Document:

exv10w12

 

Exhibit 10.12

EXCLUSIVE LICENSE AGREEMENT

     This Agreement, effective as of April 15, 2003 (the “Effective Date”), is between the
University of Massachusetts Medical School (“Medical School”), a public institution of higher
education of the Commonwealth of Massachusetts having an address of 55 Lake Avenue North,
Worcester, MA 01605, and CytRx Corporation (“Company”), a Delaware corporation having an address
of11726 San Vicente Boulevard, Suite 650, Los Angeles, California 90049.

R E C I T A L S

     WHEREAS, Medical School is owner by assignment of the invention claimed in the United States
Patent Application listed in Exhibit A pertaining to the Medical School’s invention disclosure
number UMMC 03-60 titled “Selective Silencing of a Dominant ALS Gene by RNAi”;

     WHEREAS Company desires to obtain an exclusive license in the field of inhibition of mutant
superoxide dismutase (SOD1) gene expression for the treatment of amyotrophic lateral sclerosis
(ALS); and

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

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

1. Definitions.

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

     1.2. “Biological Materials” means certain tangible biological materials that are necessary for
the effective exercise of the Patent Rights, which materials are described on Exhibit A, as well as
tangible materials that are routinely produced through use of the original materials, including,
for example, any progeny derived from a cell line, monoclonal antibodies produced by hybridoma
cells, DNA or RNA replicated from isolated DNA or RNA, recombinant proteins produced through use of
isolated DNA or RNA, and substances routinely purified from a source material included in the
original materials (such as recombinant proteins isolated from a cell extract or supernatant by
non-proprietary affinity purification methods). These Biological Materials shall be listed on
Exhibit A, which will be periodically amended to include any additional Biological Materials that
Medical School may furnish to Company.

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

 

 

     1.4. “Confidential Information” means any confidential or proprietary information furnished by
one party (the “Disclosing Party”) to the other party (the “Receiving Party”) in connection with
this Agreement, provided that such information is specifically designated as confidential. Such
Confidential Information shall include, without limitation, any diligence reports furnished to
Medical School under Section 3.1. and royalty reports furnished to Medical School under Section
5.2.

     1.5. “Field” means inhibition of mutant superoxide dismutase (SOD1) gene expression for the
treatment of amyotrophic lateral sclerosis (ALS) including therapeutics, prophylactics and
diagnostics.

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

     1.7. “Net Sales” means the gross amount billed or invoiced on sales by Company and its
Affiliates and Sublicensees of Licensed Products, less the following: (a) customary trade,
quantity, or cash discounts and commissions to non-affiliated brokers or agents to the extent
actually allowed and taken; (b) amounts repaid or credited by reason of rejection or return; (c) to
the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or
other governmental charges levied on the production, sale, transportation, delivery, or use of a
Licensed Product which is paid by or on behalf of Company; (d) outbound transportation costs
prepaid or allowed and costs of insurance in transit; and (e) allowance for bad debt that is
customary and reasonable for the industry and in accordance with generally accepted accounting
principles. Notwithstanding anything to the contrary in this Section 1.7, Net Sales does not
include sales of Licensed Products at or below the fully burdened cost of manufacturing solely for
research or clinical testing or for indigent or similar public support or compassionate use
programs.

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

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

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

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

     1.8. “Patent Rights” means the U.S. patent applications listed on Exhibit A, and any
divisional, continuation, or continuation-in-part of such patent applications to the extent the
claims are directed to subject matter specifically described therein, as well as any patent issued
thereon and any reissue or reexamination of such patent, and any foreign counterparts to such
patents and patent applications. Exhibit A shall be periodically amended to include any additional
Patent Rights that may arise. “Medical School Patent Rights” means Patent Rights assigned solely
to Medical School (and other academic institutions, if any). “Joint Patent Rights” means Patent
Rights assigned to both Medical School and Company.

     1.9. “Related Technology” means any know-how, technical information, research and development
information, test results, and data necessary for the effective exercise of the Patent Rights.

     1.10. “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.

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

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

2. Grant of Rights.

     2.1. License Grants.

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

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

          (c) Subject to applicable law or the rights of research sponsors, the Medical School shall use
its best efforts to make any improvements to the Patent Rights available to Company.

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

     2.3. Retained Rights.

          (a) Medical School. Medical School retains the right to make and use Licensed Products for
academic research, teaching, and non-commercial patient care, without payment of compensation to
Company. Medical School may license its retained rights under this Section to research
collaborators of Medical School faculty members, post-doctoral fellows, and students.

          (b) Federal Government. To the extent that any invention claimed in the Patent Rights has
been partially funded by the federal government, this Agreement and the grant of any rights in such
Patent Rights are subject to and 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 any Patent Rights. If any term of this Agreement fails to conform with such laws and
regulations, the relevant term shall be deemed an invalid provision and modified in accordance with
Section 10.11. Upon execution of this Agreement, the Medical School shall disclose in writing to
Company any funding that would be subject to this Section 2.3(b).

          (c) Other Organizations. To the extent that any invention claimed in the Patent Rights has
been partially funded by a non-profit organization or state or local agency, this
Agreement and the grant of any rights in such Patent Rights are subject to and governed by the
terms and conditions of the applicable research grant. If any term of this Agreement fails to
conform with such terms and conditions, the relevant term shall be deemed an invalid provision and
modified by the parties pursuant to Section 10.11. Upon execution of this Agreement, the Medical
School shall disclose in writing to Company any funding that would be subject to this Section
2.3(c).

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3. Company Obligations Relating to Commercialization.

     3.1. Diligence Requirements. Company shall use diligent efforts, or shall 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 or
Affiliate or Sublicensee shall fulfill the following obligations:

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

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

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

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

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

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

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

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

Company shall have the responsibility to finance its obligations in this Section 3.1, and the
Medical School shall provide reasonable cooperation to Company in this regard. In the event that
Medical School determines that Company (or an Affiliate or Sublicensee) has not fulfilled its
obligations under this Section 3.1., Medical School shall furnish Company with written notice of
such determination. Within sixty (60) days after receipt of such notice, Company shall either

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(i) fulfill the relevant obligation or (ii) negotiate with Medical School a mutually acceptable
schedule of revised diligence obligations, failing which Medical School shall have the right,
immediately upon written notice to Company, to terminate this Agreement or to grant additional
licenses to third parties to the Patent Rights and Biological Materials in the Field. The Medical
School may not unreasonably withhold acceptance of Company’s revised diligence obligations.

     3.2. Indemnification.

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

          (b) Procedures. The Indemnitees agree to provide Company with prompt written notice of any
claim, suit, action, demand, or judgment for which indemnification is sought under this Agreement.
Company agrees, at its own expense, to provide attorneys reasonably acceptable to Medical School to
defend against any such claim. The Indemnitees shall cooperate fully with Company in such defense
and will permit Company to conduct and control such defense and the disposition of such claim,
suit, or action (including all decisions relative to litigation, appeal, and settlement); provided,
however, that any Indemnitee shall have the right to retain its own counsel, at the expense of
Company, if representation of such Indemnitee by the counsel retained by Company would be
inappropriate because of actual or potential differences in the interests of such Indemnitee and
any other party represented by such counsel. Company agrees to keep Medical School informed of the
progress in the defense and disposition of such claim and to consult with Medical School with
regard to any proposed settlement.

          (c) Insurance. Company shall maintain insurance or self-insurance that is reasonably adequate
to fulfill any potential obligation to the Indemnitees, but in any event not less than one million
dollars ($1,000,000) for injuries to any one person arising out of a single occurrence and five
million dollars ($5,000,000) for injuries to all persons arising out of a single occurrence.
Company shall provide Medical School, upon request, with written evidence of such
insurance or self-insurance. Company shall continue to maintain such insurance or self-insurance
after the expiration or termination of this Agreement during any period in which Company or any
Affiliate or Sublicensee continues to make, use, or sell a product that was a Licensed Product
under this Agreement and thereafter for a period of two (2) years.

     3.3. Use of Medical School Name. In accordance with Section 7.3., Company and its Affiliates
and Sublicensees shall not use the name “University of Massachusetts Medical School” or any
variation of that name in connection with the marketing or sale of any Licensed Products.

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

     3.5. Compliance with Law. Company shall comply with, and shall ensure that its Affiliates and
Sublicensees (to the extent commercially feasible) 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 governmental authorities of any
foreign jurisdiction in which Company or an Affiliate or Sublicensee intends to make, use,
or sell Licensed Products.

     (b) Company and its Affiliates and Sublicensees shall comply with all United States
laws and regulations controlling the export of certain commodities and technical data,
including without limitation all Export Administration Regulations of the United States
Department of Commerce. Among other things, these laws and regulations prohibit, or require
a license for, the export of certain types of commodities and technical data to specified
countries. Company hereby gives written assurance that it will comply with, and will cause
its Affiliates and Sublicensees to comply with, all United States export control laws and
regulations, that it bears sole responsibility for any violation of such laws and
regulations by itself or its Affiliates or Sublicensees, and that it will indemnify, defend,
and hold Medical School harmless (in accordance with Section 3.2.) for the consequences of
any such 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,
Medical School 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. In partial consideration of the rights granted Company under this
Agreement, Company shall pay to Medical School on the Effective Date (a) a license fee of {***},
and (b) a payment in the amount of {***} to reimburse Medical School for its actual expenses
incurred as of January 31, 2003 in connection with obtaining the Patent Rights. These license fee
payments are nonrefundable and are not creditable against any other payments due to Medical School
under this Agreement.

     4.2. Equity. In partial consideration of the license granted to Company under this Agreement,
on or about April 18, 2003, Company shall issue to Medical School a total number

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of shares of Common Stock of Company, ($.01 par value per share) equal to {***} of the outstanding shares of
Company. Company shall register the shares that are issued to the Medical School within ninety
(90) days after their issuance and those shares will then be unrestricted.

     4.3. License Maintenance Fee. Beginning on the 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 Medical School {***}. This annual license maintenance fee is nonrefundable and is not
creditable against any other payments due to Medical School under this Agreement.

     4.4. Milestone Payments. Company shall pay Medical School the following milestone payments
within thirty (30) days after the occurrence of each event:

	 	 	 
	Milestone	 	Payment
	Filing of IND or equivalent for each product
	 	${***}
	Entry into Phase I Clinical trial or equivalent for each Licensed Product
	 	${***} for first product and ${***} for each subsequent product
	Entry into Phase II clinical trial or equivalent for each Licensed Product
	 	${***} for first product and ${***} for each subsequent product
	Entry into Phase III clinical trial or equivalent for each Licensed Product
	 	${***} for first product and ${***} for each subsequent product
	Filing for market approval (NDA or equivalent) in any country besides the United States
	 	${***} for first product and ${***} for each subsequent product
	Commencement of product marketing in the United States
	 	${***}
	First market approval for first three European countries in total
	 	${***}

These milestone payments are nonrefundable and are not creditable against any other payments due to
University under this Agreement.

Company shall pay Medical School a one-time bonus in the amount of {***} in the event that
cumulative gross sales of Licensed Products by Company and its Affiliates or Sublicense Income
exceed {***} in one calendar year in the United States. Company shall pay Medical School a
one-time bonus in the amount of {***} in the event that cumulative gross sales of Licensed Products
by Company and its Affiliates or Sublicense Income exceed {***} in one calendar year in Japan and
Europe.

     4.5. Royalties.

          (a) Base Royalty. In partial consideration of the rights granted Company under this
Agreement, Company shall pay to Medical School a royalty of {***} of Net Sales of Licensed Products
by Company and its Affiliates (but not Sublicensees).

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               (i) If a particular Licensed Product is within the definition of “Licensed Product” solely
because it uses or incorporates Related Technology, the royalty rate applicable to such Licensed
Product shall be reduced by {***}.

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

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

               (iv) Company shall pay Medical School {***} of Net Sales of commercial clinical laboratory
services by Company and its Affiliates

          (b) Royalty Reduction. If Medical School grants additional licenses to third parties pursuant
to Section 3.1., the royalty rates set forth in Subsection 4.5.(a) shall be adjusted, if necessary,
so as not to exceed the royalty rates charged any other licensee of the Patent Rights during the
term of the non-exclusive license.

     4.6. Minimum Royalty. At the beginning of each calendar year during the term of this
Agreement, beginning January 1, 2016, Company shall pay to Medical School a minimum royalty of
{***}. If the actual royalty payments to Medical School in any calendar year are less than the
minimum royalty payment required for that year, Company shall have the right to pay Medical School
the difference between the actual royalty payment and the minimum royalty payment in full
satisfaction of its obligations under this Section, provided such minimum payment is made to
Medical School within sixty (60) days after the conclusion of the calendar year. Waiver of any
minimum royalty payment by Medical School shall not be construed as a waiver of any subsequent
minimum royalty payment. If Company fails to make any minimum royalty payment within the sixty-day
period, such failure shall constitute a material breach of its obligations under this Agreement,
and Medical School shall have the right to terminate this Agreement in accordance with Section 8.3.

     4.7. Sublicense Income. Company shall pay Medical School {***} of all Sublicense Income.
Such amounts shall be due and payable within sixty (60) days after Company receives the relevant
payment from the Sublicensee.

     4.8. Third-Party Royalties. In the event that Company is legally required to make royalty
payments to Medical School under any agreement other than this Agreement or to one or more third
parties in order to make, use, or sell Licensed Products or have its Sublicensees make, use or sell
Licensed Products or have its Sublicensee make, use or sell Licensed Products, Company may offset a
total of fifty percent (50%) of such other Medical School and third-party payments against any
royalty payments that are due to Medical School in the same Royalty Period under this Agreement,
provided that in no event shall the royalty payments under Sections 4.5. and

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4.7., when aggregated
with any other offsets and credits allowed under this Agreement, be reduced by more than fifty
percent (50%) in any Royalty Period.

5. Royalty Reports; Payments; Records.

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

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

     (a) the number of Licensed Products sold to independent third parties in each country;

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

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

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

     (e) the portion of royalty-based Sublicense Income due to Medical School for the
applicable Royalty Period from each Sublicensee.

All such reports shall be considered Company Confidential Information. If no royalties are due to
Medical School for any Royalty Period, the report shall so state. Concurrent with this report,
Company shall remit to Medical School any payment due for the applicable Royalty Period.

     5.3. Payments in U.S. Dollars. All payments due under this Agreement shall be payable in
United States dollars. Conversion of foreign currency to U.S. dollars shall be made at the
conversion rate existing in the United States (as reported in the Wall Street Journal) on the
last working day of the calendar quarter preceding the applicable Royalty Period. Such payments
shall be without deduction of exchange, collection, or other charges.

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

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     5.5. Records. Company shall maintain, and shall cause its Affiliates and Sublicensees to
maintain, complete and accurate records of Licensed Products that are made, used, sold, or
performed under this Agreement and any amounts payable to Medical School in relation to such
Licensed Products, which records shall contain sufficient information to permit Medical School to
confirm the accuracy of any reports delivered to Medical School under Section 5.2. The relevant
party shall retain such records relating to a given Royalty Period for at least three (3) years
after the conclusion of that Royalty Period, during which time Medical School shall have the right,
at its expense, to cause its internal accountants or an independent, certified public accountant to
inspect such records during normal business hours for the sole purpose of verifying any reports and
payments delivered under this Agreement. Such accountant shall not disclose to Medical School any
information other than information relating to accuracy of reports and payments delivered under
this Agreement. The parties shall reconcile any underpayment or overpayment within thirty (30)
days after the accountant delivers the results of the audit. In the event that any audit performed
under this Section reveals an underpayment in excess of the greater of (a) five thousand dollars
($5,000) or (b) ten percent (10%) in any Royalty Period, Company shall bear the full cost of such
audit. Medical School may exercise its rights under this Section only once every year and only
with reasonable prior notice to Company.

     5.6. Late Payments. Any payments by Company that are not paid on or before the date such
payments are due under this Agreement shall bear interest, to the extent permitted by law, at two
percentage points above the Prime Rate of interest as reported in the Wall Street Journal on the
date payment is due, with interest calculated based on the number of days that payment is
delinquent.

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

     5.8. Withholding and Similar Taxes. Royalty payments and other payments due to Medical School
under this Agreement shall be reduced by reason of any withholding or similar
taxes applicable to such payments to Medical School, which shall be paid by Company as required by
applicable law and reported by Company to the Medical School.

6. Patents and Infringement.

     6.1. Responsibility for Medical School Patent Rights. Medical School shall have primary
responsibility, at the expense of Company, for the preparation, filing, prosecution, and
maintenance of all Medical School Patent Rights, using patent counsel reasonably acceptable to
Company. Medical School shall consult with Company as to the preparation, filing, prosecution, and
maintenance of all such Patent Rights reasonably prior to any deadline or action with the U.S.
Patent & Trademark Office or any foreign patent office and shall furnish Company with copies of all
relevant documents reasonably in advance of such consultation.

     6.2. Responsibility for Joint Patent Rights. Company shall have primary responsibility, at
its expense, for the preparation, filing, prosecution, and maintenance of all Joint Patent Rights,
using patent counsel reasonably acceptable to Medical School. Company shall consult with

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Medical
School as to the preparation, filing, prosecution, and maintenance of all such Patent Rights
reasonably prior to any deadline or action with the U.S. Patent & Trademark Office or any foreign
patent office and shall furnish Medical School with copies of all relevant documents reasonably in
advance of such consultation.

     6.3. Cooperation. Medical School and Company shall cooperate fully in the preparation,
filing, prosecution, and maintenance of all Patent Rights. Such cooperation includes, without
limitation, (a) promptly executing all papers and instruments or requiring employees of Medical
School or Company to execute such papers and instruments as reasonable and appropriate so as to
enable Medical School or Company to file, prosecute, and maintain such Patent Rights in any
country; and (b) promptly informing the other party of matters that may affect the preparation,
filing, prosecution, or maintenance of any such Patent Rights (such as becoming aware of an
additional inventor who is not listed as an inventor in a patent application).

     6.4. Payment of Expenses. Within thirty (30) days after Medical School invoices Company,
Company shall reimburse Medical School for all reasonable patent-related expenses incurred by
Medical School pursuant to Section 6.1. Company may elect, upon sixty (60) days written notice to
Medical School, to cease payment of the expenses associated with obtaining or maintaining patent
protection for one or more Patent Rights in one or more countries. In such event, Company shall
lose all rights under this Agreement with respect to such Patent Rights in such countries for which
it has elected not to pay.

     6.5. Abandonment. In the event that a party desires to abandon any patent or patent
application within the Patent Rights for which it has primary responsibility, such party shall
provide the other party with reasonable prior written notice of such intended abandonment or
decline of responsibility, and the other party shall have the right, at its expense, to prepare,
file, prosecute, and maintain the relevant Patent Rights.

     6.6. Grant back: The Company agrees that for any patent rights, as defined in the sponsored
research agreement that implements Company’s obligation in Section 3.1(e) that it has not licensed,
the Company grants back to the Medical School, without limiting in any way its
rights under this Agreement, a license to the Patent Rights in order that the Medical School may
license the patent rights from the sponsored research to third parties. Medical School shall pay
Company {***} of any revenues or other consideration received by Medical School with respect to any
patent rights granted back by Company pursuant to this Section 6.6.

     6.7. 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. So long as Company remains the only licensee of the Patent
Rights and Biological Materials in the Field, Company shall have the right, under its own control
and at its own expense, to 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), to defend the Patent
Rights in any declaratory judgment action brought by a third party which alleges invalidity,
unenforceability, or non-infringement of the Patent Rights. Prior to commencing any such action,
Company shall consult with Medical School and shall consider the views of Medical School regarding
the advisability of the proposed action and its effect on the

- 12 -

 

public interest. Company shall not
enter into any settlement, consent judgment, or other voluntary final disposition of any
infringement action under this Subsection without the prior written consent of Medical School,
which consent shall not be unreasonably withheld or delayed. Any recovery obtained in an action
under this Subsection 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 Medical
School 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 shall have applied), less a reasonable approximation of the royalties that Company would have
paid to Medical School 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 against any royalty payments due to Medical School under this Agreement, provided that
in no event shall the royalty payments under Section 4.5. and 4.7., when aggregated with any other
offsets and credits allowed under this Agreement, be reduced by more than fifty percent (50%) in
any Royalty Period.

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

          (d) Medical School Right to Prosecute. In the event that Company fails to initiate an
infringement action within a reasonable time after it first becomes aware of the basis for such
action, or to answer a declaratory judgment action within a reasonable time after such action is
filed, Medical School shall have the right to prosecute such infringement or answer such
declaratory judgment action, under its sole control and at its sole expense, and any recovery
obtained shall be given to Medical School.

          (e) Cooperation. Each party agrees to cooperate fully in any action under this Section 6.7.
which is controlled by the other party, provided that the controlling party reimburses
the cooperating party promptly for any costs and expenses incurred by the cooperating party in
connection with providing such assistance.

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; such notice shall summarize the Confidential Information disclosed to the Receiving
Party and reference the time and place of disclosure.

          (b) Obligations. For a period of five (5) years after disclosure of any portion of
Confidential Information, the Receiving Party shall (i) maintain such Confidential Information in
strict confidence, except that the Receiving Party may disclose or permit the disclosure of any

- 13 -

 

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

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

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

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

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

- 14 -

 

8. Term and Termination.

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

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

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

     8.4. Effect of Termination. The following provisions shall survive the expiration or
termination of this Agreement: Articles 1 and 9; Sections 3.2., 3.5., 5.2. (obligation to provide
final report and payment), 5.5., 6.4., 7.1., 7.3., 8.4., 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 due Medical School under this
Agreement, (b) Company pays Medical School the applicable royalty on such sales of Licensed
Products in accordance with the terms and conditions of this Agreement, and (c) Company and its
Affiliates and Sublicensees shall complete and sell all work-in-progress and inventory of Licensed
Products within six (6) months after the effective date of termination.

9. Dispute Resolution.

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

- 15 -

 

     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 such 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, whereupon both parties shall
be obligated to engage in a mediation proceeding under the then current Center for Public Resources
(“CPR”) Model Procedure for Mediation of Business Disputes, except that specific provisions of this
Section shall override inconsistent provisions of the CPR Model Procedure. The mediator will be
selected from the CPR Panels of Neutrals. If the parties cannot agree upon the selection of a
mediator within ninety (90) days after the Notice Date, then upon the request of either party, the
CPR shall appoint the mediator. The parties shall attempt to resolve the dispute through mediation
until one of the following occurs: (i) the parties reach a written settlement; (ii) the mediator
notifies the parties in writing that they have reached an impasse; (iii) the parties agree in
writing that they have reached an impasse; or (iv) the parties have not reached a settlement within
one hundred and twenty (120) days after the Notice Date.

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

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 or relating to this Agreement;
provided, however, that a party may suspend performance of its obligations during any period in
which the other party fails or refuses to perform its obligations.

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

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

- 16 -

 

10. Miscellaneous.

     10.1. Representations and Warranties. Medical School represents and warrants that its
employees have assigned to Medical School their entire right, title, and interest in the Patent
Rights, that it has authority to grant the rights and licenses set forth in this Agreement, and
that, to its best knowledge, Medical School does not hold any other intellectual property rights
that would be infringed by the exploitation of the Patent Rights. MEDICAL SCHOOL MAKES NO OTHER
WARRANTIES CONCERNING THE PATENT RIGHTS, RELATED TECHNOLOGY, AND BIOLOGICAL MATERIALS, INCLUDING
WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. Specifically, Medical School makes no warranty or representation (a) regarding the
validity or scope of the Patent Rights, (b) that the exploitation 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 Medical School in the area of technology transfer and shall promptly notify Medical
School of any violation that Company knows or has reason to believe has occurred or is likely to
occur. The Medical School policies currently in effect at the Worcester campus are listed on the
http://www.umassmed.edu web site.

     10.3. Tax-Exempt Status. Company acknowledges that Medical School, as a public institution of
the Commonwealth of Massachusetts, holds the status of an exempt organization under the United
States Internal Revenue Code. Company also acknowledges that certain facilities in which the
licensed inventions were developed may have been financed through offerings of tax-exempt bonds.
If the Internal Revenue Service determines, or if counsel to Medical School reasonably determines,
that any term of this Agreement jeopardizes the tax-
exempt status of Medical School or the bonds used to finance Medical School facilities, the
relevant term shall be deemed an invalid provision and modified in accordance with Section 10.11.

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

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

     10.6. Binding Effect. This Agreement shall be binding upon and inure 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, except that Company may assign this Agreement to an Affiliate
or to a successor in connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business to which this Agreement relates.

- 17 -

 

     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 shall relate only to such instance and shall not be construed
as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

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

     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 hand, recognized national
overnight courier, confirmed facsimile transmission, confirmed electronic mail, or registered or
certified mail, postage prepaid, return receipt requested, to the
following addresses or facsimile numbers of the parties:

If to Medical School:

Office of Technology Management

University of Massachusetts Medical School

365 Plantation Street, Suite 130

Worcester, MA 01605

Attention:     Joseph F.X. McGuirl

                      Executive Director

Tel: (508) 856-1626

Fax: (508) 856-5004

If to Company:

CytRx Corporation

11726 San Vicente Boulevard, Suite 650

Los Angeles, California 90049

Attention:        Steven A. Kriegsman

Invoices to:      Steven A. Kriegsman

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

     10.11. Severability. In the event that any provision of this Agreement shall be held invalid
or unenforceable for any reason, such invalidity or unenforceability shall not affect any other
provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement
to preserve (to the extent possible) their original intent. If the parties fail to reach a
modified agreement within sixty (60) days after the relevant provision is held invalid or
unenforceable, then the dispute shall be resolved in accordance with the procedures set forth in

- 18 -

 

Article 9. While the dispute is pending resolution, this Agreement shall be construed as if such
provision were deleted by agreement of the parties.

     10.12. Entire Agreement. Except for the Common Stock Purchase 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.

- 19 -

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 
	UNIVERSITY OF MASSACHUSETTS	 	 	 	CYTRX CORPORATION	 	 
	MEDICAL SCHOOL	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Joseph F. X. McGuirl
 

	 	 	 	By:
	 	/s/ Steven A. Kriegsman
 

	 	 
	 	 	Joseph F.X. McGuirl	 	 	 	Steven A. Kriegsman	 	 
	 	 	Executive Director, Office of	 	 	 	Chief Executive Officer	 	 
	 

	 	Technology Management	 	 	 	 	 	 	 	 

- 20 -

 

EXHIBIT A

List of Patent Rights

Patent Rights

Docket number: UMMC 03-60 Title: “Selective Silencing of a Dominant ALS Gene by RNAi”

Patent Application Serial number: 60/423,507, filed on November 4, 2002

Inventors: Zuoshang Xu et al

 

 

AMENDMENT NO. 1

TO

EXCLUSIVE LICENSE AGREEMENT

(UMMC 03-60)

     This Amendment No. 1, dated as of February  1, 2004 (the “Amendment”) is being made to the
Exclusive License Agreement relating to UMMC 03-60 (the “License Agreement”), effective as of April
15, 2003, by and between the University of Massachusetts Medical School (“Medical School”), a
public institution of higher education of the Commonwealth of Massachusetts having an address of 55
Lake Avenue North, Worcester, MA 01655, and CytRx Corporation (“Company”), a Delaware corporation
having an address of 11726 San Vicente Boulevard, Suite 650, Los Angeles, California 90049.

R E C I T A L S

     WHEREAS, Section 4.8 of the License Agreement provided for the calculation of payments payable
to Medical School under Section 4.5 and Section 4.7 of the License Agreement in the event Company
was required to make certain other payments to Medical School or third parties; and

     WHEREAS, Medical School and Company wish to clarify the manner in which Section 4.8 of the
License Agreement shall operate;

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

1. Amendment to Section 4.8.

     Section 4.8 of the License Agreement is hereby amended to read in full as follows:

     “4.8 Third-Party and Other Payments. If Company is legally required to make royalty
or sublicense income payments to Medical School under any other license agreement, as well as this
Agreement, or to one or more third parties, as well as this Agreement, in the same Royalty Period
for which payments are due under Section 4.5 or 4.7 in order for Company to make, use or sell
Licensed Products or have its Sublicensee make, use, or sell Licensed Products:

          (a) Other Medical School Payments. In the case of payments to Medical School under
Sections 4.5 and 4.7 with respect to any Licensed Product, Company shall pay only the highest rate
among this Agreement and any other Medical School licenses, and that one payment shall be deemed to
satisfy the payment requirements for the applicable period under not only this Agreement but each
of the other Medical School licenses.

          (b) Third Party Payments. In the case of payments to one or more third parties with
respect to any Licensed Product under this Agreement, Company may reduce its

 

 

payment to Medical School under Section 4.5 or 4.7 of this Agreement for the applicable Royalty Period by fifty
percent (50%) of the amount actually paid to third parties. However, in no event will the
reductions made pursuant to this Section 4.8(b) result in more than a fifty percent (50%) reduction
in the payments that would otherwise be payable to Medical School under Section 4.5 and 4.7 (after
taking into account Section 4.8(a)).

          (c) Example: Royalty Reductions. By way of illustration for Section 4.5 royalty
payment reductions, for a particular Licensed Product, assume a royalty of (***) of Net Sales under
another Medical School license and a payment of (***) of Net Sales to a third party. The reduction
calculation would be as follows: The total (***) royalty rate in this Agreement would apply, and
Company would reduce that rate by 50% of the (***) due to the third party, resulting in a (***)
royalty to Medical School under this Agreement, and no royalties payable to the Medical School
under the other Medical School license.

          (d) Example: Sublicense Income Payments. By way of illustration for Section 4.7
Sublicense Income payment reductions, assume (i) the total Sublicense Income received by Company
from the Sublicensee is (***), and (ii) Company paid a third party (***) in order to allow the
sublicensee to make Licensed Products. Company would then be required to pay the Medical School
under this Agreement (***) (Medical School receiving (***) of the (***) reduced by one-half of the
(***) paid to the third party). If Company also sublicensed another Medical School license with
respect to the Licensed Products, Company would not be required to make additional sublicense
income payments.”

2. Continuation of All Other Terms of Agreement.

     Except for the amendment of Section 4.8 of the License Agreement provided for in Section 1 of
this Amendment, all of the terms and conditions of the License Agreement shall continue in full
force and effect.

3. Miscellaneous.

     3.1 Dispute Resolution. The parties agree that any dispute arising out of or relating
to this Amendment shall be resolved solely by means of the procedures set forth in Article 9 of the
Agreement.

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

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

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

 

 

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

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

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

	 	 	 	 	 	 	 	 	 	 	 
	UNIVERSITY OF MASSACHUSETTS	 	 	 	CYTRX CORPORATION	 	 
	MEDICAL SCHOOL	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Chester A. Bisbee
 

Acting Executive Director
	 	 	 	By:
	 	/s/ Steven A. Kriegsman
 

Steven A. Kriegsman
	 	 
	 

	 	Office of Technology Management
	 	 	 	 	 	Chief Executive Officerexv10w13

 

Exhibit 10.13

UMass Agreement No. UMMC 03-33-06

LICENSE AGREEMENT

     This Agreement, effective as of May 18, 2006 (the “Effective Date”), is between the University
of Massachusetts Medical School (“Medical School”), a public institution of higher education of the
Commonwealth of Massachusetts having an address of 333 South Street, Suite 400, Shrewsbury, MA
01545, and CytRx Corporation (“Company”), a Delaware corporation having an address of 11726 San
Vicente Blvd., Suite 650, Los Angeles, CA 90049.

R E
C I T A L S

     WHEREAS, Medical School is owner by assignment of the invention claimed in the United States
Patent Application listed in Exhibit A pertaining to the Medical School’s invention disclosures
numbers UMMC 03-33, 03-61, and 03-101; and

     WHEREAS, Medical School has exclusively licensed the invention to Sirna Therapeutics, Inc.
with a reservation that allows the Medical School to grant this license to Company concurrently in
certain limited fields; and

     WHEREAS, Company desires to obtain a license to the above referenced invention for certain
limited fields pertaining to the development of prophylactics, therapeutics, and diagnostics for
diabetes, obesity, Amyotrophic Lateral Sclerosis (ALS), and human cytomegalovirus (HCMV) under the
rights of Medical School in any patent rights claiming those inventions; and

     WHEREAS, Medical School is willing to grant Company a license on the terms set forth in this
Agreement; and

     WHEREAS, Company and Sirna Therapeutics, Inc. are the only licensees of the technology;

     THEREFORE, Medical School and Company hereby agree as follows: 1.

Definitions.

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

     1.2. “Collaborator” means a commercial entity that enters into a written agreement
for a corporate partnership, joint venture, or other strategic alliance with Company or its
Affiliate for research, development, and/or commercialization of one or more Licensed
Products.

Page 1 of 20

 

UMass Agreement No. UMMC 03-33-06

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

     1.4. “Field” means therapeutics, prophylactics and diagnostics arising from the use
of RNAi to (a) inhibit human cytomegalovirus Immediate Early (IE) gene expression, (b)
inhibit mutant SOD1 gene expression in amyotrophic lateral sclerosis (ALS) applications,
and (c) inhibit gene targets implicated in type II diabetes and obesity.

     1.5. “Licensed Product” means any product that cannot be developed,
manufactured, used, or sold without (a) infringing one or more Valid Claims under the
Patent Rights, or (b) using some portion of the Related Technology.

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

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

1.7. “Other Company Technology” means any technology other than the Patent
Rights that is developed by Company or is licensed by Company from Medical School.

     1.8. “Patent Rights” means (a) the provisional and non-provisional United States
patent and foreign patent applications listed on Exhibit A, (b) any divisional,
continuation,
continuation-in-part, substitution or addition of such patent applications to the extent the claims
are directed to subject matter specifically described therein as well as any patent issued thereon,
(c) and any renewals, reissues, reexaminations, substitutions or extensions thereof, including
supplementary protection certificates, and (d)all foreign counterparts to such patents and patent
applications.

Page 2 of 20

 

UMass Agreement No. UMMC 03-33-06

     1.9. “Related Technology” means any know-how, technical information, research
and development information, test results, and data necessary for the effective exercise of
the Patent Rights which have been developed by Dr. Tariq M. Rana and his associates in
his laboratory at the Medical School as of the Effective Date and which are owned by
Medical School.

     1.10. “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.

     1.11.“Sublicense Income” means any payments that Company receives from a
Sublicensee in consideration of the sublicense of the rights granted Company under Section
2.1., including without limitation license fees, milestone payments, and license
maintenance fees, but excluding royalties

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

     1.13. “Valid Claim” means (a) in the case of a United States or foreign patent
application, a claim that has not been cancelled, withdrawn, or abandoned without being
refiled in another application claiming priority from said patent application; or that has not
been finally rejected by an administrative agency action from which no appeal can be
taken; or (b) in the case of an unexpired United States or foreign patent (or either one of the
foregoing that has been granted patent term extension or its equivalent), a claim that has
not been donated to the public, withdrawn, canceled or disclaimed, or held invalid or
unenforceable by a court or government agency of competent jurisdiction in an unappealed
or unappealable decision, including, through opposition, reexamination, reissue or
disclaimer.

2. Grant of Rights.

     2.1. License Grants.

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

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

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     2.2. Sublicenses. Company may grant sublicenses of its rights under Section 2.1
with the consent of Medical School, which consent may not be unreasonably withheld or
delayed, but only (a) when Company grants a license to Other Company Technology and
the sublicense is reasonably required to practice the Other Company Technology or (b)
when the sublicense is granted to Collaborators. All sublicense agreements executed by
Company pursuant to this Article 2 shall expressly bind the Sublicensee to the terms of this
Agreement, and Company shall promptly furnish Medical School with a fully executed
copy of the sublicense agreement.

     2.3. Retained Rights.

          (a) Medical School. Medical School retains the right to make and use
Licensed Products for academic research, teaching, and non-commercial patient care,
without payment of compensation to Company. Medical School may license its retained
rights under this Section to research collaborators of Medical School faculty members,
post-doctoral fellows, and students.

          (b) Federal Government. The invention claimed in the Patent Rights has
been partially funded by the federal government. Therefore, this Agreement and the grant
of any rights in such Patent Rights are subject to and 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 any Patent
Rights. If any term of this Agreement fails to conform with such laws and regulations, the
relevant term shall be deemed an invalid provision and modified in accordance with
SectionlO.il.

          (c) Other Organizations. To the extent that any invention claimed in the
Patent Rights has been partially funded by a non-profit organization or state or local
agency, this Agreement and the grant of any rights in such Patent Rights are subject to and
governed by the terms and conditions of the applicable research grant. If any term of this
Agreement fails to conform with such terms and conditions, the relevant term shall be
deemed an invalid provision and modified by the parties pursuant to Section 10.11. Upon
execution of this Agreement, the Medical School shall disclose in writing to Company any
funding that would be subject to this Section 2.3(c).

     2.4. Termination of Sirna Therapeutics, Inc. License. If the license for Patent
Rights with Sirna Therapeutics, Inc. is terminated, Medical School (a) may license the
Patent Rights outside of the Field to any other party and (b) for Patent Rights in the Field,
Medical School hereby grants Company a first option to obtain a worldwide, royalty
bearing exclusive license (the “Option Right”). Company may exercise the Option Right
by written notice to Medical School which is received by Medical School not later than
sixty (60) days after notification to Company of the termination of the Sirna Therapeutics,
Inc. license (which notification shall be delivered within a reasonable time to the
Company). If Company does not elect to exercise the Option Right, or fails to do so within

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the 60 day option period, Medical School may license its commercial rights under the Patent Rights
in the Field to any third party. If Company does exercise the Option Right, Medical School and
Company shall negotiate in good faith a license agreement containing commercially reasonable terms.
If Medical School and Company are unable to reach an agreement within three (3) months after
Company exercises the Option Right, Medical School may offer its commercial rights in the relevant
Patent Rights in the Field to any third parties.

3. Company Obligations Relating to Commercialization.

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

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

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

     (c) Company shall obtain all necessary governmental approvals for the
manufacture, use, and sale of Licensed Products.

     (d) Within seven (7) years after the Effective Date, Company shall file an
Investigational New Drug Application (“IND”) or its equivalent covering at least
one Licensed Product with the United States Food and Drug Administration
(“FDA”).

     (e) Within ten (10) years after the Effective Date, Company shall file a New
Drug Application (“NDA”) with the FDA covering at least one Licensed Product.

     (f) Within eighteen (18) months after receiving FDA approval of the NDA
for a Licensed Product, Company shall market at least one Licensed Product in the
United States.

     (g) Following commencement of marketing of a Licensed Product at any
time during the exclusive period of this Agreement, Company shall reasonably fill
the market demand for any Licensed Product.

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

     3.2. Indemnification.

          (a) Indemnity. Company shall indemnify, defend, and hold harmless
Medical School and its trustees, officers, faculty, students, employees, and agents and their
respective successors, heirs and assigns (the “Indemnitees”), against any liability, damage,
loss, or expense (including reasonable attorneys fees and expenses of litigation) incurred by
or imposed upon any of the Indemnitees in connection with any claims, suits, actions,
demands or judgments arising out of any theory of liability (including without limitation
actions in the form of tort, warranty, or strict liability and regardless of whether such action
has any factual basis) concerning any product, process, or service that is made, used, or
sold pursuant to any right or license granted under this Agreement; provided, however, that
such indemnification shall not apply to any liability, damage, loss, or expense to the extent
directly attributable to (i) the 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 Medical School to defend against any such claim. The
Indemnitees shall cooperate fully with Company in such defense and will permit Company
to conduct and control such defense and the disposition of such claim, suit, or action
(including all decisions relative to litigation, appeal, and settlement); provided, however,
that any Indemnitee shall have the right to retain its own counsel, at the expense of
Company, if representation of such Indemnitee by the counsel retained by Company would
be inappropriate because of actual or potential differences in the interests of such
Indemnitee and any other party represented by such counsel. Company agrees to keep
Medical School informed of the progress in the defense and disposition of such claim and
to consult with Medical School with regard to any proposed settlement.

          (c) Insurance. Company shall maintain insurance that is reasonably
adequate to fulfill any potential obligation to the Indemnitees, but in any event not less than
one million dollars ($1,000,000) for injuries to any one person arising out of a single
occurrence and five million dollars ($5,000,000) for injuries to all persons arising out of a
single occurrence. Company shall provide Medical School, upon request, with written

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evidence of such insurance. Company shall continue to maintain such insurance after the expiration
or termination of this Agreement during any period in which Company or any Affiliate or Sublicensee
continues to make, use, or sell a product that was a Licensed Product under this Agreement for a
period of two (2) years.

     3.3. Use of Medical School Name. In accordance with
Section 7.3., Company and its Affiliates and Sublicensees shall not use the name “University of Massachusetts Medical School” or any variation of that name in connection with the marketing or sale of
any Licensed Products.

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

     3.5. Compliance with Law. Company shall comply with, and shall ensure that its
Affiliates and Sublicensees (to the extent commercially feasible) 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
governmental authorities of any foreign jurisdiction in which Company or an
Affiliate or Sublicensee intends to make, use, or sell Licensed Products.

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

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commercially feasible under the circumstances, Medical School 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, hi partial consideration of the rights granted Company under this
Agreement, Company shall pay to Medical School within ten (10) days after the Effective
Date a license fee of (***). The license fee is noncancelable (even if Company terminates
pursuant to Section 8.3), nonrefundable and not creditable against any other payments due to
Medical School under this Agreement.

     4.2. Equity. In partial consideration of the license granted to Company under this
Agreement, before December 31, 2006, Company shall issue to Medical School (***) shares of
Common Stock of Company. Company shall file a registration statement covering the resale of the shares that are issued to the Medical School within one hundred and twenty days (120) days after
their issuance to Medical School and those shares shall then be unrestricted

     4.3. 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 Medical School (***). This annual license maintenance fee is
nonrefundable and is not creditable against any other payments due to Medical School under this
Agreement.

     4.4. Milestone Payments. Company shall pay Medical School the following
milestone payments within thirty (30) days after the occurrence of each event:

	 	 	 
	Milestone Event	 	Payment
	Filing of IND or equivalent for each Licensed Product

	 	(***)
	Entry into Phase I Clinical trial or equivalent for each Licensed Product

	 	(***)
	Entry into Phase II clinical trial or equivalent for each Licensed Product

	 	(***)
	Entry into Phase HI clinical trial or equivalent for each Licensed Product

	 	(***)
	NDA submission or its equivalent for each Licensed Product

	 	(***)
	Commencement of product marketing in the United States

	 	(***)
	Commencement of product marketing in Europe

	 	(***)

These milestone payments are nonrefundable and are not creditable against any other payments
due to Medical School under this Agreement.

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     4.5. Royalties.

          (a) Base Royalty. In partial consideration of the rights granted Company under this
Agreement, Company shall pay to Medical School a royalty of (***) percent (***) of Net Sales of
Licensed Products by Company, its Affiliates and Sublicensees.

          (b) Services royalty. Company shall pay Medical School (***) percent (***) of Net Sales
of commercial clinical laboratory services by Company and its Affiliates.

     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 Medical School a
minimum royalty of (***).Company may credit the minimum royalty paid under this Subsection 4.7
against actual royalties due and payable for the same calendar year. Waiver of any minimum royalty
payment by Medical School shall not be construed as a waiver of any subsequent minimum royalty
payment. If Company fails to make any minimum royalty payment within the sixty-day period, such
failure shall constitute a material breach of its obligations under this Agreement, and Medical
School shall have the right to terminate this Agreement in accordance with Section 8.3.

     4.7. Sublicense Income. Company shall pay Medical School (***) of all Sublicense
Income. Such Sublicense Income amounts shall be due and payable within sixty (60) days after
Company receives the relevant payment from the Sublicensee.

     4.8. Third-Party Royalties. If Company is legally required to make royalty payments to
one or more third parties in order to make, use, or sell Licensed Products, Company may offset a
total of fifty percent (50%) of actual third-party payments against any royalty payments that are
due to Medical School in the same Royalty Period. However, the royalty payments under Sections
4.5., may never result in a royalty lower than (***) in any Royalty Period. In the event that
Company is legally required to make royalty payments to Medical School for a Licensed Product under
any other license agreement, as well as this Agreement, the total royalty due to Medical School may
never be more than (***). The amendments to Section 4.6 or 4.8 dated February 1, 2004, in the
license agreements between Company and Medical School for UMMC 01-36, UMMC 02-01, UMMC 03-05, UMMC
03-17, UMMC 03-36 and UMMC 03-60 specifically do not apply to this Agreement. Further, no other
credits of payments due to Medical School under any other license agreement between Company and
Medical School apply to this Agreement.

     4.9. 5. Royalty Reports; Payments; Records.

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

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

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

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

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

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

     (e) the portion of royalty-based Sublicense Income due to Medical School for the
applicable Royalty Period from each Sublicensee.

All such reports shall be considered Company Confidential Information. If no royalties are due to
Medical School for any Royalty Period, the report shall so state. Concurrent with this report,
Company shall remit to Medical School any payment due for the applicable Royalty Period.

     5.3. Payments in United States Dollars. All payments due under this Agreement shall be
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. Such
payments shall be without deduction of exchange, collection, or other charges.

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

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

     5.6. Late Payments. Any payments by Company that are not paid on or before the date
such payments are due under this Agreement shall bear interest, to the extent permitted by law, at
two percentage points above the Prime Rate of interest as reported in the Wall Street Journal on
the date payment is due, with interest calculated based on the number of days that payment is
delinquent.

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

     5.8. Withholding and Similar Taxes. Royalty payments and other payments due to Medical
School under this Agreement shall not be reduced by reason of any withholding or similar taxes
applicable to such payments to Medical School, which shall be paid by Company as required by
applicable law and reported by Company to the Medical School.

6. Patents and Infringement.

     6.1. Responsibility for Patent Rights. Medical School shall have responsibility and
sole discretion for the preparation, filing, prosecution, and maintenance of all Patent Rights.
Subject to Medical’s School obligations to Sirna Therapeutics, Inc. with respect to Patent Rights
and Section 6.5 below, Medical School will keep Company informed of the status, prosecution and
maintenance of the Patent Rights and will consider Company’s comments and requests with respect
thereto in good faith.

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UMass Agreement No. UMMC 03-33-06

     6.2. Acknowledgement of Sirna Therapeutics, Inc. License Agreement. Company
acknowledges that the Medical School’s license of the Patent Rights to Sirna Therapeutics, Inc.,
may require the modification or abandonment of claims in the Patent Rights to resolve possible
patent interferences between the Medical School and Sirna Therapeutics, Inc

     6.3. 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.

     6.4. Abandonment. Subject to any obligations to Sirna Therapeutics, Inc., if Medical
School desires to abandon any patent or patent application within the Patent Rights (other than as
a result of any patent interference, litigation, or settlement of a patent interference or
litigation), Medical School shall provide Company with reasonable prior written notice of the
intended abandonment or decline of responsibility, and, in that case, Company may, at its expense,
prepare, file and prosecute, and maintain the relevant Patent Rights in the name of and on behalf
of the Medical School.

     6.5. Payment of Expenses. Within thirty (30) days after Medical School invoices
Company, Company shall reimburse Medical School for all out-of-pocket patent expenses incurred
pursuant to notice and consultation provisions of Section 6.1.

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; such notice shall summarize the Confidential Information disclosed
to the Receiving Party and reference the time and place of disclosure.

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

          (c) Exceptions. The obligations of the Receiving Party under Subsection 7.1.(b) above
shall not apply to the extent that the Receiving Party can demonstrate that

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certain Confidential Information (i) was in the public domain prior to the time of its disclosure
under this Agreement; (ii) entered the public domain after the time of its disclosure under this
Agreement through means other than an unauthorized disclosure resulting from an act or omission by
the Receiving Party; (iii) was independently developed or discovered by the Receiving Party without
use of the Confidential Information; (iv) is or was disclosed to the Receiving Party at any time,
whether prior to or after the time of its disclosure under this Agreement, by a third party having
no fiduciary relationship with the Disclosing Party and having no obligation of confidentiality
with respect to such Confidential Information; or (v) is required to be disclosed to comply with
applicable laws or regulations, or with a court or administrative order, provided that the
Disclosing Party receives reasonable prior written notice of such disclosure.

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

     7.2. Publications. Medical School and its employees will be free to publicly disclose
(through journals, lectures, or otherwise) the results of any research in the Field or relating to
the subject matter of the Patent Rights.

     7.3. Publicity Restrictions. Neither party may use the name of the other or any of its
respective trustees, officers, faculty, students, employees, or agents, or any adaptation of such
names, or any terms of this Agreement in any promotional material or other public announcement or
disclosure without the prior written consent of the other party. The foregoing notwithstanding:

          (a) Company shall have the right to disclose such information without the consent of Medical
School in any prospectus, offering memorandum, or other document or filing required by applicable
securities laws or other applicable law or regulation, provided that Company shall have given
Medical School at least ten (10) days (or such prior shorter period in order to enable Company to
make a timely announcement, while affording the Medical School the maximum feasible time to review
the announcement) prior written notice of the proposed text for the purpose of giving Medical
School the opportunity to comment on such text.

          (b) The Medical School may disclose that Company is a licensee of the Patent Rights.

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8. Term and Termination.

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

     8.2. Termination for Default. In the event that either party commits a material breach
of its obligations under this Agreement and fails to cure that breach within sixty (60) days after
receiving written notice thereof, the other party may terminate this Agreement immediately upon
written notice to the party in breach. 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. Company acknowledges and agrees that there is no cure period for any default
or failure to make payments of cash under Subsection 4.1 (“Subsection 4.1 Default”), or any default
or failure to provide equity as provided under Subsection 4.2 (“Subsection 4.2 Default”).

     8.3. Voluntary Termination. Company may terminate this Agreement for any reason upon
ninety (90) days’ prior written notice to Medical School. Medical School may terminate this
Agreement immediately upon written notice to Company upon the occurrence of either (a) a Subsection
4.1 Default or (b) a Subsection 4.2 Default as described in Subsection 8.2.

     8.4. Termination Fee. Upon termination of this Agreement (a) by Medical School
according to the provisions of Subsection 8.3(b) or (b) Company prior to fulfilling it’s
obligations to issue equity to Medical School as provided under Subsection 4.2, Company shall pay
Medical School a termination fee of Twenty Five Thousand Dollars ($25,000). This termination fee is
non-refundable and not creditable to other payments due to Medical School under this Agreement.

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

     8.6. Effect of Termination. The following provisions shall survive the expiration or
termination of this Agreement: Articles 1, 5, and 9; Sections 3.2., 3.5. 4.1, 7.1., 7.3., 8.4.,
8.6., 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

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Products that exist as of the effective date of termination, provided that (a) Company is current
in payment of all amounts due Medical School under this Agreement, (b) Company pays Medical School
the applicable royalty on such sales of Licensed Products in accordance with the terms and
conditions of this Agreement, and (c) Company and its Affiliates and Sublicensees shall complete
and sell all work-in-progress and inventory of Licensed Products within six (6) months after the
effective date of termination. 9. Dispute Resolution.

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

     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 such 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, whereupon both
parties shall be obligated to engage in a mediation proceeding under the then current Center for
Public Resources (“CPR”) Model Procedure for Mediation of Business Disputes, except that specific
provisions of this Section shall override inconsistent provisions of the CPR Model Procedure. The
mediator will be selected from the CPR Panels of Neutrals. If the parties cannot agree upon the
selection of a mediator within ninety (90) days after the Notice Date, then upon the request of
either party, the CPR shall appoint the mediator. The parties shall attempt to resolve the dispute
through mediation until one of the following occurs: (i) the parties reach a written settlement;
(ii) the mediator notifies the parties in writing that they have reached an impasse; (iii) the
parties agree in writing that they have reached an impasse; or (iv) the parties have not reached a
settlement within one hundred and twenty (120) days after the Notice Date.

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

Page 15 of 20

 

 

UMass Agreement No. UMMC 03-33-06

     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 or relating to this
Agreement; provided, however, that a party may suspend performance of its obligations during any
period in which the other party fails or refuses to perform its obligations.

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

     (c) Statute of Limitations. The parties agree that all applicable statutes of
limitation and time-based defenses (such as estoppel and laches) shall be tolled while the
procedures set forth in Subsections 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. Medical School represents and warrants that its
employees have assigned to Medical School 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.
MEDICAL SCHOOL MAKES NO OTHER WARRANTIES CONCERNING THE PATENT RIGHTS AND RELATED TECHNOLOGY,
INCLUDING WITHOUT LIMITATION ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. Specifically, Medical School makes no warranty or representation (a) regarding
the prosecution or 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 Medical School in the area of technology transfer and shall promptly notify
Medical School of any violation that Company knows or has reason to believe has occurred or is
likely to occur. The Medical School will provide current copies of the policies currently in effect
at the Worcester campus upon request.

     10.3. Tax-Exempt Status. Company acknowledges that Medical School, as a public
institution of the Commonwealth of Massachusetts, holds the status of an exempt organization under
the United States Internal Revenue Code. Company also acknowledges that certain facilities in which
the licensed inventions were developed may have been financed through offerings of tax-exempt
bonds. If the Internal Revenue Service determines, or if counsel to Medical School reasonably
determines, that any term of this

Page 16 of 20

 

 

UMass Agreement No. UMMC 03-33-06

Agreement jeopardizes the tax-exempt status of Medical School or the bonds used to finance Medical
School facilities, the relevant term shall be deemed an invalid provision and modified in
accordance with Section 10.11.

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

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

     10.6. Binding Effect. This Agreement shall be binding upon and inure 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, except that Company may assign this Agreement to an Affiliate
or to a successor in connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business to which this Agreement relates.

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

     10.9. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles.
Both parties agree that any legal action arising out of or in connection with this Agreement shall
be brought 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 of the parties:

If to Medical School:

Office of Technology Management

 University of Massachusetts Medical School 

333 South Street, Suite 400 Shrewsbury, MA 

01545 Attention: Executive Director

If to Company:

Page 17 of 20

 

 

UMass Agreement No. UMMC 03-33-06

CytRx Corporation

11726 San Vicente Blvd., Suite 650

Los Angeles, CA 90049

Attention: Steven A. Kriegsman

                   Chief Executive Officer

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

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

	 	 	 	 	 	 	 	 	 
	By:

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

	 	 
	 	 	 	 	 	 
	 

	 	Chester A. Bisbee
	 	 	 	 	 	Steven A. Kriegsman
	 

	 	Acting Director, OTM
	 	 	 	 	 	Chief Executive Officer

Page 18 of 20

 

 

EXHIBIT A List of Patent Rights UMMC 03-33

Invention Disclosure

Entitled “Chemically Modified siRNA and Uses Thereof

Provisional Application

“Chemically Modified siRNA and Uses Thereof

Tariq M. Rana, Ph.D. inventor

Filed 9/25/02 — Application No. 60/413,529

UMMC 03-61

Invention Disclosure

Entitled “In Vivo Gene Silencing by Chemically Modified and Stable siRNA”

Provisional Application

“In Vivo Gene Silencing by Chemically Modified and Stable siRNA”

Tariq M. Rana, Ph.D., inventor

Filed 11/15/02 — Application No. 60/426,982

UMMC 03-101

Invention Disclosure

Entitled “RNAi Modifications”

Provisional Application

“In Vivo Gene Silencing by Chemically Modified and Stable siRNA”
Tariq M. Rana, Ph.D., inventor
Filed 3/26/03 — Application No. 60/458,051

United States Application

“In Vivo Gene Silencing by Chemically Modified and Stable siRNA”

Tariq M. Rana, Ph.D., inventor

Filed 9/25/03 — Application No. 10/672,069

(Combined UMMC 03-33 UMMC 03-61 and UMMC 03-101 provisional applications)

 

 

Foreign Applications

International Patent Application No. PCT/US03/30480

“In Vivo Gene Silencing by Chemically Modified and Stable
siRNA“filed September 25, 2003. - (Combines UMMC 03-33, UMMC 03-61 and UMMC 03-101 provisional applications).

Australian Patent Application No. 2003282877 entitled “In Vivo Gene Silencing by Chemically Modified and Stable siRNA by Tariq M Rana, filed September 25, 2003.

European Patent Application No. 03774498.4 entitled “In Vivo Gene Silencing by Chemically Modified and Stable siRNA by Tariq M. Rana, filed September 25, 2003.

Canadian Patent Application No. 2500224 entitled “In Vivo Gene Silencing by Chemically Modified and Stable siRNA” by Tariq M. Rana, filed March 24, 2005.

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