exhibit_10-34.htm


    Exhibit 10.34

    
      EMPLOYMENT
AGREEMENT

       

      THIS
EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of January
30, 2009 (the "Effective Date"), by and between SCOLR Pharma, Inc., a Delaware
corporation ("Company"), and Bruce S. Morra ("Employee").

       

       The parties agree as
follows:

       

      
        	
                 
      

              	
                1.

              	
                Employment.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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".

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                2.3.

              	
                Bonuses.

              


      

       

      
        	
                 
      

              	
                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 date
due.

              


      

       

      
        
          	
                   
      

                	
                  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.

              


      

       

      
        	
                 
      

              	
                3.

              	
                Benefits.

              


      

       

      
        	
                 
      

              	
                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”.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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's
policies.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                6.

              	
                Termination
      of Employee's Employment.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        
          	
                   
      

                	
                  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.

              


      

       

      
        	
                 
      

              	
                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 of
the

              


      

       

      
        
          
             

          

          
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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.

                


        

      

    

     

    
      	
               
      

            	
              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.

            


    

     

    
      	
               
      

            	
              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:

            


    

             

    
      
        	
                 
      

              	
                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 termination
date;

              


      

    

     

    
      
         

      

      
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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

            


    

     

    
      	
               
      

            	
              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.

            


    

     

    
      	
               
      

            	
              6.6.

            	
              Change
      of Control.

            


    

     

    
      	
               
      

            	
              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.

            


    

     

    
      	
               
      

            	
              b)

            	
              A
      “Change in Control” is defined as any one of the following
      occurrences:

            


    

     

    
      	
               
      

            	
              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-outstanding
securities;

            


    

     

    
      	
               
      

            	
              ii.

            	
              the
      sale or disposition of all or substantially all of Company’s assets (or
      any transaction having similar effect is
  consummated);

            


    

     

    
      	
               
      

            	
              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

            


    

     

    
      	
               
      

            	
              iv.

            	
              the
      dissolution or liquidation of
Company.

            


    

     

    
      
         

      

      
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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.

              


      

       

      
        	
                 
      

              	
                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”):

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                b)

              	
                Employee
      complies with all surviving provisions of this
  Agreement.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        
          	
                   
      

                	
                  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 Section
409A.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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 by
reference.

              


      

              

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    
      
        	
                 
      

              	
                9.

              	
                Post-Termination
      Non-Competition.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    
      
        	
                 
      

              	
                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 such
relief.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                13.

              	
                General
      Provisions.

              


      

       

      
        	
                 
      

              	
                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 this
Agreement.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        
          	
                   
      

                	
                  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

                

     

      

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    
      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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.

              


      

       

      
        	
                 
      

              	
                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 this
Agreement.

              


      

       

      
        	
                 
      

              	
                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 in
writing.

              


      

       

      IF TO
COMPANY,
TO:                                           SCOLR
Pharma, Inc.

      19204
North Creek Pkwy, Ste 100

      Bothell,
WA  98011

       

      IF TO
EMPLOYEE,
TO:                                           Bruce
S. Morra

      51 Spring
House Lane

      Basking
Ridge, NJ 07920

      With copy
via email to brucemorra@gmail.com

      


      
        	
                 
      

              	
                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.

              


      

      
         

        
          	
                   
      

                	
                  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 or
simultaneous

                

 

      

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

    
      
        	
                 
      

              	
                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 circumstances
whatsoever.

              


      

       

      THE
PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, AND FULLY UNDERSTAND EACH
AND EVERY PROVISION. WHEREFORE, THE PARTIES HAVE EXECUTED AND MADE THIS
AGREEMENT EFFECTIVE AS OF THE DATE SET FORTH ABOVE.

       

      "Company"                                                                         
SCOLR Pharma, Inc.

       

      By

       

      /s/
Michael N. Taglich

      __________________________________________

                                      Michael
N. Taglich, Chairman of the Board

       

      "Employee"

       

      /s/ Bruce
S. Morra

      __________________________________________

       

      Bruce S.
Morra

       

      13