|   | 1. | Employment. |
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|   | 1.1. | Title      and Duties. Company hereby employs Employee as President and Chief      Executive Officer, and Employee hereby accepts such employment, on the      terms and conditions set forth herein. Employee shall perform such duties      as are customary for the position of President and Chief Executive Officer      and any additional such duties that Company's Board of Directors ("Board")      may assign from time to time. |
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|   | 1.2. | Full-time      and Best Efforts. Employee will expend Employee's best efforts on behalf      of Company, and will abide by all policies and decisions made by Company,      as well as all applicable federal, state and local laws, regulations or      ordinances. Employee will act in the best interests of Company at all      times and, subject to Section 1.4 below, will devote Employee's full      business time and efforts to the performance of Employee's assigned duties      to Company. |
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|   | 1.3. | Term.      The employment relationship formed pursuant to this Agreement shall be      effective for twelve months commencing on the Effective Date (the      "Term").  The Term may be extended by mutual agreement of      Employee and Company. |
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|   | 1.4. | Outside      Activities. Employee may serve in various capacities for non-profit,      charitable and educational organizations from time to time. Any such      non-profit work that has the potential to interfere to any degree with      Employee's services to Company must be disclosed to, and approved by, the      Board. Employee agrees that he will not accept any position with, be      employed by, provide any paid services, or serve on any Board of Directors      for a profit organization or entity other than Company without the written      approval of the Board; provided, that Employee may serve as a director of      companies that do not compete with Company, and will not materially      detract from Employee's responsibilities hereunder as determined in the      sole judgment of the Board.  Company has agreed that Employee      may continue to serve as a director of Unigene Laboratories, Inc., and      InforMedix Holdings Inc. |
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|   | 2. | Compensation. |
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|   | 2.1. | Base      Salary. As compensation for Employee's performance of Employee's duties      hereunder, Company shall pay Employee an initial base salary ("Base      Salary") of Three Hundred and Sixty Seven Thousand Five Hundred Dollars      ($367,500) for the 12 month term, payable in accordance with the normal      payroll practices of Company, less any amounts that Company is required by      applicable federal, state or local law to withhold therefrom on account of      employment, income or other taxes. Employee's Base Salary shall be      reviewed annually by the Compensation Committee of the Board and may be      increased (but not decreased without the consent of Employee) and such      increased amount shall hereafter be his "Base  Salary". |
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|   | 2.2. | Stock      Options Upon execution of this Agreement, the Company shall grant Employee      options to purchase 500,000 shares of Company's Common Stock under      Company's 2004 Equity Incentive Plan (“Plan”) at an exercise price equal      to the Closing Price of the Company’s Common Stock on the NYSE Alternext      (“Closing Price”) on January 29, 2009. Options to purchase 250,000 shares      of Company’s common Stock shall be fully vested upon execution of this      Agreement. Options to purchase 125,000 shares of Company’s Common Stock      shall vest on June 18, 2009, provided that Employee continues to serve as      Chief Executive Officer on the vesting date. The remaining options shall      vest on January 18, 2010, provided that Employee continues to serve as the      Chief Executive Officer on the vesting date. Notwithstanding anything to      the contrary contained in the Plan, Employee shall have one year from the      date of termination of employment to exercise vested stock options as of      the date of termination. Otherwise the options will be subject to the      terms and conditions of the Plan and standard form of stock option      agreement, which Employee will be required to sign as a condition of      receiving the options. |
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|   | 2.3. | Bonuses. |
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|   | a) | On      January 4, 2010, the Company shall issue Employee 214,285 shares of the      Company’s Common Stock (subject to availability under the Plan); provided,      that in the event there are not sufficient shares available for issuance      under the Plan to grant the full amount of such award, Employee will be      issued such lesser number of shares as is available under the Plan and the      remainder shall be issued when sufficient shares are available for      issuance under the Plan. The Company shall use its best efforts to make      the full amount of shares to be issued to Employee under this subsection      available to Employee on the datedue. |
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|   | b) | Employee      shall be eligible to receive a performance-based cash bonus at the end of      2009 in a targeted amount of up to 50% of Base Salary (as adjusted from      time to time) based on the achievement of certain objectives approved by      the Board of Directors in its sole discretion with the opportunity to      receive a bonus of 100% of Base Salary if target goals are exceeded and      Employee |
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|   | remains      employed on the last day of the performance period. If Employee is      terminated earlier by Company without Cause (as defined below), Employee      shall be entitled to a pro-rated bonus to the date of termination (as      calculated in 6.2). The bonus shall be based on the criteria established      by the Board of Directors as described below applied on a basis consistent      with the determination of bonus payments for other executive employees.      The terms and amount of such bonus shall be determined by the Compensation      Committee of the Board in its sole discretion, based on performance      factors and objectives that are established no later than ninety (90) days      after the first day of the fiscal year.  Any such bonus that      becomes payable shall be made within 75 days after the end of the calendar      year, with the actual payment timing during such period within Company's      sole discretion. |
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|   | 3. | Benefits. |
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|   | 3.1. | Health,      Other Welfare and Fringe Benefits. Employee will be eligible for all      customary and usual health, other welfare and fringe benefits generally      available to employees of Company, subject to the terms and conditions of      Company's plan documents. Company reserves the right to change or      eliminate its health, other welfare and fringe benefit programs on a      prospective basis, at any time, effective upon notice to Employee. In      addition, Employee will also receive $500 per month for automobile      allowance.  Company’s health, other welfare and fringe benefits,      along with the automobile allowance, shall be collectively referred to as      the “Other Benefits”. |
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|   | 3.2. | Vacation      and Personal Days. Employee will be entitled to accrue vacation of four      (4) weeks per year in accordance with Company's vacation policy and one      (1) week per year for personal days, for Employees other business .      Vacation and personal days may be carried over from year to year and any      accrued but unused vacation will be paid to Employee as additional      compensation at the time of Employee's termination of      employment.  Employee will be responsible for written reporting      of vacation time on a timely basis. |
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|   | 3.3. | Relocation      and Temporary Living Expenses. Company will reimburse Employee up to a      maximum amount of thirty thousand dollars ($30,000) for actual living      expenses in the Bothell area, reasonable expenses related to moving his      family and possessions to the Bothell area from both Utah and New Jersey,      trips for Employee and his spouse to assist with relocation, and      replacement of furniture and other household items that Employee decides      not to move to the Bothell area. Payment shall be made upon receipt of      documentation for actual expenses. |
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|   | 3.4. | Fees.      Company shall pay reasonable professional fees incurred by Employee, and      an appropriate gross up for applicable federal income taxes, to negotiate      and prepare this Agreement in an amount not to exceed Ten Thousand Dollars      ($10,000). |
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|   | 4. | Business      Expenses. Company will reimburse Employee for all reasonable out-of-pocket      expenses incurred in the performance of Employee's duties on behalf of      Company in accordance with Company'spolicies. |
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|   | 5. | Director.      As long as Employee is serving as the Chief Executive Officer and      President of Company, the Board of Directors agrees to nominate Employee      for election by the stockholders to serve as a director of      Company. |
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|   | 6. | Termination      of Employee's Employment. |
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|   | 6.1. | Termination      for Cause by Company, Disability or Death. Company may terminate      Employee's employment immediately at any time for Cause. For purposes of      this Agreement, "Cause" is defined as (a) Employee's indictment for, or      conviction (or plea of nolo contendere) of fraud, embezzlement,      misappropriation, or any felony or any misdemeanor involving an act of      moral turpitude; (b) acts or omissions constituting gross negligence,      recklessness or willful misconduct on the part of Employee with respect to      Employee's obligations to Company or otherwise relating to the business of      Company; (c) Employee's material breach of this Agreement, Company's Code      of Conduct or Company's Confidentiality and Non-Compete Agreement,      following written notice and a 30-day opportunity to cure, or (d) any      similar or related act or failure to act which is materially injurious to      Company., following written notice and a 30 day opportunity to cure. In      the event that Employee's employment is terminated in for Cause, or if      Employee's employment is terminated because of Employee's death or      Employee's inability to perform the essential functions of the position,      with or without reasonable accommodation, due to a mental or physical      disability, where such inability continues for a period or periods      aggregating ninety (90) calendar days in any 12-month period, Employee      shall be entitled to receive only the Base Salary then in effect, prorated      to the date of termination and any of the Other Benefits (including      without limitation any applicable disability insurance) and expense      reimbursements to which Employee is entitled under Sections 3 and 4 above      and otherwise by virtue of his prior employment by Company or as required      by law (collectively, the "Standard Entitlements"). All other Company      obligations to Employee pursuant to this Agreement will become      automatically terminated and completely extinguished. Employee will not be      entitled to receive the Severance Package described in Section 6.2 or 6.4      below or any part thereof. |
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|   | 6.2. | Termination      Without Cause by Company/Severance. Company may terminate Employee's      employment under this Agreement without Cause at any time upon written      notice to Employee. In the event of such termination, whether during or at      the end of the Term, Employee will receive the Standard Entitlements plus      a prorated portion (based on the percentage of the year actually employed      by the Company) of the bonus for the year of termination; provided that      such bonus will be a minimum of 25% and maximum of 75% of the Base Salary.      The remainder of the bonus, if any, will be paid based on the average      percentage of bonus awards (as a ratio to target) for the Company’s other      executive officers. The |
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|   | minimum      25% bonus will be paid to Employee at the same time as the Standard      Entitlements and any additional bonus shall be paid to Employee at the      time bonus payments are made to Company’s other executive employees.      Employee will also receive a "Severance Package" consisting of (a) a lump      sum cash payment equal to twelve (12) months of Employee's Base Salary in      effect and bonus (as calculated above) on the date of termination, and (b)      for a period of twelve (12) months following the date of termination,      continued medical coverage at Company's expense pursuant to COBRA at      existing levels as of the date of termination, and Other Benefits to the      extent the applicable plans provide continuation coverage to      non-employees. Notwithstanding the foregoing sentence, in the      event  this Agreement is extended beyond the initial Term, the      Severance Package payable to Employee will be increased to sixteen (16)      months of Base Salary and bonus (as calculated above), and continuation of      medical and Other Benefits at Company’s expense for sixteen (16) months.      Company shall provide Employee with at least thirty days notice if it      determines not to extend this Agreement. The payment of the Severance      Package is payable in a lump sum on the 45tth day following Employee's      termination date and is contingent upon Employee's satisfaction of the      Severance Conditions described below. All other Company obligations to      Employee pursuant to this Agreement will be automatically terminated and      completely extinguished. |
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|   | 6.3. | Voluntary      Resignation by Employee With Good Reason. Employee will be deemed to have      resigned for “Good Reason” if Employee resigns within ninety (90) days      after any of the following have occurred, without Employee’s written      consent, and after the expiration of the notice and cure periods described      in this paragraph above: (a) Company reduces the level of Employee’s      responsibilities or changes Employee’s duties so that Employee’s duties      are no longer consistent with the position of a Chief Executive Officer;      (b) Company reduces Employee’s Base Salary; (c) Company relocates      Employee’s principal place of work to a location more than fifty (50)      miles from its current location in Bothell, WA; or (d) Company fails to      assign the terms of this Agreement to any successors contemplated in      Section 13.1.  Notwithstanding the foregoing, Employee’s      resignation as a result of any of the foregoing conditions shall be      considered a Voluntary Resignation by Employee Without Good Reason (as      described in Section 6.4) unless Employee shall have provided written      notification to Company of the condition(s) allegedly constituting Good      Reason and Company shall have failed to correct such condition(s) within      ten (10) days after Company’s receipt of such notice. In the event that Employee voluntarily resigns with Good      Reason, Employee will receive the Standard Entitlements plus a prorated      portion of the bonus for the year of termination, (as calculated in 6.2,      Termination Without Cause by Company/Severance) and a "Severance Package"      consisting of (a) a lump sum cash payment equal to twelve (12) months of      Employee's Base Salary in effect and bonus (as calculated above) on the      date of termination, and (b) for a period of twelve (12) months following      the date of termination, continued medical coverage at Company's expense      pursuant to COBRA at existing levels as ofthe |
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|   |   | date of termination, and Other Benefits to the extent      the applicable plans provide continuation coverage to non-employees.      Notwithstanding the foregoing sentence, in the event Company determines to      extend this Agreement beyond the initial Term, the Severance Package      payable to Employee will be increased to sixteen (16) months of Base      Salary and bonus (as calculated above), and continuation of medical and      Other Benefits at Company’s expense for sixteen (16)    months. |
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|   | 6.4. | Voluntary      Resignation by Employee Without Good Reason. Employee may voluntarily      resign Employee's position with Company for any reason or no reason on      sixty (60) days' advance written notice to Company. In the event of      Employee's resignation under such circumstances, Employee will be entitled      to receive the Standard Entitlements, including salary and benefits for      the sixty (60) day notice period, but no other salary or benefits for the      remaining months of the current Term, if any. Company may, in its sole      discretion, elect to waive all or any part of such notice period provided      that Employee will be entitled to receive payment of salary and Standard      Entitlements for the full sixty (60) day period. All other Company      obligations to Employee pursuant to this Agreement will become      automatically terminated and completely extinguished. In addition,      Employee will not be entitled to receive the Severance Package described      in subsection 6.2 or 6.4 herein. |
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|   | 6.5. | Voluntary      Resignation by Employee for Good Reason Following a Change of      Control.  In the event that in connection with or within three      (3) months prior to a 409A Change of Control (as defined below) or twelve      (12) months following a Change of Control (as defined below) Employee      resigns for Good Reason (as defined above in 6.3), following thirty (30)      days’ advance written notice to Company and Company's failure to cure the      condition(s) giving rise to Good Reason within thirty (30) days following      such notice, provided that Company may, in its sole discretion, elect to      waive all or any part of such notice period, Employee will be entitled to      receive the Standard Entitlements and the Change of Control Severance      Package described below, contingent on the satisfaction of the Severance      Conditions.  As long as Employee provides the required notice,      Employee will be paid the Standard Entitlements for the duration of the      required notice period, even if Company elects to relieve Employee of      Employee‘s duties at an earlier time.  All other Company      obligations to Employee pursuant to this Agreement other than the Change      of Control Severance Package will become automatically terminated and      completely extinguished. For purposes of this Agreement, the      “Change of Control Severance Package” shall include the      following: |
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|   | a) | a      payment equal to sixteen (16) months of Employee’s Base Salary and bonus      in effect on the date of termination (bonus calculated as set forth in      Section 6.2,), less required deductions, payable in a lump sum on the 45th      day following Employee's terminationdate; |
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|   | b) | payment      of the premiums required to continue Employee’s group health care coverage      pursuant to COBRA for a period of sixteen (16) months following the date      of termination, provided Employee elects to continue and remains eligible      for such benefits and does not become eligible for health coverage through      another employer during this period, and payment for continuation of the      Other Benefits for sixteen (16) months;and |
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|   | c) | 100%      acceleration of vesting, as of the termination date, of all of the      then-unvested equity awards under this agreement and any employee benefit      plan of Company held by Employee at the time of such      termination. |
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|   | 6.6. | Change      of Control. |
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|   | a) | 280G/Limitation      of Payments and Benefits.  If, due to the benefits provided      under this Agreement, Employee is subject to any excise tax due to      characterization of any amounts payable under such sections as excess      parachute payments pursuant to Section 4999 of the Internal Revenue      Code of 1986, as amended, and the regulations promulgated thereunder      (collectively, the “Code”), the amounts payable under such sections will      be restructured (to the least extent possible) in order to avoid any      “excess parachute payment” under Section 280G(b)(1) of the      Code. |
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|   | b) | A      “Change in Control” is defined as any one of the following      occurrences: |
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|   | i. | any      “person” (as such term is used in Sections 13(d) and 14(d) of the      Securities Exchange Act of 1934 (the “Exchange Act”)), other than a      trustee or other fiduciary holding securities of Company under an employee      benefit plan of Company, becomes the “beneficial owner” (as defined in      Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of      the securities of Company representing more than 50% of (A) the      outstanding shares of common stock of Company or (B) the combined voting      power of Company’s then-outstandingsecurities; |
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|   | ii. | the      sale or disposition of all or substantially all of Company’s assets (or      any transaction having similar effect is  consummated); |
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|   | iii. | Company      is party to a merger or consolidation that results in the holders of      voting securities of Company outstanding immediately prior thereto failing      to continue to represent (either by remaining outstanding or by being      converted into voting securities of the surviving entity) more than 50% of      the combined voting power of the voting securities of Company or such      surviving entity outstanding immediately after such merger or      consolidation; or |
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|   | iv. | the      dissolution or liquidation ofCompany. |
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|   | c) | A      “409A Change of Control” is defined as a Change of Control that also      constitutes a “Change of Control event” within the meaning of Section      409A. |
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|   | 6.7. | Conditions      to Receive and Payment of Severance Package.  A Severance      Package pursuant to Sections 6.2 and 6.4, as applicable, will be paid      provided Employee satisfies all of the following conditions (the      “Severance Conditions”): |
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|   | a) | Employee      executes, at the time of Employee’s termination of employment and within      the same taxable year, or, if later, before the expiration of any      applicable statutory revocation period, a full general release, releasing      all claims, known or unknown, Employee may have against Company, its      employees, officers, directors, agents and other affiliates, arising out      of or any way related to Employee’s employment or termination of      employment with Company. |
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|   | b) | Employee      complies with all surviving provisions of this  Agreement. |
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|   | 6.8. | Section      409A Compliance.  The parties intend for this Agreement either      to satisfy the requirements of Section 409A or to be exempt from the      application of Section 409A, and this Agreement shall be construed and      interpreted accordingly.  If Company or Employee reasonably      determines that any provision of this Agreement either fails to satisfy      the requirements of Section 409A or is not exempt from the application of      Section 409A, then the parties hereby agree to amend or to clarify this      Agreement in a timely manner so that this Agreement either satisfies the      requirements of Section 409A or is exempt from the application of Section      409A. |
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|   | a) | Notwithstanding      any provision in this Agreement to the contrary, in the event Employee is      a “specified employee” as defined in Section 409A, any amounts payable      under this Agreement that are subject to the requirements of Section 409A      and to the special rule regarding payments to “specified employees” under      Section 409A(a)(2)(B) of the Code shall not be paid to Employee during      such period, but shall instead be accumulated and paid to Employee (or, in      the event of Employee's death, to Employee's estate) in a lump sum on the      first business day after the earlier of the date that is six months      following Employee's separation from service or Employee's death, with      Company to additionally pay interest at a reasonable rate on such delayed      payments for the period from the payment due date (determined without      regard to this paragraph) until the actual payment date, and any remaining      payments due under this Agreement shall be paid as otherwise provided      herein. |
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|   | b) | No      amounts shall be transferred with respect to this Agreement in a manner      that could result in income inclusion pursuant to Section 409A(b)(3) of      the Code. |
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|   | c) | To      the extent that any payments due under this Agreement are conditioned on      Employee’s termination of employment or similar event and also subject      to |
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|   | the      requirements of Section 409A, such payments shall be made only if such      termination of employment or similar event constitutes a “separation from      service” within the meaning of Section409A. |
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|   | d) | To      the extent that any reimbursement of any expense or in-kind benefits      provided under this Agreement are deemed to constitute taxable      compensation to Employee, such amounts shall be reimbursed or provided no      later than December 31 of the year following the year in which the expense      was incurred.  The amount of any such expenses reimbursed or      in-kind benefits provided in one year shall not affect the expenses or      in-kind benefits eligible for reimbursement or payment in any subsequent      year, and Employee’s right to such reimbursement or payment of any such      expenses will not be subject to liquidation or exchange for any other      benefit. |
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|   | e) | Company      hereby informs Employee that the federal, state, local and/or foreign tax      consequences (including without limitation those tax consequences      implicated by Section 409A) of this Agreement are complex and subject to      change.  Employee hereby acknowledges that Company has advised      Employee that Employee should consult with Employee’s own personal tax or      financial advisor in connection with this Agreement and its tax      consequences.  Employee understands and agrees that Company has      no obligation and no responsibility to provide Employee with any tax or      other legal advice in connection with this Agreement.  Employee      agrees that Employee shall bear sole and exclusive responsibility for any      and all adverse federal, state, local and/or foreign tax consequences      (including without limitation those tax consequences implicated by Section      409A) of this Agreement, and fully indemnifies and holds Company harmless      therefor, except to the extent any such tax consequences relate to      Company's violation of this Agreement, negligence or willful      misconduct. |
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|   | 6.9. | Taxes      and Withholdings.  Company may withhold from any amounts payable      under this Agreement, including any benefits or severance pay, such      federal, state, local or international taxes as may be required to be      withheld pursuant to applicable law or  regulations. |
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|   | 7. | No      Conflict of Interest. During the term of Employee's employment with      Company, Employee will not either directly or indirectly, whether as a      owner, director, officer, manager, consultant, agent or employee, work for      a competitor, which is defined as any company that is developing      formulations for extended release oral delivery of small molecules via      routes that would directly compete with SCOLR, but excluding, for example,      companies engaged in delivery of peptides or proteins, such as Unigene      Laboratories, Inc. ("Restricted Business"). However Employee may continue      to serve in the positions identified in Section  1.4. |
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|   | 8. | Proprietary      Information. Employee agrees to sign, and abide by Company's      Confidentiality and Non-Compete Agreement, which is provided with this      Agreement and incorporated herein byreference. |
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|   | 9. | Post-Termination      Non-Competition. |
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|   | 9.1. | Consideration      For Promise To Refrain From Competing. Employee agrees that Employee's      services are special and unique, that Company's disclosure of      confidential, proprietary information and specialized training and      knowledge to Employee, and that Employee's compensation and benefits and      severance, as applicable, are partly in consideration of and conditioned      upon Employee not competing with Company. Employee acknowledges that such      consideration for Employee's services under this Agreement is adequate      consideration for Employee's promises contained within this Section      9. |
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|   | 9.2. | Promise      To Refrain From Competing. In exchange for the consideration described in      subsection 9.1 above, Employee agrees that for the period of six (6)      months following the date Employee ceases to be employed as Chief      Executive Officer of the Company, Employee will not either directly or      indirectly, whether as a owner, director, officer, manager, consultant,      agent or employee work for a Restricted Business. For purposes of this      Section 9, the term "Company" shall mean and include Company, any      subsidiary or affiliate of Company, any successor to the business of      Company (by merger, consolidation, sale of assets or stock or otherwise)      and any other corporation or entity of which Employee may serve as a      director, officer or employee at the request of Company or any successor      of Company. |
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|   | 9.3. | Reasonableness      of Restrictions. Employee represents and agrees that the restrictions on      competition, as to time, geographic area, and scope of activity, required      by this Section 9 are reasonable, do not impose a greater restraint than      is necessary to protect the goodwill and business interests of Company,      and are not unduly burdensome to Employee. Employee expressly acknowledges      that Company competes on a nationwide basis and that the geographical      scope of these limitations is reasonable and necessary for the protection      of Company's trade secrets and other confidential and proprietary      information. |
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|   | 9.4. | Reformation      if Necessary. In the event a court of competent jurisdiction determines      that the geographic area, duration, or scope of activity of any      restriction under this Section 9 and its subsections is unenforceable, the      restrictions under this Section and its subsections shall not be      terminated but shall be reformed and modified to the extent required to      render them valid and enforceable. |
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|   | 10. | Non-Solicitation.      Employee agrees that during the term of this Agreement and for a period of      six (6) months after the termination of this Agreement, Employee will not,      either directly or indirectly, separately or in association with others,      interfere with, impair, disrupt or damage Company's business by      soliciting, encouraging or recruiting any of Company's employees or      causing others to solicit or encourage or recruit any of Company's      employees to discontinue their employment with  Company. |
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|   | 11. | Right      To Injunction/Costs Of Enforcement. Employee acknowledges that Company      will suffer immediate and irreparable harm that will not be compensable by      damages alone in the event Employee repudiates or breaches Section 7, 8, 9      or 10 or threatens or attempts to do so. In the event of any such breach      or any threatened or attempted breach, Employee agrees that Company, in      addition to and not in limitation of any other rights, remedies or damages      available to it at law or in equity, shall be entitled to obtain      temporary, preliminary and permanent injunctions to prevent or restrain      any such breach, and Company shall not be required to post a bond as a      condition for the granting of suchrelief. |
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|   | 12. | Agreement      to Arbitrate. To the fullest extent permitted by law, Employee and Company      agree to arbitrate any controversy, claim or dispute between them arising      out of or in any way related to this Agreement, the employment      relationship between Company and Employee and any disputes upon      termination of employment. Claims for workers' compensation, unemployment      insurance benefits and Company's right to obtain injunctive relief      pursuant to Section 11 above are excluded. The arbitration will be      conducted in Seattle, Washington by a single neutral arbitrator and in      accordance with the then current rules for resolution of employment      disputes of the American Arbitration Association ("AAA"). The parties are      entitled to representation by an attorney or other representative of their      choosing. The arbitrator shall have the power to enter any award that      could be entered by a judge of the trial court of the State of Washington,      and only such power, and shall follow the law. In the event the arbitrator      does not follow the law, the arbitrator will have exceeded the scope of      his or her authority and the parties may, at their option, file a motion      to vacate the award in court. The parties agree to abide by and perform      any award rendered by the arbitrator. Judgment on the award may be entered      in any court having jurisdiction thereof. Each party initially shall bear      one half the cost of the arbitration filing and hearing fees, and the cost      of the arbitrator. The arbitrator shall have discretion to award to the      prevailing party its arbitration costs and hearing fees. The parties      acknowledge that standard statute of limitations will apply and      arbitration shall constitute an “action” for purposes of the statutes of      limitation. |
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|   | 13. | General      Provisions. |
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|   | 13.1. | Assignment.      The rights and obligations of Company under this Agreement shall inure to      the benefit of, and be binding upon, the successors and assigns of      Company. Employee shall not be entitled to assign any of Employee's rights      or obligations under thisAgreement. |
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|   | 13.2. | Waiver.      Either party's failure to enforce any provision of this Agreement shall      not in any way be construed as a waiver of any such provision, or prevent      that party thereafter from enforcing each and every other provision of      this Agreement. |
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|   | 13.3. | Severability.      In the event any provision of this Agreement is found to be unenforceable      by an arbitrator or court of competent jurisdiction, such provision shall      be deemed modified to the extent necessary to allow enforceability of      the |
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|   | provision      as so limited, it being intended that the parties shall receive the      benefit contemplated herein to the fullest extent permitted by law. If a      deemed modification is not satisfactory in the judgment of such arbitrator      or court, the unenforceable provision shall be deemed deleted, and the      validity and enforceability of the remaining provisions shall not be      affected thereby. |
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|   | 13.4. | Interpretation;      Construction. The headings set forth in this Agreement are for convenience      only and shall not be used in interpreting this Agreement. Legal counsel      representing Company has drafted this Agreement and Employee has been      represented by independent counsel. Therefore, the normal rule of      construction to the effect that any ambiguities are to be resolved against      the drafting party shall not be employed in the interpretation of this      Agreement. |
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|   | 13.5. | Governing      Law. This Agreement will be governed by and construed in accordance with      the laws of the United States and the State of Washington. Each party      consents to the jurisdiction and venue of the state or federal courts in      Seattle, Washington, if applicable, in any action, suit, or proceeding      arising out of or relating to thisAgreement. |
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|   | 13.6. | Notices.      Any notice required or permitted by this Agreement shall be in writing and      shall be delivered as follows with notice deemed given as indicated: (a)      by personal delivery when delivered personally; (b) by overnight courier      upon written verification of receipt; (c) by telecopy or facsimile      transmission upon acknowledgment of receipt of electronic transmission; or      (d) by five (5) days following deposit in the U.S. Mail, certified or      registered mail, postage prepaid and return receipt requested. Notice      shall be sent to the addresses set forth below, or such other address as      either party may specify inwriting. |
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|   | 13.7. | Survival.      Sections 7 ("No Conflict of Interest"), 8 ("Confidentiality and      Proprietary Information"), 9 ("Post-Termination Non-Competition"), 10      ("Nonsolicitation"), 13 ("General Provisions") and 14 ("Entire Agreement")      of this Agreement shall survive Employee's employment by      Company. |
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|   | 14. | Entire      Agreement. This Agreement, including Employee's Confidentiality and      Non-Compete Agreement incorporated herein by reference and the Plan and      related option documents described in Subsection 2.3, constitutes the      entire agreement between the parties relating to this subject matter and      supersedes all prior orsimultaneous |
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|   | representations,      discussions, negotiations, and agreements, whether written or oral. This      Agreement may be amended or modified only with the written consent of      Employee and the Board. No oral waiver, amendment or modification will be      effective under any circumstanceswhatsoever. |
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