Document:

exv10w2

Exhibit 10.2

AGREEMENT REGARDING REDEMPTION OF WARRANTS AND EXERCISE

OF STOCK PURCHASE RIGHT

     This Agreement Regarding Redemption of Warrants and Exercise of Stock Purchase Right
(“Agreement”) is dated as of the 1st day of July, 2008 (the “Effective Date”) by and among (i)
MiddleBrook Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and (ii) Deerfield
Private Design Fund, L.P., a Delaware limited partnership (“Deerfield Design”), Deerfield Private
Design International, L.P., a British Virgin Islands limited partnership (“Deerfield Design
International”), Deerfield Special Situations Fund, L.P., a Delaware limited partnership
(“Deerfield Special Situations”), Deerfield Special Situations Fund International Limited, a
British Virgin Islands limited company (“Deerfield Special Situations International” and
collectively with Deerfield Design, Deerfield Design International and Deerfield Special
Situations, the “Deerfield Entities”), Kef Pharmaceuticals, Inc., a Delaware corporation (“Kef”),
Lex Pharmaceuticals, Inc., a Delaware corporation (“Lex”), and Deerfield Management, L.P., a
Delaware limited partnership (“Deerfield Management”).

     WHEREAS, the Company has entered into (i) the Asset Purchase Agreement, dated November 7,
2007, by and between the Company and Kef, (ii) the Asset Purchase Agreement, dated November 7,
2007, by and between the Company and Lex, (iii) the Stock Purchase Agreement, dated November 7,
2007, among the Company, Kef, the Deerfield Entities and Deerfield Management (the “Kef SPA”), (iv)
the Stock Purchase Agreement, dated November 7, 2007, among the Company, Lex, the Deerfield
Entities and Deerfield Management (the “Lex SPA”), (v) the Inventory Consignment Agreement, dated
November 7, 2007, by and between the Company and Kef, (vi) the Registration and Trademark License
Agreement, dated November 7, 2007, by and between the Company and Lex, (vii) the Regulatory
Responsibility Agreement, dated November 7, 2007, by and between the Company and Lex, (viii) the
Keflex Products Transition Agreement, dated November 7, 2007, by and between the Company and Kef,
(ix) the Contingent Manufacturing Assignment, dated November 7, 2007, between the Company and Lex,
and (x) the Registration Rights Agreement, dated November 7, 2007, by and among the Company and the
Deerfield Entities (collectively with the Deerfield Warrants (as defined below), the “Deerfield
Agreements”); and

     WHEREAS, on November 7, 2007, the Company issued to the Deerfield Entities warrants (the
“Deerfield Warrants”) to purchase an aggregate of 3,000,000 shares of common stock, $0.01 par value
per share, of the Company (the “Common Stock”) at an exercise price of $1.34 per Warrant Share; and

     WHEREAS, pursuant to the terms of the Deerfield Warrants, in the event of a Major Transaction
(as defined in the Deerfield Warrants), the Deerfield Entities have the right to require the
Company to redeem all of the outstanding Deerfield Warrants;

     WHEREAS, pursuant to a Securities Purchase Agreement (the “EGI SPA”) to be entered into
contemporaneously with the execution of this Agreement, and as may be amended from time to time, by
and between the Company and EGI-MBRK,

 

 

L.L.C., a Delaware limited liability company (“EGI”), the Company proposes to issue and sell
to EGI, and EGI proposes to purchase from the Company, for an aggregate purchase price of
$99,999,999 (the “EGI Financing”), (i) 30,303,030 shares of Common Stock and (ii) a warrant to
purchase an aggregate of 12,121,212 shares of Common Stock.

     NOW, THEREFORE, in order to induce the Company and EGI to enter into the EGI SPA, the parties
hereto agree as follows:

	1.	 	Purchase of Kef and Lex. On or prior to the consummation of the EGI Financing
pursuant to the terms of the EGI SPA (the “EGI Closing”), the Company shall exercise the Stock
Purchase Right (in each case as Stock Purchase Right is defined in Section 2.1 of the Kef SPA
and the Lex SPA, respectively) pursuant to the terms of the Kef SPA and the Lex SPA,
respectively.

	2.	 	Deerfield Warrants. The Deerfield Entities and the Company agree, notwithstanding
anything to the contrary set forth in the Deerfield Warrants and to the extent the provisions
of this Agreement are inconsistent with any provision of the Deerfield Warrants, such
provision shall be deemed to be amended by the provisions of this Section 2, that:

	 	2.1	 	The EGI Financing shall constitute a “Major Transaction” pursuant to Section
5(c)(i)(D) of the Deerfield Warrants and the execution of this Agreement shall
constitute notice of such proposed Major Transaction as contemplated by Section
5(c)(iii) of the Deerfield Warrants.

	 	2.2	 	Except as hereinafter provided, each of the Deerfield Entities hereby
irrevocably exercises its option pursuant to Section 5(c)(i) of the Deerfield Warrants
to require the Company to redeem, upon the occurrence of the EGI Closing, all the
outstanding Deerfield Warrants for an aggregate redemption price equal to $8,814,000
(the “Aggregate Redemption Price”), and the execution of this Agreement by the
Deerfield Entities shall constitute the redemption notice contemplated by Section
5(c)(iii) of the Deerfield Warrants; provided, however, that the Deerfield Entities
shall be entitled to revoke such exercise upon the earlier of (i) the termination of
the EGI SPA and (ii) December 31, 2008. The Deerfield Entities hereby represent and
warrant to the Company that they hold all of the issued and outstanding Deerfield
Warrants and that, immediately following the EGI Closing, all of the issued and
outstanding Deerfield Warrants will have been redeemed by the Company pursuant to the
terms of this Agreement.

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	 	2.3	 	Upon the occurrence of the EGI Closing, the Company shall cause EGI to pay to
the Deerfield Entities (i) the Aggregate Redemption Price and (ii) to the extent not
previously paid by the Company, the Purchase Price (in each case as Purchase Price is
defined in Section 2.3(a) of the Kef SPA and Lex SPA, respectively) due to the
Deerfield Entities upon the Closing of the Kef SPA and the Lex SPA (in each case as
Closing is defined in Section 2.6 of the Kef SPA and Lex SPA, respectively), and the
Deerfield Entities shall accept such payments from EGI as if paid by the Company.
	 
	 	2.4	 	Notwithstanding the provisions of Section 5(c)(iv) of the Deerfield Warrants,
the Company shall not be required to place the Aggregate Redemption Price in an escrow
account with an independent escrow agent three Business Days prior to the EGI Closing.

	3.	 	Deerfield Voting Agreement. Simultaneously with the execution of this Agreement,
each of the Deerfield Entities (other than Deerfield Management, L.P.) as well as Deerfield
Partners, L.P. and Deerfield International Limited shall enter into the Voting Agreement in
the form attached hereto as Exhibit A.

	4.	 	Termination of this Agreement. This Agreement shall automatically terminate on the
earlier of (a) the termination of the EGI SPA pursuant to its terms or (b) the agreement of
the parties hereto to terminate this Agreement; provided, however, that
termination of this Agreement shall not prevent any party hereunder from seeking any remedies
(at law or in equity) against the other party hereto for such party’s breach of any of the
terms of this Agreement. Deerfield Management may terminate this Agreement upon written
notice to the Company if there shall have occurred a material breach by the Company of any of
the Deerfield Agreements, which breach is not cured prior to the EGI Closing.

	5.	 	Termination of Deerfield Agreements. The parties hereby acknowledge and agree that,
following the latest of (i) the receipt by the Deerfield Entities of the Aggregate Redemption
Price, (ii) the Closing (as defined in the Kef SPA) and (iii) the Closing (as defined in the
Lex SPA), each of the Deerfield Agreements shall terminate and there shall be no further
rights or obligations of any party to any Deerfield Agreement with respect thereto.

	6.	 	Miscellaneous.

	 	6.1	 	Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein (i) constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the

3

 

	 	 	 	parties with respect to the subject matter hereof and (ii) are not intended to
confer upon any other person any rights or remedies hereunder other than EGI, which
shall be a third party beneficiary hereof.

	 	6.2	 	Successors and Assigns. This Agreement shall not be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Without relieving any party hereto of any
obligation hereunder, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and assigns.
	 
	 	6.3	 	Amendment and Modification. This Agreement may not be amended,
altered, supplemented or otherwise modified or terminated except upon the execution
and delivery of a written agreement executed by the parties hereto.
	 
	 	6.4	 	Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial delivery
service, or sent via telecopy (receipt confirmed) to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy numbers for a
party as shall be specified by like notice):

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	 	 	(i)	 	if to the Company:
	 
	 	 	 	 	 	 
	 	 	 	 	20425 Seneca Meadows Parkway
	 	 	 	 	Germantown, Maryland 20876
	 

	 	 	 	Attention:
	 	 Edward M. Rudnic, Ph.D.
	 

	 	 	 	 	 	President and Chief Executive Officer
	 

	 	 	 	Facsimile:
	 	 (301) 944-6700
	 
	 	 	 	 	 	 
	 	 	 	 	with a copy to
	 
	 	 	 	 	 	 
	 	 	 	 	Dewey & LeBoeuf LLP
	 	 	 	 	1301 Avenue of the Americas
	 	 	 	 	New York, New York
	 

	 	 	 	Attention:
	 	 Frederick W. Kanner, Esq.
	 

	 	 	 	Facsimile:
	 	 (212) 259-6333
	 
	 	 	 	 	 	 
		 	(ii)	 	if to the Deerfield Entities:
	 
	 	 	 	 	 	 
	 	 	 	 	Deerfield Management L.P.
	 	 	 	 	780 3rd Avenue, 37th Floor
	 	 	 	 	New York, New York 10017
	 	 	 	 	Attention: James E. Flynn
	 	 	 	 	Facsimile: (212) 599-1248
	 
	 	 	 	 	 	 
	 	 	 	 	with a copy to:
	 
	 	 	 	 	 	 
	 	 	 	 	Robinson, Bradshaw & Hinson, P.A.
	 	 	 	 	101 North Tryon Street, Suite 1900
	 	 	 	 	Charlotte, North Carolina 28246
	 	 	 	 	Attention: David J. Clark
	 	 	 	 	Facsimile: (704) 373-3990

	 	6.5	 	Severability. In the event that any provision of this Agreement or the
application thereof becomes or is declared by a court of competent jurisdiction to
be illegal, void or unenforceable, the remainder of this Agreement will continue in
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of such
void or unenforceable provision.

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	 	6.6	 	Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by law
or equity upon such party, and the exercise by a party of any one remedy will not
preclude the exercise of any other remedy. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled to
seek an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
	 
	 	6.7	 	No Waiver; Remedies Cumulative. No failure or delay on the part of any
party hereto in the exercise of any right hereunder will impair such right or be
construed to be a waiver of, or acquiescence in, any breach of any representation,
warranty or agreement herein, nor will any single or partial exercise of any such
right preclude other or further exercise thereof or of any other right. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive to,
and not exclusive of, any rights or remedies otherwise available.
	 
	 	6.8	 	Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
	 
	 	 	 	This Agreement shall be governed by and construed in accordance with the internal
and substantive laws of the State of Delaware, without regard to any conflicts of
laws concepts which would apply the substantive law of some other jurisdiction.
	 
	 	 	 	Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the
Court of Chancery in the State of Delaware and the Federal courts of the United
States of America located in the State of Delaware for the purpose of any suit,
action, proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection with any such
suit, action or proceeding may be served on each party hereto anywhere in the world
by the same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of
any such court in any such suit, action or proceeding and to the laying of venue in
such court. Each party hereto irrevocably waives any objection to the laying of
venue of any such suit, action or proceeding brought in such courts and irrevocably
waives any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY
RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT
AND REPRESENTS THAT

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	 	 	 	COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
	 
	 	6.9	 	Descriptive Heading. The descriptive headings used herein are for
reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
	 
	 	6.10	 	Expenses. All costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
	 
	 	6.11	 	Counterparts. This Agreement may be executed in two or more
counterparts, and by facsimile, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other party, it being understood that
all parties need not sign the same counterpart.
	 
	 	6.12	 	Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will be
construed against the party drafting such agreement or document.

[Signature page follows.]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day
and year first written above.

	 	 	 	 	 
	 	MIDDLEBROOK PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ Edward M. Rudnic
 	 
	 	 	Name:  	Edward M.  Rudnic, Ph.D. 	 
	 	 	Title:  	President & Chief Executive Officer 	 
	 

[Signature
Page to Deerfield Agreement]

 

 

	 	 	 	 	 	 	 
	 	 	DEERFIELD PRIVATE DESIGN FUND, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Deerfield Capital, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	J.E. Flynn Capital LLC,	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James E. Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James E. Flynn, Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	DEERFIELD PRIVATE DESIGN INTERNATIONAL, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Deerfield Capital, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	J.E. Flynn Capital LLC,	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James E. Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James E. Flynn, Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	DEERFIELD SPECIAL SITUATIONS FUND, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Deerfield Capital, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	J.E. Flynn Capital LLC,	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James E. Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James E. Flynn, Authorized Signatory	 	 

[Signature
Page to Deerfield Agreement]

 

 

	 	 	 	 	 	 	 
	 	 	DEERFIELD SPECIAL SITUATIONS FUND INTERNATIONAL LIMITED	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Deerfield Management Company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Flynn Management LLC,	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James E. Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James E. Flynn, Authorized Signatory	 	 
	 
	 	 	 	 	 	 
	 	 	LEX PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeff Kaplan	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jeff Kaplan

Title: Treasurer/Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	KEF PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeff Kaplan	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Jeff Kaplan	 	 
	 

	 	 	 	Title: Treasurer/Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	DEERFIELD MANAGEMENT, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James Flynn	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: James Flynn	 	 
	 

	 	 	 	Title: General Partner	 	 

[Signature
Page to Deerfield Agreement]exv10w3

Exhibit 10.3

MIDDLEBROOK PHARMACEUTICALS, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

     THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made this 1st day of July,
2008 by and between John S. Thievon, a resident of Denton County, Texas, (the “Employee”),
and MiddleBrook Pharmaceuticals, Inc., a corporation organized and existing under the laws of the
State of Delaware and formerly known as Advancis Pharmaceutical Corporation (the
“Company”).

BACKGROUND

     WHEREAS, the Company is engaged in the business of developing, improving and promoting
antibiotic therapies and the delivery and dosage of antibacterials, as well as extending the market
and patent life of important anti-infectives and oncological agents (as may be modified or expanded
by the Company during the term of this Agreement, collectively and individually, the
“Business”); and

     WHEREAS, concurrently with the execution of this Agreement, Equity Group Investments, LLC
(“EGI”) and the Company are entering into a Securities Purchase Agreement of even date
herewith (the “Purchase Agreement”), pursuant to which the parties thereto have agreed,
upon the terms and subject to the conditions set forth therein, that the Company will sell to EGI
(i) 30,303,030 shares of the authorized but unissued shares of common stock, $0.01 par value per
share, of the Company (the “Common Stock”) and (ii) a warrant to purchase an aggregate of
12,121,212 shares of Common Stock (such transaction known as the “Transaction”); and

     WHEREAS, the Company desires to employ the Employee and the Employee desires to be employed by
the Company, upon the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, and
intending to be legally bound, the parties, subject to the terms and conditions set forth herein,
agree as follows:

     1. Employment and Term. The Company hereby employs the Employee and the Employee hereby
accepts employment with the Company, as President and Chief Executive Officer (the
“Position”), effective as of the Closing Date of the Transaction (the “Commencement
Date”), and contingent upon the Closing of the Transaction. The “Closing” and the
“Closing Date” shall have the definitions assigned to such terms in the Purchase Agreement.
Employee is employed by the Company on an at will basis. The Employee shall be entitled to
terminate this Agreement at any time upon ninety (90) days prior written notice to the Company.
The Company shall be entitled to terminate this Agreement at any time subject to the provisions of
Section 8 hereof. (The entire period of time during which the Employee is employed by the Company
is referred to herein as the “Term”).

 

 

     2. Duties. During the Term, the Employee shall serve the Company faithfully and to the
best of his/her ability and shall devote his/her reasonable and prudent attention, skill and
efforts to the performance of the duties required by or appropriate for the Position. Subject to
the oversight of the Board of Directors of the Company (the “Board of Directors”), the
Employee shall have the duties and responsibilities customarily associated with the Position,
including such duties and responsibilities as may be assigned to him/her from time to time by the
Board of Directors. The Employee shall perform such duties and responsibilities at the Company’s
facility located in Germantown, Maryland or at such other location as may be mutually agreed upon
by the Company and the Employee in accordance with the business needs of the Company. The
Employee, as President and Chief Executive Officer shall report to the Board of Directors. The
Employee, as Chief Executive Officer, will be elected to the Board of Directors in accordance with
past practice.

     3. Other Business Activities. Except with the prior written consent of the Company in its
sole discretion, the Employee shall not engage, directly or indirectly, during the Term, in any
other business activities or pursuits whatsoever, except activities in connection with charitable
or civic activities, his position on the board of directors of DaySpring Pharma, LLC, personal
investments and serving as an executor, trustee or in other similar fiduciary capacity; provided
that any such activities do not interfere with the performance of his/her responsibilities and
obligations pursuant to this Agreement.

     4. Compensation. The Company shall pay the Employee, and the Employee hereby agrees to
accept, as compensation for all services to be rendered to the Company and for the Employee’s
intellectual property covenants and assignments and covenant not to compete, as provided in
Sections 6 and 7 hereof, the compensation set forth in this Section 4.

          4.1 Salary. The Company shall pay the Employee a base salary at the annual rate of
Five-Hundred Thousand USD ($500,000) (as the same may hereafter be adjusted, the “Salary”)
during the Term of this Agreement. The Salary shall be inclusive of all applicable income, social
security and other taxes and charges that are required by law to be withheld by the Company
(collectively, “Taxes”) and shall be paid and withheld in accordance with the Company’s
normal payroll practice for its executive employees from time to time in effect. The Salary shall
be subject to increase at the option and in the sole discretion of the Company based upon the
demonstrated performance of the Employee.

          4.2 Bonus. The Employee shall be eligible to be awarded an annual cash bonus (the
“Annual Bonus”), which bonus shall be determined by the Board of Directors and shall be at
a target amount of Fifty-Five percent (55%) of Salary paid during such applicable period, less
Taxes, provided that the Employee shall have achieved all of his/her performance objectives
established for such period. Such bonus shall be determined and paid no later than the
15th day of the third month of such succeeding calendar year.

          4.3 Initial Option Award. Immediately following the Commencement Date, and contingent
upon the Closing of the Transaction, the Employee shall receive an option to purchase Common Stock
under the equity-based incentive compensation plans adopted by the Company for which senior
executives are generally eligible. The amount of Common Stock subject to such option shall equal
Two and Twenty-Five Hundredths percent (2.25%) of all

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issued and outstanding Common Stock of the Company plus issued and outstanding warrants
calculated immediately following the Closing Date. The exercise price per share of Common Stock
shall equal the fair market value of the Common Stock on the date of grant. The option shall vest
over four years with Twenty-Five percent (25%) vesting at the first anniversary following the
Commencement Date and then an additional Two and Eight Hundred Thirty-Three Ten Thousandths percent
(2.0833%) vesting at the end of each month thereafter for a period of 36 months.

          4.4 Annual Equity Awards. During the Term, the Employee shall be eligible to receive
awards under the equity-based incentive compensation plans adopted by the Company for which senior
executives are generally eligible. The specific amount, terms and conditions of any such award, if
any, shall be determined in the sole discretion of the Company, but with an annual target numbering
between Twenty Hundredth percent (0.2%) and Thirty Hundredth percent (0.3%) of the Common Stock of
the Company plus issued and outstanding warrants calculated at the time of the award.

          4.5 Fringe Benefits. The Employee shall be entitled to participate in the following
programs and receive the following benefits (collectively, the “Benefits”) in accordance
with the following provisions.

               (a) The Employee shall be entitled to participate in any retirement, health or dental programs
generally made available to executive employees of the Company.

               (b) The Employee shall be entitled to participate in all vacation, life and disability
insurance and other fringe benefit programs of the Company to the extent and on the same terms and
conditions as are accorded to other executive employees of the Company.

          4.6 Reimbursement of Expenses. During the Term, the Employee shall be reimbursed for
items of travel, food and lodging and miscellaneous expenses reasonably incurred by him/her on
behalf of the Company, provided that such expenses are incurred, documented and submitted to the
Company, all in accordance with the reimbursement policies of the Company as in effect from time to
time. For purposes of satisfying Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), the parties agree that the amounts reimbursed under this Section 4.6 for one calendar
year shall not affect the amounts reimbursed for other calendar years, and reimbursement payments,
if any, shall in all events be made no later than the 15th day of the third month of the calendar
year following the calendar year in which the applicable expense is incurred.

     5. Confidentiality. The Employee recognizes and acknowledges that the Proprietary
Information (as hereinafter defined) is a valuable, special and unique asset of the Company. As a
result, both during the Term and thereafter, the Employee shall not, without the prior written
consent of the Company, for any reason either directly or indirectly divulge to any third-party or
use for his/her own benefit, or for any purpose other than the exclusive benefit of the Company,
any confidential, proprietary, business and technical information or trade secrets of the Company
or of any subsidiary or affiliate of the Company (the “Proprietary Information”) revealed,
obtained or developed in the course of his/her employment with the Company.

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Proprietary Information shall include any confidential or proprietary information or trade secrets
relating to any patents or other intellectual property assigned by the Employee to the Company.
Proprietary Information also shall include, but shall not be limited to the intangible personal
property described in Section 6.2(b) hereof and, in addition, technical information, including
research design, results, techniques and processes; apparatus and equipment design; computer
software; technical management information, including project proposals, research plans, status
reports, performance objectives and criteria, and analyses of areas for business development; and
business information, including project, financial, accounting and personnel information, business
strategies, plans and forecasts, customer lists, customer information and sales and marketing
plans, efforts, information and data. In addition, “Proprietary Information” shall include
all information and materials received by the Company or Employee from a third party subject to an
obligation of confidentiality and/or non-disclosure. Nothing contained herein shall restrict the
Employee’s ability to make such disclosures during the course of his/her employment as may be
necessary or appropriate to the effective and efficient discharge of the duties required by or
appropriate for the Position or as such disclosures may be required by law. Furthermore, nothing
contained herein shall restrict the Employee from divulging or using for his/her own benefit or for
any other purpose any Proprietary Information that is readily available to the general public so
long as such information did not become available to the general public as a direct or indirect
result of the Employee’s breach of this Section 5. Failure by the Company to mark any of the
Proprietary Information as confidential or proprietary shall not affect its status as Proprietary
Information under the terms of this Agreement.

     6. Property.

          6.1 Removal and Distribution. All right, title and interest in and to Proprietary
Information shall be and remain the sole and exclusive property of the Company. During the Term,
the Employee shall not remove from the Company’s offices or premises any documents, records,
notebooks, files, correspondence, reports, memoranda or similar materials of or containing
Proprietary Information, or other materials or property of any kind belonging to the Company,
unless necessary or appropriate in accordance with the duties and responsibilities required by or
appropriate for the Position and, in the event that such materials or property are removed, all of
the foregoing shall be returned to their proper files or places of safekeeping as promptly as
possible after the removal shall serve its specific purpose. The Employee shall not make, retain,
remove and/or distribute any copies of any of the foregoing for any reason whatsoever, except as
may be necessary in the discharge of the assigned duties and shall not divulge to any third person
the nature of and/or contents of any of the foregoing or of any other oral or written information
to which he may have access or with which for any reason he may become familiar, except as
disclosure shall be necessary in the performance of the duties; and upon the termination of his/her
employment with the Company, the Employee shall return to the Company all originals and copies of
the foregoing then in his/her possession or under his/her control, whether prepared by the Employee
or by others.

          6.2 Developments.

               (a) The Employee acknowledges that all right, title and interest in and to any and all
writings, documents, inventions, discoveries, ideas, developments, information, computer programs
or instructions (whether in source code, object code, or any

4

 

other form), algorithms, formulae, plans, memoranda, tests, research, designs, innovations,
systems, analyses, specifications, models, data, diagrams, flow charts, and/or techniques (whether
patentable or non-patentable or whether reduced to written or electronic form or otherwise) that
the Employee creates, makes, conceives, discovers or develops, either solely or jointly with any
other person, at any time during the Term, whether during working hours or at the Company’s
facility or at any other time or location, and whether upon the request or suggestion of the
Company or otherwise, (collectively, “Intellectual Work Product”) shall be the sole and
exclusive property of the Company. The Employee shall promptly disclose to the Company all
Intellectual Work Product, and the Employee shall have no claim for additional compensation for the
Intellectual Work Product, except for any excluded Intellectual Work Product that is wholly
unrelated to the pharmaceutical industry, in the broadest sense, provided that such Intellectual
Work Product is not conceived, discovered or developed, either solely or jointly with any other
person during working hours or at the Company’s facility or using any other Company resource.

               (b) The Employee acknowledges that all the Intellectual Work Product that is copyrightable
shall be considered a work made for hire under United States Copyright Law. To the extent that any
copyrightable Intellectual Work Product may not be considered a work made for hire under the
applicable provisions of the United States Copyright Law, or to the extent that, notwithstanding
the foregoing provisions, the Employee may retain an interest in any Intellectual Work Product, the
Employee hereby irrevocably assigns and transfers to the Company any and all right, title, or
interest that the Employee may have in the Intellectual Work Product under copyright, patent, trade
secret and trademark law, in perpetuity or for the longest period otherwise permitted by law,
without the necessity of further consideration. The Company shall be entitled to obtain and hold
in its own name all copyrights, patents, trade secrets, and trademarks with respect thereto.

               (c) The Employee shall reveal promptly all information relating to any such Intellectual
Property to the Board of Directors, and, at the Company’s expense, shall cooperate with the Company
and execute such documents as may be necessary or appropriate (i) in the event that the Company
desires to seek copyright, patent or trademark protection, or other analogous protection,
thereafter relating to the Intellectual Work Product, and when such protection is obtained, renew
and restore the same, or (ii) to defend any opposition proceedings in respect of obtaining and
maintaining such copyright, patent or trademark protection, or other analogous protection.

               (d) In the event the Company is unable after reasonable effort to secure the Employee’s
signature on any of the documents referenced in Section 6.2 (c) hereof, whether because of the
Employee’s physical or mental incapacity or for any other reason whatsoever, the Employee hereby
irrevocably designates and appoints the Company and its duly authorized officers and agents as the
Employee’s agent and attorney-in-fact, to act for and on the behalf and stead to execute and file
any such documents and to do all other lawfully permitted acts to further the prosecution and
issuance of any such copyright, patent or trademark protection, or other analogous protection, with
the same legal force and effect as if executed by the Employee.

5

 

               (e) The Employee represents that the innovations, designs, systems, analyses, ideas, and all
copyrights, patents, trademarks and trade names, or similar intangible personal property
(collectively, the “Pre-existing Property”) identified on Schedule I hereof
comprise all of the innovations, designs, systems, analyses, ideas and all copyrights, patents,
trademarks and trade names, or similar intangible personal property that the Employee has made or
conceived of prior to the date hereof, and same are excluded from the operation of the other
provisions of this Section 6.2. In the event that the Employee learns of any Pre-existing Property
that he inadvertently failed to include in Schedule I, and the circumstances surrounding the
failure of such inclusion are reasonably satisfactory to the Company, the Employee and the Company
shall jointly amend Schedule I to include such property.

     7. Covenant not to Compete.

          7.1 Restrictions. Provided that the Company is in compliance with Section 8.7 hereof,
if applicable, the Employee shall not, during the Term and for a period of one (1) year thereafter
(the “Restricted Period”), except as an employee of the Company and in order to carry out
the Employee’s duties hereunder, do any of the following directly or indirectly without the prior
written consent of the Company in its sole discretion:

               (a) engage or participate, directly or indirectly, in any business activity competitive with
the Business or the business of the Company or any of the Company’s subsidiaries or affiliates as
conducted during the Term;

               (b) become interested (as owner, stockholder, lender, partner, co-venturer, director, officer,
employee, agent, consultant or otherwise) in any person, firm, corporation, association or other
entity engaged in any business that is competitive with the Business or of the business of the
Company or any subsidiary or affiliate of the Company as conducted during the Term, or become
interested in (as owner, stockholder, lender, partner, co-venturer, director, officer, employee,
agent, consultant or otherwise) any portion of the business of any person, firm, corporation,
association or other entity where such portion of such business is competitive with the Business of
the Company or the business of any subsidiary or affiliate of the Company as conducted during the
Term (notwithstanding the foregoing, the Employee may hold not more than one percent (1%) of the
outstanding securities of any class of any publicly-traded securities of a company that is engaged
in activities referenced in this Section 7.1).

               (c) solicit, call on or transact or engage in any business activity with, either directly or
indirectly, any (i) customer with whom the Company shall have dealt at any time during the one (1)
year period immediately preceding the termination of the Employee’s employment hereunder, or (ii)
corporate partner, collaborator, independent contractor or supplier with whom the Company shall
have dealt at any time during the one (1) year period immediately preceding the termination of the
Employee’s employment hereunder;

               (d) influence or attempt to influence any then current or prospective supplier, customer,
corporate partner, collaborator, or independent contractor of the Company to terminate or modify
any written or oral agreement or course of dealing with the Company; or

6

 

               (e) influence or attempt to influence any person either (i) to terminate or modify an
employment, consulting, agency, distributorship or other arrangement with the Company, or (ii) to
employ or retain, or arrange to have any other person or entity employ or retain, any person who
has been employed or retained by the Company as an employee, consultant, agent or distributor of
the Company at any time during the one (1) year period immediately preceding the termination of the
Employee’s employment hereunder.

          7.2 Acknowledgement. The Employee acknowledges that he has carefully read and
considered the provisions of this Section 7. The Employee acknowledges that the foregoing
restrictions will limit his/her ability to earn a livelihood in a business competitive with the
Business, but he nevertheless believes that he has received and will receive sufficient
consideration and other benefits in connection with the payment by the Company of the compensation
set forth in Sections 4 and 8.7 to justify such restrictions, which restrictions the Employee does
not believe would prevent him/her from earning a living in the businesses that are not competitive
with the Business and without otherwise violating the restrictions set forth herein.

     8. Early Termination. The Employee’s employment hereunder may be terminated during the
Term upon the occurrence of any one of the events described in this Section 8. Upon termination,
the Employee shall be entitled only to such compensation and benefits as described in this Section
8. The word “termination” as used throughout the Agreement with respect to the Employee’s
employment hereby refers to a “separation from service” by the Employee from the Company, as
defined by Treasury Regulation §1.409A-1(h).

          8.1 Automatic Termination. This Agreement shall be effective on the Commencement
Date. Upon the termination of the Purchase Agreement pursuant to Section 7 thereof, this Agreement
shall automatically terminate and become void.

          8.2 Involuntary Termination.

               (a) Termination for Disability.

                    (i) In the event of the disability of the Employee such that the Employee is unable to perform
the duties and responsibilities hereunder to the full extent required by this Agreement by reasons
of illness, injury or incapacity for a period of more than one hundred eighty (180) consecutive
days or more than one hundred eighty (180) days, in the aggregate, during any three hundred
sixty-five (365) day period (“Disability”), the Company shall have the right to terminate
Employee’s employment hereunder by written notice to the Employee.

                    (ii) In the event of a termination of the Employee’s employment hereunder pursuant to Section
8.2(a)(i), the Employee will be entitled to receive all accrued and unpaid (as of the date of such
termination) Salary and applicable Benefits; and, provided that the Employee has complied with all
of his/her obligations under this Agreement and continues to comply with all of his/her surviving
obligations hereunder listed in Section 10, a pro-rata Annual Bonus for the portion of the year
prior to the date of termination during which the Employee was employed by the Company (the
“Pro Rata Bonus”). All of the foregoing

7

 

payments shall be paid within thirty (30) days following the termination date. Except as
specifically set forth in this Section 8.1(a)(ii) or as provided by applicable law, the Company
shall have no liability or obligation to the Employee for compensation or benefits hereunder by
reason of, or subsequent to, such termination.

               (b) Termination by Death. In the event that the Employee dies during the Term, the
Employee’s employment hereunder shall be terminated thereby and the Company shall pay to the
Employee’s executors, legal representatives or administrators an amount equal to the accrued and
unpaid Salary, applicable Benefits and Pro Rata Bonus. All the foregoing payments shall be paid
within thirty (30) days following the termination date. Except as specifically set forth in this
Section 8.2(b) or as provided by applicable law, the Company shall have no liability or obligation
hereunder to the Employee’s executors, legal representatives, administrators, heirs or assigns or
any other person claiming under or through him/her by reason of or subsequent to the Employee’s
death.

          8.3 Termination for Cause.

               (a) The Company shall have the right to terminate the Employee’s employment hereunder at any
time for “cause” upon written notice to the Employee. For purposes of this Agreement, “cause”
shall mean the Employee’s (including, if the Employee is not a natural person, any employee of or
contractor to the Employee who is involved, directly or indirectly, in the provision of services to
the Company) (a) dishonesty, embezzlement, theft or fraudulent misconduct; (b) abuse of a
controlled substance that materially impairs the performance of the Employee’s duties to the
Company; (c) conduct adverse to the business interests, or reputation of the Company; (d) material
breach of any terms hereof or of any agreement between the Company and the Employee, (including,
but not limited to, terms relating to non-disclosure, non-competition and invention assignment)
which, if curable, remains uncured thirty (30) days after the Employee receives written notice of
such breach; or (e) commission of a felony.

               (b) In the event of a termination of the Employee’s employment hereunder pursuant to Section
8.3(a), the Employee shall be entitled to receive all accrued but unpaid (as of the effective date
of such termination) Salary and Benefits. All the foregoing payments shall be paid within thirty
(30) days following the termination date. All Salary and Benefits shall cease at the time of such
termination, subject to the requirements of applicable law. Except as specifically set forth in
this Section 8.3, the Company shall have no liability or obligation hereunder by reason of or
subsequent to such termination.

          8.4 Termination by the Company Without Cause. Notwithstanding anything to the
contrary set forth herein, the Company shall have the right to terminate the Employee’s employment
hereunder at any time before or after a Change in Control (as defined below), for any reason or no
reason, with or without cause, effective upon the date designated by the Company upon written
notice to the Employee.

          8.5 Termination for Good Reason Following a Change in Control.

8

 

               (a) The Employee shall have the right to terminate the Employee’s employment hereunder at any
time for Good Reason within twelve (12) months following a Change in Control.

               (b) “Good Reason” means the occurrence of any one of the following without the Employee’s
consent:

                    (i) any requirement that the Employee relocate, by more than thirty-five (35) miles, from the
principal location where the Employee performs services for the Company, provided that such
relocation constitutes a material change to the Employee’s employment;

                    (ii) any material diminution in the Employee’s authority, duties or responsibilities (other
than a change due to a Disability); or

                    (iii) any material reduction in the Employee’s Salary or Annual Bonus.

Notwithstanding the foregoing, an event that is or would constitute grounds for a resignation for a
Good Reason shall not constitute such grounds for a resignation for Good Reason if: (A) Employee
does not send a notice of termination to the Company within thirty (30) days after the event
occurs; or (B) the Company reverses the action or cures the default that would give rise to a
termination for a Good Reason within thirty (30) days after the delivery of the notice of
termination.

               (c) “Change in Control” means: (i) the acquisition (other than from the Company) in
one or more transactions by any Person, as defined below, of the beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended) of
thirty-three percent (33%) or more of (A) the then outstanding shares of the securities of the
Company, or (B) the combined voting power of the then outstanding securities of the Company
entitled to vote generally in the election of directors (the “Company Voting Stock”); (ii)
the closing of a sale or other conveyance of assets representing fifty percent (50%) or more of the
fair market value of the Company’s consolidated assets (in a single transaction or in a series of
related transactions); (iii) the dissolution or liquidation of the Company; (iv) a change in the
composition of the Board of Directors, as a result of which, fewer than one-half of the incumbent
directors after such change are directors who either (A) had been directors of the Company
twenty-four (24) months prior to such change or (B) were elected, or nominated for election, to the
Board of Directors with the approval of at least a majority of the directors who had been the
Company’s directors twenty-four (24) months prior to such change and who were still in office at
the time of the election or nomination; or (v) the effective time of any merger, share exchange,
consolidation, or other business combination involving the Company if immediately after such
transaction persons who hold a majority of the outstanding voting securities entitled to vote
generally in the election of directors of the surviving entity (or the entity owning one hundred
percent (100%) of such surviving entity) are not persons who, immediately prior to such
transaction, held a majority of the Company Voting Stock; provided, however, that a Change in
Control shall not include (X) a public offering of capital stock of the Company; (Y) any
distribution of capital stock of the Company by a

9

 

partnership or limited liability company to a partner of such partnership or member of such
limited liability company in respect of the interest of such partner or member and without the
payment of additional consideration; or (Z) any transaction pursuant to which shares of capital
stock of the Company are transferred or issued to any trust, charitable organization, foundation,
family partnership or other entity controlled directly or indirectly by, or established for the
benefit of any of the current or former executive officers of the Company or their immediate family
members (including spouses, children, grandchildren, parents, and siblings, in each case to include
adoptive relations), or transferred to any such immediate family members. For purposes of this
definition of Change in Control, a “Person” means any individual, entity or group within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended,
other than: employee benefit plans sponsored or maintained by the Company or by affiliates
controlled by the Company, or an underwriter of the Common Stock of the Company in a registered
public offering.

          8.6 Termination for Good Reason In the Event of
a Potential Change in Control.

               (a) The Employee shall have the right to terminate the Employee’s employment hereunder at any
time following a Potential Change in Control if after a Potential Change in Control (and prior to
the occurrence or abandonment of a Change in Control) there is a Good Reason event and such Good
Reason event was the result of a request or direction given by a Person seeking to effectuate a
Change in Control.

               (b) “Potential Change in Control” means (i) the Company enters into a definitive
agreement, the consummation of which would result in the occurrence of a Change in Control; or (ii)
any Person publicly announces an intention to take actions which, if consummated, would constitute
a Change in Control.

          8.7 Severance Benefits. In the event of a termination of the Employee’s employment
hereunder without cause before or after a Change in Control pursuant to Section 8.4 or for Good
Reason within twelve (12) months following a Change in Control pursuant to Section 8.5(a), the
Employee shall be entitled to receive the following.

               (a) All accrued but unpaid (as of the effective date of such termination) Salary and Benefits
and, provided that the Employee has complied with all of his/her obligations under this Agreement
and continues to comply with all of his/her surviving obligations hereunder listed in Section 10, a
Pro Rata Bonus. All the foregoing payments shall be paid within thirty (30) days following the
termination date, and Benefits shall be paid or provided pursuant to the terms of the applicable
Benefit plan. All Salary shall cease at the time of such termination, except as required under
applicable law or as provided herein. Except as specifically set forth in this Section 8, the
Company shall have no liability or obligation hereunder by reason of or subsequent to such
termination.

               (b) Provided that the Employee has complied with all of his/her obligations under this
Agreement and continues to comply with all of his/her surviving obligations hereunder listed in
Section 10, severance pay in the form of a lump sum payment within sixty (60) days of such
termination (subject to the provisions of Section 8.7(e)), in an

10

 

amount equal to the Salary that the Employee would have earned if the Employee had continued
working for the Company during the twenty-four (24) month period immediately following the
Employee’s date of termination. Such payment shall be subject to all Taxes.

               (c) Provided that the Employee has complied with all of his/her obligations under this
Agreement and continues to comply with all of his/her surviving obligations hereunder listed in
Section 10, continued Benefits as in effect on the date preceding his/her termination for a period
of twenty-four (24) months following termination, made in accordance with any terms applicable to
such Benefits. All reimbursements and in-kind benefits provided under this Section 8.7(c), shall
be made or provided in accordance with the requirements of Section 409A of the Code, including,
where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during
the Employee’s lifetime (or during a shorter period of time specified in this Agreement), (ii) the
amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year
may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any
other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the
last day of the calendar year following the year in which the expense is incurred (or such earlier
date if specified in this Agreement), and (iv) the right to reimbursement or in-kind benefits is
not subject to liquidation or exchange for another benefit.

               (d) Except as provided in subsections (a), (b) and (c) above, the Company shall have no
liability or obligation by reason of or subsequent to the termination of the employment
relationship between the Company and the Employee.

               (e) Notwithstanding anything in this Agreement to the contrary, the intent of the parties is
that payments and benefits under this Agreement comply with Section 409A of the Code and,
accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in
compliance therewith. Each amount to be paid or benefit to be provided under this Agreement shall
be construed as a separate identified payment for purposes of Section 409A, and any payments
described in this Agreement that are due within the “short term deferral period” as defined in
Section 409A shall not be treated as deferred compensation unless applicable law requires
otherwise. If required to avoid the application of an accelerated or additional tax under Section
409A of the Internal Revenue Code, amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to this Agreement during the six-month period immediately following
the Employee’s termination of employment shall instead be paid on the first business day after the
date that is six months following the Employee’s termination of employment (or upon the Employee’s
death, if earlier).

     9. Representations, Warranties and Covenants of the Employee.

          9.1 Restrictions. The Employee represents and warrants to the Company that:

               (a) There are no restrictions, agreements or understandings whatsoever to which the Employee
is a party which would prevent or make unlawful the Employee’s execution of this Agreement or the
Employee’s employment hereunder, or which is or would be inconsistent or in conflict with this
Agreement or the Employee’s employment

11

 

hereunder, or, except as set forth in any agreements previously provided to the Company, would
prevent, limit or impair in any way the performance by the Employee of the obligations hereunder;
and

               (b) The Employee has disclosed to the Company all restraints, confidentiality commitments or
other employment restrictions that he has with any other employer, person or entity.

          9.2 Obligations to Former Employers. The Employee covenants that in connection with
his/her provision of services to the Company, he shall not breach any obligation (legal, statutory,
contractual or otherwise) to any former employer or other person, including, but not limited to
obligations relating to confidentiality and proprietary rights. The parties each confirm, warrant
and stipulate that John S. Thievon has in good faith fully disclosed his Change in Control
Agreement with Adams Respiratory Therapeutics, Inc., attached hereto as Exhibit A, and said
agreement does not constitute a breach of this agreement in part or in total.

          9.3 Obligations Upon Termination. Upon and after his/her termination or cessation of
employment with the Company and until such time as no obligations of the Employee to the Company
hereunder exist, the Employee (i) shall provide a complete copy of this Agreement to any
prospective employer or other person, entity or association engaged in the Business, with whom or
which the Employee proposes to be employed, affiliated, engaged, associated or to establish any
business or remunerative relationship prior to the commencement thereof and (ii) shall notify the
Company of the name and address of any such person, entity or association prior to his/her
employment, affiliation, engagement, association or the establishment of any business or
remunerative relationship.

     10. Survival of Provisions. The provisions of this Agreement set forth in Sections 5, 6,
7, 8, 9, 10, 19 and 20 hereof shall survive the termination of the Employee’s employment hereunder.

     11. Successors and Assigns. This Agreement shall inure to the benefit of and be binding
upon the Company and the Employee and their respective successors, executors, administrators, heirs
and/or assigns; provided that neither party shall make any assignment of this Agreement or any
interest herein, by operation of law or otherwise, without the prior written consent of the other
party.

     12. Notice. Any notice hereunder by either party shall be given by personal delivery or by
sending such notice by certified mail, return-receipt requested, or telecopied, addressed or
telecopied, as the case may be, to the other party at its address set forth below or at such other
address designated by notice in the manner provided in this section. Such notice shall be deemed
to have been received upon the date of actual delivery if personally delivered or, in the case of
mailing, two (2) days after deposit with the U.S. mail, or, in the case of facsimile transmission,
when confirmed by the facsimile machine report.

12

 

	 	 	 
	(a)

	 	If to the Company, to:
	 
	 	 
	 

	 	MiddleBrook Pharmaceuticals, Inc.
	 

	 	20425 Seneca Meadows Parkway
	 

	 	Germantown, Maryland 20876
	 

	 	Attn.: Edward M. Rudnic, Ph.D.
	 

	 	          President and Chief Executive Officer
	 

	 	Fax: 301-944-6700
	 
	 	 
	 

	 	with a copy to (which shall not constitute notice):
	 
	 	 
	 

	 	Dewey & LeBoeuf LLP
	 

	 	1301 Avenue of the Americas
	 

	 	New York, New York 10019
	 

	 	Attention: Frederick W. Kanner, Esq.
	 

	 	Fax: 212-259-6333
	 
	 	 
	(b)

	 	If to the Employee, to:
	 
	 	 
	 

	 	Mr. John S. Thievon
	 

	 	ATTN: Joe A. England II
	 

	 	1333 Corporate Drive, Suite 209
	 

	 	Irving, Texas 75038
	 

	 	Facsimile: (972) 719 -0905

     13. Entire Agreement; Amendments. This Agreement contains the entire agreement and
understanding of the parties hereto relating to the subject matter hereof, and merges and
supersedes all prior and contemporaneous discussions, agreements, amendments and understandings of
every nature between the parties hereto relating to the employment of the Employee with the
Company. This Agreement may not be changed or modified, except by an agreement in writing signed
by each of the parties hereto.

     14. Waiver. The waiver of the breach of any term or provision of this Agreement shall not
operate as or be construed to be a waiver of any other or subsequent breach of this Agreement.

     15. Governing Law. This Agreement shall be construed and enforced in accordance with the
laws of the State of Delaware, without regard to the principles of conflicts of laws of any
jurisdiction.

13

 

     16. Invalidity. If any provision of this Agreement shall be determined to be void,
invalid, unenforceable or illegal for any reason, the validity and enforceability of all of the
remaining provisions hereof shall not be affected thereby. If any particular provision of this
Agreement shall be adjudicated to be invalid or unenforceable, such provision shall be deemed
amended to delete therefrom the portion thus adjudicated to be invalid or unenforceable, such
amendment to apply only to the operation of such provision in the particular jurisdiction in which
such adjudication is made; provided that, if any provision contained in this Agreement shall be
adjudicated to be invalid or unenforceable because such provision is held to be excessively broad
as to duration, geographic scope, activity or subject, such provision shall be deemed amended by
limiting and reducing it so as to be valid and enforceable to the maximum extent compatible with
the applicable laws of such jurisdiction, such amendment only to apply with respect to the
operation of such provision in the applicable jurisdiction in which the adjudication is made.

     17. Section Headings. The section headings in this Agreement are for convenience only;
they form no part of this Agreement and shall not affect its interpretation.

     18. Number of Days. In computing the number of days for purposes of this Agreement, all
days shall be counted, including Saturdays, Sundays and legal holidays; provided that, if the final
day of any time period falls on a Saturday, Sunday or day which is a legal holiday in Delaware or
Maryland, then such final day shall be deemed to be the next day which is not a Saturday, Sunday or
legal holiday.

     19. Specific Enforcement. The Employee acknowledges that the restrictions contained in
Sections 5, 6, and 7 hereof are reasonable and necessary to protect the legitimate interests of the
Company and its affiliates and that the Company would not have entered into this Agreement in the
absence of such restrictions. The Employee also acknowledges that any breach by him/her of
Sections 5, 6, or 7 hereof will cause continuing and irreparable injury to the Company for which
monetary damages would not be an adequate remedy. The Employee shall not, in any action or
proceeding to enforce any of the provisions of this Agreement, assert the claim or defense that an
adequate remedy at law exists. In the event of such breach by the Employee, the Company shall have
the right to enforce the provisions of Section 5, 6, and 7 of this Agreement by seeking injunctive
or other relief in any court, and this Agreement shall not in any way limit remedies of law or in
equity otherwise available to the Company.

     20. Consent to Suit. Subject to the provisions of Section 21 hereof, any legal proceeding
arising out of or relating to this Agreement shall be instituted in the Court of Chancery of New
Castle County, or if such court does not have jurisdiction or will not accept jurisdiction, in any
state or federal court of general jurisdiction in the State of Delaware, and each of the Company
and the Employee hereby consents to the personal and exclusive jurisdiction of such court and
hereby waives any objection that either party may have to the laying of venue of any such
proceeding and any claim or defense of inconvenient forum. If an action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to recover, in addition to any other relief, reasonable attorneys’ fees, costs and
disbursements.

14

 

     21. Arbitration. Subject to the last sentence of this Section 21, if any dispute arises
over the terms of this Agreement between the parties to this Agreement, either Employee or Company
may submit the dispute to binding arbitration within thirty (30) days after such dispute arises, to
be governed by the evidentiary and procedural rules of the American Arbitration Association
(Commercial Arbitration). Employee and Company shall mutually select one (1) arbitrator within ten
(10) days after a dispute is submitted to arbitration. In the event that the parties do not agree
on the identity of the arbitrator within such period, the arbitrator shall be selected by the
American Arbitration Association. The arbitrator shall hold a hearing on the dispute in
Wilmington, Delaware within thirty (30) days after having been selected and shall issue a written
opinion within fifteen (15) days after the hearing. The arbitrator shall also decide on the
allocation of the costs of the arbitration to the respective parties, but Employee and Company
shall each be responsible for paying the fees of their own legal counsel, if legal counsel is
obtained. Either Employee or Company, or both parties, may file the decision of the arbitrator as
a final, binding and unappealable judgment in a court of appropriate jurisdiction. Notwithstanding
the foregoing provisions of this Section 21 to the contrary, matters in which an equitable remedy
or injunctive relief is sought by a party, including but not limited to the remedies referred to in
Section 19 hereof, shall not be required to be submitted to arbitration, if the party seeking such
remedy or relief objects thereto, but shall instead be subject to the provisions of Sections 19 and
20 hereof.

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

     23. Authorization. In connection with the execution of this Agreement, the Employee shall
be provided with a copy of the resolutions of the Board of Directors authorizing the execution of
this Agreement on behalf of the Company.

[SIGNATURES ON FOLLOWING PAGE]

15

 

     IN WITNESS WHEREOF, the parties have caused this Executive Employment Agreement to be executed
the day and year first written above.

	 	 	 	 	 
	 	MIDDLEBROOK PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ Wayne T. Hockmeyer
 	 
	 	Name:	 	Wayne T. Hockmeyer 	 
	 	Title:	 	Chairman, Compensation Committee 	 

	 	 	 	 	 
	 	                                                /s/ John S. Thievon
 	 
	 	John S. Thievon 	 
	 	 	 
	 

 

Schedule I

Preexisting Property:

16

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