Document:

Exhibit 10.10

 

EMPLOYMENT AGREEMENT

     This Employment Agreement (this “Agreement”) is made and entered into as of February
22, 2007 (“Effective Date”) by and between RXi Pharmaceuticals Corporation
(“Employer”), a Delaware corporation and a majority owned subsidiary of CytRx Corporation,
a Delaware corporation (“CytRx”), and Tod Woolf, an individual and resident of the
Commonwealth of Massachusetts (“Employee”).

     WHEREAS, Employer and Employee desire to enter into an employment agreement under which
Employee shall serve on a full-time basis as Employer’s President and Chief Executive Officer on
the terms set forth in this Agreement, with the term of this 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 continue to employ
Employee, and Employee shall continue to serve, as Employer’s President and Chief Executive
Officer. Employee shall also continue to serve as a member of Employer’s Board of Directors
(“Board”). Employee understands that his duties as President and Chief Executive Officer may
change from time to time over the term of this Agreement in the discretion of Employer’s Board of
Directors, but such duties shall in all events be consistent with the duties customarily assigned
to the Chief Executive Officer of a company such as Employer.

     2. Duties; Place of Employment. Employee shall perform all duties assigned to him by
the Employer’s Board faithfully, diligently and to the best of his ability. Such duties include,
without limitation, the overseeing and implementation of the business plan adopted by the Board (as
may be revised from time to time by the Board). Employee shall perform the services contemplated
under this Agreement in accordance with the policies established by and under the direction of the
Board of Directors. Employee shall have such corporate power and authority as shall reasonably be
required to enable him to discharge his duties under this Agreement. Employee’s services hereunder
shall be rendered at Employer’s offices in Worcester, Massachusetts, except for travel when and as
required in the performance of Employee’s duties hereunder.

     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, except as
noted on Schedule A, which contains other potential activities of the Employee and disclosed
conflicts of interest.

     4. Term. The term (the “Term”) of Employee’s employment shall commence on the
Effective Date and shall expire on December 31, 2008, unless sooner terminated in accordance with
Section 6. Neither Employer nor Employee shall have any obligation to extend or renew this
Agreement. In the event the Agreement shall not be extended or renewed by Employer beyond the
Term, Employer shall continue to pay Employee his salary as provided for in Section 5.1 during the
period commencing on the date on which the Term ends and ending on the earlier of (a) June 30, 2009
or (b) the date of Employee’s re-employment with another employer.

 

 

     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 Base Salary of Two Hundred Fifty Thousand Dollars ($250,000).

          5.2. Discretionary Bonus. Employee may be eligible for an annual bonus for his
services during the Term. Employee’s eligibility to receive a bonus, any determination to award
Employee such a bonus and, if awarded, the amount thereof shall be in Employer’s sole discretion.

          5.3. Stock Options. At the first regularly scheduled meeting of the Board following
the date upon which Employer closes an equity financing, in a single transaction or series of
related transactions, of at least $15,000,000 (a “Financing”), Employer shall grant
Employee a stock option under RXi Pharmaceuticals Corporation’s 2007 Incentive Plan (the
“Plan”) to purchase a number of shares of Employer’s common stock equal to 3/70th of the
number of shares of Employer’s common stock held by CytRx immediately prior to the Financing (the
“Option”). The Option shall vest and become exercisable in 36 equal monthly installments
beginning on the one-month anniversary of the date of grant, in each case, that Employee remains in
the continuous employ of Employer through such anniversary date. The Option shall (a) be
exercisable at an exercise price equal to the fair market value at the time of granting as
determined by Employer, (b) have a term of ten years, 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 Option.
Notwithstanding anything to the contrary in Section 6.2 or other provisions of this Agreement or of
the stock option agreement evidencing the Option, in the event that either (a) a Covered
Transaction as defined in the Plan occurs or (b) CytRx votes its shares of capital stock of
Employer to elect individuals who are (i) employees, officers or directors of CytRx, (ii)
employees, officers or directors of any entity that has a contractual business relationship with
CytRx, or (iii) employees, officers, directors of any entity that has a contractual business
relationship with any officer or director of CytRx (collectively, “Affiliates”) to constitute a
majority of the Employer’s Board of Directors, the Option shall thereupon vest in full and become
exercisable as to all of the shares covered thereby in accordance with the terms of the Plan.
Furthermore, in the event that the Employee is terminated without Cause or resigns for Good Reason,
the shares that would have vested during the Severance Period (as defined in Section 6.2 below)
shall vest and become exercisable as of the date of such termination.

          5.4. 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.

          5.5. Vacation. Employee shall be entitled to twenty (20) business days of vacation
each year during the Term in accordance with Massachusetts law.

2

 

          5.6. 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. 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.

          5.7. 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 or Voluntary Resignation Without Good Reason.
Employer may terminate Employee’s employment hereunder for “Cause” upon notice to Employee and
Employee may voluntarily resign his employment hereunder upon notice to Employer. “Cause”
for this purpose shall mean any of the following:

                (a) Employee’s breach of any material term of the Agreement; provided that the first occasion
of any particular breach shall not constitute such Cause unless Employee shall have previously
received written notice from Employer stating the nature of such breach and affording Employee at
least ten days to correct such breach;

                (b) Employee’s conviction of, or plea of guilty or nolo contendere to, any felony or other
crime of moral turpitude;

                (c) Employee’s act of fraud or dishonesty injurious to Employer or its reputation;

                (d) Employee’s continual failure or 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 ten days to correct the same;

                (e) Employee’s act or omission that, in the reasonable determination of Employer’s Board of
Directors (or a Committee of the Board), indicates alcohol or drug abuse by Employee;

                (f) Employee’s act or personal conduct that, in the judgment of Employer’s Board of Directors
(or a Committee of the Board), gives rise to a material risk of liability of Employee or Employer
under federal or applicable state law for discrimination, or sexual or other forms of harassment,
or other similar liabilities to subordinate employees; or

                (g) The termination, on or before June 30, 2007, of any exclusive license agreement entered
into between Employer and the University of Massachusetts Medical School due to the failure of
Employer to close the Financing.

3

 

                Upon termination of Employee’s employment by Employer for Cause or by Employee due to a
voluntary resignation without Good Reason, 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 as provided in Sections
5.1 and 5.5 as of the date of such termination and any unpaid bonus that may have been previously
awarded Employee as provided in Section 5.2 prior to such date.

          6.2. Termination by Employer without Cause or by Employee for Good Reason. Employer
may also terminate Employee’s employment without Cause upon notice to Employee. Employee may also
terminate Employee’s employment for Good Reason upon notice to the Employer. Upon termination of
Employee’s employment by Employer without Cause or by Employee for Good Reason, 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 as of the date of such termination as required by
Massachusetts law and any unpaid bonus that may have been previously awarded Employee as provided
in Section 5.2 prior to such date, which shall be due and payable upon the effective date of such
termination; (b) an amount, which shall be due and payable within ten (10) days following the
effective date of such termination, equal to the salary that would otherwise be payable as provided
in Section 5.1 for the period of time which is equal to the earlier of either (i) the
twelve-month anniversary of such termination date; or (ii) the remainder of the Term of the
Agreement but in no event less than six (6) months (either (i) or (ii) 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. For purposes of this Agreement, Good Reason shall
mean any of the following: (i) a material reduction in Employee’s duties, position, or
responsibilities in effect immediately prior to such reduction; (ii) the Company reduces Employee’s
Base Salary or bonus opportunity by more than 5% relative to his salary and bonus opportunity in
effect immediately prior to such reduction; (iii) there is a material reduction by the Company in
the kind or level of benefits to which Employee is entitled immediately prior to such reduction
with the result that Employee’s overall benefits package is significantly reduced; (iv) without
Employee’s express written consent, Employee’s relocation to a facility or a location more than
thirty five (35) miles from his then current location in Worcester, Massachusetts; or (v) CytRx
votes its shares of capital stock of Employer to elect individuals who are Affiliates to constitute
a majority of the Employer’s Board of Directors.

          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 Massachusetts law and any unpaid bonus that may have been previously awarded
Employee as provided in Section 5.2 prior to such date.

4

 

     7. Confidentiality. While this Agreement is in effect and for a period of four years
thereafter, Employee shall hold and keep secret and confidential all “trade secrets” (within the
meaning of applicable law) and other confidential or proprietary information of Employer and shall
use such information only in the course of performing Employee’s duties under this Agreement;
provided, however, that with respect to trade secrets, Employee shall hold and keep secret and
confidential such trade secrets for so long as they remain trade secrets under applicable law.
Employee shall maintain in trust all such trade secret or other confidential or proprietary
information, as Employer’s property, including, but not limited to, all documents concerning
Employer’s business, including Employee’s work papers, telephone directories, customer information
and notes, and any and all copies thereof in Employee’s possession or under Employee’s control.
Upon the expiration or earlier termination of Employee’s employment with Employer, or upon request
by Employer, Employee shall deliver to Employer all such documents belonging to Employer, including
any and all copies in Employee’s possession or under Employee’s control.

     8. 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 Section 7 of this 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. This 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.

     9. Indemnification; Insurance. Employer and Employee acknowledge that, as the Chief
Executive Officer of Employer, Employee shall be a corporate officer of Employer and, as such,
Employee shall be entitled to indemnification to the full extent mandated by Employer to its
officers, directors and agents under the Employer’s Certificate of Incorporation and Bylaws as in
effect as of the date of this Agreement. Subject to his insurability thereunder, Employer shall
maintain Employee as an additional insured under its current policy of directors and officers
liability insurance and shall use commercially reasonable efforts to continue to insure Employee
thereunder, or under any replacement policies in effect from time to time, during the Term.
Furthermore CytRx shall indemnify, defend and hold harmless Employee and IPIFINI, Inc. for any
claim against Employee arising from his work for Employer from the commencement of Employee’s
service as Employer’s President and/or Chief Executive Officer through the Effective Date.

     10. Severable Provisions. The provisions of this 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.

     11. Successors and Assigns. This 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 this Agreement without the prior written consent
of the other party.

5

 

     12. Entire Agreement. This 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 this Agreement that are
not set forth otherwise therein or herein. Except as expressly provided herein, this 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 this Agreement. The parties agree that Employee’s fiduciary responsibility will be
to RXi Pharmaceuticals, and not to CytRx, with no prejudice to the fact that CytRx may be advancing
the compensation prior to the date of the Financing.

     13. Amendment. No modification of this 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 this Agreement be enforceable or valid.

     14. Governing Law. This Agreement is and shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts without giving effect to Massachusetts’s
choice-of-law rules.

     15. Review by Counsel. Following the closing of the Financing, Employer shall
reimburse Employee for consultation and review of this Agreement by legal counsel of his choosing
up to a maximum of $3,000.

     16. Notice. All notices and other communications under this 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 this provision):

	 	 	 
	 

	 	If to Employer:
	 
	 	 
	 

	 	RXi Pharmaceuticals Corporation

One Innovation Drive

Worcester, MA 01605
	 
	 	 
	 

	 	and
	 
	 	 
	 

	 	Until the closing of the Financing, with a copy to:
	 

	 	CytRx Corporation
	 

	 	11726 San Vicente Boulevard, Suite 650
	 

	 	Los Angeles, CA 90049
	 

	 	Facsimile: (310) 826-5529
	 

	 	Attention: Chief Executive Officer

6

 

	 	 	 	 	 
	 

	 	If to Employee:	 	 
	 
	 	 	 	 
	 

	 	Mr. Tod Woolf	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

     17. Survival. Sections 8 through 19 shall survive the expiration or termination of
this Agreement.

     18. Counterparts. This 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.

     19. Attorney’s Fees. In any action or proceeding to construe or enforce any provision
of this 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.

     IN WITNESS WHEREOF, this Agreement is executed as of the day and year first above written.

	 	 	 	 	 
	 	 	“EMPLOYER”
	 
	 	 	 	 
	 

	 	By:
	 	/s/ STEVEN A. KRIEGSMAN
	 

	 	 	 	 
	 

	 	 	 	Steven A. Kriegsman
	 

	 	 	 	Director
	 
	 	 	 	 
	 	 	“EMPLOYEE”
	 
	 	 	 	 
	 	 	/s/ TOD WOOLF
	 	 	 
	 	 	 	Tod Woolf
	 
	 	 	 	 
	 	 	For the purposes of Section 9 only, CytRx Corporation has executed this
Agreement as follows:
	 
	 	 	 	 
	 	 	CYTRX CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ STEVEN A. KRIEGSMAN
	 

	 	 	 	 
	 

	 	 	 	Steven A. Kriegsman
	 

	 	 	 	President

7Exhibit 10.11

 

Exhibit
10.11

RXi PHARMACEUTICALS CORPORATION

One Innovation Drive

Worcester, Massachusetts 01605

February 23, 2007

	 	 	 
	CytRx Corporation

	 	Tariq M. Rana, Ph.D.
	11726 San Vicente Boulevard, Suite 650

	 	University of Massachusetts
	Los Angeles, California 90049

	 	364 Plantation St., LRB 827,
	 

	 	Lab 860 A-E
	Michael P. Czech, Ph.D.

	 	Worcester, MA 01605
	University of Massachusetts

	 	 
	55 Lake Avenue, Suite 100

	 	Gregory J. Hannon, Ph.D.
	Worcester, MA 01605

	 	Howard Hughes Medical Institute
	 

	 	Cold Spring Harbor Laboratory
	Craig C. Mello, Ph.D.

	 	One Bungtown Road
	Howard Hughes Medical Institute

	 	Cold Spring Harbor, NY 11724
	University of Massachusetts
	 	 
	373 Plantation St., Suite 219
	 	 
	Worcester, MA 01605
	 	 

      Re: Stockholders Agreement

Gentlemen:

     RXi Pharmaceuticals Corporation (“RXi”), CytRx Corporation (“CytRx”), and the other current
stockholders and Scientific Advisory Board members of RXi (“SAB Members”) believe it is in their
mutual best interests to enter into this letter agreement (this “Agreement”) in order to set forth
their understanding and agreement regarding their ownership and voting of shares of common stock of
RXi (“RXi Shares”), which for this purpose includes any and all additional shares of common stock
and other voting securities of RXi that they may acquire or own at any time. The parties also
believe it is mutually beneficial that, in consideration of CytRx’s willingness to enter into this
Agreement, RXi grant CytRx certain rights to purchase any “New Securities” (as defined in Annex 1)
which RXi proposes to sell or issue.

     In consideration of the mutual promises set forth herein, and other good and valuable
consideration, the parties hereby agree as follows:

     1. From the period beginning upon the closing of an equity financing of RXi in an aggregate
amount of not less than $15 million dollars from investors (including CytRx acting as an Investor)
(the “Initial Financing”), CytRx agrees that it will not vote its RXi Shares or otherwise take
steps to elect or have elected individuals who are (i) employees, officers or directors of CytRx,
(ii) employees, officers or directors of any entity that has a contractual business relationship
with CytRx, or (iii) employees, officers, directors of any entity that has a contractual business
relationship with any officer or director of CytRx (collectively, (i), (ii), and

 

 

CytRx Corporation

February 23, 2007

Page 2

(iii) are “Affiliates”) to constitute a majority of RXi’s Board of Directors, and, in the
event that Affiliates are elected to hold a majority of the seats of RXi’s Board of Directors,
CytRx shall use reasonable efforts to cause a sufficient number of its Affiliates to resign from
their position as directors of RXi or to cause a sufficient number of independent directors to be
added to RXi’s Board of Directors, so that Affiliates do not constitute a majority of RXi’s Board
of Directors. If at any time following the Initial Financing, CytRx, together with its
subsidiaries and any other entities controlled by, or under common control with, CytRx
(collectively, “CytRx Affiliates”) hold in the aggregate a majority of the outstanding voting power
of RXi, CytRx will use reasonable efforts without delay to transfer or otherwise dispose of a
sufficient number of shares of RXi’s voting stock to bring the aggregate ownership by CytRx and
CytRx Affiliates of the total outstanding shares of RXi’s voting stock below fifty percent (50%),
subject to the rules and regulations of the Securities and Exchange Commission and applicable state
securities laws.

     2. CytRx agrees that, from the period beginning at the closing of the Initial Financing it
shall vote, or provide its written consent with respect to, all RXi Shares then owned or controlled
by it and CytRx Affiliates in such manner as shall be recommended by the Board of Directors of RXi
with respect to any or all of the following matters that may be submitted by RXi for action by the
stockholders of RXi:

          (a) any proposal to amend the certificate of incorporation of RXi to increase the authorized
RXi Shares in order to facilitate obtaining additional financing needed by RXi at any time and from
time to time to fund its ongoing working capital requirements;

          (b) the sale and issuance of RXi Shares or other securities in any such working capital
financing; and

          (c) any other matter submitted for action by the RXi stockholders generally with respect to
any such financing;

provided, however, that CytRx shall have no obligation hereunder with respect to
any of the foregoing matters in which CytRx or the RXi Shares owned by it or CytRx Affiliates would
receive different treatment than the treatment afforded the other RXi stockholders generally; and
provided further, that CytRx’s obligations above shall not extend to any financing
for purposes of acquiring the business, technologies, assets, or operations of any other company.

     3. RXi hereby grants CytRx the rights set forth on Annex 1 hereto, which is incorporated
herein by reference. Such rights granted to CytRx shall become effective as of the first date as
of which the issued and outstanding RXi Shares owned in the aggregate by CytRx and CytRx Affiliates
shall constitute less than 50% of the total issued and outstanding RXi Shares, and shall terminate
upon the earlier of (a) January 8, 2012 or (b) the first date as of which CytRx and CytRx
Affiliates own in the aggregate less than ten percent (10%) of the outstanding RXi Shares.
Notwithstanding the provisions of Annex 1, the rights granted thereunder to CytRx

 

 

CytRx Corporation

February 23, 2007

Page 3

shall be suspended if, and for so long as, CytRx shall be in breach of any of its obligations
under this Agreement.

     4. Except for the provisions of paragraph 3, above, the provisions of this Agreement may be
terminated at any time by the written consent or agreement of CytRx, RXi, and a majority of the SAB
Members then serving as such. Unless sooner terminated, the provisions of this Agreement shall
terminate as to an SAB Member, at such time as he is no longer serving as a member of RXi’s
Scientific Advisory Board.

     5. This Agreement is governed by and construed in accordance with the laws of the State of
Delaware irrespective of any conflicts of law principles.

     6. This Agreement shall be binding upon CytRx, RXi, and the SAB Members and their respective
heirs and successors in interest. The obligations of each of CytRx and the SAB Members hereunder
shall terminate as to any RXi Shares sold, transferred or assigned by it or him upon such sale,
transfer or assignment, and this Agreement shall not bind or inure to the benefit of any transferee
of RXi Shares sold, assigned or transferred by any party (other than transfers to CytRx Affiliates
and other than transfers to a successor in interest of all or any substantial part of the business
or assets of a party by way of sale, exchange, merger or otherwise).

     7. This Agreement may not be modified or amended, except in a writing signed by CytRx, RXi,
and at least a majority of the SAB Members who are then serving as members of RXi’s Scientific
Advisory Board.

     8. Without limiting the rights of each party hereto to pursue any and all other legal and
equitable remedies available to such party, each party acknowledges and agrees that the remedy at
law in the event of a breach by any party of it obligations under this Agreement would be
inadequate and, therefore, that the parties shall be entitled to specific performance, injunctive
relief and other equitable remedies in such event.

     9. This Agreement, including Annex 1 hereto, contain the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior and contemporaneous
agreements and understandings with respect thereto.

     10. The parties hereto shall at all times act in good faith and shall not take any actions, or
fail to take actions, to circumvent or frustrate the provisions of this Agreement.

 

 

CytRx Corporation

February 23, 2007

Page 4

     11. This Agreement may be executed in counterparts, each of which when executed and delivered
shall be deemed to be an original and all of which when taken together shall constitute but one and
the same instruction.

	 	 	 	 	 
	 

	 	 	 	Very truly yours,
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	Tod Woolf, Ph.D., Chief Executive Officer
	 

	 	 	 	RXi Pharmaceuticals Corporation
	 
	 	 	 	 
	AGREED, ACKNOWLEDGED AND ACCEPTED:	 	 
	 
	 	 	 	 
	CYTRX CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	Steven Kriegsman

President and Chief Executive Officer	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Craig C. Mello, Ph.D.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Tariq M. Rana, Ph.D.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Michael P. Czech, Ph.D.	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	Gregory J. Hannon, Ph.D.	 	 

 

 

ANNEX 1

Preemptive Rights

SECTION 1. General

	 	A.	 	CytRx shall have the right, on the terms and provisions of this Annex 1, to purchase New
Securities (as defined below in Paragraph B) that RXi may, from time to time, sell, issue or
exchange.
	 
	 	B.	 	“New Securities” shall mean, subject to Section 4.B, any shares of common stock of
RXi (“RXi Common Stock”) and other equity securities of RXi, whether now authorized or
not, any rights, options, and warrants to purchase RXi Common Stock or other equity
securities, and securities of any type whatsoever that are, or may become, convertible into,
or exercisable or exchangeable for, shares of RXi Common Stock or other equity securities.

SECTION 2. Sales and Issuances of New Securities for Cash

	 	A.	 	RXi shall not at any time issue or sell for cash any New Securities (each, a “Cash
Sale”), unless and until RXi shall have first delivered to CytRx notice of the proposed
Cash Sale (the “Cash Offer Notice”) and otherwise complied with the provisions of this
paragraph A, as follows:

	 	(i)	 	The Cash Offer Notice shall (1) describe in reasonable detail the proposed Cash
Sale, (2) set forth the nature and dollar amount of the New Securities involved (the
“Offered Securities”), (3) describe the sale price of the Offered Securities
and other terms of the proposed Cash Sale, (4) identify the persons or entities, if
known, to which the Offered Securities are proposed to be offered, issued or sold, and
(5) include an express offer to issue and sell to CytRx a portion of such Offered
Securities determined by multiplying the total dollar amount of Offered Securities by
CytRx’s Proportionate Percentage (as hereinafter defined) as determined as of the date
of the Cash Offer Notice. CytRx’s “Proportionate Percentage” for purposes of
this Annex shall mean, as of any determination date, a fraction, expressed as a
percentage, the numerator of which is the sum of (w) the number of issued and
outstanding shares of RXi Common Stock then owned beneficially (as hereinafter defined)
by CytRx plus (x) the number of shares of RXi Common Stock that may be acquired by
CytRx upon the exercise, conversion or exchange of rights, options, warrants and other
securities of RXi owned beneficially by CytRx that are exercisable or exchangeable for,
or convertible into, shares of RXi Common Stock within 60 days of the date of
determination of such beneficial ownership, and the denominator of which is the sum of
(y) the total number of shares of RXi Common Stock then issued and outstanding plus (z) the number of shares referred to in clause (x) above. CytRx shall be deemed to
“beneficially own” shares of RXi Common Stock and other

A-1

 

ANNEX 1

	 	 	 	securities that are held of record by CytRx or held in the name of a broker or other
custodian for CytRx’s account.

	 	(ii)	 	CytRx shall have the right during the 10-business day period following delivery
of the Cash Offer Notice to elect to purchase, at the price and upon the other terms
specified therein, its Proportionate Percentage of the Offered Securities; provided,
however, that RXi may postpone or terminate the transaction described in the Cash Offer
Notice, which shall have the effect of postponing or terminating CytRx’s rights under
this paragraph A. To exercise its rights under this paragraph A, CytRx must notify RXi
on or prior to the expiration of the foregoing 10-business day period of the amount, if
any, of the Offered Securities (not to exceed its CytRx’s Proportionate Percentage
thereof) that CytRx elects to purchase (the “Notice of Acceptance”).
	 
	 	(iii)	 	RXi shall have 90 days from the date of the Cash Offer Notice to consummate
the Cash Sale in accordance with the Cash Offer Notice, which may include the issuance
or sale of all or any part of the Offered Securities which CytRx has not elected to
purchase as reflected in the Notice of Acceptance. Any of the Offered Securities not
so issued or sold by RXi within such 90-day period shall not be issued or sold by RXi,
unless and until RXi again complies with the procedures specified in this Annex.
	 
	 	(iv)	 	In the event RXi determines in good faith to issue or sell less than all the
Offered Securities pursuant to the Cash Sale, then the amount of the Offered Securities
that CytRx shall be entitled to purchase shall automatically be reduced to an amount
equal to the amount of the Offered Securities, if any, that CytRx elected to purchase
as set forth in its Notice of Acceptance multiplied by a fraction, (1) the numerator of
which shall be the amount of Offered Securities that RXi issues or sell (including the
Offered Securities to be issued or sold to CytRx pursuant to subparagraph A(ii) above
prior to such reduction) and (2) the denominator of which shall be the amount of the
Offered Securities that RXi initially proposed to issue or sell as specified in the
Cash Offer Notice.
	 
	 	(v)	 	On the date of the closing of the issuance or sale of all or less than all the
Offered Securities, CytRx shall purchase from RXi, and RXi shall sell and issue to
CytRx, the amount of Offered Securities specified in the Notice of Acceptance (as
reduced pursuant to subparagraph A(iv) above, if applicable) upon the terms and
conditions specified in the Cash Offer Notice. The purchase by CytRx of any of the
Offered Securities is subject in all cases to the preparation, execution and delivery
by RXi and CytRx of a customary purchase agreement relating to such Offered Securities
and other documents consistent with the terms of the Cash Offer Notice and reasonably
satisfactory in form and substance to CytRx, RXi and their respective counsel.

A-2

 

ANNEX 1

SECTION 3. Sales and Issuances of New Securities Other than for Cash

	A.	 	If at any time or from time to time RXi shall issue or sell for consideration other than cash
any New Securities (each, a “Non-Cash Sale”), it shall comply with the provisions of
this Section 3, as follows:

	 	(i)	 	RXi shall deliver to CytRx notice of the Non-Cash Sale (the “Non-Cash Offer
Notice”). Except as provided below, the Non-Cash Offer Notice shall be delivered
within 10 days following the issuance or sale of such New Securities and (1) describe
in reasonable detail the Non-Cash Sale, (2) set forth the nature and amount of the New
Securities involved, (3) describe the price or value attributable to the New
Securities, and other terms of the Non-Cash Sale, (4) identify the persons or entities,
if known, to which such New Securities are proposed to be offered, issued or sold, and
(5) include an express offer to issue and sell to CytRx from RXi’s authorized but
unissued shares of RXi Common Stock, or from treasury shares, such number of shares of
RXi Common Stock as are necessary and sufficient to restore CytRx, after giving effect
to such award, issuance, sale or exchange, to its Proportionate Percentage as of the
time immediately preceding such Non-Cash Sale. Notwithstanding the foregoing, if the
amount of the New Securities issued or sold in a Non-Cash Sale, when added to all other
New Securities issued and sold in Non-Cash Sales of which CytRx shall not have been
notified by RXi in accordance with this subparagraph A(i), represents 5% or less of the
shares of RXi Common Stock outstanding immediately prior to such Non-Cash Sale, then
RXi may postpone the Non-Cash Offer Notice hereunder until the date 10 days following
the earlier of (1) the end of the calendar quarter during which such Non-Cash Sale
occurred and (2) the date of the next subsequent issuance or sale of New Securities in
a Non-Cash Sale which, when added to all other New Securities issued and sold by RXi in
Non-Cash Sales as to which no Non-Cash Offer Notice shall have been given to CytRx,
exceeds 1% of the shares of RXi Common Stock outstanding immediately prior to the
earliest of all such unreported Non-Cash Sales; provided, however, that in the event
the Board of Directors of RXi shall determine to authorize or approve of a merger of
RXi with or into any other person or entity, or a sale or other disposition of all or
substantially all of RXi shares of capital stock, business or assets, RXi shall
immediately deliver to CytRx all previously postponed Non-Cash Offer Notices.
	 
	 	(ii)	 	CytRx shall have the right during the 30-day period following delivery of the
Non-Cash Offer Notice to elect in its discretion to purchase all or any portion of the
number of shares of RXi Common Stock determined as provided in subparagraph A(i) above.
To exercise its rights under this paragraph A, CytRx must notify RXi on or prior to
the expiration of the foregoing 30-day period of the number, if any, of such shares of
RXi Common Stock, up to the whole number thereof, that CytRx elects to purchase (the
“Notice of Acceptance”). The

A-3

 

ANNEX 1

	 	 	 	purchase price to CytRx of such shares of RXi Common Stock shall be the Fair Value
(as defined below) of such shares.

	 	(iii)	 	At a closing to be held on a date that is mutually agreeable to RXi and CytRx
that is not more than 20 days after the Notice of Acceptance, CytRx shall acquire from
RXi, and RXi shall sell and issue to CytRx, the number of shares of RXi Common Stock
specified in the Notice of Acceptance. The purchase by CytRx of such shares of RXi
Common Stock is subject in all cases to the preparation, execution and delivery by RXi
and CytRx of a customary purchase agreement relating to such shares of RXi Common Stock
and other documents consistent with the terms hereof and reasonably satisfactory in
form and substance to CytRx, RXi and their respective counsel.
	 
	 	(iv)	 	The “Fair Value” per share of RXi’s Common Stock shall be equal to the average
closing price of RXi Common Stock as reported on Nasdaq (or other principal exchange on
which such shares are then traded) over the 10 trading days ending on the earlier of
(1) the date of any press release or other announcement by RXi of the transaction
involving such New Securities and (2) the date that CytRx delivers its Notice of
Acceptance under subparagraph B(ii) above. If RXi Common Stock is not publicly traded
at that time, the Fair Value of a share of RXi Common Stock shall be the fair market
value per share of RXi Common Stock as determined in good faith by the Board of
Directors of RXi acting by not less than a majority of the disinterested directors of RXi.

SECTION 4. Excluded Securities and New Option Securities

	 	A.	 	Notwithstanding any other provision of this Annex, this Annex shall not apply to (i) any New
Securities issued as a dividend or other distribution on or with respect to RXi Common Stock,
or (ii) any stock split, recapitalization or reclassification of RXi Common Stock.
	 
	 	B.	 	Notwithstanding any other provision of this Annex, the provisions of this Annex shall not
apply to the grant, award or issuance for consideration other than cash of any New Securities
consisting solely of options, warrants or other rights to subscribe for or purchase shares of
RXi Common Stock or other equity securities (“New Option Securities”). With respect
to any New Option Securities granted, awarded or issued by RXi for consideration other than
cash, the provisions of Section 3 shall apply in all respects to the issuance or sale of any
New Securities upon the exercise or conversion of such New Option Securities. Without
limiting the generality of the preceding sentence, the purchase price to CytRx of any shares
of RXi Common Stock that it elects to purchase upon any such exercise or conversion shall be
the Fair Value of such shares as of the date of CytRx’s Notice of Acceptance delivered in
accordance with Section 3.

A-4

 

ANNEX 1

SECTION 5. Miscellaneous

	 	A.	 	All notices and other communications provided for or permitted to be given under this Annex
shall be in writing and shall be given by depositing the notice in the United States mail,
addressed to the party to be notified, postage paid, and registered or certified with return
receipt requested, or by such notice being delivered in person or by facsimile communication
to such party. Notices or other communications given or served pursuant hereto shall be
effective upon receipt by the party to be notified. All notices or other communications to be
sent to RXi shall be sent to One Innovation Drive, Worcester, Massachusetts 01605, or such
other address as RXi may specify by notice hereunder to CytRx. All notices or other
communications to be sent to CytRx shall be sent or made at the address of CytRx as set forth
in RXi’s books and records or such other address as CytRx may specify by notice hereunder to
RXi.
	 
	 	B.	 	No delay or failure on the part of any party in exercising any rights hereunder, and no
partial or single exercise thereof, shall constitute a waiver of such rights or of any other
rights hereunder.
	 
	 	C.	 	In the event that any provision of this Annex, or the application of such provision to any
person or circumstance, is determined by a court, arbitrator or other adjudicator to be
invalid or unenforceable to any extent, the remainder of this Annex, and the application of
such provision to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and such provision and each other provision of
this Annex shall be valid and enforceable to the greatest extent permitted by law.
	 
	 	D.	 	In the event of any arbitration, litigation or other legal proceeding involving the
interpretation of this Annex or enforcement of the rights or obligations of the parties
hereto, the prevailing party or parties shall be entitled to recover reasonable attorneys’
fees and expenses as determined by the court, arbitrator or other adjudicator. In the event
that the arbitration, litigation or other legal proceeding is successful only in party, the
court, arbitrator or other adjudicator shall be entitled to prorate and allocate said fees and
expenses between the parties.

A-5

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