SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

This Second Amendment to the Employment Agreement (this “Amendment”) is effective as of December 9, 2015, by and between Ted Danse (the “Executive”) and Acucela Inc. (the “Company”).

A.    Executive and the Company are parties to that certain Employment Agreement dated as of May 1, 2015 as amended by that certain Amendment to Employment Agreement dated as of July 13, 2015 (collectively the “Employment Agreement”), pursuant to which the Company agreed to employ Executive, and Executive agreed to be employed by the Company, as the Company’s Chief Business Officer, subject to the terms and conditions of the Employment Agreement.

B.    Executive and the Company wish to amend and clarify the Employment Agreement as provided herein.

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

1.Amendments Concerning Determination of Incentive Bonus. Section 4(c) is hereby amended and restated in its entirety as follows:

2.Amendments Concerning Stock Options/Equity Awards to be Granted. Section 4(g) is hereby amended and restated in its entirety as follows:

(g)    Stock Options/Equity Awards. Subject to Board approval and any required shareholder approval (which Company shall use its best efforts to obtain, if needed), the Company will provide Executive restricted stock grants (“Restricted Stock”) and stock options (“Stock Options”) as set forth in separate agreements pursuant to the Company’s 2014 Equity Incentive Plan, as amended (the “2014 Plan”). The exercise price of the Stock Options and the grant value of the Restricted Stock will be the current fair market value of the Company’s common stock as determined by the Board consistent with the requirements of IRC Sec. 409A and other applicable statutes and the aggregate number of shares subject to the Stock Options and Restricted Stock shall be equal to one percent (1%) of the Company’s outstanding shares of common stock on the Effective Date on a fully diluted basis. The Stock Options will be subject to a four year vesting period, with twenty-five percent (25%) of the Stock Options vesting one-year after the Effective Date, and the remaining seventy-five percent (75%) of the Stock Options vesting thereafter on a monthly pro rata basis over the following three (3) years with the Stock Options becoming completely vested four (4) years from the Effective Date; provided that upon the occurrence of a Change in Control, a termination of the Executive’s employment by the Company without Cause, or a termination of employment by the Executive with Good Reason (“Acceleration Triggers”), the number of Stock Options subject to vesting through the nine (9) month period following the date of termination of employment (the “Termination Date”) shall become vested as of the Termination Date, or in the case of a Change in Control, upon the closing date of the transaction that results in a Change in Control, while all remaining unvested Stock Options shall be forfeited. Executive shall have nine (9) months following the Termination Date to exercise all vested Stock Options. All unvested Stock Options also shall be forfeited upon a termination of employment by the Company for Cause or a termination by Executive without Good Reason. The Restricted Stock shall be subject to repurchase by the Company over a four (4) year period, with 100% of the Restricted Stock subject to repurchase during the first year from the Effective Date and 75% of the Restricted Stock subject to repurchase thereafter on a monthly pro rata basis over the following three (3) years with the repurchase capability terminating four (4) years from the Effective Date; provided that upon the occurrence of an Acceleration Trigger, the number of shares of Restricted Stock that would become fully owned by the Executive (and no longer subject to the Company’s repurchase option) through the nine (9) month period following the Termination Date shall become fully owned as of the Termination Date, or in case of a Change in Control, upon the closing date of the transaction that results in a Change in Control, while all remaining shares of Restricted Stock subject to the Company’s repurchase option shall be repurchased by the Company. All shares of Restricted Stock subject to repurchase by the Company also shall be repurchased by the Company upon a termination of

employment by the Company for Cause or a termination by Executive without Good Reason. Notwithstanding the foregoing, if the Acceleration Trigger is a Change in Control and the Executive’s employment with the Company’s successor is terminated within twelve (12) months of the Change in Control either by: (a) the Company’s successor without Cause, or (b) the Employee with Good Reason, then 100% of all remaining unvested Stock Options shall become immediately vested as of the Termination Date and 100% of all Restricted Stock shall become fully owned and no longer subject to Company repurchase as of the Termination Date.

3.Amendments Concerning Termination Provisions. Section 5(a) is hereby amended and restated in its entirety as follows:

(a)Termination by Company for Cause; Voluntary Termination. In the event Executive’s employment with the Company is terminated for “Cause” (as defined herein) by the Company or voluntarily by Executive (i) the Company shall pay Executive any unpaid base salary due for periods prior to the Termination Date; (ii) the Company shall pay Executive all of Executive’s accrued and unused vacation through the Termination Date; and (iii) following submission of proper expense reports by Executive, the Company shall reimburse Executive for all expenses reasonably and necessarily incurred by Executive in connection with the business of the Company prior to termination. These payments shall be made promptly upon termination and within the period of time mandated by applicable law. 

4.Current Section 5(b) (iii) shall be deleted in full and replaced in its entirely as follows:

(iii)    Receive an incentive bonus (less applicable tax withholding) described in Section 4(c) above, in an amount equal to 65% of nine (9) months of Executive’s annual base salary in effect on the Termination Date. Such bonus to be paid to Executive according to the provisions of Section 4(c).

5.The following is added as a new Section 5(b)(iv) of the Agreement:

(iv)    Any Restricted Stock subject to repurchase through the nine (9) month period following the Termination Date shall no longer be subject to repurchase as of the Termination Date, while all remaining Restricted Stock shall be fully owned and no longer subject to repurchase. Any unvested portion of Options shall immediately vest and become exercisable as to that number of shares that would have vested had Executive remained a full time employee with the Company through the nine (9) month period following the Termination Date and, the terms of the 2014 Plan notwithstanding, Executive shall have nine months following the Termination Date during which to exercise such vested Options.

6.Amendments Concerning Non-Renewal of Agreement. The following is added as a new Section 5(g):

(g)    Agreement Non-Renewal. Any non-renewal of this Agreement by the Company pursuant to Section 3 shall constitute a termination of Executive’s employment by Company without Cause.

7.Amendment Concerning Change in Control. Section 11(b) is hereby amended to add a further additional sentence at the end of the Section as follows:

Notwithstanding the foregoing, the transaction will not be deemed a Change in Control if the Company enters into: (i) any acquisition or merger with an entity owned, directly or indirectly, by stockholders of the Company in substantially the same proportion as their ownership of the Company, or (ii) a transaction whose primary purpose is the reincorporation of the Company in another jurisdiction, either within or outside the United States.

8.Amendment Concerning Good Reason. Section 11(d) is hereby amended and restated to read in its entirety as follows:

(d)    Good Reason. For purposes of this Agreement, “Good Reason” is defined as the occurrence of any of the following: (i) The Company’s request for the Executive to relocate to a Company location outside of King, Pierce, or Snohomish counties in the State of Washington; (ii) A material breach of this Agreement by the Company; (iii) Executive has a material reduction in position, status, duties or responsibilities, or is assigned duties materially inconsistent with his or her position and/or, (iv) Executive’s base salary is reduced. If the Executive wishes to terminate his or her employment for Good Reason, he must first give Company written notice of the circumstances constituting Good Reason within forty‑five (45) days after the occurrence of such Good Reason event, the Employer must have at least thirty (30) days’ opportunity to cure unless the circumstances are not subject to being cured, and Executive must terminate his employment no later than sixty (60) days after the expiration of the cure period. The definition of Good Reason in this Section 11 supersedes the definition provided in Section 26.20 of the 2014 Plan.

9.Amendment to Entire Agreement Provision. Section 14(b) is hereby amended and restated to read in its entirety as follows:

(b)    Entire Agreement. This Agreement, the related Notice of Restricted Stock Unit Award and Restricted Stock Unit Agreement, and the Company’s Intellectual Property Agreement with Executive dated the Effective Date (the “Intellectual Property Agreement”), shall supersede and replace all prior agreements or understandings relating to the subject matter hereof, and no agreement, representations or understandings (whether oral or written or whether express or implied) which are not expressly set forth in this Agreement have been made or entered into by either party with respect to the relevant matter hereof. In the event of any

conflict between this Agreement and any of the 2014 Plan, the Notice of Restricted Stock Unit Award, Restricted Stock Unit Agreement or Intellectual Property Agreement, the terms of this Agreement shall prevail, including, without limitation, that the following sections of the 2014 Plan existing as of the date of this Amendment shall not be applicable to Executive: (i) the final six sentences of Section 20.1 regarding consequences of a “Qualifying Termination” and “Acceleration”, and (ii) Section 26.20, definition of “Good Reason”.

10.Extended Term. Regardless of the Effective Date, the Company acknowledges and agrees that the first Extended Term of Executive’s Agreement will continue from the date of execution of this Amendment until December 31, 2016. Thereafter, the Agreement will be subject to automatic renewal for successive one-year periods according to the terms of Section 3 of the Agreement.

11.No Other Amendments. Except as specifically amended hereby, the terms of the Employment Agreement remain and continue in full force and effect and are hereby confirmed in all respects.

12.Counterparts. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

IN WITNESS WHEREOF, each of the parties has executed this Amendment, in the case of the Company by its duly authorized officer.

Ted Danse