Executive Employment Agreement

Exhibit 10.7

Executive Employment Agreement

     This Executive Employment Agreement (“Agreement”) is entered into as of February 26, 2003 (the “Effective Date”), by and between Prestwick Pharmaceuticals, Inc., a Delaware corporation (the “Company”) and Kathleen Clarence-Smith, M.D., Ph.D. (the “Executive”).

     Whereas, the Company desires to employ the Executive pursuant this Employment Agreement as of the Employment Date, defined below, and the Executive desires such employment with the Company on the terms and conditions set forth below.

     Now Therefore, in consideration of the foregoing recital and the respective covenants and agreements of the parties contained in this document, the Company and the Executive agree as follows:

     1. Employment and Duties. During the Employment Period (as defined in paragraph 2 below), the Executive shall serve as President of the Company until the Company hires a new Chief Executive Officer or President, which the Executive acknowledges is the intention of the Company, at which time the Executive shall become the Chief Scientific Officer of the Company (in charge of research and development). The duties, authority and responsibilities of the Executive shall be commensurate with the duties, authority and responsibilities customarily accorded an executive officer with such titles and shall include such duties and responsibilities as may from time to time be reasonably assigned to the Executive by the Board of Directors (the “Board”) and the Chief Executive Officer or President of the Company, as applicable. The Executive, to the best of her ability, shall perform faithfully and competently such services and duties as are customarily incident to such employment.

     2. Employment Period.

          (a) Basic Rule. The term of this Agreement shall begin on January 1, 2003 (“Employment Date”), and shall continue thereafter until the date when Executive’s employment terminates pursuant to Section 2(b) below (the “Employment Period”). Executive’s employment relationship is at-will; accordingly Executive may terminate her employment with or without Good Reason, and the Company may terminate her employment with or without Cause (all as provided in Section 2(b) below).

          (b) Termination. Subject to the provisions of Section 10 below:

               (i) Without Cause. The Employment Period shall be terminated immediately if the Company terminates Executive’s employment without Cause (as defined in Section 2(b)(iii) below) or if Executive resigns her employment without Good Reason (as defined in Section 2(b)(iv) below).

               (ii) Death or Disability. The Employment Period shall be terminated immediately upon the Executive’s death or at such time as a physical or mental disability, the existence of which is confirmed by a licensed health provider, causes Executive to be unable to perform the essential duties of her position hereunder with or without reasonable accommodation for a period of six (6) consecutive months.

1.

               (iii) Cause. The Employment Period shall be terminated immediately (except as otherwise provided below) if the Company terminates Executive’s employment for Cause and delivers to Executive a written Notice specifying with particularity the facts and circumstances constituting Cause for termination of her employment. “Cause” is defined for purposes of this Agreement as any of the following: (A) a material breach by the Executive of this Agreement or any agreement entered into between the Executive and the Company that materially impairs the Company’s interests therein in such a manner as to cause material loss, damage or injury to the Company; (B) gross negligence, serious misconduct or material failure by Executive in connection with the discharge of the duties of her position in such a manner as to cause material loss, damage or injury to the Company; (C) Executive’s engagement in any activity that constitutes a material conflict of interest with the Company; or (D) Executive’s conviction of, a guilty plea with respect to, or a plea of nolo contendere to, a charge that Executive has committed a felony under the laws of the United States or of any state or a crime involving moral turpitude, including, but not limited to, fraud, theft, embezzlement or any crime that results in or is intended to result in personal enrichment at the expense of the Company. With regard to for “Cause” termination pursuant to subsection (C), above, the Employment Period may be terminated by the Company for Cause, no earlier than thirty (30) days after providing Executive a written Notice specifying with particularity the facts and circumstances constituting Cause for termination of her employment unless Executive, during such thirty (30) day period, remedies the breach or violation specified in the notice to the reasonable, good faith satisfaction of the Board.

               (iv) Good Reason. The Employment Period may be terminated by Executive for Good Reason, no earlier than thirty (30) days after providing the Company a written Notice specifying with particularity the facts and circumstances constituting Good Reason for termination of her employment, unless the Company, during such thirty (30) day period, remedies the breach or violation specified in the notice to the reasonable, good faith satisfaction of Executive. “Good Reason” is defined for purposes of this Agreement as any of the following: (A) a material breach of this Agreement by the Company; (B) a material diminution in the duties or responsibilities of Executive as contemplated by Section 1 above without her written consent; provided, however, that no diminution of duties or responsibilities shall be deemed to occur solely because the Company becomes a subsidiary, division or unit of another corporation or entity as long as Executive’s position, authorities, duties and/or responsibilities within that subsidiary, division or unit remain materially unchanged, or because there has been a change in the reporting hierarchy incident thereto involving Executive; (C) the involuntary relocation of Executive’s place of employment outside of a 60 mile radius from the Company’s offices in the Washington, D.C. area; or (D) a reduction in Executive’s base salary without her written consent (other than a reduction in base salary that also is applicable to other executive’s of the Company).

     3. Base Salary. For services rendered by the Executive pursuant to this Agreement, including services as a member of the Board, Executive shall be entitled to receive a base salary (“Base Salary”) at an annual rate of $262,500, as of the Employment Date. Executive’s Base Salary shall be reviewed no less than annually by the Board and may be increased, but in no event shall decrease without Executive’s consent, during the Employment Period; provided, however, that Executive’s Base Salary may be reduced in the event the base salary of the other executive’s of the Company incur a similar reduction. Executive’s Base Salary, less applicable

2.

deductions, shall be paid in periodic installments in accordance with the Company’s regular payroll practices (which as of the date hereof is bi-monthly).

     4. Stock Option. On January 13, 2003, the Company granted Executive under the Prestwick Pharmaceuticals, Inc. 2003 Equity Incentive Plan (“the Plan”) a non-qualified stock option to purchase One Million Two Hundred Fifty Thousand (1,250,000) shares of the Company’s common stock at an exercise price equal to $0.037 per share (the “Option”). The Option is subject to the terms and conditions of the Plan and Executive’s grant agreement, which will include a three-year vesting schedule under which, during Executive’s continuous service to the Company (as defined in the Plan), twenty-five percent (25%) of the Option shares will vest on the one-year anniversary of the Employment Date and the remaining Option shares will vest in equal monthly installments over the subsequent two (2) years; provided, however, that the vesting for the Option shall be accelerated as follows: in the event (a) Executive terminates her employment for Good Reason or the Company (or a successor following a Change in Control (as defined in the Plan) occurring on or before January 13, 2005) terminates the Executive without Cause (so long as Executive executes a general release in favor of the Company on or before the effective date of termination), or (b) there occurs a Change of Control (as defined in the Plan) after January 13, 2005, then the entire unvested portion of the Option will immediately accelerate and be fully vested. Executive acknowledges that except as provided in Sections 4 and 5 of this Agreement, there are no further commitments on behalf of the Company to grant to Executive any additional option grants. The Board may consider granting additional stock options to Executive at its sole discretion.

     5. Bonus. In addition to the Base Salary and the Option set forth above, in the event that Executive meets certain milestones set forth on Exhibit A to this Agreement (as determined by the Company), Executive shall be granted stock options to purchase up to One Million Two Hundred Fifty Thousand (1,250,000) shares of Common Stock (as set forth on Exhibit A), which options shall be fully vested and immediately exercisable on the date of grant and shall have an exercise price equal to $0.037 per share. In addition, the Board may, in its sole discretion, grant Executive a cash bonus at any time (“Bonus”).

     6. Indemnification. As an employee, officer and agent of the Company, Executive shall be indemnified by the Company to the fullest extent permitted by Delaware law. To implement this provision, the Company shall procure directors and officers liability insurance as soon as practicable after the Effective Date of this Agreement and shall name Executive as an insured under its policy.

     7. Expenses. The Executive, in the performance of her duties and responsibilities under this Agreement, shall be entitled to reimbursement by the Company for all reasonable, ordinary and necessary travel, entertainment, and other expenses, incurred by the Executive during the Employment Period in accordance with the policies and procedures established by the Company for its senior executive officers; provided, however, that Executive shall properly account for such expenses in accordance with the Company’s policies and procedures, and shall timely submit accurate and complete reports of such expenses.

     8. Other Benefits. During the Employment Period, the Executive shall be entitled to participate in and have the benefits of all present and future vacation, holiday, paid leave,

3.

unpaid leave, life, accident, disability, dental, vision and health plans, pension, profit-sharing and savings plans and all other plans and benefits which the Company now or in the future from time to time makes available to employees.

     9. Vacations and Holidays. Executive shall be entitled to accrue such annual vacation time with full pay as the Company may provide in its standard policies and practices for any other management executives; provided, however, that in any event Executive shall be entitled to a minimum of three (3) weeks’ annual paid vacation time.

     10. Termination Payments. Subject to the provisions of Section 2, above:

          (a) Termination by the Company With Cause or by Executive Without Good Reason. In the event that the Company terminates Executive’s employment with Cause, or Executive terminates her employment without Good Reason, the Company shall pay Executive, no later than the effective date of termination, a lump sum equal to her accrued and unpaid Base Salary through the data of termination and all accrued but unused vacation pay.

          (b) Termination by the Company Without Cause or by Executive With Good Reason. In the event that the Company terminates Executive’s employment without Cause, or Executive terminates her employment with Good Reason, then, subject to Executive’s continued compliance with the terms of the Company’s Proprietary Information, Inventions, Non-Solicitation and Non-Competition Agreement, Executive shall receive the following as her sole severance benefits (collectively, the “Severance Benefits”): (i) Executive will continue to receive payments of her base salary at the same rate in effect as of the termination effective date, paid on the Company’s standard payroll dates (or in lump sum, at the Company’s discretion) for the first six months of the Severance Period (as defined below), subject to standard payroll deductions and withholdings; (ii) Executive will receive a lump sum payment equal to fifty-percent (50%) of her annual base salary in effect as of the termination effective date, paid on the last day of the Severance Period, subject to standard payroll deductions and withholdings; and (iii) if Executive timely elects to continue Executive’s Company-provided group health insurance coverage pursuant to the federal COBRA law, through the end of the Severance Period or until such time as Executive qualifies for health insurance benefits through a new employer, whichever occurs first, the Company will reimburse Executive for the cost of such COBRA premiums to continue health insurance coverage at the same level of coverage for Executive and Executive’s dependents (if applicable) in effect as of the termination date. As a condition of and prior to the receipt of all or any of the Severance Benefits, Executive shall provide the Company with a general release of known and unknown claims, in a form acceptable to the Company and the Executive. Executive shall notify the Company in writing immediately upon qualifying for health insurance benefits through a new employer. For purposes of this Agreement, the “Severance Period” is defined as twelve (12) months from the effective termination date.