Document:

exv10w2

 

Exhibit 10.2

RXi-CSHL LICENSE AGREEMENT

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

R E C I T A L S

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

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

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

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

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

1. Definitions.

1.1. “Biological Materials” means tangible biological materials that, to the extent that
CSHL has a right to transfer such materials, are necessary for the effective exercise of the Patent
Rights and are actually provided by Dr. Hannon or a member of Dr. Gregory Hannon’s lab to the
Company, as well as additional tangible materials that are routinely produced through use of those
materials, including, for example, any progeny derived from a cell line, monoclonal antibodies
produced by hybridoma cells, DNA or RNA replicated from isolated DNA or RNA, recombinant proteins
produced through use of isolated DNA or RNA, and substances routinely purified from a source
material included in the original materials (such as, recombinant proteins isolated from a cell
extract or supernatant by non-proprietary affinity purification methods). Dr. Hannon will secure
the approval of CSHL and/or, as needed, the Howard Hughes Medical Institute (HHMI) prior to the
transfer of any such Biological Material to Company.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

2. Grant of Rights.

2.1. License Grants.

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

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

2.2. Rights of the U.S. Government.

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

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

2.3. Additional Research Licensees.

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

2.4. Co-Marketer Licensees.

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

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

3. Company Obligations Relating to Commercialization.

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

3.2. Indemnification.

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

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

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

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

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

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

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

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

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

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

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

4. Consideration for Grant of Rights.

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

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

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4.3. Milestone Payments.

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

	 	 	 
	Milestone	 	Payment
	Filing of IND or equivalent for each Covered Product

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

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

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

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

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

	 	{***}

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

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

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

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

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

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

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

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

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

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

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

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

5. Royalty Reports; Payments; Records and Auditing.

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

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

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

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

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

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

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

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

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

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

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

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

Payee Information:

	 
	COLD SPRING HARBOR LABORATORY

Bungtown Road

P.O. Box 100

Cold Spring Harbor, New York 11724

Attn: Mr. John Maroney

Director, Office of technology Transfer

For wire transfer by Company:

	 	 	 
	CSHL Bank:

	 	The Chase Manhattan Bank

ABA No. 021 000 021

350 Main St.

Huntington, NY 11743

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	Payee:

	 	Cold Spring Harbor Laboratory

Account no. 777521385

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

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

6. Patents and Infringement.

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

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

7. Confidential Information; Publications; Publicity.

7.1. Confidential Information.

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

(b) Obligations. For a period of five (5) years after disclosure of any portion of
Confidential Information, the Receiving Party shall (i) maintain Confidential Information in
confidence, except that the Receiving Party may disclose or permit the disclosure of any
Confidential Information to its trustees or directors, officers, employees, consultants, and

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

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

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

7.2. Publicity.

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

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

12

 

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

8. Term and Termination.

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

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

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

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

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

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

13

 

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

9. Dispute Resolution.

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

9.2. Dispute Resolution Procedures.

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

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

(c) Trial Without Jury. If the parties fail to resolve the dispute through mediation, or
if neither party elects to initiate mediation, each party may pursue any other remedies legally
available to resolve the dispute.

9.3. Preservation of Rights Pending Resolution.

14

 

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

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

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

10. Miscellaneous.

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

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

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

15

 

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

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

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

10.7. Assignment. Neither party may assign this Agreement without the prior written
consent of the other party, which consent may not be unreasonably withheld, except that Company may
assign this Agreement to an or to a successor in connection with the merger, consolidation, or sale
of all or substantially all of its assets or that portion of its business to which this Agreement
relates.

10.8. Amendment and Waiver. This Agreement may be amended, supplemented, or otherwise
modified only by means of a written instrument signed by both parties. Any waiver of any rights or
failure to act in a specific instance relates only to that instance and is not an agreement to
waive any rights or fail to act in any other instance.

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

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

If to CSHL:

	 
	COLD
SPRING HARBOR LABORATORY

Bungtown Road

P.O. Box 100

Cold Spring Harbor, New York 11724

	Attn:  Mr.
John Maroney 

            Director, Office of technology Transfer

	 
	If to Company:

	 
	RXi
Corporation 

Suite 650

11726 San Vicente Blvd. 

Los Angeles, CA 90049

16

 

	 
	Attn:

	        Chief Executive Officer

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

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

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

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

	 	 	 
	COLD SPRING HARBOR LABORATORY

	 	 
	 
	 	 
	By: John Maroney
	 	 
	 
	 	 
	 
	 	 
	 

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

     

Chief Executive Officer

Date: 3/15/07

17

 

EXHIBIT A

CSHL-P-010/HANNON01

 

 

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

	 	PCT
	 	2003210621	 	 	 	 	 	 	 	 	Pending
	Australia

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

	 	ORD
	 	2001245793	 	 	 	 	 	 	 	 	Pending
	Australia

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

	 	PCT
	 	2473944	 	 	 	 	 	 	 	 	Pending
	Canada

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

	 	ORD
	 	2403397	 	 	 	 	 	 	 	 	Pending
	Canada

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

	 	PCT
	 	03732052.0	 	 	1546174	 	 	 	 	Published
	European Patent Convention

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

	 	ORD
	 	01918752.5	 	 	1272630	 	 	 	 	Published
	European Patent Convention

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

	 	ORD
	 	05106782.4	 	 	1073660	 	 	 	 	Published
	Hong Kong

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

	 	ORD
	 	03104793.8	 	 	 	 	 	 	 	 	Published
	Hong Kong

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

	 	ORD
	 	151781	 	 	 	 	 	 	 	 	Pending
	Israel

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

 

 

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

	 	PCT
	 	2003-562262	 	 	533484	 	 	 	 	Published
	Japan

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

	 	ORD
	 	2001-567320	 	 	2003-52636	 	 	 	 	Published
	Japan

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

	 	ORD
	 	US03/001963
	 	03/062394	 	 	 	 	National
	Patent Cooperation Treaty

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

	 	ORD
	 	US05/42488
	 	 	 	 	 	 	 	Pending
	Patent Cooperation Treaty

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

	 	ORD
	 	US01-08435
	 	WO01/68836
	 	 	 	National
	Patent Cooperation Treaty

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

	 	CIP
	 	09/858862	 	 	04/0018999	 	 	 	 	Published
	 

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

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

 

 

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

	 	CIP
	 	10/997086	 	 	 	 	 	 	 	 	Pending
	United States of America

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

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

	 	PRO
	 	60/189739	 	 	 	 	 	 	 	 	Expired
	 

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

	 	PRO
	 	60/243097	 	 	 	 	 	 	 	 	Expired
	 

	 	 	 	24-Oct-2000
	 	 	 	 	 	 	 	 
	Title:	 	METHODS AND COMPOSITIONS FOR RNA INTERFERENCE
	Inventor(s):	 	HAMMOND, Scott, HANNON, Gregory J.; BERNSTEIN, Emily; CAUDY, Amyexv10w3

 

Exhibit 10.3

INVENTION DISCLOSURE AGREEMENT

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

R E C I T A L S

     Whereas, the Company would like to receive disclosures of future Medical School RNAi
technologies for the purpose of determining its interest in securing an option for the first right
to negotiate with Medical School for a license to said RNAi technologies;

     Whereas, Company is engaged in business relating to the development and
commercialization of products that use or incorporate RNAi technologies and is developing the
capability of developing commercial applications of RNAi technologies; and

     Whereas, the Medical School is willing to disclose RNAi technologies to Company
according to the terms of this Agreement.

     Therefore, Medical School and Company agree as follows:

	1.	 	Disclosure.

     1.1. Definitions.

          (a) “Effective Date” means the date of the closing of the Initial Financing, as
defined below.

          (b) “Field” means RNAi technologies for human therapeutic use.

          (c) “Initial Financing” means the financing of the Company of at least Fifteen Million
US Dollars ($15,000,000) from investors that may include CytRx Corporation.

          (d) “Patent Rights” means invention disclosures, patent applications, and patents that
the Medical School has the authority to license and are not obligated to other parties (e.g., by
sponsored research agreement, material transfer agreements,) for license by the Medical School
within the Field, but specifically excludes inventions or other technology developed by
laboratories of Howard Hughes Medical Institute investigators, whether resulting in invention
disclosures, patent applications, patents or other tangible media.

     1.2. Disclosure. After the internal disclosure is accepted by Medical School
according to Medical School policy, the Medical School shall promptly disclose to Company in
reasonable detail in writing Patent Rights in the Field that are conceived or reduced to practice
by the Medical School during the term of this Agreement.

Page 1 of 7 

 

     1.3. MEDICAL SCHOOL MAKES NO WARRANTIES CONCERNING THE PATENT RIGHTS, 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, scope,
or patentability of any Patent Rights, (b) that the exploitation of the Patent Rights 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.

2. Consideration for Disclosure Right. In consideration of the rights granted Company
under this Agreement, Company shall pay the following to Medical School as of the Effective Date
One Million One Hundred Thousand US Dollars ($1,100,000) according to the following schedule.

     2.1. Eight Hundred Thousand US Dollars ($800,000) within thirty (30) days of the Effective
Date, payable in cash or that number of shares of Common Stock of Company having an aggregate
valuation equal to Eight Hundred Thousand US dollars ($800,000) according to the Company valuation
at the Initial Financing. In connection with the issuance of stock pursuant to this Section 2.1,
Medical School agrees to become a party to other agreements of Company to the same extent (except
any limitations relating to the Medical School’s status as an agency of the Commonwealth of
Massachusetts, e.g., prohibition on indemnification) as holders of more than five percent (5%) of
the Common Stock of Company (such as, voting agreement and stock restriction agreement).
University acknowledges that all certificates representing the shares described in this Section 2.1
may bear customary legends requiring compliance with the Securities Act of 1933 and related state
securities laws upon any transfer of such shares. Company shall use commercially reasonable
efforts to register the stock issued to Medical School pursuant to this Section 2.1 as soon as
possible, subject to customary terms in connection with such transaction.

     2.2. Three Hundred Thousand US Dollars ($300,000), payable annually in three (3) One Hundred
Thousand US Dollar ($100,000) payments within thirty (30) days of the Effective Date and each
anniversary of the Effective Date during the term of this Agreement.

     3. Option to License Patent Rights.

     3.1. Within sixty (60) days after disclosure pursuant to Section 1.2 (the “Option Period”),
Company may choose to negotiate a license for the Patent Rights after Company pays the Medical
School a nonrefundable “Option Fee” of Twenty-Five Thousand Dollars ($25,000) within the Option
Period. After timely receipt of the Option Fee, Medical School grants Company a first option to
negotiate a worldwide, royalty-bearing, exclusive license under its rights in the Patent Rights
within the Field (the “Option Right”).

     3.2. If Company elects not to exercise the Option Right, or fails to exercise the Option Right
during the Option Period, Medical School may license its rights under the Patent Rights to any
third party without recourse by or obligation to Company.

Page 2 of 7 

 

     3.3. If Company does elect to exercise the Option Right, Medical School and Company shall
negotiate in good faith a license agreement containing commercially reasonable terms in the form of
Medical School’s then current standard license agreement. If Medical School and Company do not
reach agreement within one hundred twenty (120) days after Company exercises the Option Right (the
“Negotiation Period”), Medical School may offer its rights in the Patent Rights to any third
parties without recourse by or obligation to Company. However, if the parties fail to reach an
agreement within the Negotiation Period, the following terms apply:

          a. Within five (5) business days after expiration of the Negotiation Period, Company may elect
to have the terms of the license determined by arbitration by delivering written notice of that
election to Medical School. If Company elects arbitration, the arbitration shall be conducted in
Boston, Massachusetts, by one (1) independent arbitrator who is experienced in licensing
biotechnology intellectual property. The arbitrator shall be chosen by mutual consent of the
parties within thirty (30) days after Company elects arbitration. Company shall pay the first Ten
Thousand Dollars ($10,000) of the expenses of the arbitration, and thereafter the parties shall
share the expenses equally. Unless Company rejects the arbitrator’s decision or fails to enter
into the license agreement within ten (10) days after the arbitrator’s decision, each party is
responsible for its own legal expenses in association with the arbitration. The arbitration shall
be in a format in which the arbitrator shall rule that either Company’s or Medical School’s
proposed terms are the final terms. The arbitrator shall issue its ruling to the parties within
sixty (60) days of being selected. Once the terms have been established by the arbitrator and
delivered in writing to Company, Company has ten (10) days to enter into the license agreement on
those terms or to reject those terms. If Company rejects those terms or fails to enter into the
license agreement within ten (10) days after the arbitrator’s decision, (a) Medical School
thereafter is free to license its rights under the Patent Rights to any third party without further
notice to Company, and (b) Company shall reimburse Medical School for its out-of-pocket arbitration
expenses.

          b. If Company does not elect arbitration pursuant to Subsection 3.3(a), Medical School is free
to license its rights under the Patent Rights to any third party.

4. Patent Rights. Medical School is responsible at its expense and in its sole discretion
for the preparation, filing, prosecution, and maintenance of the optioned Patent Rights.

5. Information Exchange.

     5.1. Purpose. During the term of this Agreement, Company and Medical School are
likely to exchange information relating to the Patent Rights. The following provisions are
intended to protect the confidential or proprietary information of each party.

     5.2. Definition of Confidential Information. “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 the
information is specifically designated as confidential. Confidential Information includes, without
limitation, any information relating to the Patent Rights. The Disclosing Party shall

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

     5.3. Obligations. For five (5) years after disclosure of any portion of Confidential
Information, the Receiving Party shall (a) maintain Confidential Information in 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 Confidential Information and who need to know Confidential Information for
the purposes of this Agreement; (b) use Confidential Information solely for the purposes of this
Agreement; and (c) allow its trustees or directors, officers, employees, consultants, and advisors
to reproduce the Confidential Information only to the extent necessary for the purposes of this
Agreement, with all reproductions being Confidential Information.

     5.4. Exceptions. The obligations of the Receiving Party under Section 5.3. above do
not apply to the extent the Receiving Party can demonstrate that the Confidential Information (a)
was in the public domain prior to the time of its disclosure under this Agreement; (b) 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; (c) was
independently developed or discovered by the Receiving Party without use of the Confidential
Information as evidenced by written records of Company; (d) is or was disclosed to the Receiving
Party at any time, whether prior to or after the time of its disclosure under this Agreement, by a
third party having no fiduciary relationship with the Disclosing Party and having no obligation of
confidentiality with respect to the Confidential Information; or (e) is required to be disclosed to
comply with applicable laws or regulations, or with a court or administrative order, provided that
the Disclosing Party receives reasonable prior written notice of the disclosure.

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

6. Term and Termination.

     6.1. Term. This Agreement commences on the Effective Date and remains in effect for
three (3) years, unless earlier terminated in accordance with the provisions of this Agreement.

Page 4 of 7 

 

     6.2. Termination for Default. If either party commits a material breach of its
obligations under this Agreement and fails to cure that breach within sixty (60) days after
receiving written notice 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 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 Medical School to terminate this Agreement immediately upon written notice to Company,
without the sixty-day cure period.

     6.3. Failure to Complete Financing. Notwithstanding any other provision of this
Agreement, if the Initial Financing has not been completed by June 30, 2007, this Agreement
automatically terminates immediately without notice or possibility of cure.

     6.4. Termination by Company. Company may elect to terminate this Agreement at any
time upon prior, written notice to Medical School.

     6.5. Effect of Termination. The following provisions survive the expiration or
termination of this Agreement: Articles 3 (only for Patent Rights optioned before expiration of
term, unless this Agreement is terminated for material breach by Company), and 5; Sections 6.5,
7.1., 7.2., and 7.6.

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

7. Miscellaneous.

     7.1. Publicity Restrictions. Neither party may use the name of the other or any of
its trustees, officers, faculty, students, employees, or agents, or any adaptation of those 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 or CytRx Corporation may 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 or CytRx Corporation
shall provide Medical School at least ten (10) days (or a shorter period in order to enable Company
to make a timely announcement to fulfill applicable securities laws or other applicable law or
regulation, while affording 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 the text, and (b) Medical School may disclose the existence of the agreement (but not
its terms) according to its customary practice of disclosing its research sponsors and
collaborators.

     7.2. Research Partially Funded by Grants.

Page 5 of 7 

 

          (a) Federal Government. To the extent that any invention claimed in the Patent Rights
has been funded by the federal government, this Agreement and the grant of any rights in the
invention 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. If any
term of this Agreement fails to conform to those laws and regulations, the relevant term is invalid
and the parties shall modify the term pursuant to Section 7.8.

          (b) Other Organizations. To the extent that any invention claimed in the Patent
Rights has been funded by a non-profit organization, state or local agency, or commercial entity,
this Agreement and the grant of any rights in the invention is subject to and governed by the terms
of the applicable research grant. If any term of this Agreement fails to conform to those terms,
the relevant term is invalid and the parties shall modify the term pursuant to Section 7.8.

     7.3. Tax-Exempt Status. Company acknowledges that Medical School, as a public
institution of the Commonwealth of Massachusetts, is an exempt organization under the United States
Internal Revenue Code. Company also acknowledges that certain facilities in which the inventions
subject to the license disclosure 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 is invalid and the
parties shall modify the term pursuant to Section 7.8.

     7.4. Assignment. This Agreement may not be assigned by either party without the prior
written consent of the other party, including without limitation, in connection with a merger,
consolidation, or sale of all or substantially all of its assets or that portion of its business
(including any subsidiary) to which this Agreement relates

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

     7.6. Governing Law. This Agreement is governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts irrespective of any conflicts of law principles. Any
action regarding this Agreement shall be brought in Massachusetts Superior Court, Suffolk County.

     7.7. Notice. Any notices required or permitted under this Agreement shall be in
writing, shall specifically refer to this Agreement and Agreement reference number (as provided in
the Agreement header), 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:
	 	If to Company:
	 
	 	 	 	 
	 

	 	Office of Technology Management
	 	RXi Pharmaceuticals Corporation
	 

	 	University of Massachusetts
	 	One Innovation Drive

Page 6 of 7 

 

	 	 	 	 	 
	 

	 	333 South Street, Suite 400
	 	Worcester, MA 01605
	 

	 	Shrewsbury, MA 01545	 	 
	 

	 	Attention: Executive Director
	 	Attention: President

All notices under this Agreement are effective upon receipt. A party may change its contact
information immediately upon written notice to the other party in the manner provided in this
Section 7.7.

     7.8. Severability. If any provision of this Agreement is held invalid or
unenforceable for any reason, the invalidity or unenforceability does not affect any other
provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement
to preserve (to the extent possible) their original intent.

     7.9. 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 acknowledge that this Agreement
has no effect on and does not limit any of Company’s rights under any specific license or sponsored
research agreements that have been executed between the parties prior to the Effective Date.

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

	 	 	 	 	 	 	 	 	 	 	 
	UNIVERSITY OF MASSACHUSETTS	 	 	 	RXi PHARMACEUTICALS CORP.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ JAMES P. McNAMARA	 	 	 	By:	 	/s/ TOD WOOLF	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 
	Name:

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

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

	 	 	 	 	 	Date:	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 

Page 7 of 7

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