Document:

EX-10.18 Reich Employment Letter

 

EXHIBIT 10.18

EXEGENICS INC.

4400 Biscayne Blvd

Suite 900

Miami, Florida 33137

March 29, 2007

Samuel J. Reich

320 Brookway Rd

Merion Station, PA 19066

Dear Sam:

     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 and Acuity as its Executive Vice President and you
will have responsibilities and obligations which are commensurate with this position. You will
report to the Chief Executive Officer of the Company. 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. When reasonably requested by the Company, you will be
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 in the coming weeks and you will be afforded a
reasonable period of time to complete your relocation. Prior to 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. When 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 all of 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 date of this Employment Letter (the “Effective Date”) and, unless earlier
terminated in accordance with the terms of the Employment Letter, shall end on the first
anniversary of the Effective Date. Except as provided in the Employment Letter, on the first
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 thirty (30) days prior to such
anniversary.

     5. Salary. You will be paid a salary at the annual rate of $210,000, payable in monthly
installments in accordance with the Company’s prevailing payroll practices for executive employees.
This salary will be subject to adjustment 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 beyond, and must be used within, three
months of the end of each year.

     7. Bonus. Within ten days of the Effective Date, you will be paid a bonus of $30,000, 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 30% 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

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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 500,000 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. All unvested equity awards shall be forfeited. 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 Acuity or the Company (including
any rights to advance reimbursement for costs or expenses) pursuant to any
provision in Acuity’s or the Company’s certificate of incorporation, bylaws or as may be
otherwise provided for by law or contract.

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     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, authority, duties or
responsibilities contemplated by this Employment Letter, 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 Philadelphia, or 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 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 direction or 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 use 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

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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 all equity awards shall be exercisable by you for a period of
one (1) year following termination pursuant to this Section 12.

     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 the your beneficiaries for a period of one (1)
year following termination pursuant to this Section 13.

     14. Non-Competition Provision. During the term of your employment with the Company and for
one-year thereafter(so long Acuity is in compliance with its contractual obligations, if any, under
this Letter Agreement 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).

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     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 Letter Agreement.

     16. Termination following a Change in Control. In the event that the Company shall terminate
your employment hereunder without Cause or you shall termination your employment hereunder for Good
Reason within one year following a “Change in Control” of the Company, 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.

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 Letter Agreement, 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.

     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.

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     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 Acuity
Pharmaceuticals, Inc. 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.

Very truly yours,

/s/ Phillip Frost

Phillip Frost, M.D.

Chief Executive Officer and Chairman

ACCEPTED AND AGREED TO:

/s/ Samuel J. Reich

Name: Samuel J. Reich

Date: ______________________

7EX-10.19 Pfost Employment Agreement

 

EXHIBIT 10.19

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made as of September 25, 2004 (the “Effective
Date”), by and between Acuity Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and
Dale R. Pfost (“Executive”).

     WHEREAS, the Company and Executive were previously parties to that certain Employment
Agreement dated as of March 27, 2003 (the “Original Employment Agreement”);

     WHEREAS, on September 24, 2004, the Company issued shares of its Series B Convertible
Preferred Stock (the “Series B Shares”) to a group of investors (the “Investors”) pursuant to a
Series B Preferred Stock Purchase Agreement (the “Purchase Agreement”);

     WHEREAS, to satisfy a condition precedent to the Investors’ obligations under the Purchase
Agreement, the Company and Executive entered into a Termination Agreement and Release (the
“Termination Agreement”), pursuant to which, among other things, (i) the Company agreed to issue to
Executive 100,000 Series B Shares (the “Executive Shares”), a warrant (the “Executive Warrant”)
exercisable for the purchase of up to 12,500 shares of the Company’s Common Stock (the “Common
Stock”), an option exercisable for the purchase of up to 141,000 Series B Shares and an option
exercisable for the purchase of up to 43,500 shares of Common Stock (the “Executive Options”), (ii) the Original Employment Agreement was terminated and (iii) the Company and Executive agreed to
enter into a new employment agreement upon the terms and subject to the conditions contained in the
Termination Agreement; and

     WHEREAS, the Company and Executive desire to enter into this Agreement to comply with the
terms and conditions of the Termination Agreement and to set forth the terms and conditions of
Executive’s employment by the Company and the rights and obligations of the parties upon
termination of such employment.

     NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:

     1. Employment. The Company shall employ Executive as its President and Chief
Executive Officer, and Executive accepts such employment and agrees to remain in the employ of the
Company, upon the terms and conditions set forth in this Agreement during the Employment Period (as
defined below). Executive shall report directly to the Board of Directors of the Company (the
“Board”). From the Effective Date through the first anniversary thereof, Executive shall serve as
the Chairman of the Board.

     2. Performance of Duties.

     (a) During his employment by the Company, Executive shall devote his best efforts and his
entire business time, ability and attention to the business affairs of the Company and shall
faithfully and efficiently perform such duties, consistent with the stature and responsibility of
his position, as may be assigned to him from time to time by the Board.

 

 

     (b) Notwithstanding any provision herein to the contrary, Executive 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 Executive’s 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 Executive within ten (10) business days of the actual
receipt by the Company of such request. Failure by the Company to respond to the Executive 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 the Executive’s current outside activities,
which are listed on Exhibit “A” attached hereto.

     3. Term of Employment. The term of Executive’s employment (the “Employment Period”)
shall commence on the Effective Date and, unless earlier terminated in accordance with the terms
hereof, shall end on September 24, 2006. Except as hereinafter provided, on the second anniversary
of the Effective Date and on each subsequent anniversary thereof, the Employment Period shall be
automatically extended for one additional year unless either party shall have given to the other
party written notice of non-extension at least thirty (30) days prior to such anniversary. If
written notice of non-extension is given as provided above, the Executive’s employment under this
Agreement shall terminate on the last day of the Employment Period (as it may be extended pursuant
hereto).

     4. Base Salary and Benefits.

     (a) The Company agrees to pay Executive an annual salary in the amount of $265,000 per annum,
with such salary to be reviewed (but not decreased) annually by the Board or an appropriate
committee thereof (such salary, as the same may be adjusted from time to time, is hereinafter
referred to as the “Base Salary”), payable in accordance with standard payroll practices of the
Company. Base Salary shall be considered by the Board for increase based upon performance and
other considerations as appropriately determined by the Board, including without limitation
performance assessment, market assessment for comparable executive and employment terms and awards
as may be deemed appropriate from time to time. The Board’s first annual review of the Executive
to consider Executive’s Base Salary shall take place no later than the end of the calendar year
2005. At this review, the Board will consider the performance of Executive for the last quarter of
year 2004 and for calendar year 2005.

     (b) The Company shall reimburse Executive for all reasonable out-of-pocket expenses incurred
by him in the course of performing his services, duties and responsibilities under this Agreement
in a manner that is consistent with the Company’s policies in effect from time to time (including
business travel policies); provided that Executive shall furnish to the Company reasonably adequate
records and documentary evidence of such expenses. The Company shall reimburse Executive for his
legal fees incurred in connection with this Agreement up to a maximum of $3,000.

     (c) Executive shall be entitled to participate in any health benefit plan, retirement,
supplemental income or benefit plans which the Company in its sole discretion sponsors for the
members of senior management generally.

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     (d) Executive shall be entitled to four weeks of compensated vacation time each year, in
addition to Company recognized holidays and sick days taken in accordance with the Company’s
policies in effect from time to time. On the day prior to each anniversary of the Effective Date,
accrued but unused vacation will be carried forward automatically to the next year without loss or
limitation; including twenty eight days accrued and unused vacation from the start date of April 9,
2003; provided, however, that Executive shall not be permitted to take more than six weeks vacation
in any 12-month period, unless (i) approved by the Board or (ii) if Executive or Company shall have
notified the other party of its intention not to renew this Agreement in accordance with Section 3.

     5. Bonus. Executive shall be eligible to receive an annual merit bonus. Payment of
any bonus shall be at the sole discretion of the Board. Bonuses shall be based upon performance
and other considerations as appropriately determined by the Board, including without limitation
performance assessment, market assessment for comparable executive and employment terms and awards
as may be deemed appropriate from time to time. The Board’s first annual review of the Executive
to consider any bonus shall take place no later than the end of the calendar year 2005. At this
review, the Board will consider the performance of Executive for the last quarter of year 2004 and
for calendar year 2005.

     6. Restricted Shares. In connection with the Company’s and Executive’s entry into the
Original Employment Agreement, the Company issued 100,000 shares of its Common Stock to Executive
(the “Restricted Shares”) pursuant to a Restricted Stock Agreement dated March 31, 2003 (the
“Restricted Stock Agreement”). The Restricted Stock Agreement shall be amended and restated to
replace the definitions of “Cause” and “Good Reason” contained therein with the definitions
provided in Section 8(f) and to replace the term “permanent disability” as used therein with the
term and definition of “Disability” set forth in Section 8(e). All other terms of the Restricted
Stock Agreement shall remain the same and the Restricted Shares shall continue to vest in
accordance with, and shall remain subject to the terms of, the Restricted Stock Agreement. A list
of the Executive Shares, Executive Warrants, Executive Options, Restricted Shares, and any other
equity awards granted to the Executive, along with a summary of the vesting schedule for each such
award which is subject to vesting, is set forth on Exhibit “B” attached hereto, which Exhibit may
be amended from time to time as additional equity awards are granted to the Executive.

     7. Annual Awards. Executive shall be eligible to participate in the Company’s stock
option plans and programs in effect from time to time and will be eligible for consideration for
grants under such plans for calendar years during the Employment Period commencing January 1, 2005
on the same basis as other members of senior management generally. Awards will be in the sole
discretion of the Board, and shall be based upon performance and other considerations as
appropriately determined by the Board, including without limitation performance assessment, market
assessment for comparable executive and employment terms and awards as may be deemed appropriate
from time to time. The Board’s first annual review of the Executive to determine the size of any
annual award shall take place in the first calendar quarter of 2005. At this review, the Board
will consider the performance of Executive for the calendar year 2004.

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     8. Termination Payments.

     (a) For Cause by the Company or Without Good Reason by Executive. The Company may
terminate Executive’s employment hereunder for Cause (as defined below) and Executive may terminate
his employment hereunder without Good Reason (as defined below). In the event of such termination,
Executive’s compensation and benefits hereunder shall cease as of the effective date of termination
and the Company shall pay Executive all amounts accrued but unpaid under this Agreement as of the
date of such termination. The Company shall not thereafter be obligated to make any further
payments to Executive. In addition, in the event of such termination, during the first ninety (90)
days after the Effective Date, (i) the Company shall have the right, exercisable in the sole
discretion of the Board, to repurchase the Executive Shares for a purchase price equal to the
lesser of $1.65 (adjusted for stock splits, recapitalizations, or other similar event) and the
then-current fair market value per share and (ii) the Executive Warrants and the Executive Options
shall automatically terminate and be of no further force or effect.

     (b) Upon Non-Renewal by Executive. If Executive’s exercises his right not to renew
this Agreement:

          (1) the Company shall pay Executive all amounts accrued but unpaid under this Agreement as of
the effective date of such termination;

          (2) the Executive Warrant and the Executive Options shall remain outstanding in accordance
with their terms; except that the Executive Warrant and the Executive Options shall be exercisable
by the Executive, Executive’s estate or by the Executive’s beneficiaries for a period of two (2)
years following termination pursuant to this Section 8(b); and

          (3) any options or other convertible securities issued to Executive before the Effective Date
(other than the Executive Warrant and the Executive Options) shall remain outstanding subject to
their terms; except that all equity awards (including without limitation, Restricted Shares and
Annual Awards) shall be exercisable by the Executive, Executive’s estate or by the Executive’s
beneficiaries for a period of at least six (6) months following termination pursuant to this
Section 8(b).

     (c) Without Cause by the Company, for Good Reason by Executive or Upon Non-Renewal by
Company. The Company may terminate Executive’s employment hereunder without Cause or exercise
its right not to renew this Agreement and Executive may terminate his employment hereunder for Good
Reason. If Executive’s employment is terminated by the Company without Cause (and other than due
to his death or Disability), the Company exercises its right not to renew this Agreement or if
Executive terminates his employment for Good Reason:

          (1) the Company shall pay Executive all amounts accrued but unpaid under this Agreement as of
the effective date of such termination;

          (2) provided that Executive executes a release in form and substance reasonably satisfactory
to the Board (the “Release”), and as long as Executive is in compliance with the provisions of
Sections 9, 10 and 11, Executive shall continue to receive the Base Salary for a period commencing
on the effective date of termination and ending on the first anniversary thereof (the “Severance
Period”); provided, however, that all amounts payable under this Section 8(c)(2)

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shall be subject to reduction by all amounts paid to Executive by another person or entity for
employment or consulting services provided by Executive during the Severance Period, subject to
Section 10(a);

          (3) provided that Executive executes the Release, and as long as Executive is in compliance
with the provisions of Sections 9, 10 and 11, the Company shall reimburse Executive for his cost of
purchasing medical benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, during the Severance Period until such time as Executive is eligible to receive medical
benefits from another person or entity comparable to those provided by Company immediately prior to
his termination;

          (4) the Executive Shares shall not be subject to repurchase and the Executive Warrant and the
Executive Options shall remain outstanding in accordance with their terms;

          (5) any options or other convertible securities issued to Executive on or after the Effective
Date shall continue to vest in accordance with their vesting schedules, but only during the
Severance Period, and any such unvested options or other convertible securities remaining at the
termination of the Severance Period shall be forfeited; and

          (6) any options or other convertible securities issued to Executive before the Effective Date
shall remain outstanding subject to their terms; except that all equity awards (including without
limitation, Restricted Shares and Annual Awards) shall be exercisable by the Executive, Executive’s
estate or by the Executive’s beneficiaries for a period of at least one (1) year following
termination pursuant to this Section 8(c).

     (d) Death. Executive’s employment hereunder shall automatically terminate in the
event of Executive’s death. If Executive’s employment is terminated due to Executive’s death, the
Company shall pay to Executive’s estate or legal representative all amounts accrued but unpaid
under this Agreement as of the effective date of Executive’s termination and thereafter shall not
have any further obligation or liability under this Agreement. In addition, the Executive Shares
shall not be subject to repurchase and the Executive Warrant, the Executive Options and all other
options and other convertible securities shall remain outstanding subject to their terms, except
that all equity awards (including without limitation, Restricted Shares and Annual Awards) shall be
exercisable by the executors or administrators of the Executive’s estate or by the Executive’s
beneficiaries for a period of at least three (3) years following termination pursuant to this
Section 8(d).

     (e) Disability. If Executive is incapacitated by accident, sickness or otherwise so
as to render him, for any period totaling 60 or more days during any consecutive twelve-month
period, or in the reasonable opinion of the Board, is mentally or physically incapable of
performing the services required of him under this Agreement, the Company may terminate his
employment immediately following such 60-day period by giving him written notice specifying the
effective date of termination. In the event of such termination:

          (1) the Company shall pay to Executive all amounts accrued but unpaid under this Agreement as
of the last day of Executive’s employment with the Company and thereafter shall not have any
further obligation or liability under this Agreement;

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          (2) prior to such termination under this Section 8(e), Executive shall continue to receive his
compensation under Section 4, provided such compensation shall be subject to reduction by any
disability insurance payments received by Executive for which the Company makes premium payments;
and

          (3) the Executive Shares shall not be subject to repurchase and the Executive Warrant, the
Executive Options and all other options and convertible securities shall remain outstanding subject
to their terms; except that all equity awards (including without limitation, Restricted Shares and
Annual Awards) shall be exercisable by the Executive, Executive’s estate or by the Executive’s
beneficiaries for a period of at least three (3) years following termination pursuant to this
Section 8(e).

     (f) Certain Definitions.

          (1) As used herein, “Cause” shall mean (i) Executive’s commission of fraud in connection with
Executive’s employment or intentional theft, misappropriation or embezzlement of the Company’s
funds; (ii) Executive’s 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) Executive’s material breach of his obligations under this Agreement, which
breach has not been cured as set forth below; (iv) Executive’s willful violation of any express
direction or requirement established by the Board in good faith and which violation has not been
cured as set forth below; (v) Executive’s incompetence or misconduct in the performance of, or
neglect of, Executive’s duties hereunder which is materially detrimental to the Company and has not
been cured as set forth below; (vi) Executive’s material violation of policies of the Company which
adversely affects the Company and has not been cured as set forth below; (vii) Executive’s use of
alcohol or other drugs which interfere with the performance of Executive’s duties, or the
conviction of or Executive’s entering of a guilty plea or plea of no contest with respect to the
use of any illegal drugs or narcotics; or (viii) any other conduct by Executive that would
adversely affect the Company or its reputation and has not been cured as set forth below.

          All determinations of “Cause” shall be made by a majority of the Board provided, that,
Executive shall abstain from any such determination and Executive’s presence at a meeting in
respect thereof shall not count toward the quorum at such meeting. If the Company elects to
terminate Executive’s employment for Cause pursuant to clauses (iii), (iv), (v), (vi) and (viii) of
the definition of “Cause” and the action or inaction prompting such termination is capable of cure,
the Company shall first give Executive written notice thereof, including a description of the
evidence upon which the Board has relied to support such finding and, a period of forty five (45)
days (the “Cause Notice Period”) from the date of such notice to cure the action or inaction giving
rise to the written notice. If such action or inaction is not cured by Executive by the end of the
Cause Notice Period, as determined by the majority of the Board (Executive shall abstain from any
such determination and Executive’s presence at a meeting in respect thereof shall not count toward
the quorum at such meeting) and communicated to the Executive in writing, such termination shall be
effective upon the first day after the expiration of the Cause Notice Period.

          (2) As used herein, “Good Reason” shall mean (i) any action by the Company which results in a
substantial diminution in Executive’s position, authority, duties or responsibilities (including
status, offices, titles and reporting requirements and Executive’s status as

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chairman of the Board during the one-year period commencing on the Effective Date)
contemplated by this Agreement, or (ii) material breach by the Company of its obligations under
this Agreement or (iii) the Company’s requiring the Executive to be based at any office or location
other than the Company’s offices in Philadelphia, Pennsylvania or within a radius of forty five
(45) miles of Philadelphia, Pennsylvania, except for travel reasonably required in connection with
the performance of the Executive’s responsibilities hereunder, unless the Company reimburses the
Executive for all reasonable out of pocket costs incurred by the Executive in connection with such
relocation, including reimbursement of any federal, state or local income or payroll taxes incurred
by the Executive with respect to payments made by the Executive or on the Executive’s behalf so
that the Executive shall be made whole on an after-tax basis. If Executive elects to terminate his
employment for Good Reason pursuant to clause (ii) of the definition of “Good Reason,” Executive
shall first give the Board written notice thereof, including all evidence on which Executive has
made such a finding and a period of forty five (45) 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 the Executive in writing, such
termination shall be effective upon the first day after the expiration of the Good Reason Notice
Period.

          (3) Notice of Termination. Notice with respect to any purported termination of
employment pursuant to clauses (iii), (iv), (v), (vi) and (viii) of the definition of “Cause” where
the action or inaction prompting such termination is capable of cure shall be provided in
accordance with the procedures set forth in such definition. Notice with respect to any purported
termination of employment pursuant to clause (ii) of the definition of “Good Reason” shall be
provided in accordance with the procedures set forth in such definition. Notice of a termination
of employment pursuant to Section 8(d) shall not be required to be given; however, the Company
shall promptly provide to the estate or beneficiaries of the Executive a summary of all
compensation, equity awards, benefits and other assets related to the Company to which the estate
or beneficiaries of the Executive shall be entitled and any vesting and other restrictions thereon
pursuant to this Agreement and otherwise. Any other purported termination of employment shall be
communicated by a written Notice of Termination. A “Notice of Termination” shall mean a notice
that shall indicate the specific termination provision in this Agreement relied upon, shall set
forth in reasonable detail the basis for termination of employment under the provisions so
indicated and shall indicate the effective date of termination.

9. Inventions and Ideas.

     (a) Disclosure. Executive shall promptly and fully disclose to the Company, with all
necessary detail, all developments, know-how, discoveries, inventions, improvements, concepts,
ideas, formulae, processes and methods (whether copyrightable, patentable or otherwise) made,
received, conceived, acquired or written by Executive (whether or not at the request or upon the
suggestion of the Company), solely or jointly with others, during the period of Executive’s
employment by the Company that (i) applies to the historical or current fields of business or
technology of the Company or any anticipated fields of business or technology of the Company or
(ii) are otherwise made through the material use of the Company’s time, facilities or materials
(the foregoing being hereinafter referred to collectively as the “Inventions”);

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     (b) Assignment and Transfer. Executive agrees to assign and transfer to the Company
all of Executive’s rights, titles and interests in and to each of the Inventions, and Executive
further agrees, at any time or from time to time promptly upon the request of the Company or its
successors or assigns, to do, execute, acknowledge and deliver, or that he will cause to be done,
executed, acknowledged and delivered, to the Company or its successors or assigns, as the case may
be, all such further acts, transfers, assignments, deeds, powers and assurances of title, and
additional papers and instruments, and will do or cause to be done all acts or things as often as
may be proper or necessary or advisable for better assuring, conveying, transferring and assigning
the Inventions, and effectively to carry out the intent hereof, and to vest in the Company the
entire right, title and interest of Executive in and to all of the Inventions, including
applications for and assignments of patents and copyrights, and all renewals thereof, as may be
necessary to obtain patents and copyrights in any and all countries, and Executive will warrant the
same to the Company and its successors and assigns and will cooperate in the defense of any claims
or demands.

     (c) Power of Attorney. If the Company is unable, after reasonable effort, to secure
Executive’s signature on any application for patent, copyright, trademark or other analogous
registration or other documents regarding any legal protection relating to an Invention, whether
because of Executive’s physical or mental incapacity or for any other reason whatsoever, Executive
hereby irrevocably designates and appoints the Company and its duly authorized officers and agents
as his agent and attorney-in-fact, to act for and in Executive’s behalf and stead to execute and
file any such application or applications or other documents and to do all other lawfully permitted
acts to further the prosecution and issuance of patent, copyright or trademark registrations or any
other legal protection thereon with respect to an Invention with the same legal force and effect as
if executed by Executive.

10. Noncompetition; Nonsolicitation.

     (a) During the Employment Period and until the earlier of (i) the one year anniversary from
the Employment Period (ii) the complete cessation of the Company’s business which business is not
being continued by an assignee, successor or affiliate of the Company or (iii) the Involuntary
Bankruptcy of the Company which results in the dissolution or cessation of business by the Company,
Executive shall not: (1) engage or participate directly or indirectly in any business which is, or
as a result of Executive’s 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 employing RNA interference
technology for the treatment of ophthalmic disorders; (2) be or 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; or (3) seek in
competition with the business of the Company to procure orders from or do business with any
customer of the Company in connection with a Competing Business. Notwithstanding the foregoing,
(A) Executive may own publicly traded debt or equity securities of other entities as a passive
investors, as long as Executive does not own more than 1% of the outstanding amount of such
securities and (B) upon Executive’s request, the Board in its sole discretion may elect to waive
compliance by Executive with any of the provisions contained in this Section 10(a). As used herein
“Involuntary Bankruptcy” shall mean the voluntary or involuntary bankruptcy (unless dismissed
within ninety (90) days), or the institution of any proceeding by or against the Company seeking to

8

 

adjudicate the Company bankrupt or insolvent or seeking (unless dismissed within ninety (90)
days), protection or relief of the Company or its debts under any law relating to bankruptcy,
insolvency or relief of debtors.

     (b) During the Employment Term and for a period of one year thereafter, Executive shall not:
(i) solicit, or contact with a view to the engagement or employment by any person or entity of any
person who is, or was within the six-month period preceding the termination of Executive’s
employment hereunder, an employee of the Company; (ii) seek to contract with or engage (in such a
way as to adversely affect or interfere with the business of the Company) any person or entity who
has been contracted with or engaged to manufacture, assemble, supply or deliver products, goods,
materials or services to the Company; or (iii) engage in or participate in any effort or act to
induce any of the customers, associates, consultants, or employees of the Company to take any
action which might be disadvantageous to the Company.

     11. Confidentiality. Executive acknowledges a duty of confidentiality owed to the
Company and Executive agrees not to, at any time during or after the Employment Period, retain in
writing, use, divulge, furnish, or make accessible to anyone, without the express authorization of
the Board, any trade secret, development plans, customer information, processes, product
information and any other private or confidential information or knowledge of the Company, obtained
or acquired by Executive while providing services to or while employed by the Company. Executive
acknowledges that all development plans, computer software, business cards, telephone lists,
customer lists, price lists, contract forms, catalogs, Company books, records, and files and
know-how acquired while providing services to or while employed by the Company are the property of
the Company and shall not be duplicated, removed from the Company’s possession or premises or made
use of other than in pursuit of the Company’s business or as may otherwise be required by law or
any legal process, and, upon termination of employment for any reason, Executive shall deliver to
the Company, without further demand, all copies thereof which are then in Executive’s possession or
under Executive’s control.

     12. Injunctive Relief. Executive acknowledges that his compliance with the agreements
in Sections 9, 10 and 11 hereof is necessary to protect the good will and other proprietary
interests of the Company and that Executive has been and will be entrusted with highly confidential
information regarding the Company and its technology and is conversant with the Company’s affairs,
its trade secrets and other proprietary information. Executive acknowledges that a breach of any
of his agreements in Sections 9, 10 and 11 hereof will result in irreparable and continuing damage
to the Company for which there will be no adequate remedy at law; and Executive agrees that, in the
event of any breach of the aforesaid agreements, the Company and its successors and assigns shall
be entitled to injunctive relief and to such other and further relief as may be proper.

     13. Survival. It is expressly understood and agreed that all covenants and agreements
set forth in Sections 8, 9, 10, 11, 12, 13 and 14 shall survive any expiration or termination of
this Agreement.

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     14. Miscellaneous.

     (a) Assignment. Executive shall not assign his obligations hereunder to any other
person or entity, and any assignment by Executive in violation of the terms hereof shall be null
and void. Subject to the foregoing, the rights and obligations of the parties under this Agreement
shall inure to the benefit of, and shall be binding upon, the parties’ respective successors and
assigns.

     (b) Notices. All notices, requests, consents and other communications required or
permitted hereunder to any party shall be deemed to be sufficient if contained in a written
instrument delivered in person or duly sent by certified mail, postage prepaid; by an overnight
delivery service, charges prepaid; or by confirmed by telecopy; addressed to such party at the
address set forth below or such other address as may hereafter be designated in writing by the
addressee to the addressor:

if to the Company, to:

Acuity Pharmaceuticals, Inc.

3701 Market Street

Philadelphia, PA 19104

Attention: Chairman of the Compensation Committee

and Secretary of the Company

with a copy to:

Pepper Hamilton LLP

3000 Two Logan Square

Philadelphia, PA 19103

Attention: Ilan Katz, Esq.

if to Executive, to:

Dale Pfost

1525 Bardsey Dr.

Ambler, PA 19002

with a copy to:

Stark & Stark, P.C.

993 Lenox Drive

Lawrenceville, NJ 08648

Attention: Rachel Lilienthal Stark, Esq.

     (c) Entire Agreement. This Agreement, together with the Termination Agreement and the
Restricted Stock Agreement, contains the entire agreement between the Company and Executive with
respect to the subject matter hereof and shall supersede any and all prior agreements, and there
have been no oral or other agreements of any kind whatsoever as a condition precedent or inducement
to the signing of this Agreement or otherwise concerning this Agreement or the subject matter
hereof.

10

 

     (d) Waivers and Further Agreements. Any waiver of any term or condition of this
Agreement shall not operate as a waiver of any other breach of such term or condition or any other
term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of
such provision or of any other provision hereof; provided, however, that no such written waiver,
unless it, by its own terms, explicitly provides to the contrary, shall be construed to effect a
continuing waiver of the provision being waived and no such waiver in any instance shall constitute
a waiver in any other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to require full
compliance with such provision.

     (e) Amendments. Any amendment to this Agreement shall be in writing and signed by
both parties hereto.

     (f) Severability. If any provision of this Agreement shall be held or deemed to be,
or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any
jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of
any provision with any constitution or statute or rule of public policy or for any other reason,
such circumstance shall not have the effect of rendering the provision or provisions in question
invalid, inoperative or unenforceable in any other jurisdiction or in any other case or
circumstance or of rendering any other provision or provisions herein contained invalid,
inoperative or unenforceable to the extent that such other provisions are not themselves actually
in conflict with such constitution, statute or rule of public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such invalid, inoperative or
unenforceable provision had never been contained herein and such provision reformed so that it
would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or
in such case.

     (g) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute one and the same
instrument, and in pleading or proving any provision of this Agreement, it shall not be necessary
to produce more than one of such counterparts.

     (h) Section Headings. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

     (i) Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the law (other than the law governing conflict of law questions) of the
Commonwealth of Pennsylvania.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	ACUITY PHARMACEUTICALS, INC.

 	 
	 	By:  	David A. Eichler
 	 
	 	 	Title: Director & Member of Compensation Committee 	 
	 	 	 	 
	 

	 	 	 	 	 
	 	EXECUTIVE:

 	 
	 
	 	/s/
Dale R. Pfost 	 
	 	
Dale R. Pfost 	 

12

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