exv10w18



 





Exhibit 10.18




EMPLOYMENT AGREEMENT




     The Employment Agreement (the “Agreement”) is made and entered into as of August 28,
2007 (the “Effective Date”) by and between RXi Pharmaceuticals Corporation, a Delaware
corporation (“RXi” or “Employer”), and Stephen J. DiPalma, 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 RXi’s Chief Financial Officer 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 Chief Financial Officer. As a condition to the Employee’s
employment by the Employer, Employee shall execute the 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 include, but are not limited
to, the oversight of the financial matters of the Employer, timely filing of SEC documents,
maintaining timely compliance with SEC and other government rules and regulations (including SOX
compliance), maintaining accurate company accounting, general operations support, business
development and interaction with investors. Employee’s services hereunder shall be rendered
primarily at RXi’s office, except for travel when and as required in the performance of Employee’s
duties hereunder, and those occasions (on average less than one day per week) when the Employee, at
his discretion, works from an off-site location.



     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. Compensation. As the total consideration for Employee’s services rendered under the
Agreement, Employer shall pay or provide Employee the following compensation and benefits:



          4.1. Salary. Commencing on the Effective Date, Employee shall be entitled to receive
an annual Base Salary of Two Hundred and Twenty Thousand Dollars ($220,000). Employee shall
receive an annual performance bonus for the achievement of certain company and Employee performance
goals, these goals will be established by the Compensation Committee of the Employer’s Board of
Directors. For 2007, the Employee shall receive a pro rated bonus, based upon the Effective Date.
The bonus for top performance against these goals shall be 30% of the annual Base Salary.



          4.2. 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 (“Options”) under the RXi Pharmaceuticals 2007 Incentive Plan (the “Plan”) to purchase
100,000 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.
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.



          4.3. 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.



          4.4. Vacation. Employee will be entitled to 25 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, the Employee’s paid “time off” will be pro-rated). Paid time off may be taken at such times
and intervals as the Employee 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.



          4.5. 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.



          4.6. 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.



     5. Termination. The Agreement may be terminated as set forth in this Section 5.



          5.1. Termination by Employer for Cause or Voluntary Resignation. 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 the
purpose of this Agreement 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 has failed
to cure such breach within ten (10) 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 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
indicates alcohol or drug abuse by Employee; or



               (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.



               (g) Employee’s act or omission that, results in the Company being cited for material
weaknesses or deficiencies in internal controls, needing to restate financial statements
and/or becoming delisted from its then current stock exchange.



          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 of the date of such termination.



          5.2. Termination by Employer without Cause. Employer may also terminate Employee’s
employment without Cause upon notice to Employee. Upon termination of Employee’s employment by
Employer without Cause or termination by Employee with Good Reason during the term of employment,
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 (only as accrued during the
term of employment) as of the date of such termination; (b) six (6) months’ of salary from the date
of termination (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.



          5.3. Termination by Employee for Good Reason. The Employee’s employment hereunder may be
terminated by the Employee for Good Reason. For purposes of this Agreement, “Good Reason” shall
mean (i) any material reduction by the Company of the Employee’s compensation or benefits payable
hereunder (it being understood that a reduction of benefits applicable to all employees of the
Company, including the Employee, shall not be deemed a material reduction of the Employee’s
compensation package for purposes of this definition) and/or (ii) any change in the Employee’s
position or title that is not agreeable to the Employee.



          5.4 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.



     6. 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.



     7. 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.



     8. 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.



     9. Entire Agreement. The Agreement including Schedule A and Exhibit 1 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.



     10. 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.



     11. 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.



     12. 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:



RXi Pharmaceuticals Corp.

One Innovation Drive

Worcester, MA 01605



If to Employee:





Though company e-mail or company regular mail box if employed by Company or if not employed:


Steve
DiPalma

12 Deer Path

Natick, MA 01760




     13. Survival. Sections 6 through 15 shall survive the expiration or termination of
the Agreement.



     14. 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.



     15. 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.



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




	 	 	 	 	 
	 	EMPLOYER





RXi Pharmaceuticals Corporation

 	 
	 	By:  	/s/ Tod Woolf 	 
	 	 	Tod Woolf 	 
	 	 	Chief Executive Officer
RXi Pharmaceuticals Corporation 	 
	 





	 	 	 	 	 
	EMPLOYEE

 	 	 
	/s/ Stephen DiPalma	 	 
	Stephen DiPalma, MBA	 	 
	 	 	 
	 







 









 








Schedule A





	I.	 	Potential consulting activities. As of the Effective Date, the Employee is
providing professional services to another company, whose business is unrelated to the
Employer’s business and which presents no conflict of interest for the Employee, and the
Employee may desire to continue this relationship on a part-time basis. The Employer
acknowledges this pre-existing relationship and agrees that the Employee may continue to
provide professional services to this company, on a part-time basis and provided this
activity does not materially interfere with the performance of the Employee’s duties
hereunder.






	II.	 	Potential participation on the Board of Directors of other companies. The
Employee has had significant involvement with Boards in the past, including as a Director
or Trustee, and may desire to seek appointment to an outside Board in the future. If so,
the Employee will inform the Employer that he is contemplating an outside Board position
and request approval to pursue such an opportunity, and the Employer agrees to give
consider this request in good faith.