EMPLOYMENT AGREEMENT
Exhibit 10.17
The Employment Agreement (the “Agreement”) is made and entered into as of June 25th,
2007 (the “Effective Date”) among RXi Pharmaceuticals Corporation, a Delaware corporation
(“RXi” or “Employer”) and Xxxxxx Xxxxxxxx, an individual and resident of the State
of Colorado (“Employee”).
WHEREAS, Employer and Employee desire to enter into an employment agreement under which
Employee shall serve on a full-time basis as RXi’s Vice President of Technology and/or Business
Development on the terms set forth in the Agreement, with the term of the Agreement to commence on
the Effective Date.
NOW, THEREFORE, upon the above premises, and in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows.
1. Engagement. Effective as of the Effective Date, Employer shall employ Employee, and
Employee shall serve, as RXi’s Vice President of Technology Development and/or Business
Development. As a condition to the Employee’s employment by the Employer, Employee shall execute
the Employer’s Employee Confidentiality, Non-Competition, and Proprietary Information Agreement,
attached hereto as Exhibit 1 (the “Confidentiality Agreement”).
2. Duties. Employee shall perform all duties assigned to him by the Employer
faithfully, diligently and to the best of his ability. Such duties may include, but are not
limited to promotion of RXi, searching for and evaluating technology for in-licensing, negotiation
of in-licensing, outlicensing and collaborative agreements, guiding research activities, performing
sequence design and developing novel technologies, and supporting informatics. Employee’s services
hereunder shall be rendered at the headquarters of the Company and will require extensive travel to
various locations.
3. Time and Efforts. Employee shall devote all of his business time,
efforts, attention and energies to Employer’s business and the discharge of his duties
hereunder.
5. Compensation. As the total consideration for Employee’s services rendered under the
Agreement, Employer shall pay or provide Employee the following compensation and benefits:
5.1. Salary. Commencing on the Effective Date, Employee shall be entitled to receive
an annual salary (the “Base Salary”) of one hundred and seventy thousand dollars ($170,000).
Employee shall receive a performance bonus for the achievement of certain performance goals, these
goals to be established by the Compensation Committee of the Employer’s Board of Directors. The
target for top performance shall be 16.5%.
5.2. Stock Options. At the first regularly scheduled meeting of the Board of
Directors of the Employer following the Effective Date the Employer shall grant Employee stock
options under the RXi Pharmaceuticals 2007 Incentive Plan (the “Plan”) to purchase 105,561
shares. The Options shall vest in quarterly installments over 4 years beginning on the first
quarterly anniversary of the Effective Date of the Agreement provided, in each case, that Employee
remains in the continuous employ of Employer through such quarterly anniversary date. Each vested
Option shall (a) be exercisable at an exercise price equal to the fair market value at the time of
granting as determined by Employer’s Board of Directors, (b) have a term of ten years and be
exercisable by Employee at any time during such ten year period, and (c) be on such other terms as
shall be determined by Employer’s Board of Directors (or the Compensation Committee of the Board)
and set forth in a customary form of stock option agreement under the Plan evidencing the Options.
Notwithstanding anything to the contrary in Section 6.2 or other provisions of the Agreement or of
the stock option agreement evidencing the Options, upon the occurrence of a “Covered Transaction”
(as defined in the Plan), the Options shall thereupon vest in full and become exercisable as to all
of the shares covered thereby in accordance with the terms of the Plan.
5.3. Expense Reimbursement. Employer shall reimburse Employee for reasonable and
necessary business expenses incurred by Employee in connection with the performance of Employee’s
duties in accordance with Employer’s usual practices and policies in effect from time to time.
Employer shall also pay the Employee’s reasonable moving expenses, up to $27,000, from his current
residence to the state of Massachusetts.
5.4. Vacation. Employee will be entitled to 22.5 days of paid “time off” (vacation
days plus sick time/personal time) for each full calendar year in accordance with the Company’s
policies from time to time in effect, in addition to holidays observed by the Company (for partial
calendar years, your paid “time off” will be pro-rated). Paid time off may be taken at such times
and intervals as you shall determine, subject to the business needs of the Company, and otherwise
shall be subject to the policies of the Company, as in effect from time to time. The number of
paid “time off” days will accrue per pay period and will stop accruing once 20 days have been
reached.
5.5. Employee Benefits. Employee shall be eligible to participate in any medical
insurance and other employee benefits made available by Employer to all of its employees under its
group plans and employment policies in effect during the term of employment. Employee acknowledges
and agrees that, any such plans or policies now or hereafter in effect may be modified or
terminated by Employer at any time in its discretion.
5.6. Payroll Taxes. Employer shall have the right to deduct from the compensation and
benefits due to Employee hereunder any and all sums required for social security and withholding taxes and for any other federal, state, or local tax or charge which may
be in effect or hereafter enacted or required as a charge on the compensation or benefits of
Employee.
6. Termination. The Agreement may be terminated as set forth in this Section 6.
6.1. Termination by Employer for Cause. Employer may terminate Employee’s employment
hereunder for Cause upon notice to Employee. “Cause” for the purpose shall mean any of the
following:
(a) Employee’s breach of any material term of the Agreement, coupled with material harm
sustained by the company; provided that the first occasion of any particular breach shall not
constitute such Cause unless Employee has failed to cure such breach within twenty (20) days after
receiving written notice from Employer stating the nature of such breach;
(b) Employee’s conviction of, or plea of guilty or nolo contendere to, any felony;
(c) Employee’s act of fraud in course of his employment;
(d) Employee’s refusal to perform his material duties as required under the Agreement after
written notice from Employer stating the nature of such failure or refusal and affording Employee
at least twenty(20) days to correct the same;
(e) Employee’s act or omission that demonstrates alcohol or drug abuse by Employee;
(f) Employee’s act or personal conduct that, in the reasonable judgment of Employer’s Board of
Directors (or a Committee of the Board), constitutes unlawful discrimination or harassment under
federal or applicable state law of the subordinate employees.
Upon termination of Employee’s employment by Employer for Cause or by Employee due to a
voluntary resignation, all compensation and benefits to Employee hereunder shall cease and Employee
shall be entitled only to payment, not later than three days after the date of termination, of any
accrued but unpaid salary and unused vacation time (only as accrued during the then-current year of
employment), as provided in Sections 5.1 and 5.5, as of the date of such termination.
6.2. Termination by Employer without Cause. Employer may also terminate Employee’s
employment without Cause upon notice to Employee.
6.2.1. Upon termination of Employee’s employment by Employer without Cause or by Employee,
all compensation and benefits to Employee hereunder shall cease and Employee shall be entitled to
payment of: (a) any accrued but unpaid salary and unused vacation time as of the date of such
termination (from the current year); (b) six (6) months’ salary from the date of termination (in
this section, this period shall be referred to as the “Severance Period”) in the form of
salary continuation; and (c) continued participation at Employer’s cost and expense, during the
Severance Period in any Employer-sponsored group
benefit plans in which Employee was participating as of the date of termination or reimbursement
as provided in Section 5.5.
6.2.2. Notwithstanding anything to the contrary contained in this Agreement, in the event of
a Change of Control of Employer, if Employee’s employment is
terminated by Employer within one (1) year after the Change of Control (other than for Cause), then: (i) the greater of (a) fifty
percent (50%) of Employee’s unvested options shall vest immediately, or (b) twelve (12) months
unvested options shall vest immediately and; and (ii) Employee shall be entitled to (a) any
accrued but unpaid salary and unused vacation time as of the date of such termination; (b) twelve
(12) months’ of salary from the date of termination, payable in accordance with the normal
payroll practice of the Company; (in this section, this period shall be referred to as the
“Severance Period”) and (c) continued participation, at Employer’s cost and expense,
during the Severance Period in any Employer-sponsored group benefit plans in which Employee was
participating as of the date of termination or reimbursement as provided in Section 5. For
purposes of this Agreement, a “Change in Control” shall mean, other than ownership changes
involving CytRx, (i) an acquisition of any voting securities of the Employer (the “Voting
Securities”) by any “person” (as the term “person” is used for purposes of Section 13(d) or
Section 14(d) of the Securities Exchange Act of 1934, as amended (the “1934 Act”))
immediately after which such person has “beneficial ownership” (within the meaning of Rule 13d-3
promulgated under the 1934 Act) (“Beneficial Ownership”) of 50% or more of the combined
voting power of the Employer’s then outstanding Voting Securities without the approval of the
Board; (ii) a merger or consolidation that results in more than 50% of the combined voting power
of the Employer’s then outstanding Voting Securities of the Employer or its successor changing
ownership (whether or not approved by the Board); (iii) the sale of all or substantially all of
the Employer’s assets; or (iv) approval by the shareholders of the Employer of a plan of complete
liquidation of the Employer.
6.3. Death or Disability. Employee’s employment will terminate automatically in the
event of Employee’s death or upon notice from Employer in event of his permanent disability.
Employee’s “permanent disability” shall have the meaning ascribed to such term in any
policy of disability insurance maintained by Employer (or Employee, as the case may be) with
respect to Employee, or if no such policy is then in effect, shall mean Employee’s inability to
fully perform his duties hereunder for any period of at least 75 consecutive days or for a total
of 90 days, whether or not consecutive. Upon termination of Employee’s employment as aforesaid,
all compensation and benefits to Employee hereunder shall cease and Employer shall pay to the
Employee’s heirs or personal representatives, not later than ten days after the date of
termination, any accrued but unpaid salary and unused vacation as of the date of such termination
as required by law. In the event of his death or disability, Employee’s fiduciary or Employee (in
case of disability) may exercise options that the Employee would have been permitted to exercise
just prior to the death or disability.
7. Equitable Remedies; Injunctive Relief. Employee hereby acknowledges and agrees that
monetary damages are inadequate to fully compensate Employer for the damages that would result from
a breach or threatened breach of the Confidentiality Agreement and, accordingly, that Employer
shall be entitled to equitable remedies, including, without limitation,
specific performance, temporary restraining orders, and preliminary injunctions and permanent
injunctions, to enforce such Section without the necessity of proving actual damages in connection
therewith. The provision shall not, however, diminish Employer’s right to claim and recover
damages or enforce any other of its legal or equitable rights or defenses.
8. Severable Provisions. The provisions of the Agreement are severable and if any one
or more provisions is determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions, and any partially unenforceable provisions to the extent enforceable, shall
nevertheless be binding and enforceable.
9. Successors and Assigns. The Agreement shall inure to the benefit of and shall be
binding upon Employer, its successors and assigns and Employee and his heirs and representatives;
provided, however, that neither party may assign the Agreement without the prior written consent of
the other party.
10. Entire Agreement. The Agreement including Schedule A contains the entire
agreement of the parties relating to the subject matter hereof, and the parties hereto have made no
agreements, representations or warranties relating to the subject matter of the Agreement that are
not set forth otherwise therein or herein. Except as expressly provided herein, the Agreement
supersedes any and all prior or contemporaneous agreements, written or oral, between Employee and
Employer relating to the subject matter hereof. Any such prior or contemporaneous agreements are
hereby terminated and of no further effect, and Employee, by the execution hereof, agrees that any
compensation provided for under any such agreements is specifically superseded and replaced by the
provisions of the Agreement.
11. Amendment. No modification of the Agreement shall be valid unless made in
writing, approved by the Compensation Committee and signed by the parties hereto and unless such
writing is made by an executive officer of Employer (other than Employee). The parties hereto
agree that in no event shall an oral modification of the Agreement be enforceable or valid.
12. Governing Law. The Agreement is and shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts without giving effect to the choice-of-law rules
of Massachusetts.
13. Notice. All notices and other communications under the Agreement shall be in
writing and mailed, telecopied (in case of notice to Employer only) or delivered by hand or by a
nationally recognized courier service guaranteeing overnight delivery to a party at the following
address (or to such other address as such party may have specified by notice given to the other
party pursuant to the provision):
If to Employer:
If to Employee:
Xxxxxx Xxxxxxxx
[fill in address]
[fill in address]
14. Survival. Sections 7 through 16 shall survive the expiration or termination of
the Agreement.
15. Counterparts. The Agreement may be executed in counterparts, each of which shall
be deemed to be an original and all of which together shall be deemed to be one and the same
agreement.
16. Attorney’s Fees. In any action or proceeding to construe or enforce any provision
of the Agreement the prevailing party shall be entitled to recover its or his reasonable attorneys’
fees and other costs of suit in addition to any other recoveries.
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IN WITNESS WHEREOF, the Agreement is executed as of the day and year first above written.
| EMPLOYER RXi Pharmaceuticals Corporation |
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| By: | /s/ Xxx Xxxxx | |||
| Xxx Xxxxx | ||||
| Chief Executive Officer RXi Pharmaceuticals Corporation |
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| EMPLOYEE |
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| /s/ Xxxxxx Xxxxxxxx | ||||
| Xxxxxx Xxxxxxxx | ||||
