Document:

exv4w2

Exhibit 4.2

April 14, 2011

RXi Pharmaceuticals Corporation

60 Prescott Street

Worcester, MA 01605

Attention: Mark J. Ann, President and Chief Executive Officer

     The undersigned is the record and beneficial owner of the warrants to purchase shares of
common stock, par value $0.01 per share (“Common Stock”) of RXi Pharmaceuticals Corporation (the
“Company”) set forth on Schedule A hereto (the “Warrants”).

     The undersigned understands that the Company intends to effect an underwritten public offering
(the “Offering”) of units consisting of (i) shares of Common Stock and warrants to purchase shares
of Common Stock (the “New Warrants”). The Offering is described in the Company’s preliminary
prospectus supplement, dated April 14, 2011 (the “Preliminary Prospectus Supplement”), filed with
the Securities and Exchange Commission (the “Commission”). The undersigned acknowledges receipt of
a copy of the Preliminary Prospectus. Certain additional information relating to the terms of the
Offering, including the terms of the New Warrants have been provided to the undersigned by Roth
Capital Partners, LLC. The undersigned further acknowledges that it has received such additional
information and has had an opportunity to ask questions of and receive answers from the Company
regarding the terms of the Offering.

     In consideration of its participation in the Offering, effective as of the closing date of the
Offering, the undersigned irrevocably agrees to exchange its Warrants for warrants to purchase
Common Stock having the same terms as the New Warrants (the “Exchange Warrants”) and exercisable,
subject to the terms of the Exchange Warrants, for the same aggregate number of shares of Common
Stock as the Warrants are currently exercisable (the “Exchange”). Not later than the Closing Date,
the undersigned shall deliver its Warrants to the Company for cancellation, and any Warrants not so
delivered shall thereafter cease to be exercisable and shall represent the right to receive the
Exchange Warrants pursuant to the terms hereof. The Company shall deliver to the undersigned, or as
the undersigned may otherwise direct, the Exchange Warrants to which the undersigned is entitled
hereunder at the same time as it delivers the New Warrants pursuant to the terms of the Offering.

     The undersigned hereby represents and warrants that (i) it owns the Warrants free and clear of
all liens, claims, encumbrances and other adverse claims whatsoever, (ii) this letter agreement has
been duly authorized, executed and delivered by the undersigned and constitutes a valid and binding
agreement of the undersigned, enforceable against the undersigned in accordance with its terms and
(iii) the undersigned has not paid or received any commission or other remuneration in connection
with the Exchange.

[signature page immediately follows]

 

 

	 	 	 	 	 	 	 

	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Title:
	 	 

	 	 

ACCEPTED AND AGREED,

as of the date first written above.

	 	 	 	 	 

	RXI PHARMACEUTICAL CORPORATION
	 
	 	 	 	 
	By:
	 	 	 	 
	Title:

	 	 

Authorized Signatory
	 	 

 

 

Schedule A

	 	 	 	 	 
	Class or Series of Warrants	 	Number of Warrant Shares	 	 
	 
	 	 	 	 
	March 2011 13-Month Warrants

	 	 

	 	 
	March 2011 5-Year Warrantsexv10w1

Exhibit
10.1

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

 Filed Separately With The Securities And Exchange Commission.

PATENT AND TECHNOLOGY LICENSE AGREEMENT

     This thirty-nine (39) page AGREEMENT (“AGREEMENT”) is made on this 11th day of September,
2006, by and between: (1) THE BOARD OF REGENTS (“BOARD”) of THE UNIVERSITY OF TEXAS SYSTEM
(“SYSTEM”), an agency of the State of Texas, whose address is 201 West 7th Street, Austin, Texas
78701, on behalf of THE UNIVERSITY OF TEXAS M. D. ANDERSON CANCER CENTER (“UTMDACC”), a component
institution of SYSTEM; (2) THE HENRY M. JACKSON FOUNDATION FOR THE ADVANCEMENT OF MILITARY
MEDICINE, INC. (“HJF”), a Maryland tax-exempt corporation, whose address is 1401 Rockville Pike,
Suite 600, Rockville Maryland 20852, on its own behalf and on behalf of THE UNIFORMED SERVICES
UNIVERSITY OF THE HEALTH SCIENCES (“USU”), an institution of higher learning within the Department
of Defense, an agency of the United States Government, located at 4301 Jones Bridge Road, Bethesda,
Maryland 20814-4779; and (3) ADVANCED PEPTIDE THERAPEUTICS, INC., a Delaware corporation having a
principal place of business located at 9450 E Larkspur Drive, Scottsdale, AZ 85260-8417
(“LICENSEE”).

RECITALS

	A.	 	BOARD and US ARMY originally owned certain PATENT RIGHTS and TECHNOLOGY RIGHTS related to
JOINT INVENTION, as defined below, developed by employees of UTMDACC and US ARMY.

	B.	 	US ARMY transferred ownership of its interest in the PATENT RIGHTS and TECHNOLOGY RIGHTS in
the JOINT INVENTION to USU, which subsequently assigned its ownership interest therein to HJF,
which is the patent management and

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	 	 	licensing agent for USU; therefore, the PATENT RIGHTS and TECHNOLOGY RIGHTS in JOINT
INVENTION are jointly owned by BOARD and HJF.

	C.	 	BOARD owns certain PATENT RIGHTS and TECHNOLOGY RIGHTS related to BOARD INVENTION, as defined
below, developed by Constantin G. Ioannides and Bryan A. Fisk, employees of UTMDACC.

	D.	 	MARIA IOANNIDES, a co-inventor of BOARD INVENTION, was not an employee of UTMDACC at the time
BOARD INVENTION was created, but, as indicated on ATTACHMENT A, has assigned all of her right,
title and interest in BOARD INVENTION to BOARD.

	E.	 	BOARD, through UTMDACC, and HJF desire to have the LICENSED SUBJECT MATTER developed in the
LICENSED FIELD and used for the benefit of LICENSEE, BOARD, SYSTEM, UTMDACC, HJF, the
inventor(s), and the public as outlined in BOARD’s Intellectual Property Policy.

	F.	 	LICENSEE wishes to obtain a license from BOARD and HJF to practice LICENSED SUBJECT MATTER.

     NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained, the
parties agree as follows:

I. EFFECTIVE DATE

	1.1	 	This AGREEMENT is effective as of the date written above (“EFFECTIVE DATE”), which is the
date fully executed by all the parties.

II. DEFINITIONS

	 	 	As used in this AGREEMENT, the following terms have the meanings indicated:

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	2.1	 	AFFILIATE means any business entity more than fifty percent (50%) owned by LICENSEE, any
business entity which owns more than fifty percent (50%) of LICENSEE, or any business entity
that is more than fifty percent (50%) owned by a business entity that owns more than fifty
percent (50%) of LICENSEE.

	2.2	 	BOARD INVENTION means the discoveries, know-how, information and inventions created by
Constantin G. Ioannides, Bryan A. Fisk and Maria Ioannides and further described in UTMDACC
Invention Disclosure Report MDA94-022, entitled “Cancer Therapies by HER-2 Peptides” and/or
U.S. Patent No. 6,514,942.

	2.3	 	JOINT INVENTION means the discoveries, know-how, information and inventions created by
Constantin G. Ioannides, Martin L. Campbell, Catherine O. O’Brian and George Peoples and
further described in UTMDACC Invention Disclosure Report MDA 01-049, entitled “Induction of
Tumor Immunity by Controlled Modification of Amino Acid Side Chain Length Using
Methyl/Methylene (CH2/CH3)” and/or U.S. Provisional Application No. 60/362,778.

	2.4	 	LICENSED FIELD for JOINT INVENTION (and all PATENT RIGHTS and TECHNOLOGY RIGHTS relating
thereto) means the use of the JOINT INVENTION only with HER family (erb-B) peptides and only
in the field of human therapeutics. JOINT INVENTION may not be used in connection with any
other peptides, including, but not limited to, the modification of peptides other than HER
family (erb-B) peptides. LICENSED FIELD for BOARD INVENTION (and all PATENT RIGHTS and
TECHNOLOGY RIGHTS relating thereto) means the field of human therapeutics.

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	2.5	 	LICENSED PRODUCTS means any product or service comprising any LICENSED SUBJECT MATTER sold by
LICENSEE or any AFFILIATE pursuant to this AGREEMENT.

	2.6	 	LICENSED SUBJECT MATTER means inventions and discoveries covered by PATENT RIGHTS or
TECHNOLOGY RIGHTS within LICENSED FIELD.

	2.7	 	LICENSED TERRITORY means worldwide.

	2.8	 	MARKETING APPROVAL means the approval or authorization required for the marketing of a
LICENSED PRODUCT in the United States, the European Union or other country within the LICENSED
TERRITORY, such as the issuance of an approval action by the United States Food and Drug
Administration (“FDA”) on an NDA in the United States, or the issuance of its equivalent by
the European Medicines Agency in the European Union.

	2.9	 	NDA means a New Drug Application or Biologics License Application filed with the FDA for
MARKETING APPROVAL, or an equivalent application filed with any equivalent agency or
governmental authority outside of the United States.

	2.10	 	NET SALES means the gross revenues received by LICENSEE or any AFFILIATE from a SALE less
sales discounts actually granted, sales and/or use taxes actually paid, import and/or export
duties actually paid, outbound transportation actually prepaid or allowed, and amounts
actually allowed or credited due to returns (not exceeding the original billing or invoice
amount), all as recorded by LICENSEE in LICENSEE’s official books and records in accordance
with generally accepted accounting practices and consistent with LICENSEE’s financial
statements and/or regulatory filings with the United States Securities and Exchange
Commission, if any.

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	2.11	 	PATENT RIGHTS means BOARD’s and HJF’s rights in information or discoveries described in
invention disclosures, or claimed in any patents, and/or patent applications, whether domestic
or foreign, and all divisionals, continuations, continuations-in-part, reissues,
reexaminations or extensions thereof, and any letters patent that issue thereon as defined in
Exhibit I attached hereto.

	2.12	 	PHASE II CLINICAL TRIAL means: (a) that portion of the drug development and review process
which provides for early controlled clinical trials conducted to obtain preliminary data on
the effectiveness of an investigational new drug for a particular indication, as more
specifically defined by the rules and regulations of the FDA, including 21 C.F.R. § 312.21 or
any future revisions or substitutes therefor; or (b) a similar clinical trial in any national
jurisdiction other than the United States. Commencement of a PHASE II CLINICAL TRIAL shall be
deemed to occur upon the administration of LICENSED PRODUCT or placebo to the first patient
enrolled in the PHASE II CLINICAL TRIAL.

	2.13	 	PHASE III CLINICAL TRIAL means: (a) that portion of the drug development and review process
in which expanded clinical trials are conducted to gather the additional information about
effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of
an investigational new drug, as more specifically defined by the rules and regulations of the
FDA, including 21 C.F.R. § 312.21 or any future revisions or substitutes therefor; or; (b) a
similar clinical trial in any national jurisdiction other than the United States. Commencement
of a PHASE III CLINICAL TRIAL shall be deemed to occur upon the administration of LICENSED
PRODUCT or placebo to the first patient enrolled in the PHASE III CLINICAL TRIAL.

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	2.14	 	SALE or SOLD means the transfer or disposition of a LICENSED PRODUCT for value to a party
other than LICENSEE or AFFILIATE.

	2.15	 	TECHNOLOGY RIGHTS means BOARD’s and HJF’s rights in any and all technical information,
know-how, processes, procedures, compositions, devices, methods, formulae, protocols,
techniques, software, designs, drawings, or data created by the inventor(s) listed in Exhibit
I at UTMDACC or the U S ARMY before the EFFECTIVE DATE, which are not specifically claimed in
PATENT RIGHTS but that are necessary for practicing PATENT RIGHTS.

	2.16	 	VALID CLAIM means a claim of: (a) any issued, unexpired patent that has not been revoked or
held unenforceable or invalid by a decision of a court or governmental agency of competent
jurisdiction from which no appeal can be taken, or with respect to which an appeal is not
taken within the time allowed for appeal; or (b) any pending patent application that that has
not been cancelled, withdrawn or abandoned.

III. LICENSE

	3.1	 	BOARD, through UTMDACC, and HJF hereby grant to LICENSEE a royalty-bearing, exclusive license
under LICENSED SUBJECT MATTER to manufacture, have manufactured, use, import, offer to sell
and/or sell LICENSED PRODUCTS within LICENSED TERRITORY for use within LICENSED FIELD. This
grant is subject to Sections 14.2 and 14.3 hereinbelow, the payment by LICENSEE to UTMDACC of
all consideration as provided herein, the timely payment of all amounts due under any related
sponsored research agreement between UTMDACC and/or HJF and LICENSEE in effect during this
AGREEMENT, and is further subject to the following rights retained by BOARD, UTMDACC and HJF
to:

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	 	(a)	 	Publish the general scientific findings from research related to LICENSED
SUBJECT MATTER, subject to the terms of Article XI—Confidential Information and
Publication; and

	 	(b)	 	Use LICENSED SUBJECT MATTER for research, teaching, patient care, and other
educationally-related purposes.

	3.2	 	LICENSEE may extend the license granted herein to any AFFILIATE provided that the AFFILIATE
consents in writing to be bound by this AGREEMENT to the same extent as LICENSEE. LICENSEE
agrees to deliver such contract to UTMDACC within thirty (30) calendar days following
execution thereof.

	3.3	 	LICENSEE may grant sublicenses under LICENSED SUBJECT MATTER consistent with the terms of
this AGREEMENT provided that LICENSEE is responsible for its sublicensees relevant to this
AGREEMENT, and for diligently collecting all amounts due LICENSEE from sublicensees. If a
sublicensee pursuant hereto becomes bankrupt, insolvent or is placed in the hands of a
receiver or trustee, LICENSEE, to the extent allowed under applicable law and in a timely
manner, agrees to use its best reasonable efforts to collect all consideration owed to
LICENSEE and to have the sublicense agreement confirmed or rejected by a court of proper
jurisdiction.

	3.4	 	LICENSEE must deliver to UTMDACC a true and correct copy of each sublicense granted by
LICENSEE, and any modification or termination thereof, within thirty (30) calendar days after
execution, modification, or termination.

	3.5	 	If this AGREEMENT is terminated pursuant to Article XIII-Term and Termination, BOARD, UTMDACC
and HJF agree to accept as successors to LICENSEE, existing sublicensees in good standing at
the date of termination provided that each such

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	 	 	sublicensee consents in writing to be bound by all of the
terms and conditions of this AGREEMENT.

IV. CONSIDERATION, PAYMENTS AND REPORTS

	4.1	 	In consideration of rights granted by BOARD and HJF to LICENSEE under this AGREEMENT,
LICENSEE agrees to pay UTMDACC the following:

	 	(a)	 	All reasonable out-of-pocket expenses incurred by UTMDACC and/or HJF in filing,
prosecuting, enforcing and maintaining PATENT RIGHTS, and all such future expenses
incurred by UTMDACC and/or HJF, for so long as, and in such countries as this AGREEMENT
remains in effect. UTMDACC will invoice LICENSEE within thirty (30) calendar days of
the EFFECTIVE DATE for such expenses incurred as of that time and on a quarterly basis
thereafter. The invoiced amounts will be due and payable by LICENSEE within thirty
(30) calendar days of invoice; and
	 
	 	(b)	 	A nonrefundable license documentation fee in the amount of [***]. This license
documentation fee is due and payable as follows: [***] shall be due and payable within
thirty (30) days after the EFFECTIVE DATE; the remaining amount of [***] shall be paid
on or before the earlier of (1) the first anniversary of the EFFECTIVE DATE, or (2)
within thirty (30) days of LICENSEE’s obtaining a commitment of at least seven million
dollars ($7,000,000.00) in funding. This license documentation fee will not reduce the
amount of any other payment provided for in this ARTICLE IV; and

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	 	(c)	 	[***] shares of Common Stock of LICENSEE, par value $.0001 per share, which
shall be issued to BOARD and/or its designee(s) within sixty (60) days after this
AGREEMENT has been executed by all parties; and
	 
	 	(d)	 	The following nonrefundable annual license maintenance fees or the total
running royalty set forth in Section 4.1(e)(ii) (said royalties being payable
quarterly), whichever is greater:
	 
	 	(i)	 	[***] due on the first anniversary of the EFFECTIVE DATE;

	 	(ii)	 	[***] due on the second anniversary of the EFFECTIVE DATE;
	 
	 	(iii)	 	[***] due on the third anniversary of the EFFECTIVE DATE;
	 
	 	(iv)	 	[***] due on the fourth anniversary of the EFFECTIVE DATE; and
	 
	 	(v)	 	[***] due on the fifth anniversary of the EFFECTIVE DATE; and

	 	(e)	 	Beginning the quarter following the fifth anniversary of the EFFECTIVE DATE,
LICENSEE shall pay UTMDACC, on a quarterly basis, the greater of: (i) an annual minimum
royalty of [***] (payable in four equal quarterly installments of [***] each); or (ii)
a running royalty (payable quarterly as set forth in Section 4.3, below) which shall be
equal to the combined total of all of the following running royalties:

	 		 	(i) as to NET SALES of LICENSED PRODUCTS in a given jurisdiction covered by at
least one VALID CLAIM existing in such jurisdiction at the time of the relevant
SALE: (1) [***]% of the first [***] of such NET SALES; (2) [***]% of the second
[***] of such NET SALES; and
(3) [***]% of all such NET SALES in excess of [***]; and

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	 		 	(ii) as to NET SALES of any LICENSED PRODUCT in a given jurisdiction not covered by
any VALID CLAIM existing in such jurisdiction at the time of the relevant SALE: (1)
[***]% of the first [***] of such NET SALES; (2) [***]% of the second [***] of such
NET SALES, and (3) [***]% of all such NET SALES in excess of [***]; and

	 	(f)	 	The following one-time milestone payments:

	 	(i)	 	Commencement of Phase III Clinical Trial for a LICENSED PRODUCT $ [***]
	 
	 	(ii)	 	Filing of an NDA for a LICENSED PRODUCT $[***]
	 
	 	(iii)	 	Marketing Approval of a LICENSED PRODUCT $[***]
	 
	 	(iv)	 	First SALE of a LICENSED PRODUCT $[***]

	 	 	 	For purposes hereof, “Commencement” means administration of the first dose to a
human. Each of the foregoing milestone payments shall be made by LICENSEE to
UTMDACC within thirty (30) days of achieving the milestone event and shall [***]
reduce the amount of any other payment provided for in this ARTICLE IV; and

	 	(g)	 	The following percentages of all consideration, other than research and
development money, due within thirty (30) days of receipt, received by LICENSEE from
either (i) any sublicensee pursuant to Sections 3.3 and 3.4 hereinabove, or (ii) any
assignee pursuant to Section 12.1 hereinbelow (in consideration for UTMDACC and HJF
allowing the assignment), including but not limited to, royalties, up-front payments,
marketing, distribution, franchise, option, license, or documentation fees, bonus and
milestone payments and equity securities:

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	 	(i)	 	[***]% if sublicensed or assigned after the EFFECTIVE DATE but
prior to the commencement of a Phase II Clinical Trial;

	 	(ii)	 	[***]% if sublicensed or assigned after the commencement of a
Phase II Clinical Trial but prior to the commencement of a Phase III Clinical
Trial;

	 	(iii)	 	[***]% if sublicensed or assigned after commencement of a
Phase III Clinical Trial, but prior to the filing of an NDA; and

	 	(iv)	 	[***]% if sublicensed or assigned after filing of an NDA.

	4.2	 	If LICENSEE is obligated to pay running royalties to a third party to avoid infringing such
third party’s patent rights which dominate the PATENT RIGHTS, as documented by a written
opinion of LICENSEE’S outside patent counsel, a copy of which is provided to UTMDACC, LICENSEE
may reduce the running royalties due UTMDACC by [***] of the running royalty rate actually
being paid to such third party, provided that the running royalty rate due UTMDACC will not be
reduced by more than [***] of the royalty rates specified in Section 4.1(e) and in no event
shall be less than [***].

	4.3	 	Unless otherwise provided, all such payments are payable within thirty (30) calendar days
after March 31, June 30, September 30, and December 31 of each year during the term of this
AGREEMENT, at which time LICENSEE will also deliver to UTMDACC a true and accurate report,
giving such particulars of the business conducted by LICENSEE and its sublicensees, if any
exist, during the preceding three calendar months under this AGREEMENT as necessary for
UTMDACC to account for LICENSEE’s payments hereunder. This report will include pertinent
data, including, but not limited to:

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	 	(a)	 	the accounting methodologies used to account for and calculate the items
included in the report and any differences in such accounting methodologies used by
LICENSEE since the previous report; and

	 	(b)	 	a list of LICENSED PRODUCTS produced for the three (3) preceding calendar
months categorized by the technology it relates to under PATENT RIGHTS and whether or
not it is covered by a VALID CLAIM; and

	 	(c)	 	the total quantities of LICENSED PRODUCTS produced by the categories listed in
Section 4.3(b); and

	 	(d)	 	the total SALES by the categories listed in Section 4.3(b); and

	 	(e)	 	the calculation of NET SALES by the categories listed in Section 4.3(b); and

	 	(f)	 	the royalties so computed and due UTMDACC by the categories listed in Section
4.3(b) and/or minimum royalties; and

	 	(g)	 	all consideration received from each sublicensee or assignee and payments due
UTMDACC; and

	 	(h)	 	all other amounts due UTMDACC herein. Simultaneously with the delivery of each such report, LICENSEE agrees to pay UTMDACC the
amount due, if any, for the period of such report. These reports are required even if no
payments are due.

	4.4	 	During the term of this AGREEMENT and for three (3) years thereafter, LICENSEE agrees to keep
complete and accurate records of its and its sublicensees’ SALES and NET SALES in sufficient
detail to enable the royalties and other payments due hereunder to be determined. LICENSEE
agrees to permit UTMDACC or its representatives, at UTMDACC’s expense, to periodically examine
LICENSEE’s books, ledgers, and records

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	 	 	during regular business hours for the purpose of and to the extent necessary to verify any
report required under this AGREEMENT. If any amounts due UTMDACC are determined to have been
underpaid in an amount equal to or greater than five percent (5%) of the total amount due
during the period so examined, then LICENSEE will pay the cost of the examination plus
accrued interest at the highest allowable rate.

	4.5	 	Within thirty (30) calendar days following each anniversary of the EFFECTIVE DATE, LICENSEE
will deliver to UTMDACC a written progress report as to LICENSEE’s (and any sublicensee’s)
efforts and accomplishments during the preceding year in diligently commercializing LICENSED
SUBJECT MATTER in the LICENSED TERRITORY and LICENSEE’s (and sublicensees’) commercialization
plans for the upcoming year. UTMDACC may provide copies of any progress, royalty or other
reports provided by LICENSEE to UTMDACC under this AGREEMENT in confidence to HJF, which may
provide the same in confidence to USU and/or US ARMY.

	4.6	 	All amounts payable hereunder by LICENSEE will be paid in United States funds without
deductions for taxes, assessments, fees, or charges of any kind. Checks are to be made
payable to The University of Texas M. D. Anderson Cancer Center, and sent by United States
mail to Box 297402, Houston, Texas 77297, Attention: Manager, Sponsored Programs or by wire
transfer to:

	 	 	JPMorgan Chase Bank, N.A.

910 Travis

Houston, Texas 77002

SWIFT: [***]

ABA ROUTING NO: [***]

ACCOUNT NAME: [***]

ACCOUNT NO.: [***]

	 	 	REFERENCE: include title and EFFECTIVE DATE of AGREEMENT and type of payment (e.g., license
documentation fee, milestone payment, royalty [including

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	 	 	applicable patent/application identified by MDA reference number and patent number or
application serial number], or maintenance fee, etc.).

	4.7	 	No payments due or royalty rates owed under this AGREEMENT will be reduced as the result of
co-ownership of LICENSED SUBJECT MATTER by BOARD and/or HJF, and another party, including, but
not limited to, LICENSEE.

V. SPONSORED RESEARCH

	5.1	 	If LICENSEE desires to sponsor research for or related to the LICENSED SUBJECT MATTER, and
particularly where LICENSEE receives payments for sponsored research pursuant to a sublicense
under this AGREEMENT, LICENSEE (a) will notify UTMDACC and/or HJF in writing of all
opportunities to conduct this sponsored research (including clinical trials, if applicable),
(b) will solicit research and/or clinical proposals from UTMDACC and/or HJF for this purpose,
and (c) will give good faith consideration to funding the proposals at UTMDACC and/or HJF.

VI. PATENTS AND INVENTIONS

	6.1	 	If after consultation with LICENSEE, the parties agree that a new patent application should
be filed for LICENSED SUBJECT MATTER, UTMDACC will prepare and file appropriate patent
applications, and LICENSEE will pay the reasonable cost of searching, preparing, filing,
prosecuting and maintaining same. If LICENSEE notifies UTMDACC that it does not intend to pay
the cost of an application, or if LICENSEE does not respond or make an effort to agree with
UTMDACC and HJF on the disposition of rights of the subject invention, then UTMDACC may file
such application at its own expense and LICENSEE’s rights to such invention under this
AGREEMENT shall terminate in their entirety. UTMDACC will provide LICENSEE with a copy of the

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	 	 	application for which LICENSEE has paid the cost of
filing, as well as copies of any documents received or
filed during prosecution thereof. The parties agree
that they share a common legal interest to get valid
enforceable patents and that LICENSEE will keep all
privileged information received pursuant to this
Section confidential.

VII. INFRINGEMENT BY THIRD PARTIES

	7.1	 	LICENSEE, at its expense, must enforce any patent exclusively licensed hereunder against
infringement by third parties and is entitled to retain recovery from such enforcement. After
reimbursement of LICENSEE’s reasonable legal costs and expenses related to such recovery,
LICENSEE agrees to pay UTMDACC either: (a) the royalty detailed in Section 4.1(e) for any
monetary recovery that is for sales of LICENSED PRODUCTS lost due to the infringement and
related punitive damages; or (b) [***] of reasonable royalties awarded and related punitive
damages in any recovery in which the award is for reasonable royalties. LICENSEE must notify
UTMDACC in writing of any potential infringement within thirty (30) calendar days of knowledge
thereof. If LICENSEE does not file suit against a substantial infringer within six (6) months
of knowledge thereof, then BOARD, UTMDACC and/or HJF (“ENFORCING PARTY or PARTIES”) may, at
its sole discretion, enforce any patent licensed hereunder on behalf of itself and LICENSEE,
with ENFORCING PARTY or PARTIES retaining all recoveries from such enforcement, and/or reduce
the license granted hereunder to non-exclusive.

	7.2	 	In any suit or dispute involving an infringer, the parties agree to cooperate fully with each
other. At the request and expense of the party or parties bringing suit, the other party or

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	 	 	parties will permit access during
regular business hours, to all relevant
personnel, records, papers,
information, samples, specimens, and
the like in its possession.

VIII. PATENT MARKING

	8.1	 	LICENSEE agrees that all packaging containing individual LICENSED PRODUCT(S), documentation
therefor, and when possible for actual LICENSED PRODUCT(S) sold by LICENSEE, AFFILIATES,
and/or sublicensees of LICENSEE will be permanently and legibly marked with the number of any
applicable patent(s) licensed hereunder in accordance with each country’s patent laws,
including Title 35, United States Code.

IX. INDEMNIFICATION AND INSURANCE

	9.1	 	LICENSEE agrees to hold harmless and indemnify BOARD, SYSTEM, UTMDACC, HJF, USU, US ARMY, and
their Regents, officers, employees, students and agents from and against any claims, demands,
or causes of action whatsoever, costs of suit and reasonable attorney’s fees, including
without limitation, those costs arising on account of any injury or death of persons or damage
to property caused by, or arising out of, or resulting from, the exercise or practice of the
rights granted hereunder by LICENSEE, its officers, its AFFILIATES or their officers,
employees, agents or representatives.

	9.2	 	In no event shall BOARD, SYSTEM, UTMDACC, HJF, USU or US ARMY be liable for any indirect,
special, consequential or punitive damages (including, without limitation, damages for loss of
profits or expected savings or other economic losses, or for injury to persons or property)
arising out of, or in connection with, this AGREEMENT or its subject matter, regardless of
whether BOARD, SYSTEM, UTMDACC, HJF, USU or US ARMY knows or should know of the possibility of
such damages.

16

 

	9.3	 	Beginning at the time when any LICENSED SUBJECT MATTER is being distributed or sold
(including for the purpose of obtaining regulatory approvals) by LICENSEE or by a sublicensee,
LICENSEE shall, at its sole cost and expense, procure and maintain commercial general
liability insurance in amounts not less than $2,000,000 per incident and $2,000,000 annual
aggregate, and LICENSEE shall use reasonable efforts to have the BOARD, SYSTEM, UTMDACC, HJF,
USU, US ARMY, and their Regents, officers, employees, students and agents named as additional
insureds. Such commercial general liability insurance shall provide: (i) product liability
coverage; (ii) broad form contractual liability coverage for LICENSEE’s indemnification under
this AGREEMENT; and (iii) coverage for litigation costs. The minimum amounts of insurance
coverage required herein shall not be construed to create a limit of LICENSEE’s liability with
respect to its indemnification under this AGREEMENT.

	9.4	 	LICENSEE shall provide UTMDACC with written evidence of such insurance within thirty (30)
days of its procurement. Additionally, LICENSEE shall provide UTMDACC with written notice of
at least fifteen (15) days prior to the cancellation, non-renewal or material change in such
insurance.

	9.5	 	LICENSEE shall maintain such commercial general liability insurance beyond the expiration or
termination of this AGREEMENT during: (i) the period that any LICENSED SUBJECT MATTER
developed pursuant to this AGREEMENT is being commercially distributed or sold by LICENSEE or
by a sublicensee or agent of LICENSEE; and (ii) the five (5) year period immediately after
such period.

17

 

X. USE OF NAME

	10.1	 	LICENSEE will not use the name of (or the name of any employee of) UTMDACC, SYSTEM, BOARD,
HJF, USU and/or US ARMY in any advertising, promotional or sales literature, on its Web site,
or for the purpose of raising capital without the advance express written consent of the
appropriate party secured through:

	 	 	For UTMDACC, SYSTEM or BOARD:

	 	 	The University of Texas

M. D. Anderson Cancer Center, Legal Services

P.O. Box 301439, Unit 0537

Houston, TX 77230-1439

ATTENTION: Natalie Wright

Email: [***]

	 	 	For HJF:

The Henry M. Jackson Foundation for the Advancement of Military Medicine, Inc.

1401 Rockville Pike, Suite 600

Rockville, MD 20852

ATTENTION: General Counsel

Email: [***]

	 	 	For USU or US ARMY:

The Uniformed Services University of the Health Sciences

4301 Jones Bridge Road

Room A1030

Bethesda, MD 20814

ATTENTION: General Counsel

Email: [***]

	 	 	Notwithstanding the above, LICENSEE may use the name of (or name of employee of) UTMDACC,
SYSTEM or BOARD in routine business correspondence, or as needed in appropriate regulatory
submissions without express written consent.

XI. CONFIDENTIAL INFORMATION AND PUBLICATION

	11.1	 	UTMDACC, HJF and LICENSEE each agree that all information contained in documents marked
“confidential” and forwarded to one party by another (i) are to be received in strict
confidence, (ii) are to be used only for the purposes of this

18

 

	 	 	AGREEMENT, and (iii) will not be disclosed by the recipient party (except as required by law
or court order), its agents or employees without the prior written consent of the disclosing
party, except to the extent that the recipient party can establish by competent written
proof that such information:

	 	(a)	 	was in the public domain at the time of disclosure; or

	 	(b)	 	later became part of the public domain through no act or omission of the
recipient party, its employees, agents, successors or assigns; or

	 	(c)	 	was lawfully disclosed to the recipient party by a third party having the right
to disclose it; or

	 	(d)	 	was already known by the recipient party at the time of disclosure as
substantiated by recipient’s written records; or

	 	(e)	 	was independently developed by the recipient party without use of the
disclosing party’s confidential information; or

	 	(f)	 	is required by law or regulation to be disclosed.

	11.2	 	Each party’s obligation of confidence hereunder will be fulfilled by using at least the same
degree of care with the disclosing party’s confidential information as it uses to protect its
own confidential information, but always at least a reasonable degree of care. This obligation
will exist while this AGREEMENT is in force and for a period of three (3) years thereafter.

	11.3	 	UTMDACC and HJF each reserves the right to publish the general scientific findings from
research related to LICENSED SUBJECT MATTER, with due regard to the protection of LICENSEE’s
confidential information. UTMDACC or HJF (whichever plans to publish) will submit the
manuscript of its proposed publication to LICENSEE at

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	 	 	least thirty (30) calendar days
before publication, and LICENSEE
shall have the right to review and
comment upon the publication in
order to protect LICENSEE’s
confidential information. Upon
LICENSEE’s request, publication may
be delayed up to sixty (60)
additional calendar days to enable
LICENSEE to secure adequate
intellectual property protection of
LICENSEE’s confidential information
that would otherwise be affected by
the publication.

XII. ASSIGNMENT

	12.1	 	Except in connection with the sale of all of LICENSEE’s assets to a third party, this
AGREEMENT may not be assigned by LICENSEE without the prior written consent of UTMDACC and
HJF, which will not be unreasonably withheld or delayed.

XIII. TERM AND TERMINATION

	13.1	 	Subject to Sections 13.3 and 13.4 hereinbelow, the term of this AGREEMENT is from the
EFFECTIVE DATE to the date upon which all PATENT RIGHTS have expired, or all claims in the
PATENT RIGHTS have been declared invalid or unenforceable by a court or tribunal in a final
decision not subject to further appeal, or have been abandoned.

	13.2	 	Any time after two (2) years from the EFFECTIVE DATE, BOARD or UTMDACC have the right to
terminate this license in any national political jurisdiction within the LICENSED TERRITORY if
LICENSEE, within ninety (90) calendar days after receiving written notice from UTMDACC of the
intended termination, fails to provide written evidence satisfactory to UTMDACC that LICENSEE
or its sublicensee(s) has commercialized or is actively and effectively attempting to
commercialize a licensed invention in such jurisdiction(s). The following definitions apply
to Section 13.2: (a) “commercialize” means having SALES in such jurisdiction; (b) “active
attempts to

20

 

	 	 	commercialize” means conducting an effective ongoing and active research, development,
manufacturing, marketing or sales program as appropriate, directed toward obtaining
regulatory approval, and/or production and/or SALES in any jurisdiction, and has provided
plans acceptable to UTMDACC, in its sole discretion, to commercialize licensed inventions in
the jurisdiction(s) that UTMDACC intends to terminate.

	13.3	 	Subject to any rights herein which survive termination, this AGREEMENT will earlier terminate
in its entirety:

	 	(a)	 	automatically, if LICENSEE becomes bankrupt or insolvent and/or if the business
of LICENSEE shall be placed in the hands of a receiver, assignee, or trustee, whether
by voluntary act of LICENSEE or otherwise; or

	 	(b)	 	upon thirty (30) calendar days written notice from UTMDACC, if LICENSEE
breaches or defaults on the payment or report obligations of ARTICLE IV, or use of name
obligations of ARTICLE X, unless, before the end of the such thirty (30)-calendar day
notice period, LICENSEE has cured the default or breach to UTMDACC’s satisfaction, and
so notifies UTMDACC, stating the manner of the cure; or

	 	(c)	 	upon thirty (30) calendar days written notice from UTMDACC, if LICENSEE fails
to commence a Phase II Clinical Trial or Phase III Clinical Trial in the United States
or the European Union within twenty four (24) months of the EFFECTIVE DATE, unless,
before the end of such thirty (30) day period, LICENSEE provides evidence satisfactory
to UTMDACC that it has commenced the Clinical Trial; or

21

 

	 	(d)	 	upon thirty (30) calendar days written notice from UTMDACC, if LICENSEE
fails to acquire at least seven million dollars ($7,000,000.00) in funding (whether by
debt, equity, merger, reverse merger, grant, corporate partnering or sublicensing) and
provides evidence of same to UTMDACC within twelve (12) months of the EFFECTIVE DATE;
or
	 
	 	(e)	 	upon ninety (90) calendar days written notice from UTMDACC if LICENSEE breaches
or defaults on any other obligation under this AGREEMENT, unless, before the end of the
such ninety (90) calendar-day notice period, LICENSEE has cured the default or breach
to UTMDACC’s satisfaction and so notifies UTMDACC, stating the manner of the cure; or
	 
	 	(f)	 	at any time by mutual written agreement between LICENSEE, UTMDACC and HJF upon
one hundred eighty (180) calendar days written notice to all parties and subject to any
terms herein which survive termination; or
	 
	 	(g)	 	if Section 13.2 is invoked; or
	 
	 	(h)	 	if LICENSEE has defaulted or been late on its payment obligations pursuant to
the terms of this AGREEMENT on any two (2) occasions in a twelve (12) month period.

	13.4	 	Upon termination of this AGREEMENT:

	 	(a)	 	nothing herein will be construed to release any party of any obligation
maturing prior to the effective date of the termination; and
	 
	 	(b)	 	LICENSEE covenants and agrees to be bound by the provisions of Articles IX
(Indemnification and Insurance), X (Use of Name) and XI (Confidential Information and
Publication) of this AGREEMENT; and

22

 

	 	(c)	 	LICENSEE may, after the effective date of the termination, sell all LICENSED
PRODUCTS and parts therefor that it has on hand at the date of termination, if LICENSEE
pays the earned royalty thereon and any other amounts due pursuant to Article IV of
this AGREEMENT; and
	 
	 	(d)	 	Subject to Section 13.4(c), LICENSEE agrees to cease and desist any use and all
SALE of the LICENSED SUBJECT MATTER and LICENSED PRODUCTS upon termination of this
AGREEMENT; and
	 
	 	(e)	 	LICENSEE grants to BOARD, UTMDACC and HJF a nonexclusive royalty bearing
license with the right to sublicense specific fields of use outside of the LICENSED
FIELD to others with respect to improvements made by LICENSEE (including improvements
licensed by LICENSEE from third parties) in the LICENSED SUBJECT MATTER. LICENSEE,
UTMDACC and HJF agree to negotiate in good faith the royalty rate for the nonexclusive
license. BOARD’s, UTMDACC’s and HJF’s right to sublicense others hereunder is solely
for the purpose of permitting others to develop and commercialize the entire technology
package.

XIV. WARRANTY: SUPERIOR-RIGHTS

	14.1	 	Except for the rights, if any, of the Government of the United States of America as set forth
below and subject to the limitations set forth in Section 14.2, BOARD and HJF represent and
warrant their belief that (a) they are the owners of the entire right, title, and interest in
and to LICENSED SUBJECT MATTER, (b) they have the sole right to grant licenses thereunder, and
(c) they have not knowingly granted licenses thereunder to any other entity that would
restrict rights granted hereunder except as stated herein.

23

 

	14.2	 	As more specifically set forth in ATTACHMENT A, Maria Ioannides has assigned her right, title
and interest as a co-inventor of BOARD INVENTION to BOARD, and has represented and warranted
to BOARD that her interest in the BOARD INVENTION is not obligated to a third party and that
she is free to transfer her interest in the BOARD INVENTION to BOARD. BOARD and UTMDACC do not
represent or warrant the extent of Maria Ioannides’ interest in BOARD INVENTION. BOARD’s
rights and interest in any Patent Rights, Technology Rights and/or Licensed Subject Matter as
a result of Maria Ioannides being a co-inventor thereof are limited to the rights granted to
the BOARD by Maria Ioannides in ATTACHMENT A.

	14.3	 	LICENSEE understands that the LICENSED SUBJECT MATTER may have been developed by an employee
or employees of, or under a funding agreement with the Government of the United States of
America and, if so, that the Government may have certain rights relative thereto. This
AGREEMENT is explicitly made subject to the Government’s rights under any such agreement and
any applicable law or regulation, including P.L. 96-517 as amended by P.L. 98-620. To the
extent that there is a conflict between any such agreement, applicable law or regulation and
this AGREEMENT, the terms of such Government agreement, applicable law or regulation shall
prevail. In addition, the Government retains the right to use the INVENTION and/or PATENT
RIGHTS for noncommercial research purposes. LICENSEE agrees that LICENSED PRODUCTS used or
SOLD in the United States will be manufactured substantially in the United States, unless a
written waiver is obtained in advance from the GOVERNMENT.

	14.4	 	LICENSEE understands and agrees that BOARD, UTMDACC and HJF by this AGREEMENT, make no
representation as to the operability or fitness for any use, safety,

24

 

	 	 	efficacy, approvability by regulatory authorities, time and cost of development,
patentability, and/or breadth of the LICENSED SUBJECT MATTER. BOARD, UTMDACC and HJF, by
this AGREEMENT, also make no representation as to whether any patent covered by PATENT
RIGHTS is valid or as to whether there are any patents now held, or which will be held, by
others or by BOARD, UTMDACC or HJF in the LICENSED FIELD, nor do BOARD, UTMDACC and HJF make
any representation that the inventions contained in PATENT RIGHTS do not infringe any other
patents now held or that will be held by others or by BOARD or HJF.

	14.5	 	LICENSEE, by execution hereof, acknowledges, covenants and agrees that LICENSEE has not been
induced in any way by BOARD, SYSTEM, UTMDACC, HJF or employees thereof to enter into this
AGREEMENT, and further warrants and represents that (a) LICENSEE has conducted sufficient due
diligence with respect to all items and issues pertaining to this AGREEMENT; and (b) LICENSEE
has adequate knowledge and expertise, or has used knowledgeable and expert consultants, to
adequately conduct such due diligence, and agrees to accept all risks inherent herein.

XV. GENERAL

	15.1	 	This AGREEMENT constitutes the entire and only agreement between the parties for LICENSED
SUBJECT MATTER and all other prior negotiations, representations, agreements and
understandings are superseded hereby. No agreements altering or supplementing the terms
hereof will be made except by a written document signed by all parties.

	15.2	 	Any notice required by this AGREEMENT must be given by prepaid, first class, certified mail,
return receipt requested, and addressed in the case of UTMDACC to:

25

 

The University of Texas M. D. Anderson Cancer Center

Office of Technology Commercialization

7515 S. Main, Suite 490, Unit 0510

Houston, Texas 77030

ATTENTION: Christopher C. Capelli

with copy to BOARD:

BOARD OF REGENTS

The University of Texas System

201 West Seventh Street

Austin, Texas 78701

ATTENTION: Office of General Counsel

In the case of LICENSEE to:

Advanced Peptide Therapeutics, Inc.

9450 E Larkspur Drive

Scottsdale, Arizona 85260-8417

ATTENTION: Robert E Kennedy

Or in the case of HJF to:

The Henry M. Jackson Foundation for

the Advancement of Military Medicine, Inc.

1401 Rockville Pike, Suite 600

Rockville, Maryland 20852

ATTENTION: General Counsel

or
other addresses as may be given from time to time under the terms of this notice provision.

	15.3	 	LICENSEE must comply with all applicable federal, state and local laws and regulations in
connection with its activities pursuant to this AGREEMENT.

	15.4	 	This AGREEMENT will be construed and enforced in accordance with the laws of the United
States of America and of the State of Texas, without regard to its conflict of law provisions.
The Texas State Courts of Harris County, Texas (or, if there is exclusive federal
jurisdiction, the United States District Court for the Southern District of Texas)

26

 

	 	 	shall have exclusive jurisdiction and venue over any dispute arising out of this AGREEMENT,
and LICENSEE consents to the jurisdiction of such courts; however, nothing herein shall be
deemed as a waiver by BOARD, SYSTEM or UTMDACC of its sovereign immunity.

	15.5	 	Any dispute or controversy arising out of or relating to this AGREEMENT, its construction or
its actual or alleged breach will be decided by mediation. If the mediation does not result
in a resolution of such dispute or controversy, it will be finally decided by an appropriate
method of alternate dispute resolution, including without limitation, arbitration, conducted
in the city of Houston, Harris County, Texas, in accordance with the applicable, then-current
procedures of the American Arbitration Association. The arbitration panel will include
members knowledgeable in the evaluation of the LICENSED SUBJECT MATTER. Judgment upon the
award rendered may be entered in the highest court or forum having jurisdiction, state or
federal. The provisions of this Section 15.5 will not apply to decisions on the validity of
patent claims or to any dispute or controversy as to which any treaty or law prohibits such
arbitration. The decision of the arbitration must be sanctioned by a court of law having
jurisdiction to be binding upon and enforceable by the parties.

	15.6	 	Failure of BOARD, UTMDACC or HJF to enforce a right under this AGREEMENT will not act as a
waiver of right or the ability to later assert that right relative to the particular situation
involved.

	15.7	 	Headings included herein are for convenience only and will not be used to construe this
AGREEMENT.

27

 

	15.8	 	If any part of this AGREEMENT is for any reason found to be unenforceable, all other parts
nevertheless will remain enforceable.

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized representatives to execute
this AGREEMENT.

	 	 	 	 	 	 	 	 	 	 	 

	BOARD OF REGENTS OF THE 

UNIVERSITY OF TEXAS SYSTEM	 	 	 	ADVANCED PEPTIDE THERAPEUTICS, 
INC.	 	 
	 
	By

	 	/s/ John Mendelsohn, M.D.
	 	 	 	By
	 	/s/ Robert E. Kennedy	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	 

	 	John Mendelsohn, M.D.
	 	 	 	 	 	Name: Robert E. Kennedy	 	 
	 

	 	President
	 	 	 	 	 	Title: President and CFO	 	 
	 

	 	The University of Texas	 	 	 	 	 	 	 	 
	 

	 	M. D. Anderson Cancer Center	 	 	 	 	 	 	 	 
	 
	Date: 9/11/06	 	 	 	Date: 8/16/06	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	THE UNIVERSITY OF TEXAS

M. D. ANDERSON CANCER CENTER	 	 	 	THE HENRY M. JACKSON 
FOUNDATION FOR
THE	 	 
	 
	 	 	 	 	 	ADVANCEMENT OF MILITARY 
MEDICINE,
INC.	 	 
	By

	 	/s/ Leon Leach
 

Leon Leach

Executive Vice President

The University of Texas

M. D. Anderson Cancer Center
	 	 	 	
By
	 	
/s/ John W. Lowe
 

John W. Lowe

President
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date: 9/7/06	 	 	 	Date: 8/24/06	 	 
	 
	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	 
	Approved as to Content:

 	 
	By 	       /s/ Christopher C. Capelli
 	 	 
	 	Christopher C. Capelli 	 
	 	Vice President, Technology Transfer

M. D. Anderson Cancer Center 	 

Date: 8/20/06

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EXHIBIT I

     MDA94-022, entitled “Cancer Therapies by HER-2 Peptides,” and U. S. Patent No. 6,514,942,
created by Constantin G. Ioannides, Bryan A. Fisk and Maria Ioannides (owned by BOARD).

     MDA 01-049, entitled “Induction of Tumor Immunity by Controlled Modification of Amino Acid
Side Chain Length Using Methyl/Methylene (CH2/CH3),” and U. S. Provisional Application No.
60/362,778, created by Constantin G. Ioannides, Martin L. Campbell, Catherine O. O’Brian and George
Peoples (jointly owned by BOARD and HJF).

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ATTACHMENT A

(Assignment Agreement and Assignment)

[***]

30

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