exv10w7






Exhibit 10.7




CONSULTING AGREEMENT




          This Agreement dated this 27th day of June, 2008, is executed by and between
MiddleBrook Pharmaceuticals, Inc., a Delaware corporation (the “Company”), located at 20425 Seneca
Meadows Parkway, Germantown, MD 20876, and Edward M. Rudnic, Ph.D. (“Consultant”), located at 13517
Maidstone Lane, Potomac, MD 20854 (the “Agreement”).




          WHEREAS, Consultant holds the position of President and Chief Executive Officer of the Company
and, in connection with an expected change in the Company’s management, Consultant’s employment
with the Company will terminate effective with the closing of the EGI transaction;




          WHEREAS, in the event of such termination of employment, the Company desires to obtain
consulting services from Consultant commencing on the day following the close of the EGI
transaction (the “Effective Date”), pursuant to the terms and conditions set forth in this
Agreement;




          WHEREAS, Consultant possesses the requisite skills, training and experience to perform the
services called for under this Agreement, and wishes to perform the services based on the terms and
conditions herein; and




          WHEREAS, based on the nature of the relationship that the parties intend to establish, the
Company hereby engages the Consultant as an independent contractor.




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





	1)	 	This Agreement shall be effective on the Effective Date. Other than as contemplated by the
immediately following proviso, this Agreement shall be of no force or effect and neither party
shall have any rights or obligations hereunder until the Effective Date; provided, however,
that (i) no party may terminate, modify or amend this Agreement prior to the Effective Date
unless in a writing signed by the Company and Consultant, and (ii) the provisions of this
Paragraph 1, and any definitions in this Agreement, shall be effective upon execution of this
Agreement by the parties hereto. If the termination of Consultant’s employment with the
Company does not occur, this Agreement shall be null and void and of no force or effect.
	 
	2)	 	The original term of this Agreement shall be for 24-months commencing on the Effective Date.
This Agreement may be renewed for additional 12-month periods by mutual agreement of the
parties hereto.
	 
	3)	 	Commencing on the Effective Date, the Consultant shall be available on a mutually agreeable
schedule to provide such consulting services with respect to the business of the Company as
the Company reasonably requests. The consulting services that may be requested of Consultant
shall be of a nature that reflects and is consistent with Consultant’s skills,





 









 











	 	 	experience, expertise and services provided by Consultant to the Company prior to the Effective
Date. The Consultant shall perform such services in a thorough, efficient, and workmanlike
manner, promptly and with due diligence and care, and in accordance with that standard of care
and skill ordinarily exercised by members of the profession performing similar services. In
addition, Consultant shall comply with all applicable federal, state and local statutes,
ordinances and regulations in the course of performing such objectives.






	4)	 	The Company enters in this Agreement based on Consultant’s experience with the business of
the Company and his demonstrated ability to accomplish the objectives of such business.
Consequently, the Company will not provide Consultant with any training or instructions with
respect to the services to be provided hereunder. Similarly, Consultant is responsible for
providing any equipment, materials or supplies that Consultant determines are necessary to
accomplish the objectives.
	 
	5)	 	Consistent with the parties’ intent that the relationship created by this Agreement be that
of service recipient and independent contractor, Consultant shall retain the exclusive right
to control and direct all details of the services that Consultant performs hereunder,
including where, when and how the services are to be performed. Consultant’s failure to
accomplish the services by the mutually agreed deadline, however, shall constitute a material
breach of this Agreement, unless the Company agrees to an extended deadline.
	 
	6)	 	Other than with respect to the Options granted pursuant to Paragraph 10 and the changes to
the Prior Employment Options pursuant to Paragraph 11, Consultant shall not be eligible to
participate in any benefit programs that the Company now or hereafter maintains for its
employees with respect to services performed hereunder, and Consultant hereby waives any such
right to participate in the programs. This waiver of any right to participate in
Company-sponsored employee benefit programs represents a material component of the terms of
compensation agreed to by these parties and is not in any way conditioned on any
representation or assumption concerning status of Consultant with respect to the Company as an
employee or independent contractor.
	 
	7)	 	For all purposes, including but not limited to the Federal Insurance Contributions Act
(“FICA”), the Social Security Act, the Federal Unemployment Tax Act (“FUTA”), income tax
withholding and any and all other federal, state and local laws, rules and regulations,
Consultant shall be treated as an independent contractor and not as an employee with respect
to the Company.
	 
	8)	 	Consultant acknowledges and agrees that Consultant shall be responsible (as a self-employed
individual) for filing all tax returns, tax declarations and tax schedules, and for the
payment of all taxes required, when due, with respect to any and all compensation earned by
Consultant under this Agreement. The Company will neither pay nor withhold any employment
taxes with respect to the compensation it pays Consultant. Rather, the Company will report
the amounts it pays Consultant on IRS Forms 1099, to the extent required to do so under
applicable Internal Revenue Code provisions.
	 
	9)	 	Consultant’s fees for services provided under this Agreement shall be Three Thousand Dollars
($3,000) per day or Fifteen Hundred Dollars ($1,500) per half-day, plus reasonable travel
expenses. The Company shall have no obligation to pay a fee prior to receipt of an





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	 	 	invoice from Consultant requesting payment of the same. The Company will not reimburse
Consultant for any other expenses incurred in connection with the performance of services
hereunder unless otherwise agreed by the Company. For purposes of satisfying Section 409A of
the Internal Revenue Code of 1986, as amended, the parties agree that any amount reimbursed
hereunder for one calendar year shall not affect the amounts reimbursed for other calendar
years, and all reimbursement payments, if any, shall in all events be made no later than the end
of the calendar year following the calendar year in which the applicable expense is incurred.






	10)	 	The Company shall take all action necessary to grant to Consultant, on the Effective Date, a
stock option (the “Option”) pursuant to the terms of the Amended and Restated Middlebrook
Pharmaceuticals, Inc. Stock Incentive Plan (the “Option Plan”) to purchase 100,000 shares of
Company common stock at an option price equal to the Fair Market Value of such Common stock on
the date of grant as determined pursuant to the terms of the Option Plan. The Option shall
vest, in its entirety, upon expiration of the original term of this Agreement or, if earlier,
upon a material breach of the Agreement by the Company; provided, however, that such vesting
shall not otherwise limit the Consultant’s remedies at law or in equity for such breach. The
Option shall otherwise be governed by the terms and conditions set forth in a stock option
agreement evidencing the Option.
	 
	11)	 	With respect to stock options (other than the Option) relating to shares of the Company
common stock which are held by Consultant on the Effective Date (the “Prior Employment
Options”), (i) Consultant’s obligations to provide consulting services under this Agreement
shall constitute continued “Service” with the Company (as described in the Amended and
Restated Middlebrook Pharmaceuticals, Inc. Stock Incentive Plan and any applicable stock
option agreement) so that (i) such Prior Employment Options shall continue to vest during the
term of this Agreement (including any additional terms following the original term), and (ii)
the exercisability of such Prior Employment Options shall be determined as if such Service
continued until the expiration of the term of this Agreement (including any additional terms
following the original term). In addition, with respect to any Prior Employment Options that
are incentive stock options (as defined in Section 422 of the Internal Revenue Code, as
amended) and that are exercised more than three (3) months from the effective date of
termination of Consultant’s employment with the Company, such Prior Employment Options shall
not be incentive stock options and instead be nonqualified stock options.
	 
	12)	 	Subject to approval of the Company, Consultant shall have the right to engage others to
assist in the accomplishment of the services described herein. Consultant shall be solely
responsible for (a) complying with all applicable employment and labor laws with respect to
any assistants it engages, (b) paying all compensation owed to such assistants, and (b)
paying, and/or withholding and remitting to the appropriate government agency, any applicable
employment taxes that might be owed with respect to such compensation. Consultant also shall
indemnify and hold the Company harmless against any and all liabilities attributable to the
obligations imposed on Consultant under this Paragraph 12. This Paragraph 12 shall survive
the termination of this Agreement.




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	13)	 	The Consultant reserves the right to, and intends to, perform services for others, so long as
the performance of such services does not interfere with the performance of services
hereunder.
	 
	14)	 	Consultant acknowledges and agrees that in the course of the performance of services pursuant
to this Agreement, Consultant will be given access to, or come into possession of,
confidential information of the Company, which information includes trade secrets, proprietary
data or other confidential information. Consultant acknowledges and agrees that he will not
use, duplicate or divulge to others any such confidential information of the Company except in
connection with the performance of services under this Agreement. Consultant agrees and
covenants that Consultant shall not remove or copy any data, research, memoranda, reports,
records, documents, publications, journals, diaries, computer programs, files, information
contained in files, or other information or material pertaining to the business, research, or
technology of the Company without the express written consent of the Company, which in all
events shall be considered to be the owner and possessor of all such data, research,
memoranda, reports, records, documents, publications, journals, diaries, computer programs,
files, information contained in files, or other information or material. Consultant covenants
and agrees that Consultant shall in no way utilize any such information in Consultant’s
possession for the gain or advantage of Consultant (other than in Consultant’s performances of
services hereunder) and/or to the detriment of the Company. Upon a termination of this
Agreement, or at such earlier date as the Company may request, Consultant shall deliver
forthwith to the Company all such data, research, memoranda, reports, records, documents,
publications, journals, diaries, computer programs, files, information contained in files, or
other information or material (including all extracts, abstracts, copies, or portions thereof)
which are then in Consultant’s possession or control. The obligations of this Paragraph 14
shall survive the termination of this Agreement.





	15)	 	(a) Consultant acknowledges and agrees that, as part of his engagement with the Company, he
may be expected to make new contributions of value to the Company and agrees to promptly
disclose to the Company any and all inventions, discoveries, works of authorship, writings,
computer software programs, processes, formulas, improvements or revisions (collectively,
“Works”), whether subject to copyright, patent, registration or other protection as
intellectual property or not, which he may make, devise, conceive, create, design, invent,
develop or discover, either solely or jointly with another or others, during his engagement by
the Company, whether at the request or upon the suggestion of the Company or otherwise, which
(i) are improvements (A) to the Company’s Pulsys technology or to any of the Company’s patents
issued as of the date of this Agreement or during the term of this Agreement, (B) to the
Company’s patent applications filed as of the date of this Agreement, or (C) to additional
Company patent applications of which the Consultant has knowledge that are filed during the
term of this Agreement; (ii) were created using the Company’s facilities, equipment, resources
or personnel during any time following the date the Consultant commenced employment with the
Company and prior to the expiration of the term of this Agreement; (iii) come about as a
result of Consultant’s access to confidential, proprietary, or trade secret information
belonging to the Company; or (iv) substantially relate to any business of the Company, or any
services, programs or products offered, used, sold or being developed by the Company at the
time





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	 	 	he creates or develops such Works, of which Consultant became aware through his consulting
relationship with the Company or otherwise through Consultant’s provision of services
hereunder. Any and all of the foregoing shall belong exclusively to the Company and, to the
extent it is copyrightable material, shall be deemed to be “Works Made for Hire,” and the
Company shall be deemed the author or creator thereof.






	 	(b) Consultant shall assign to the Company, and hereby does so assign, all Works disclosed,
or required to be disclosed, in accordance with this Section and assigns the right to obtain
patents or copyright registrations on any and all such Works in any or all countries in his
name or otherwise.






	16)	 	Upon the request of the Company, whether or not made during the period of his engagement with
the Company, Consultant shall assist the Company in any way necessary, including, but not
limited to executing documents, to accomplish the following, in any or all countries, with
respect to any and all Works disclosed, or required to be disclosed, in accordance with
Paragraph 15: (a) to perfect in the Company all right, title and interest in and to the Work;
(b) to file for and/or obtain a patent or patents, copyright registration or copyright
registrations, trademark, trade name, domain name or similar registration, or other means
established for the protection of intellectual property on the Work, in the United States or
any other country; and (c) to protect and enforce the Company’s rights in the Work. The
provisions of Paragraphs 14, 15 and 16 shall survive the termination of this Agreement.
	 
	17)	 	This Agreement may be terminated only (i) by one party hereto upon a material breach of the
Agreement by the other party hereto (the “Breaching Party”) and notice of such breach given by
the first party to the Breaching Party, in which case the termination shall be effective at
the time the notice is received by the Breaching Party, (ii) upon mutual written agreement of
the parties hereto, or (iii) automatically upon expiration of the original term or any renewed
terms of the Agreement without additional renewal by the parties hereto.
	 
	18)	 	This Agreement shall be governed by and construed and enforced in accordance with the laws of
the State of Delaware. Any and all disputes arising out of, relating to the performance of
services contracted for under, this Agreement, shall be settled by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association, or any
successor thereto then prevailing. Such arbitration shall be final and binding upon the
parties, and shall be the sole and exclusive remedy of the parties with respect to any dispute
arising out of, relating to, or resulting from the interpretation of the terms of this
Agreement, or any breach thereof. The costs of such arbitration shall be borne equally by the
parties. Notwithstanding the foregoing provisions of this Paragraph 18 to the contrary,
matters in which an equitable remedy or injunctive relief is sought by a party, shall not be
required to be submitted to arbitration, if the party seeking such remedy or relief objects
thereto, but instead shall be submitted to a court of law having appropriate jurisdiction.
This Paragraph 18 shall survive the termination of this Agreement.
	 
	19)	 	This Agreement shall constitute the entire written agreement between the parties, and shall
supersede any and all agreements or understandings in effect between the parties hereto;
provided, however, that this Agreement shall not affect in any way the rights and obligations
of the Company and Consultant under the Employment Agreement between the Company




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	 	 	and Consultant dated April 8th, 2008. This Agreement may not be modified except by
written agreement executed by the parties hereto.






	20)	 	Each provision of this Agreement shall be treated as a separate and independent clause, and
the unenforceability of any one clause shall in no way impair the enforceability of any of the
other clauses herein. Moreover, if one or more of the provisions contained in this Agreement
shall for any reason be held to be excessively broad as to scope, activity, subject or
otherwise so as to be unenforceable at law, such provision or provisions shall be construed by
the appropriate judicial body by limiting or reducing such provision or provisions, so as to
be enforceable to the maximum extent comparable with the applicable law as such law shall then
be.
	 
	21)	 	No breach of any provision hereof can be waived unless in writing. Waiver of any breach of
any provision hereof shall not be deemed to be a waiver of any other breach of the same, or
any other provision.
	 
	22)	 	Any notice required or permitted under this Agreement shall be in writing and shall be deemed
given upon the earlier of (a) when it is personally delivered, (b) three (3) days after having
been mailed by certified mail, postage prepaid, return receipt requested or (c) two (2) days
after having been sent by recognized overnight delivery service, in all cases sent to the
address first set forth above, or to such other address as the person to whom notice is to be
given may have previously furnished to the other in writing in the manner set forth herein.





[signatures on following page]




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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first
above written.



	 	 	 	 	 	 	 
	MIDDLEBROOK PHARMACEUTICALS, INC.	 	CONSULTANT	 	 
	 
	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Wayne T. Hockmeyer
 

Wayne T. Hockmeyer
	 	/s/ Edward M. Rudnic
 

Name: Edward M. Rudnic, Ph.D.
	 	 
	Title:

	 	Chairman, Compensation Committee
	 	TIN: