Document:

Exhibit
10.1

 

November 15,
2007

 

Dear Michael:

 

I am very pleased to
extend to you this offer to join the Depomed team as Vice President, Product
Development, reporting to Carl Pelzel, President and CEO.  The rate of pay we offer is $310,000.00
annually.  In addition, a one-time
sign-on bonus of $25,000.00 will be paid to you within 15 days of your first
day of employment.  This offer of
employment is valid through Monday, November 19, 2007.

 

Your compensation package
additionally includes options to acquire 95,000 shares of Depomed Common Stock,
at a per-share market price established upon approval by Depomed’s Board of
Directors.  These options will vest over
a four-year period, as provided for in Depomed’s 2004 Equity Plan. The plan
will be forwarded to you upon Board approval. 
Under Depomed’s formal bonus plan, the bonus target at the vice
president level is 35% of base pay; a copy of the plan is enclosed for your
review.

 

Also, you will be entitled to our complete benefits package including
participation in Depomed’s healthcare insurance and, should you choose to
participate, a 401(k) retirement plan. 
During your first year of employment you will be entitled to 14 days of
vacation and to the ten holidays that are observed by the Company.

 

Additionally, as a
condition for employment, it will be necessary that you sign a copy of the
Company’s Confidential Information, Secrecy and Invention Agreement. Consistent
with Company policy, the initial three months of employment are considered
introductory and for the purpose of performance evaluation; employment at
Depomed is considered “at will”.  As
required by law, you must show proof of citizenship, permanent residency in the
U.S. or authorization to work in the U.S. 
To complete the I-9 form, we ask that you bring copies of this
documentation on your first day of employment.

 

Michael, I am very
pleased to extend this offer to you, and on behalf of all the Depomed employees
I look forward to having you join us. Oral drug delivery is the focus of
Depomed’s activities and your skills and experience will make you an important
member of our Company.  If you elect to
accept this offer, please sign and return one copy of this letter to me.  A pre-addressed, envelope is provided for
your convenience.

 

This letter correctly
sets forth our agreement.

 

	
  Sincerely,

  
	
   

  
	
  Signed: 

  	
  /s/ Matthew M. Gosling

  	
   

  
	
  Matthew M. Gosling

  
	
  Vice President and
  General Counsel

  
	
   

  
	
  Signed: 

  	
  /s/ Michael Sweeney,
  M.D.

  	
   

  
	
  Michael Sweeney, M.D.

  
	
   

  
	
  Dated: 11/19/2007EXHIBIT
10.1

 

Second Amended and Restated

Employment Agreement

 

THIS SECOND
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) made effective as
of the second day of May 2008 (the “Effective Date”), by and between
Advanced Life Sciences, Inc., an Illinois corporation (the “Company”), and
Michael J. Cogan (the “Executive”).

 

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

 

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

 

WHEREAS, the Company
desires to employ the Executive in accordance with the terms and conditions
hereinafter set forth and the Executive desires to be so employed; and

 

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

 

NOW, THEREFORE, in
consideration of the mutual covenants contained herein, the Company and the
Executive agree as follows:

 

1.                                       Term.  The
employment of the Executive by the Company pursuant to this Agreement shall
begin as of the Effective Date and shall expire on the third anniversary of the
Effective Date (the “Term”), unless extended, as set forth below, or otherwise
terminated pursuant to the provisions of this Agreement; provided, however,
that commencing on the third anniversary of the Effective Date and on each
anniversary thereafter, the Term of this Agreement shall automatically be
extended for one additional year unless, not later than 90 days prior to such
anniversary, the Executive or the Company shall have given notice in writing
that he or it does not wish to extend this Agreement.

 

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

 

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

 

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

 

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

 

(b)           Bonus.  The Executive shall be eligible to
participate throughout the Term in the Company’s annual bonus plan or any
similar or successor bonus plan (“Bonus Plan”) in accordance with the Company’s
compensation practices and the terms and provisions of the Bonus Plan.  Each year, the Executive may be eligible to
receive a target performance
bonus of thirty percent (30%) of Base Salary.  
The amount of the Executive’s target performance bonus shall be reviewed
annually and may be increased by the Compensation Committee.

 

1

 

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

 

(d)           Other
Benefits and Perquisites.  During the
Term of the Executive’s employment hereunder:

 

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

 

(ii) Vacation.  The Executive shall be entitled to not less
than 20  days of paid vacation in each calendar
year, in accordance with the Company’s vacation policy.

 

(iii)          Expense
Reimbursement.  The Executive shall
be entitled to receive reimbursement for all reasonable business, travel or
other out-of-pocket expenses incurred by the Executive in fulfilling the
Executive’s duties and responsibilities hereunder, provided that such expenses
are incurred and accounted for in accordance with the policies and procedures
established by the Company.

 

5.                                       Termination.

 

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

 

(i)            The
death of the Executive;

 

(ii)           By
the Company for “Cause”, which shall mean any of the following:, as determined
by the Board in its discretion:  (A) conviction
of or plea of guilty or nolo contendere
to any criminal violation involving dishonesty or fraud; (B) engagement in
conduct that is injurious to the Company; (C) engagement in any act of
dishonesty or misconduct that results in damage to the Company or its business
or reputation or that the Board determines to adversely affect the value,
reliability or performance of the Executive to the Company; (D) refusal or
failure to substantially comply with the Company’s human resources rules,
policies, directions and/or restrictions relating to harassment and/or
discrimination, or with compliance or risk management rules, policies,
directions and/or restrictions; (E) unauthorized use or disclosure of
Confidential Information (as defined below) or other trade secrets of the
Company; (F) loss of any license or registration that is necessary for the
Executive to perform his duties to the Company, or commission of any act that
could result in the legal disqualification of the Executive from being employed
by the Company or any of its affiliates; (G) failure to cooperate with the
Company or any of its affiliates in any internal investigation or administrative,
regulatory or judicial proceeding; or (H) continuous failure by the
Executive to perform his duties to the Company (which may include any sustained
and unexcused absence of the Executive from the performance of such duties,
which absence has not been certified in writing as due to physical or mental
illness or disability), after a written demand for performance has been
delivered to the Executive identifying the manner in which the Executive has
failed to substantially perform such duties. 
The application of any part of the definition of Cause set forth in
clauses (A) through (H) above to the Executive shall not preclude or
prevent the reliance by the Company or the Board on any other part of the
definition that also may be applicable. 
In addition, the Executive’s employment shall be deemed to have
terminated for Cause if, after the Executive’s employment has terminated, facts
and circumstances are discovered that would have justified a termination for
Cause.

 

(iii)          By
mutual agreement between the Company and the Executive; or

 

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

 

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

 

2

 

and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated.

 

(c)           “Date
of Termination” shall mean (i) if the Executive’s employment is terminated
pursuant to Section 5(a)(i) above, the date of his death; (ii) if
the Executive’s employment is terminated pursuant to Section 5(a)(ii) or
5(a)(iv) above, the date such Notice of Termination is given (or such
later date as provided therein); (iii) if the Executive’s employment is
terminated pursuant to Section 5(a)(iii) above, the date mutually agreed
to by the parties; (iv) the date the Term of this Agreement expires, if
either the Company or the Executive provides notice in accordance with Section 1;
or (v) if the Executive terminates his employment and fails to provide
written notice to the Company of such termination, the date of such
termination.

 

6.                                       Compensation Upon Termination.

 

(a)           The
following payments shall be made upon the Executive’s termination of employment
for any reason:  (i) earned but
unpaid Base Salary through the Executive’s Date of Termination; (ii) any
accrued but unpaid vacation; (iii) unreimbursed business expenses owed
pursuant to Section 4(d)(iii); (iv) any outstanding notes payable to
the Executive along with the interest due; and (v) any amounts payable
under any of the Company’s Bonus Plan and Benefit Plans in accordance with the
terms of those plans.  All amounts under
clauses (i) through (v) shall be paid in a lump sum on the
Executive’s Date of Termination or as soon as administratively practicable
thereafter.

 

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

 

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

 

(d)           In addition to the payments made
under Section 6(a), if the Executive’s employment is terminated by the
Company without Cause pursuant to Section 5(a)(iv) above, and
conditioned upon the Executive’s execution of a valid and legally enforceable
release of claims against the Company, the Company shall, for a period of
twelve (12) months following the Date of Termination (the “Severance
Period”):  (i) provide to the
Executive salary continuation paid in accordance with the Company’s applicable
payroll practices, at the Executive’s Base Salary rate in effect as of the Date
of Termination and (ii) continue the Executive’s coverage under the
Company’s health medical, dental, vision, disability, and life and accident
benefit plans, in which the Executive participated immediately prior to the
Date of Termination, provided, however, that if the Company cannot continue
such coverage, the Company shall provide or arrange to provide, at its expense,
similar coverage to the Executive and if such coverage cannot be arranged, the  Company will provide a cash equivalent payment to the
Executive.  In
addition, no later than two and one-half (21⁄2) months following the end of the
year in which the Executive’s employment is terminated, the Company shall pay
the Executive in a lump sum an amount equal to the Executive’s target
performance bonus multiplied by a fraction, the numerator of which is the
number of days in the calendar year in which the Executive’s employment is
terminated through the Date of Termination and the denominator of which is
365.  Notwithstanding the forgoing,
vacation days shall not accrue during the Severance Period.

 

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

 

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

 

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

 

3

 

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

 

(i)            The Company shall
pay the Executive a lump sum cash amount equal to (2) times the sum of (A) the
Executive’s annual Base Salary as in effect on the date of the Executive’s
termination of employment and (B) the Executive’s target performance bonus
amount as in effect for the fiscal year in which the Executive’s employment is
terminated:

 

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

 

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

 

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

 

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

 

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

 

(A)          any
“person” (as such term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act), including a
“group” (as defined in Section 13(d)(3) of the Exchange Act), other
than (I) the Company, (II) any wholly-owned subsidiary of the Company,
(III) any employee benefit plan (or related trust) sponsored or maintained
by the Company or any of its affiliates, or (IV) a “Permitted Holder” (as
defined below), becomes a “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
having fifty percent (50%) or more of the combined voting power of the
then-outstanding securities of the Company that may be cast for the election of
directors of the Company (other than as a result of an issuance of securities
initiated by the Company in the ordinary course of business) (the “Company
Voting Securities”); provided, however, that the event described in this Section 7(c)(i) shall
not be deemed to be a Change in Control by virtue of any underwriter
temporarily holding securities pursuant to an offering of such securities;

 

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

 

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

 

4

 

applicable, the entity
that as a result of such Business Combination owns the Company or all or
substantially all of the Company’s assets either directly or through one or
more subsidiaries; or

 

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

 

Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because
any person acquires beneficial ownership of more than fifty percent (50%) of
the Company Voting Securities as a result of the acquisition of Company Voting
Securities by the Company which reduces the number of Company Voting Securities
outstanding; provided, however, that if after such acquisition by the Company such
person becomes the beneficial owner of additional Company Voting Securities
that increases the percentage of outstanding Company Voting Securities
beneficially owned by such person, a Change in Control transaction shall then
occur.

 

Further
notwithstanding the foregoing, unless a majority of the Incumbent Directors
determines otherwise, no Change in Control shall be deemed to have occurred
with respect to the Executive if the Change in Control results from actions or
events in which the Executive is a participant in a capacity other than solely
as an officer, employee or director of the Company or any of its affiliates.

 

(ii)                                  “Permitted Holders” means (A) Michael
T. Flavin (the “Principal”), (B) the spouse or any immediate family member
of the Principal and any child or spouse of any spouse or immediate family
member of the Principal, (C) a trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, owners or persons
beneficially holding, directly or indirectly, a controlling interest of which
consists of the Principal and/or such other persons referred to in the
immediately preceding clause (B), or (D) the trustees of any trust
referred to in clause (D).

 

(iii)                               “Good Reason” means any of the following
conditions, without the Executive’s consent, (A) a material diminution in
the Executive’s Base Salary, (B) a material diminution in the Executive’s
authority, duties, or responsibilities, (C) a material diminution in the
authority, duties, or responsibilities of the supervisor to whom the Executive
is required to report, including a requirement that the Executive report to a
corporate officer or employee instead of reporting directly to the Board (or
other similar governing body), (D) a material diminution in the budget
over which the Executive retains authority, (E) a material change in the
geographic location at which the Executive must perform services, and (F) any
other action or inaction that constitutes a material breach by the Company of
this Agreement.  If one or more of the
above conditions exists, the Executive must provide notice to the Company
within ninety (90) days of the initial existence of the condition.  Upon such notice, the Company shall have a
period of thirty (30) days during which it may remedy the condition.

 

(d)                                 Treatment of Parachute Payments.

 

(i)                                     Notwithstanding any other provisions of
this Agreement, and except as set forth below, in the event that any payment or
benefit received or to be received by the Executive in connection with a Change
in Control or the termination of the Executive’s employment (whether pursuant
to the terms of this Agreement or any other plan, arrangement or agreement with
the Company, any person whose actions result in a Change in Control or any
person affiliated with the Company or such person) (all such payments and
benefits, including payments under Section 7(a) above, being
hereinafter called “Total Payments”) is determined to be an “excess parachute
payment” pursuant to Section 280G of the Internal Revenue Code of 1986, as
amended (the “Code”), or any successor or substitute provision of the Code,
with the effect that the Executive is liable for the payment of the excise tax
described in Code Section 4999 or any successor or substitute provision of
the Code (the “Excise Tax”), then, after taking into account any reduction in
the Total Payments provided by reason of Code Section 280G in such other
plan, arrangement or agreement, the Executive may first elect to reduce the
noncash payments and benefits, after which the cash payments provided in Section 7(a)(i) of
this Agreement shall then be reduced, to the extent necessary so that no
portion of the Total Payments is subject to the Excise Tax.

 

(ii)                                  All determinations required to be made
under this Section 7(d), and the assumptions to be utilized in arriving at
such determination, shall be made by the certified public accounting firm used
for 

 

5

 

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

 

(iii)          As a result of the uncertainty in the
application of Code Sections 280G and 4999 at the time of the initial
determination by the Accounting Firm hereunder, it is possible that the
Internal Revenue Service (the “IRS”) or other agency will claim that an Excise
Tax, or a greater Excise Tax, is due.  If
the Executive is required to make a payment of any such Excise Tax, the Company
will promptly pay the Executive an additional amount equal to the amount, or
greater amount, of Excise Tax the Executive is required to pay (plus a gross up
payment for any income taxes, interest, penalties or additional Excise Tax payable
by Executive with respect to such Excise Tax or additional payment), as
determined by the Accounting Firm.  The
Executive will notify the Company in writing of any claim by the IRS or other
agency that, if successful, would require payment by the Company of the
additional payments under this paragraph. 
The Executive and the Company shall each reasonably cooperate with the
other in connection with any administrative or judicial proceedings concerning
the existence or amount of liability for Excise Tax with respect to the Total
Payments.  The Company shall pay all fees
and expenses of the Executive relating to a claim by the IRS or other
agency.  Payments under this Section 7(d)(iii) will
be made by the end of the Executive’s taxable year next following the
Executive’s taxable year in which the Executive remits the related taxes, in
accordance with Code Section 409A and Treas. Reg. §1.409A-3(i)(1)(v) (or
any similar or successor provisions).

 

8.                                       Code Section 409A.

 

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

 

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

 

6

 

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

 

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

 

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

 

9.                                       Restrictive  Covenants.

 

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

 

7

 

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

 

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

 

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

 

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

 

(e)           Inventions.  The Executive acknowledges all inventions of
the Company (including, but not limited to, procedures, systems, machines,
methods, processes, uses, apparatuses, compositions of matter, designs, or
configurations of any kind, discovered, conceived, reduced to practice, developed,
made or produced) (“Inventions”) that (i) relate to the present or planned
business of the Company or the work performed by the Company for its customers,
and (ii) are conceived or reduced to practice by the Executive, either
alone or with others, during the Executive’s employment with the Company or
during a period of 120 days after the Executive’s Date of Termination, whether
or not done during the Executive’s regular working hours, are the sole property
of the Company, including, without limitation, all domestic and foreign patent
rights, rights of registration or other protection under the copyright laws, or
other rights pertaining to the Inventions. 
For purposes of this Agreement, Inventions shall include any
improvements to an Invention and shall not be limited to the definition of a
patentable invention or copyrightable work of authorship as contained in the
United States patent or copyright laws. 
The Executive shall disclose promptly and fully in writing to the
Company each Invention, whether or not reduced to practice, that the Executive
conceives or learns (either alone or jointly with others) during the Term of
Employment.  The Executive hereby assigns
to the Company, or its nominee, all of the Executive’s right, title and
interest, including international priority rights, in and to all Inventions
(other than any Invention that was developed entirely on the Executive’s own
time and for which no equipment, supplies, facilities or trade secret
information of the Company was used, unless such Invention relates directly to
the Company’s business or to the Company’s actual or demonstrably anticipated
research or development), and in and to all United States or foreign patents,
copyrights and other proprietary rights granted thereon or resulting therefrom,
and in and to all applications for United States or foreign copyrights, patents
and other proprietary rights.  The
Executive shall execute all papers, perform all lawful acts or assist the
Company in any way the Company deems necessary or advisable (at the Company’s
expense) for the preparation, filing, prosecution, issuance, procurement,
maintenance or enforcement of patents applications and patents of the United
States and foreign countries, and for obtaining and enforcing copyright protection
and registration, of any Invention.  To
that end, the Executive shall at the Company’s request and without limitation,
testify in any suit or other proceeding involving any of the Inventions,
execute all documents that the Company reasonably determines to be necessary or
convenient for use in applying for and obtaining patent or copyright protection
and registration on any of the Inventions and enforcement of that protection
and registration, and execute all necessary documents and papers required to vest
title in and assign to the Company (or its nominee) patent or copyright
protection and registration.  The
Executive’s obligation to assist the Company in obtaining and enforcing patent
or copyright protection and registration for the Inventions shall continue
following termination of this 

 

8

 

Agreement, but Company shall compensate the Executive
following the expiration or termination of this Agreement at a rate of $10 for
the execution of each document and $150 per day for each day or portion thereof
spent at the Company’s request in rendering assistance, plus reimbursement for
the reasonable out-of-pocket expenses incurred by the Executive for such
assistance.  The Executive hereby
irrevocably appoints the Company and its duly authorized officers and agents as
his agent and attorney-in-fact to act for and on behalf of the Executive in
filing all patent applications, applications for copyright protection and
registration amendments, renewals and all other appropriate documents in any
way related to the Inventions.

 

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

 

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

 

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

 

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

 

If to
the Executive:

 

Michael J. Cogan

1440
Davey Road

Woodridge,
Illinois 60517

 

If to
the Company:

 

Advanced Life Sciences, Inc.

1440
Davey Road

Woodridge,
Illinois 60517

Attn: Chief Executive
Officer

 

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

 

12.                                 General Provisions. 
No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and such officer of the Company as may be specifically designated
by the Company’s Board.  No waiver by
either party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party that are not set forth expressly in this Agreement.

 

13.                                 Validity.  The
invalidity or unenforceability of any provision or provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.  If any provision of this Agreement is found
to be invalid or unenforceable, in whole or in part, then it shall be deemed to
be modified or restricted to the extent and in the manner necessary to render
it valid and enforceable, or shall be deemed excised from this Agreement, as
the case may require, and this Agreement shall be construed and enforced to the
maximum extent 

 

9

 

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

 

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

 

15.                                 Entire Agreement. 
This Agreement sets forth the entire agreement of the parties hereto in
respect of the subject matter contained herein and supersedes all prior
agreements, promises, covenants, arrangements, communications, representations
or warranties, whether oral or written, by any officer, employee or
representative of any party hereto; and any prior agreement of the parties
hereto in respect of the subject matter contained herein is hereby terminated
and canceled. For the avoidance of doubt, the Company and the Executive hereby
agree that this Agreement shall replace and supersede the Original Employment
Contract and govern the relationship of the parties.

 

16.                                 Irreparable Harm. 
The Executive acknowledges that: (i) the Executive’s compliance
with this Agreement is necessary to preserve and protect the proprietary
rights, Confidential Information and the goodwill of the Company and its
subsidiaries as going concerns; (ii) any failure by the Executive to
comply with the provisions of this Agreement shall result in irreparable and
continuing injury for which there will be no adequate remedy at law; and (iii) in
the event that the Executive should fail to comply with the terms and conditions
of this Agreement, the Company shall be entitled, in addition to such other
relief as may be proper, to all types of equitable relief (including, but not
limited to, the issuance of an injunction and/or temporary restraining order)
as may be necessary to cause the Executive to comply with this Agreement, to
restore to the Company its property, and to make the Company whole.

 

17.                                 Consent to Jurisdiction and Forum; Legal
Fees and Costs.  The Company and the Executive hereby
expressly and irrevocably agree that any action, whether at law or in equity,
arising out of or based upon this Agreement or the Executive’s employment by
the Company shall only be brought in a federal or state court located in Cook
County, Illinois.  The Executive hereby
irrevocably consents to personal jurisdiction in such court and to accept
service of process in accordance with the provisions of such court.  In connection with any dispute arising out of
or based upon this Agreement or the Executive’s employment by the Company, each
party shall be responsible for its or his own legal fees and expenses and all
court costs shall be shared equally by the Company and the Executive unless the
court apportions such legal fees or court costs in a different manner.

 

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

 

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

 

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

 

	
  EXECUTIVE

  	
   

  	
  ADVANCED
  LIFE SCIENCES, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael J. Cogan

  	
   

  	
  By:

  	
  /s/ Michael T. Flavin

  
	
  Name:

  	
  Michael
  J. Cogan

  	
   

  	
  Name:

  	
  Michael T. Flavin,
  Ph.D.

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
							

 

10

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