**EXHIBIT10.1**

 

**Second Amended and Restated**

**Employment Agreement**

 

THIS SECONDAMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) made effective asof the second day of May 2008 (the “Effective Date”), by and betweenAdvanced Life Sciences, Inc., an Illinois corporation (the “Company”), andMichael J. Cogan (the “Executive”).

 

WHEREAS, the Company andthe Executive previously entered into an employment contract effective November 13,2007 (the “Original Employment Contract”); and

 

WHEREAS, the Company andthe Executive desire to enter into this Second Amended and Restated Agreement,effective as of the Effective Date, to amend and restate the OriginalEmployment Contract; and

 

WHEREAS, the Companydesires to employ the Executive in accordance with the terms and conditionshereinafter set forth and the Executive desires to be so employed; and

 

WHEREAS, theCompany has agreed with the Executive that this Agreement shall set forth theterms and conditions of the Executive’s employment with the Company;

 

NOW, THEREFORE, inconsideration of the mutual covenants contained herein, the Company and theExecutive agree as follows:

 

1.                                       Term.  Theemployment of the Executive by the Company pursuant to this Agreement shallbegin as of the Effective Date and shall expire on the third anniversary of theEffective Date (the “Term”), unless extended, as set forth below, or otherwiseterminated pursuant to the provisions of this Agreement; provided, however,that commencing on the third anniversary of the Effective Date and on eachanniversary thereafter, the Term of this Agreement shall automatically beextended for one additional year unless, not later than 90 days prior to suchanniversary, the Executive or the Company shall have given notice in writingthat he or it does not wish to extend this Agreement.

 

2.                                       Position and Duties. The Executive shall serve as the Vice President and Chief AccountingOfficer of the Company, and shall have such responsibilities, duties andauthority as are assigned by the Chief Executive Officer and are customarilyassociated with such position, including but not limited to, those he may haveas of the Effective Date.  The Executiveshall devote such time to the performance of his duties as is necessary tosatisfactorily perform his responsibilities and duties.

 

3.                                       Place of Performance. In connection with the Executive’s employment by the Company, theExecutive shall be based at the principal executive offices of the Companycurrently in Woodridge, Illinois, except for required travel on the Company’sbusiness.

 

4.                                       Compensation and Related Matters. During the Term of the Executive’s employment, as compensation andconsideration for the performance by the Executive of the Executive’s duties,responsibilities and covenants pursuant to this Agreement, the Company shallpay the Executive and the Executive agrees to accept in full payment for suchperformance the amounts and benefits set forth below.

 

(a)           Salary.  The Company shall pay to the Executive anannual base salary of $217,048 (“Base Salary”), payable in substantially equalinstallments no less frequently than monthly in accordance with the Company’sapplicable payroll practices.  TheCompensation Committee of the Board of Directors of the Company (the“Compensation Committee”) shall review the Base Salary annually, at a minimum,or at such other time as it deems a review necessary and may increase the BaseSalary on a prospective basis.  Any suchsalary adjustment shall then be considered Base Salary for the purposes of thisAgreement. The Executive’s Base Salary shall not be reduced after any increase,without the Executive’s consent.

 

(b)           Bonus.  The Executive shall be eligible toparticipate throughout the Term in the Company’s annual bonus plan or anysimilar or successor bonus plan (“Bonus Plan”) in accordance with the Company’scompensation practices and the terms and provisions of the Bonus Plan.  Each year, the Executive may be eligible toreceive a target performancebonus of thirty percent (30%) of Base Salary.  The amount of the Executive’s target performance bonus shall be reviewedannually and may be increased by the Compensation Committee.

 

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(c)           Stock Incentive Plan.  The Executiveshall be eligible to receive additional awards of the Company’s common stockunder the Company’s Stock Incentive Plan or under any other equity plan of theCompany as determined by the Compensation Committee in its discretion.

 

(d)           OtherBenefits and Perquisites.  During theTerm of the Executive’s employment hereunder:

 

(i)  Benefit Plans.  The Executive shall be entitled toparticipate in or receive benefits under any employee pension or welfarebenefit plan or arrangement made available by the Company at any time duringhis employment hereunder to its employees (collectively the “Benefit Plans”),including without limitation each qualified retirement plan, life insurance andaccident plan, medical, dental insurance plans, and disability plan, subject toand on a basis consistent with the terms, conditions and overall administrationof such plans and arrangements, as they may be amended from time to time.

 

(ii) Vacation.  The Executive shall be entitled to not lessthan 20****days of paid vacation in each calendaryear, in accordance with the Company’s vacation policy.

 

(iii)          ExpenseReimbursement.  The Executive shallbe entitled to receive reimbursement for all reasonable business, travel orother out-of-pocket expenses incurred by the Executive in fulfilling theExecutive’s duties and responsibilities hereunder, provided that such expensesare incurred and accounted for in accordance with the policies and proceduresestablished by the Company.

 

5.                                       Termination.

 

(a)                                  The Executive’s employment hereunder maybe terminated under the following circumstances:

 

(i)            Thedeath of the Executive;

 

(ii)           Bythe Company for “Cause”, which shall mean any of the following:, as determinedby the Board in its discretion:  (A) convictionof or plea of guilty or *nolo contendere*to any criminal violation involving dishonesty or fraud; (B) engagement inconduct that is injurious to the Company; (C) engagement in any act ofdishonesty or misconduct that results in damage to the Company or its businessor reputation or that the Board determines to adversely affect the value,reliability or performance of the Executive to the Company; (D) refusal orfailure to substantially comply with the Company’s human resources rules,policies, directions and/or restrictions relating to harassment and/ordiscrimination, or with compliance or risk management rules, policies,directions and/or restrictions; (E) unauthorized use or disclosure ofConfidential Information (as defined below) or other trade secrets of theCompany; (F) loss of any license or registration that is necessary for theExecutive to perform his duties to the Company, or commission of any act thatcould result in the legal disqualification of the Executive from being employedby the Company or any of its affiliates; (G) failure to cooperate with theCompany or any of its affiliates in any internal investigation or administrative,regulatory or judicial proceeding; or (H) continuous failure by theExecutive to perform his duties to the Company (which may include any sustainedand unexcused absence of the Executive from the performance of such duties,which absence has not been certified in writing as due to physical or mentalillness or disability), after a written demand for performance has beendelivered to the Executive identifying the manner in which the Executive hasfailed to substantially perform such duties. The application of any part of the definition of Cause set forth inclauses (A) through (H) above to the Executive shall not preclude orprevent the reliance by the Company or the Board on any other part of thedefinition that also may be applicable. In addition, the Executive’s employment shall be deemed to haveterminated for Cause if, after the Executive’s employment has terminated, factsand circumstances are discovered that would have justified a termination forCause.

 

(iii)          Bymutual agreement between the Company and the Executive; or

 

(iv)          By the Executive or the Company forany reason other than as stated in Sections 5(a)(i) through 5(a)(iii) above,upon providing a Notice of Termination (as defined in Section 5(b)).

 

(b)                                 Notice of Termination. Any termination of the Executive’s employment by the Company or by theExecutive (other than a termination pursuant to Section 5(a)(i) above)shall be communicated by written Notice of Termination to the other partyhereto in accordance with Section 10. For purposes of this Agreement, a “Notice of Termination” shall mean anotice that shall indicate the specific termination provision in this Agreementrelied upon 

 

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and shall set forth inreasonable detail the facts and circumstances claimed to provide a basis fortermination of the Executive’s employment under the provision so indicated.

 

(c)           “Dateof Termination” shall mean (i) if the Executive’s employment is terminatedpursuant to Section 5(a)(i) above, the date of his death; (ii) ifthe Executive’s employment is terminated pursuant to Section 5(a)(ii) or5(a)(iv) above, the date such Notice of Termination is given (or suchlater date as provided therein); (iii) if the Executive’s employment isterminated pursuant to Section 5(a)(iii) above, the date mutually agreedto by the parties; (iv) the date the Term of this Agreement expires, ifeither the Company or the Executive provides notice in accordance with Section 1;or (v) if the Executive terminates his employment and fails to providewritten notice to the Company of such termination, the date of suchtermination.

 

6.                                       Compensation Upon Termination.

 

(a)           Thefollowing payments shall be made upon the Executive’s termination of employmentfor any reason:  (i) earned butunpaid Base Salary through the Executive’s Date of Termination; (ii) anyaccrued but unpaid vacation; (iii) unreimbursed business expenses owedpursuant to Section 4(d)(iii); (iv) any outstanding notes payable tothe Executive along with the interest due; and (v) any amounts payableunder any of the Company’s Bonus Plan and Benefit Plans in accordance with theterms of those plans.  All amounts underclauses (i) through (v) shall be paid in a lump sum on theExecutive’s Date of Termination or as soon as administratively practicablethereafter.

 

(b)           In the event that the Executive’semployment is terminated pursuant to Sections 5(a)(i) or 5(a)(ii), or bythe Executive for any reason****pursuantto Section 5(a)(iv), above, the Company shall have no further obligationto the Executive under this Agreement, other than the payments in Section 6(a).

 

(c)           If the Executive’s employment isterminated by the parties pursuant to Section 5(a)(iii) above, theExecutive shall be entitled to receive the compensation the parties specify inany written agreement that the Company and the Executive execute regarding theExecutive’s termination.

 

(d)           In addition to the payments madeunder Section 6(a), if the Executive’s employment is terminated by theCompany without Cause pursuant to Section 5(a)(iv) above, andconditioned upon the Executive’s execution of a valid and legally enforceablerelease of claims against the Company, the Company shall, for a period oftwelve (12) months following the Date of Termination (the “SeverancePeriod”):  (i) provide to theExecutive salary continuation paid in accordance with the Company’s applicablepayroll practices, at the Executive’s Base Salary rate in effect as of the Dateof Termination and (ii) continue the Executive’s coverage under theCompany’s health medical, dental, vision, disability, and life and accidentbenefit plans, in which the Executive participated immediately prior to theDate of Termination, provided, however, that if the Company cannot continuesuch coverage, the Company shall provide or arrange to provide, at its expense,similar coverage to the Executive and if such coverage cannot be arranged, the****Company will provide a cash equivalent payment to theExecutive.** **Inaddition, no later than two and one-half (21⁄2) months following the end of theyear in which the Executive’s employment is terminated, the Company shall paythe Executive in a lump sum an amount equal to the Executive’s targetperformance bonus multiplied by a fraction, the numerator of which is thenumber of days in the calendar year in which the Executive’s employment isterminated through the Date of Termination and the denominator of which is365.  Notwithstanding the forgoing,vacation days shall not accrue during the Severance Period.

 

(e)           TheExecutive shall not be required to mitigate the amount of any payment providedfor in this Section 6 by seeking other employment or otherwise, nor shallthe amount of any payment or benefit provided for in this Section 6 bereduced by any compensation earned by the Executive as the result of employmentby another employer, by retirement benefits, by offset against any amountclaimed to be owed by the Executive to the Company, or otherwise.

 

(f)            Theobligations of the Company to make payments and provide benefits under this Section 6shall survive the termination of this Agreement.

 

7.                                       Change in Control. Upon a Change in Control (as defined below), all outstanding stockoptions and other equity awards under the Company’s Stock Incentive Plan orother similar or successor plan held by the Executive will immediately becomefully vested and exercisable.

 

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(a)                                  Payments and Benefits Upon EmploymentTermination Upon a Change in Control. If, within twenty four (24) months after a Change in Control, theExecutive’s employment is terminated by the Company other than for Cause or ifthe Executive terminates employment for Good Reason (as defined below), theCompany shall provide the following payments and benefits to the Executive, inlieu of those payments and benefits provided under Sections 6(d), but inaddition to the amounts payable under Section 6(a):

 

(i)            The Company shallpay the Executive a lump sum cash amount equal to (2) times the sum of (A) theExecutive’s annual Base Salary as in effect on the date of the Executive’stermination of employment and (B) the Executive’s target performance bonusamount as in effect for the fiscal year in which the Executive’s employment isterminated:

 

(Base Salary + Target Performance Bonus)   x  2   =   lump sum cash amount

 

(ii)           The Company shallcontinue the Executive’s coverage under the Company’s health medical, dental,vision, disability, and life and accident insurance benefit plans in which theExecutive participated immediately prior to the Executive’s termination ofemployment for a period of twenty four (24) months, provided, however, that ifthe Company cannot continue such coverage, the Company shall provide or arrangeto provide, at its expense, similar coverage to the Executive and if suchcoverage cannot be arranged, the****Company willprovide a cash equivalent payment to the Executive.

 

(b)                                 Timing of Payment.  All payments under Section 7(a)(i) shallbe made in a lump sum cash payment as soon as practicable, but in no event morethan 10 days after the Executive’s termination of employment.

 

(c)                                  Definitions.  For purposes of this Agreement, the followingterms shall have the following definitions:

 

(i)  “Change in Control” means theoccurrence of any one or more of the following:

 

(A)          any“person” (as such term is defined in Section 3(a)(9) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”) and as used inSections 13(d)(3) and 14(d)(2) of the Exchange Act), including a“group” (as defined in Section 13(d)(3) of the Exchange Act), otherthan (I) the Company, (II) any wholly-owned subsidiary of the Company,(III) any employee benefit plan (or related trust) sponsored or maintainedby the Company or any of its affiliates, or (IV) a “Permitted Holder” (asdefined below), becomes a “beneficial owner” (as defined in Rule 13d-3under the Exchange Act), directly or indirectly, of securities of the Companyhaving fifty percent (50%) or more of the combined voting power of thethen-outstanding securities of the Company that may be cast for the election ofdirectors of the Company (other than as a result of an issuance of securitiesinitiated by the Company in the ordinary course of business) (the “CompanyVoting Securities”); provided, however, that the event described in this Section 7(c)(i) shallnot be deemed to be a Change in Control by virtue of any underwritertemporarily holding securities pursuant to an offering of such securities;

 

(B)           individuals who, as of the date ofthis Agreement, constitute the Board (the “Incumbent Directors”), together withany new director(s) whose election or nomination for election by theCompany’s stockholders subsequent to the date hereof was approved by a vote ofat least two-thirds (2/3) of the directors then still in office who either wereIncumbent Directors or whose election or nomination for election was previouslyso approved, cease for any reason to constitute a majority thereof;

 

(C)           the consummation by the Company of areorganization, merger or consolidation, or sale or other disposition of all orsubstantially all of the assets of the Company (a “Business Combination”), ineach case, unless immediately following such Business Combination:  (A) holders of the securities of theCompany entitled to vote generally in the election of directors of the Companyimmediately prior to such Business Combination own or hold, in substantiallythe same proportions as their ownership immediately prior to such BusinessCombination, more than 50% of the combined voting power of then outstandingvoting securities entitled to vote generally in the election of directors of (x) theentity resulting from such Business Combination, or (y) if 

 

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applicable, the entitythat as a result of such Business Combination owns the Company or all orsubstantially all of the Company’s assets either directly or through one ormore subsidiaries; or

 

(D)          the stockholders of the Companyapprove a plan of complete liquidation or dissolution of the Company.

 

Notwithstandingthe foregoing, a Change in Control shall not be deemed to occur solely becauseany person acquires beneficial ownership of more than fifty percent (50%) ofthe Company Voting Securities as a result of the acquisition of Company VotingSecurities by the Company which reduces the number of Company Voting Securitiesoutstanding; provided, however, that if after such acquisition by the Company suchperson becomes the beneficial owner of additional Company Voting Securitiesthat increases the percentage of outstanding Company Voting Securitiesbeneficially owned by such person, a Change in Control transaction shall thenoccur.

 

Furthernotwithstanding the foregoing, unless a majority of the Incumbent Directorsdetermines otherwise, no Change in Control shall be deemed to have occurredwith respect to the Executive if the Change in Control results from actions orevents in which the Executive is a participant in a capacity other than solelyas an officer, employee or director of the Company or any of its affiliates.

 

(ii)                                  “Permitted Holders” means (A) MichaelT. Flavin (the “Principal”), (B) the spouse or any immediate family memberof the Principal and any child or spouse of any spouse or immediate familymember of the Principal, (C) a trust, corporation, partnership or otherentity, the beneficiaries, stockholders, partners, owners or personsbeneficially holding, directly or indirectly, a controlling interest of whichconsists of the Principal and/or such other persons referred to in theimmediately preceding clause (B), or (D) the trustees of any trustreferred to in clause (D).

 

(iii)                               “Good Reason” means any of the followingconditions, without the Executive’s consent, (A) a material diminution inthe Executive’s Base Salary, (B) a material diminution in the Executive’sauthority, duties, or responsibilities, (C) a material diminution in theauthority, duties, or responsibilities of the supervisor to whom the Executiveis required to report, including a requirement that the Executive report to acorporate officer or employee instead of reporting directly to the Board (orother similar governing body), (D) a material diminution in the budgetover which the Executive retains authority, (E) a material change in thegeographic location at which the Executive must perform services, and (F) anyother action or inaction that constitutes a material breach by the Company ofthis Agreement.  If one or more of theabove conditions exists, the Executive must provide notice to the Companywithin ninety (90) days of the initial existence of the condition.  Upon such notice, the Company shall have aperiod of thirty (30) days during which it may remedy the condition.

 

(d)                                 Treatment of Parachute Payments.

 

(i)                                     Notwithstanding any other provisions ofthis Agreement, and except as set forth below, in the event that any payment orbenefit received or to be received by the Executive in connection with a Changein Control or the termination of the Executive’s employment (whether pursuantto the terms of this Agreement or any other plan, arrangement or agreement withthe Company, any person whose actions result in a Change in Control or anyperson affiliated with the Company or such person) (all such payments andbenefits, including payments under Section 7(a) above, beinghereinafter called “Total Payments”) is determined to be an “excess parachutepayment” pursuant to Section 280G of the Internal Revenue Code of 1986, asamended (the “Code”), or any successor or substitute provision of the Code,with the effect that the Executive is liable for the payment of the excise taxdescribed in Code Section 4999 or any successor or substitute provision ofthe Code (the “Excise Tax”), then, after taking into account any reduction inthe Total Payments provided by reason of Code Section 280G in such otherplan, arrangement or agreement, the Executive may first elect to reduce thenoncash payments and benefits, after which the cash payments provided in Section 7(a)(i) ofthis Agreement shall then be reduced, to the extent necessary so that noportion of the Total Payments is subject to the Excise Tax.

 

(ii)                                  All determinations required to be madeunder this Section 7(d), and the assumptions to be utilized in arriving atsuch determination, shall be made by the certified public accounting firm usedfor 

 

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auditing purposes by theCompany immediately prior to the date of the Executive’s termination ofemployment or, if the parties determine that such certified public accountingfirm cannot make such determination because of legal restrictions, the partiesshall agree on a different certified public accounting firm (such certifiedpublic accounting firm is hereinafter referred to as the “Accounting Firm”),which shall provide detailed supporting calculations both to the Company andthe Executive not later than 5 days prior to the date of the Executive’stermination of employment.  The Companyshall pay all fees and expenses of the Accounting Firm.  Any determination by the Accounting Firmshall be binding upon the Company and the Executive, except as provided inparagraph (ii) below.

 

(iii)          As a result of the uncertainty in theapplication of Code Sections 280G and 4999 at the time of the initialdetermination by the Accounting Firm hereunder, it is possible that theInternal Revenue Service (the “IRS”) or other agency will claim that an ExciseTax, or a greater Excise Tax, is due.  Ifthe Executive is required to make a payment of any such Excise Tax, the Companywill promptly pay the Executive an additional amount equal to the amount, orgreater amount, of Excise Tax the Executive is required to pay (plus a gross uppayment for any income taxes, interest, penalties or additional Excise Tax payableby Executive with respect to such Excise Tax or additional payment), asdetermined by the Accounting Firm.  TheExecutive will notify the Company in writing of any claim by the IRS or otheragency that, if successful, would require payment by the Company of theadditional payments under this paragraph. The Executive and the Company shall each reasonably cooperate with theother in connection with any administrative or judicial proceedings concerningthe existence or amount of liability for Excise Tax with respect to the TotalPayments.  The Company shall pay all feesand expenses of the Executive relating to a claim by the IRS or otheragency.  Payments under this Section 7(d)(iii) willbe made by the end of the Executive’s taxable year next following theExecutive’s taxable year in which the Executive remits the related taxes, inaccordance with Code Section 409A and Treas. Reg. §1.409A-3(i)(1)(v) (orany similar or successor provisions).

 

8.                                       Code Section 409A.

 

(a)           This Agreement is intended to complywith Code Section 409A and the interpretative guidance thereunder,including the exceptions for short-term deferrals, separation pay arrangements,reimbursements, and in-kind distributions, and shall be administeredaccordingly.  The Agreement shall be construedand interpreted with such intent.

 

(b)           To the extent payments under Section 6(d) aresubject to Code Section 409A and the Executive is a Specified Employee (asdefined below) as of the Date of Termination, distributions to the Executivemay not be made before the date that is six months after the date of the Dateof Termination or, if earlier, the date of the Executive’s death (the “SixMonth Delay Rule”).  The term “SpecifiedEmployee” has the meaning given to that term in Code Section 409A and Treas.Reg. §1.409A-1(c)(i) (or other similar or successor provisions).  Payments to which the Executive wouldotherwise be entitled during the first six months following the Date ofTermination (the “Six Month Delay”) will be accumulated and paid on the firstday of the seventh month following the Date of Termination.  Notwithstanding the Six Month Delay Rule setforth in this Section 8(b), to the maximum extent permitted under Code Section 409Aand Treas. Reg. §1.409A-1(b)(9)(iii) (or any similar or successorprovision), during the Six Month Delay, the Company will provide the paymentsset forth in Section 6(d)(i) above, but in no event will the amountof such payments exceed during the Six Month Delay an amount equal to two timesthe lesser of (i) the maximum amount that may be taken into account undera qualified plan pursuant to Code Section 401(a)(17) for the year in whichthe Date of Termination occurs and (ii) the sum of the Executive’sannualized compensation based upon the annual rate of pay for services providedto the Company for the taxable year of the Executive preceding the taxable yearof the Executive in which the Executive’s Date of Termination occurs (adjustedfor any increase during that year that was expected to continue indefinitely ifthe Executive had not had a Date of Termination), provided that amounts paidunder this sentence will count toward, and will not be in addition to, thetotal payment amount required to be made to the Executive by the Company under Section 6(d)(i) above.  Notwithstanding the Six Month Delay Rule setforth in this Section 8(b), to the maximum extent permitted under Code Section 409Aand Treas. Reg. §1.409A-1(b)(9)(v) (or any similar or successorprovision), the Company will provide the payments set forth in Section 6(d)(ii),if not otherwise excepted from Code Section 409A, to the extent suchpayments do not exceed the applicable dollar amount under Code Section 402(g)(1)(B) forthe year in which the Date of Termination occurs; provided that amounts paidunder this sentence will count toward, and will not be in addition to, thetotal payment amount required to be made to the Executive by the Company under Section 6(d)(ii) above.

 

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(c)                                  Payments under Section 7(a)(i) areintended to qualify as short-term deferrals. However, if the Company reasonably determines that a payment under Section 7(a)(i) abovedoes not qualify as a short-term deferral under Code Section 409A andTreas. Reg. §1.409A-1(b)(4) (or any similar or successor provisions), orthat other benefits under Section 7(a) do not qualify for anexception from Code Section 409A and the Executive is a Specified Employeeas of the Date of Termination, distributions to the Executive are subject tothe Six Month Delay Rule.  Payments towhich the Executive would otherwise be entitled during the Six Month Delay willbe accumulated and paid on the first day of the seventh month following theDate of Termination.  Notwithstanding theSix-Month Delay Rule set forth in this Section 8(c):

 

(i)            To the maximum extent permittedunder Code Section 409A and Treas. Reg. §1.409A-1(b)(9)(iii) (or anysimilar or successor provision), during the first month of the Six-Month Delay,the Company will pay the Executive an amount equal to the lesser of:  (i) the total lump sum severanceprovided under Section 7(a)(i) or (ii) two times the lesser of (A) themaximum amount that may be taken into account under a qualified plan pursuantto Code Section 401(a)(17) for the year in which the Date of Terminationoccurs, and (B) the sum of the Executive’s annualized compensation basedupon the annual rate of pay for services provided to the Company for thetaxable year of the Executive preceding the taxable year of the Executive inwhich the Executive’s Date of Termination occurs (adjusted for any increaseduring that year that was expected to continue indefinitely if the Executivehad not had a Date of Termination); provided that amounts paid under thissentence will count toward, and will not be in addition to, the total paymentamount required to be made to the Executive by the Company under Section 7(a)(i) above.

 

(ii)           To the maximum extent permitted underCode Section 409A and Treas. Reg. §1.409A-1(b)(9)(v) (or any similaror successor provision), the Company will provide the payments set forth in Section 7(a)(ii),if not otherwise excepted from Code Section 409A, to the extent suchpayments do not exceed the applicable dollar amount under Code Section 402(g)(1)(B) forthe year in which the Date of Termination occurs; provided that amounts paidunder this sentence will count toward, and will not be in addition to, thetotal payment amount required to be made to the Executive by the Company under Section 7(a)(ii) above.

 

9.                                       RestrictiveCovenants.

 

(a)                                  Trade Secrets.  The Executive acknowledges that he has hadand shall have access to confidential information of the Company, whether ornot reduced to writing and whether in paper, electronic, digital, analog orother format (including, but not limited to, trade secrets, know-how,Inventions (as defined below), new product and product development information,research results, marketing and sales programs, customer and supplierinformation, financial data, employee records, cost information, pricinginformation, sales and marketing strategies, the identity of customers,information received by the Company under an obligation of confidentiality tocustomers, and all information generated by the Company for customers) relatingto the past, present or planned business, customers, clients, contacts, prospectsand assets of the Company that is unique, valuable and has not purposefullybeen made generally known to the public by the Company (“ConfidentialInformation”).  Confidential Informationshall not include any information that: (i) is now, or hereafter becomes,through no act or failure to act on the part of the Executive that constitutesa breach of this Section 9, generally known or available to the public; (ii) ishereafter furnished without restriction on disclosure to the Executive by athird party, other than an employee or agent of the Company, who is not underany obligation of confidentiality to the Company; (iii) is disclosed withthe written approval of the Company; or (iv) is required to be disclosedor provided by law, court order, or similar compulsion, including pursuant toor in connection with any legal proceeding involving the parties hereto;provided, however, that such disclosure shall be limited to the extent sorequired or compelled; and provided further, however, that if the Executive isrequired to disclose such Confidential Information, the Executive shall givethe Company notice of such disclosure and cooperate in seeking suitableprotections.  The Executive acknowledgesthat all Confidential Information, and all documents, files, reports, drawings,designs, specifications, formulae, samples, data, writings, tools, equipment,memory devices or any other tangible objects that incorporate, contain, referto or embody any Confidential Information (“Items”), acquired by the Executive inconnection with the Executive’s employment with the Company are the property ofthe Company.  Other than in the course ofperforming services for the Company or otherwise authorized in writing by theCompany, the Executive shall not, at any time, directly or indirectly use,divulge, furnish or make accessible to any person any Confidential Information,but instead shall keep all Confidential Information strictly and absolutelyconfidential.  The Executive shall deliverpromptly to the Company, at the termination of his employment or at any othertime at the request of the Company, without retaining any 

 

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copies, all Items and anyother documents or materials in the Executive’s possession relating, directlyor indirectly, to any Confidential Information.

 

(b)           Non-competition.  Beginning on the Effective Date and for aperiod of twelve (12) months following Executive’s Date of Termination (the“Restricted Period”), Executive shall not directly or indirectly, alone or inconjunction with any other party, own any interest in, operate, control, engagein or participate as a partner, director, principal, officer, employee,independent contractor or agent of, act as a consultant to, perform anyservices for, or assist in any way any company, person, or entity in the UnitedStates that is engaged in “Competing Services” (as defined herein).  Competing Services shall mean chemistry andbiology research and development relating to, arising from, connected with, orcompetitive with or intended to be competitive with, any product or researchproject as to which the Executive performed services for the Company, or aboutwhich the Executive received access to Confidential Information while employedby the Company.  If the Executive obtainsother employment during the twelve-month period after the Executive’s Date ofTermination, the Executive agrees to notify the Company in writing of the nameand address of such employer.

 

(c)           Non-Solicitation of Employees. Duringthe Restricted Period, the Executive shall not, directly or indirectly solicitor induce, or attempt to solicit or induce, any current employee of theCompany, or any individual who becomes an employee during the RestrictedPeriod, to leave his or her employment with the Company or join or becomeaffiliated with any other business or entity, hire any employee of the Companyor in any way interfere with the relationship between any employee and theCompany.

 

(d)           Non-Solicitation ofCustomers.  During the Restricted Period,the Executive shall not, directly or indirectly, solicit or induce, or attemptto solicit or induce, any customer, supplier, licensee, licensor or otherbusiness relation of the Company to terminate its relationship or contract withthe Company, to cease doing business with the Company, or in any way interferewith the relationship between any such customer, supplier, licensee or businessrelation and the Company (including making any negative statements orcommunications concerning the Company or their employees).

 

(e)           Inventions.  The Executive acknowledges all inventions ofthe Company (including, but not limited to, procedures, systems, machines,methods, processes, uses, apparatuses, compositions of matter, designs, orconfigurations of any kind, discovered, conceived, reduced to practice, developed,made or produced) (“Inventions”) that (i) relate to the present or plannedbusiness of the Company or the work performed by the Company for its customers,and (ii) are conceived or reduced to practice by the Executive, eitheralone or with others, during the Executive’s employment with the Company orduring a period of 120 days after the Executive’s Date of Termination, whetheror not done during the Executive’s regular working hours, are the sole propertyof the Company, including, without limitation, all domestic and foreign patentrights, rights of registration or other protection under the copyright laws, orother rights pertaining to the Inventions. For purposes of this Agreement, Inventions shall include anyimprovements to an Invention and shall not be limited to the definition of apatentable invention or copyrightable work of authorship as contained in theUnited States patent or copyright laws. The Executive shall disclose promptly and fully in writing to theCompany each Invention, whether or not reduced to practice, that the Executiveconceives or learns (either alone or jointly with others) during the Term ofEmployment.  The Executive hereby assignsto the Company, or its nominee, all of the Executive’s right, title andinterest, including international priority rights, in and to all Inventions(other than any Invention that was developed entirely on the Executive’s owntime and for which no equipment, supplies, facilities or trade secretinformation of the Company was used, unless such Invention relates directly tothe Company’s business or to the Company’s actual or demonstrably anticipatedresearch or development), and in and to all United States or foreign patents,copyrights and other proprietary rights granted thereon or resulting therefrom,and in and to all applications for United States or foreign copyrights, patentsand other proprietary rights.  TheExecutive shall execute all papers, perform all lawful acts or assist theCompany in any way the Company deems necessary or advisable (at the Company’sexpense) for the preparation, filing, prosecution, issuance, procurement,maintenance or enforcement of patents applications and patents of the UnitedStates and foreign countries, and for obtaining and enforcing copyright protectionand registration, of any Invention.  Tothat end, the Executive shall at the Company’s request and without limitation,testify in any suit or other proceeding involving any of the Inventions,execute all documents that the Company reasonably determines to be necessary orconvenient for use in applying for and obtaining patent or copyright protectionand registration on any of the Inventions and enforcement of that protectionand registration, and execute all necessary documents and papers required to vesttitle in and assign to the Company (or its nominee) patent or copyrightprotection and registration.  TheExecutive’s obligation to assist the Company in obtaining and enforcing patentor copyright protection and registration for the Inventions shall continuefollowing termination of this 

 

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Agreement, but Company shall compensate the Executivefollowing the expiration or termination of this Agreement at a rate of $10 forthe execution of each document and $150 per day for each day or portion thereofspent at the Company’s request in rendering assistance, plus reimbursement forthe reasonable out-of-pocket expenses incurred by the Executive for suchassistance.  The Executive herebyirrevocably appoints the Company and its duly authorized officers and agents ashis agent and attorney-in-fact to act for and on behalf of the Executive infiling all patent applications, applications for copyright protection andregistration amendments, renewals and all other appropriate documents in anyway related to the Inventions.

 

(f)            Survival.  The provisions set forth in this Section 9shall survive termination of this Agreement.

 

(g)           ScopeLimitations.  If the scope, period oftime or area of restriction specified in this Section 9 are or would bejudged to be unreasonable in any court proceeding, then the period of time,scope or area of restriction shall be reduced or limited in the manner and tothe extent necessary to make the restriction reasonable, so that therestriction may be enforced in those areas, during the period of time and inthe scope that are or would be judged to be reasonable.

 

10.                                 Binding Agreement; Successors. This Agreement and all rights of the Executive hereunder shall inure tothe benefit of and be enforceable by the Executive’s personal or legalrepresentatives, executors, administrators, successors, heirs, distributees,devisees and legatees.  If the Executiveshould die while any amounts would still be payable to him hereunder if he hadcontinued to live, all such amounts, unless otherwise provided herein, shall bepaid in accordance with the terms of this Agreement to the Executive’s devisee,legatee, or other designee or, if there be no such designee, to the Executive’sestate.  This Agreement shall be bindingupon, and inure to the benefit of, any successors or assigns of theCompany.  This Agreement is not intendedto confer upon any person other than the parties hereto (and the Executives’Spouse and dependents) any rights or remedies, except as specifically providedin this Section 10.

 

11.                                 Notice.  Notices,demands and all other communications provided for in this Agreement shall be inwriting and shall be deemed to have been duly given when delivered, ifdelivered personally, or (unless otherwise specified) when received, if mailedby United States certified or registered mail, return receipt requested,postage prepaid, by Federal Express or other reputable overnight courierservice or by facsimile, addressed as follows:

 

If tothe Executive:

 

Michael J. Cogan

1440Davey Road

Woodridge,Illinois 60517

 

If tothe Company:

 

Advanced Life Sciences, Inc.

1440Davey Road

Woodridge,Illinois 60517

Attn: Chief ExecutiveOfficer

 

or to such other address as any party may havefurnished to the other in writing in accordance herewith, except that noticesof change of address shall be effective only upon receipt.

 

12.                                 General Provisions. No provision of this Agreement may be modified, waived or dischargedunless such waiver, modification or discharge is agreed to in writing signed bythe Executive and such officer of the Company as may be specifically designatedby the Company’s Board.  No waiver byeither party hereto at any time of any breach by the other party hereto of, orcompliance with, any condition or provision of this Agreement to be performedby such other party shall be deemed a waiver of similar or dissimilarprovisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral orotherwise, express or implied, with respect to the subject matter hereof havebeen made by either party that are not set forth expressly in this Agreement.

 

13.                                 Validity.  Theinvalidity or unenforceability of any provision or provisions of this Agreementshall not affect the validity or enforceability of any other provision of thisAgreement, which shall remain in full force and effect.  If any provision of this Agreement is foundto be invalid or unenforceable, in whole or in part, then it shall be deemed tobe modified or restricted to the extent and in the manner necessary to renderit valid and enforceable, or shall be deemed excised from this Agreement, asthe case may require, and this Agreement shall be construed and enforced to themaximum extent 

 

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permitted by law,as if the provision had been originally incorporated herein as so modified orrestricted, or as if it had not originally been incorporated herein, as thecase may be.

 

14.                                 Counterparts. This Agreement may be executed in one or more counterparts, each ofwhich shall be deemed to be an original but all of which together shallconstitute one and the same instrument.

 

15.                                 Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto inrespect of the subject matter contained herein and supersedes all prioragreements, promises, covenants, arrangements, communications, representationsor warranties, whether oral or written, by any officer, employee orrepresentative of any party hereto; and any prior agreement of the partieshereto in respect of the subject matter contained herein is hereby terminatedand canceled. For the avoidance of doubt, the Company and the Executive herebyagree that this Agreement shall replace and supersede the Original EmploymentContract and govern the relationship of the parties.

 

16.                                 Irreparable Harm. The Executive acknowledges that: (i) the Executive’s compliancewith this Agreement is necessary to preserve and protect the proprietaryrights, Confidential Information and the goodwill of the Company and itssubsidiaries as going concerns; (ii) any failure by the Executive tocomply with the provisions of this Agreement shall result in irreparable andcontinuing injury for which there will be no adequate remedy at law; and (iii) inthe event that the Executive should fail to comply with the terms and conditionsof this Agreement, the Company shall be entitled, in addition to such otherrelief as may be proper, to all types of equitable relief (including, but notlimited to, the issuance of an injunction and/or temporary restraining order)as may be necessary to cause the Executive to comply with this Agreement, torestore to the Company its property, and to make the Company whole.

 

17.                                 Consent to Jurisdiction and Forum; LegalFees and Costs.  The Company and the Executive herebyexpressly and irrevocably agree that any action, whether at law or in equity,arising out of or based upon this Agreement or the Executive’s employment bythe Company shall only be brought in a federal or state court located in CookCounty, Illinois.  The Executive herebyirrevocably consents to personal jurisdiction in such court and to acceptservice of process in accordance with the provisions of such court.  In connection with any dispute arising out ofor based upon this Agreement or the Executive’s employment by the Company, eachparty shall be responsible for its or his own legal fees and expenses and allcourt costs shall be shared equally by the Company and the Executive unless thecourt apportions such legal fees or court costs in a different manner.

 

18.                                 Withholding. All payments made to the Executive pursuant to this Agreement shall besubject to applicable withholding taxes, if any, and any amount so withheldshall be deemed to have been paid to the Executive for purposes of amounts dueto the Executive under this Agreement.

 

19.                                 Governing Law. This Agreement is governed by and is to be construed and enforced inaccordance with the laws of the State of Illinois, without regard to itsconflict of law provisions.

 

IN WITNESS WHEREOF, theparties have executed this Agreement on the date and year first above written.

 
| **EXECUTIVE** | ** **           | **ADVANCED  LIFE SCIENCES, INC.** |
|---------------|----------------------|-----------------------------------|
|          |                 |                              |   |
| By:           | /s/ Michael J. Cogan |                              | By: | /s/ Michael T. Flavin |
| Name:         | Michael  J. Cogan    |                              | Name: | Michael T. Flavin,  Ph.D. |
|          |                 | Title:                            | Chief Executive Officer |
|               |                      |                                   |  |  |  |  |

 

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