Exhibit 10.1



 





EXHIBIT 10.1




EXEGENICS INC.

4400 Biscayne Blvd.

Suite 900

Miami, Florida 33137




April 9, 2007




Dale R. Pfost

1525 Bardsey Drive

Lower Gwynedd, PA 19002-1546




Dear Dale:




     I am sending you this letter (this “Employment Letter”) to memorialize the understanding
between you and eXegenics Inc. (the “Company”) regarding your employment terms with the Company and
its wholly owned subsidiary, Acuity Pharmaceuticals, LLC (the “Subsidiary”). This Employment
Letter sets forth the terms of your employment with the Company as approved by the Company’s board
of directors. You may indicate your agreement with these terms by signing and dating the enclosed
duplicate original of this Employment Letter and returning the same to me.



     1. Position. You will serve the Company as its President and you will have responsibilities
and obligations not inconsistent with the position of President which shall be mutually agreed upon
by you and the Company. You will report directly to Phil Frost, the Chief Executive Officer of the
Company, and the Company’s Board of Directors. You will also serve the Subsidiary in the same
capacity, provided that no additional compensation or benefits will be provided for any services
provided to any affiliate of the



 









 







Company, and notwithstanding anything to the contrary set forth herein, a termination of
employment or Change in Control at the Subsidiary level shall not trigger any payments or
acceleration of any vesting of securities hereunder.



     2. Place of Employment. The Company will have its principal place of business in and around
the city of Miami in the State of Florida. You are required to relocate to the Miami area to be
closer to the Company’s principal office. The exact timeframe for your relocation will be
determined after the Effective Date and you will be afforded a reasonable period of time to
complete your relocation. From the Effective Date through the date of your relocation, you will be
required to make yourself available in Miami when reasonably requested by the Company. It is
contemplated that you will spend up to ten (10) days per month in Miami prior to your relocation.
You will be reimbursed for your documented travel expenses prior to the time for relocation.



     3. Reimbursement for Relocation. The Company requires that you relocate to the Miami area.
You will be reimbursed for your documented relocation expenses (which will include moving expenses,
travel expenses for you and your family, temporary housing for up to three months and customary
closing costs (excluding points, concessions and pre-paid expenses such as insurance, taxes,
homeowner’s warranties, etc.) for your purchase of a residence in the Miami area, which will be
grossed up for taxes. If, within one year from the date of your relocation, your employment with
the Company is terminated for Cause or if you voluntarily terminate your employment with the
Company other than for Good Reason, you will be required to refund the relocation monies paid by
the Company, including the tax gross-up.



     4. Term of Employment. The term of your employment with the Company (the “Employment Period”)
shall commence on the Effective Date and, unless earlier terminated in accordance with the terms of
the Employment Letter, shall end on the one-year anniversary of the Effective Date (the “Initial
Termination Date”). Except as provided in the Employment Letter, on the one-year anniversary of
the Effective Date, and on each subsequent anniversary thereof, the Employment Period shall be
automatically extended for one additional year unless either you or the Company shall have given to
the other party written notice of non-extension at least sixty (60) days prior to such anniversary.



     5. Salary. You will be paid a salary at the annual rate of $325,000, payable in monthly
installments in accordance with the Company’s prevailing payroll practices for executive employees.
This salary will be subject to increase (but not decrease) pursuant to the Company’s employee
compensation policies in effect from time to time. All forms of compensation from the Company will
be subject to reduction to reflect applicable withholding and payroll taxes.



     6. Benefits. You will be entitled to participate in such benefit programs as are generally
made available to other executives of the Company. If you are then an employee in good standing
you will be entitled to four (4) weeks paid vacation each year and sick days and other holidays in
accordance with the Company’s then prevailing policies to be established from time to time for
executive employees. Unused vacation



 









 







time will not accrue and will lapse and be lost if unused beyond the first quarter of the year
following their being earned. We recognize you currently have 19 days of unused vacation accrued
from previous years. These days will not be lost and will be retained if unused. If for any
reason this Employment Letter is terminated or not renewed, you will be paid for any unused
vacation days.



     7. Bonus. Within ten (10) days of the Effective Date, you will be paid a bonus of $40,000,
which represents your bonus for fiscal year 2006. Going forward, you will be eligible for an
annual merit bonus, potentially to be paid each year, in accordance with the procedures established
by the Company for executive employees. Your targeted bonus for the first year will be equal to
approximately 40% of your base salary and will be based on criteria established from time to time
by the Company. These criteria will include, but not be limited to, your accomplishments against
set objectives, the Company’s success and your general contributions to the Company’s success, the
general fiscal position of the Company and additional factors to be deemed appropriate by the
Company’s senior management and board of directors. Payment of any bonus shall be at the sole
discretion of the Company. The bonus you receive may be below or above the target or may not be
paid at all. Any bonus paid for a period of time which is less than 12 months will be paid pro rata
for such time period. You must be an employee in good standing at the time of any potential
payment. Any bonus, if paid, will be paid prior to the end of the first fiscal quarter following
the fiscal year for which a bonus is to be paid.



     8. Reimbursement for Travel Expenses. The Company shall reimburse you for approved travel and
other out-of-pocket expenses incurred by you in the course of your employment consistent with
applicable procedures in place at any time.



     9. Stock Options. Subject to: (i) the adoption and approval of an equity incentive plan with
sufficient authorized shares by the stockholders of the Company, and (ii) the approval of the
Compensation Committee of the Board of Directors of the Company, you shall be granted an option to
purchase 300,000 shares of the Company’s common stock (subject to adjustment in the event of any
stock splits or reverse stock splits). The exercise price per share for each new option grant will
be equal to the fair market value per share on the date the option is granted. The options will be
subject to the terms and conditions contained in a stock option agreement to be entered into by you
and the Company prior to the grant. The options shall vest in forty eight (48) monthly installments
from the date of grant.



     10. Termination without Cause and Resignation for Good Reason or Non-extension of Employment
Before One Year Anniversary. The Company may terminate your employment hereunder without “Cause.”
If your employment is terminated by the Company without “Cause,” you terminate your employment with
the Company for “Good Reason” or the Company delivers to you a notice of non-extension, in
accordance with Section 4 hereof, prior to the one-year anniversary of the Effective Date (which
initial non-renewal shall be treated as a termination for purposes of this Section 10), the Company
shall pay you all amounts accrued but unpaid as of the effective date of such termination. In
addition, you shall continue to receive your then applicable base salary and benefits for twelve
(12) months thereafter (the “Severance



 









 







Period”). Any outstanding equity awards granted to you which would have vested during the
Severance Period shall vest automatically upon such termination and all vested equity awards shall
be exercisable for one year from the effective date of termination. Upon the effective date of
termination, all other unvested equity awards shall be forfeited. Any shares issued to you shall
not be subject to repurchase. In order to receive the severance payments set forth in this Section
10, you will be required to enter into a customary separation and release agreement with the
Company which will include the extension of the non-competition provision set forth in Section 12
during the Severance Period. Such separation agreement shall provide that (i) any and all
obligations of the Company to pay you accrued salary, bonus or benefits shall survive and shall not
be released or waived by you, (ii) any release shall not restrict or adversely affect your ability
to exercise any vested stock options or otherwise infringe upon your ownership of any the Company
securities, and (iii) you shall not be required to release or waive any rights that you may have to
be indemnified by the Subsidiary or the Company (including any rights to advance reimbursement for
costs or expenses) pursuant to any provision in the Subsidiary’s or the Company’s certificate of
incorporation, bylaws or as may be otherwise provided for by law or contract.




     As used herein, “Good Reason” shall mean (i) any action by the Company which results
in any diminution in your salary or reporting requirements (ii) any action by the Company
which results in a material diminution in your position, title, authority, duties or
responsibilities contemplated by this Employment Letter (and specifically in Section 1
above) or (iii) material breach by the Company of its obligations under this Employment
Letter or (iv) the Company’s requiring you to be based at any office or location other than
a location within 30 miles from the Company’s offices in Miami, except for travel
reasonably required in connection with the performance of the your responsibilities
hereunder.




     If you elect to terminate your employment for Good Reason, you shall first give the
Company written notice thereof, including reasonable evidence or description of
circumstances to support your finding of Good Reason and a period of thirty (30) days (the
“Good Reason Notice Period”) from the date of such notice to cure such breach. If such
breach is not cured by the Company by the end of the Good Reason Notice Period with such
cure being communicated to you in writing, such termination shall be effective upon the
first day after the expiration of the Good Reason Notice Period.



     11. Termination for Cause. The Company shall be permitted to terminate your employment
hereunder for Cause (as defined below). In the event of such termination, your compensation and
benefits shall cease as of the effective date of termination and the Company shall pay you all
amounts accrued but unpaid as of the date of such termination. The Company shall not thereafter be
obligated to make any further payments to you. In addition all outstanding equity awards granted
to you, vested or unvested, shall immediately be terminated.




     As used herein, “Cause” shall mean (i) your commission of fraud in connection with
your employment or intentional theft, misappropriation or



 









 







embezzlement of the Company’s funds; (ii) your conviction of or the entering of a
guilty plea or plea of no contest with respect to, a felony, the equivalent thereof, or any
other crime with respect to which imprisonment is the punishment; (iii) your material
breach of your obligations under this Employment Letter; (iv) your willful violation of any
express reasonable direction or reasonable requirement established by the Chief Executive
Officer or Board of Directors in good faith, (v) your incompetence or misconduct in the
performance of, or neglect of, your duties hereunder which is materially detrimental to the
Company; (vii) your abuse of alcohol or other drugs which interfere with the performance of
your duties, or the conviction of or your entering of a guilty plea or plea of no contest
with respect to the use of any illegal drugs or narcotics.




     If the Company elects to terminate your employment for Cause pursuant to clauses
(iii), (iv), and (v) of the definition of “Cause” and the action or inaction prompting such
termination is capable of cure, the Company shall first give you written notice thereof,
including a description of the evidence upon which the Company has relied to support such
finding and, a period of thirty (30) days from the date of such notice to cure the action
or inaction giving rise to the written notice.



     12. Disability. If you are incapacitated by accident, sickness or otherwise so as to render
you, for any period totaling 60 or more days during any consecutive twelve-month period, or in the
reasonable opinion of the Company’s board of directors, is mentally or physically incapable of
performing the services required of you under this Employment Letter, the Company may terminate
your employment immediately following such 60-day period by giving you written notice specifying
the effective date of termination. In the event of such a termination, the Company shall pay to
you all amounts accrued but unpaid under this Employment Letter as of the effective date of your
termination and thereafter shall not have any further obligation or liability under this Employment
Letter. In addition, all restricted shares, options and other securities shall remain outstanding
subject to their terms, except that the all equity awards shall be exercisable by you for one (1)
year following termination pursuant to this Section 12 and any shares issued to you shall not be
subject to repurchase.



     13. Death. Your employment with the Company shall automatically terminate in the event of
your death. In the event of such a termination, the Company shall pay to your estate or legal
representative all amounts accrued but unpaid under this Employment Letter as of the effective date
of your termination and thereafter shall not have any further obligation or liability under this
Employment Letter. In addition, all restricted shares, options and other securities shall remain
outstanding subject to their terms, except that all equity awards shall be exercisable by the
executors or administrators of your estate or by your beneficiaries for one (1) year following
termination pursuant to this Section 13 and any shares issued to you shall not be subject to
repurchase.



     14. Non-Competition Provision. During the term of your employment with the Company and for
one-year thereafter (so long the Subsidiary is in compliance with its



 









 







contractual obligations, if any, under this Employment Letter to provide you with any
severance payments or benefits following a termination event) you agree that you shall not engage
or participate directly or indirectly in any business which is, or as a result of your engagement
or participation would become, competitive with any aspect of the business of the Company and any
specific applications or technologies in which the Company has initiated significant plans to
develop (the “Competing Business”), such business currently being the development and
commercialization of therapeutic compounds for the treatment of ophthalmic disorders. During this
period, you agree not to become a stockholder, partner, owner, officer, director or employee or
agent of, or a consultant to or give financial or other assistance to, any person or entity engaged
in any such Competing Business (other than ownership of 3% or less of the outstanding securities of
any publicly traded company).



     15. Continuing Obligations after Termination. You hereby acknowledge and agree that you have
entered into an Inventions and Proprietary Information Agreement, and that the terms, conditions
and covenants contained in such agreement remain in full force and effect and is not in any way
modified by the execution of this Employment Letter.



     16. Termination following a Change in Control. In the event that the Company shall terminate
your employment hereunder without Cause, or you shall terminate your employment hereunder for Good
Reason within one year following a “Change in Control” of the Company or in the event of a “Change
in Control” of the Company prior to the one-year anniversary of the Effective Date, the Company
delivers to you a notice of non-extension, in accordance with Section 4 hereof, prior to the
one-year anniversary of the Effective Date, then, in addition to all of the payments and benefits
provided by Section 10 of this Employment Letter, all outstanding equity awards which are unvested
as of such termination date shall automatically become vested and you shall have a period of one
(1) year from such date of termination to exercise any such equity awards and any shares issued to
you shall not be subject to repurchase.




     For purposes of this Section 16, a “Change in Control” shall be deemed to have
occurred if any person other than the Frost Group, LLC and its affiliates, is or becomes
the beneficial owner of 60% or more of the combined voting power of the Company’s then
outstanding securities; or the stockholders of the Company approve a merger or
consolidation of the Company with any other unrelated entity (which would not result in the
voting securities of the Company outstanding immediately prior thereto continuing to
represent more than 50% of the combined voting power of the Company or such surviving
entity outstanding immediately after such merger or consolidation) or the sale of all or
substantially all of the assets of the Company to any other unrelated entity.



     17. Your Termination Right. You may terminate this Employment Letter at any time for any
reason upon at least 30 days written notice to the Company. In the event of such a termination,
the Company shall pay to you all amounts accrued but unpaid under this Employment Letter as of the
effective date of your termination and thereafter shall not have any further obligation or
liability under this Employment Letter. In



 









 







addition, all restricted shares, options and other securities shall remain outstanding subject
to their terms, except that all equity awards shall be exercisable by you for a period of three (3)
months following termination pursuant to this Section 17. All unvested equity awards shall be
forfeited. Upon such a termination, the provisions of this Employment Letter, including Sections
14 and 15, shall remain in full force and effect.



     18. Outside Activities. While you render services to the Company, you will not engage in any
other gainful employment, business or activity without the written consent of the Company. While
you render services to the Company, you also will not assist any person or organization in
competing with the Company, in preparing to compete with the Company or in hiring any employees of
the Company. Notwithstanding any provision herein to the contrary, you shall not be precluded from
devoting reasonable periods of time required for serving as a member of no more than two committees
or advisory boards or boards of directors of companies or organizations which have been approved by
the Board, so long as such memberships or activities do not interfere with the performance of your
duties hereunder and are not directly or indirectly competitive with, nor contrary to, the business
or other interests of the Company. Such approval shall not be unreasonably denied and shall be
provided to you within ten (10) business days of the actual receipt by the Company of such request.
Failure by the Company to respond to you within ten (10) business days of the actual receipt by
the Company of such request shall be deemed approval of such request. The Company approves of your
current outside activities, which are listed on Exhibit “A” attached hereto.



     19. Amendment and Governing Law. This Employment Letter may not be amended or modified except
by an express written agreement signed by you and a duly authorized officer of the Company. The
terms of this Employment Letter and the resolution of any disputes will be governed by the laws of
the State of Florida.



     This Employment Letter contains all of the terms of your employment with the Company and
supersede any prior understandings or agreements, whether oral or written, between you and the
Subsidiary or the Company. You may indicate your agreement with these terms and accept this offer
by signing and dating the enclosed duplicate original of this Employment Letter and returning them
to me, upon which this Letter Agreement will be a binding agreement between you and the Company.



	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/ Phillip Frost
 	 
	 	Phillip Frost, M.D. 	 
	 	Chief Executive Officer
eXegenics Inc. 	 
	 



ACCEPTED AND AGREED TO:

/s/ Dale R. Pfost     

Name: Dale R. Pfost

Date: April 9, 2007