Document:

exv10w03

 

Exhibit
10.03

ALLIED WASTE INDUSTRIES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Restated Effective January 1, 2006

 

 

Article 1. The Plan

     1.1 Establishment of the Plan. The Company previously established this supplemental
executive retirement plan effective August 1, 2003, and hereby amends and restates this plan
effective January 1, 2006. This plan shall be known as the “Allied Waste Industries, Inc.
Supplemental Executive Retirement Plan”.

     1.2 Purpose of the Plan. This Plan is intended to provide deferred compensation to a
“select group of management or highly compensated employees” within the meaning of ERISA Section
201(2). As such, this Plan is intended to be exempt from the participation, vesting, funding, and
fiduciary requirements of Title I of ERISA, to the fullest extent permitted by the law. This Plan
shall at all times be “unfunded” within the meaning of ERISA and the Code.

Article 2. Definitions

     Whenever used in the Plan, the following terms shall have the meanings set forth below unless
otherwise expressly provided. When the defined meaning is intended, the term is capitalized. The
definition of any term in the singular shall also include the plural. Words used in the masculine
form shall include the feminine form.

     2.1 “Board” means the Company’s Board of Directors or an authorized committee thereof.

     2.2 “Code” means the Internal Revenue Code of 1986, as amended from time to time. A
reference to a particular section of the Code shall also be deemed to refer to any other regulatory
guidance under that Code section.

     2.3 “Employment Agreement” means the agreement between a Participant and the Company,
setting forth the terms of the Participant’s employment, including but not limited to the right to
receive Retirement Benefits.

     2.4 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time to time. A reference to a particular section of ERISA shall also be deemed to refer to any
regulatory guidance under that section.

     2.5 “Participant” means an eligible individual who is designated as a Participant in
accordance with Article 3.

     2.6 “Participation Date” means the effective date of a Participant’s participation in
the Plan, as specified in Schedule A.

     2.7 “Plan” means this Allied Waste Industries, Inc. Supplemental Executive Retirement
Plan, as may be amended from time to time. The Employment Agreements, together with this Plan
document and any Schedules, shall be deemed to constitute a single plan.

 

 

     2.8 “Plan Administrator” means the Management Development/Compensation Committee of
the Board.

     2.9 “Plan Year” means the calendar year.

     2.10 “Retirement” shall have the same meaning as defined in the Participant’s
Employment Agreement or in the applicable Schedule in the case of a Participant who does not have
an Employment Agreement.

     2.11 “Retirement Date” shall be the date upon which the Participant is entitled to
receive or begin receiving Retirement Benefits, as provided for in the Participant’s Employment
Agreement or as provided for in the applicable Schedule in the case of a Participant who does not
have an Employment Agreement.

     2.12 “Retirement Benefits” means the cash compensation provided for in the
Participant’s Employment Agreement or in the applicable Schedule, in the case of a Participant who
does not have an Employment Agreement, in the event of the Participant’s termination of employment
with the Company due to Retirement.

     2.13 “Schedule” or “Schedules” means the schedule or schedules that are
attached to this Plan document and are made a part of this Plan document by reference herein.

Article 3. Eligibility and Participation

     3.1 Eligibility. Eligibility to participate in the Plan shall be limited to a select
group of management or highly compensated employees of the Company who are designated by the Plan
Administrator as eligible to participate in the Plan.

     3.2 Participation. Each employee who is designated as eligible to participate in the
Plan shall be listed on Schedule A and shall become a participant in the Plan as of his or her
Participation Date. The Company may amend Schedule A from time to time to add or delete
Participants in accordance with this Article. A Participant shall cease to be a Participant when
all benefits due under the Plan have been paid in full or, if earlier, the effective date on which
the Participant is no longer designated as eligible to participate and/or the date on which the
Participant terminates employment with the Company for any reason other than Retirement.

Article 4. Retirement Benefit

     When a Participant reaches his Retirement Date, he shall receive or begin receiving payment of
his Retirement Benefits. The Participant’s Retirement Benefits shall be paid in the amount, time,
and form as required in the Participant’s Employment Agreement or in the applicable Schedule in the
case of a Participant who does not have an Employment Agreement.

2

 

Article 5. Trust

     5.1 Trust. The Company may establish and maintain a trust as part of the Plan, to
implement the provisions of the Plan. If the Company establishes a trust, it will be treated as a
grantor trust under Code Sections 671 through 679, and the Company may make such contributions as
it determines. Any trust will be trusteed by an independent third-party trustee appointed by the
Company and will be unsecured from creditors to the extent described in the trust document.

     5.2 Investments of the Trust. If the Company establishes a trust, the Company shall
determine how trust assets shall be invested. No person shall have any interest whatsoever in any
specific asset of the Company or the trust. To the extent that any person acquires a right to
receive payments under the Plan, such right shall be no greater than the rights of any unsecured
general creditor of the Company.

Article 6. Administration

     6.1 Administration. The Plan shall be administered by the Plan Administrator:

          (a) The Plan Administrator shall have all powers necessary or appropriate to carry out the
provisions of the Plan. The Plan Administrator may, from time to time, establish rules for the
administration of the Plan and the transaction of the Plan’s business.

          (b) The Plan Administrator shall have the exclusive right to make any finding of fact
necessary or appropriate for any purpose under the Plan including, but not limited to, the
determination of eligibility for and amount of any benefit.

          (c) The Plan Administrator shall have the exclusive right to interpret the terms and
provisions of the Plan and to determine any and all questions arising under the Plan or in
connection with its administration, including, without limitation, the right to remedy or resolve
possible ambiguities, inconsistencies, or omissions by general rule or particular decision, all in
its sole and absolute discretion.

          (d) All findings of fact, determinations, interpretations, and decisions of the Plan
Administrator shall be conclusive and binding upon all persons having or claiming to have any
interest or right under the Plan and shall be given the maximum deference allowed by law.

     6.2 Appeals from Denial of Claims.

          (a) If any claim for benefits under the Plan is wholly or partially denied, the claimant shall
be given notice of the denial. This notice shall be in writing, within a reasonable period of time
after receipt of the claim by the Plan Administrator. This period shall not exceed 90 days after
receipt of the claim, except that if special circumstances require an extension of time,

3

 

written notice of the extension shall be furnished to the claimant, and an additional 90 days
shall be considered reasonable.

          (b) This notice shall be written in a manner calculated to be understood by the claimant and
shall set forth the following information:

     (i) the specific reasons for the denial;

     (ii) specific reference to the Plan provisions on which the denial is based;

     (iii) a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why this material or information is
necessary;

     (iv) an explanation that a full and fair review by the Plan Administrator of the
decision denying the claim may be requested by the claimant or an authorized representative
by filing with the Plan Administrator, within 60 days after the notice has been received, a
written request for the review; and

     (v) if this request is so filed, an explanation that the claimant or an authorized
representative may receive pertinent documents and submit issues and comments in writing
within the same 60-day period specified in Subsection (iv).

          (c) The decision of the Plan Administrator upon review shall be made promptly, and not later
than 60 days after the Plan Administrator’s receipt of the request for review, unless special
circumstances require an extension of time for processing. In this case, the claimant shall be so
notified, and a decision shall be rendered as soon as possible, but not later than 120 days after
receipt of the request for review. If the claim is denied, wholly or in part, the claimant shall be
given a copy of the decision promptly. The decision shall be in writing, shall include specific
reasons for the denial, shall include specific references to the pertinent Plan provisions on which
the denial is based, and shall be written in a manner calculated to be understood by the claimant.

     6.3 Tax Withholding. The Company may withhold from any payment under this Plan any
federal, state, or local taxes required by law to be withheld with respect to the payment and any
sum the Company may reasonably estimate as necessary to cover any taxes for which they may be
liable and that may be assessed with regard to the payment.

     6.4 Expenses. All expenses incurred in the administration of the Plan shall be paid by
the Company.

4

 

Article 7. Amendment and Termination of the Plan

     The Company hereby reserves the right to amend, modify, or terminate the Plan in whole or in
part, at any time, and for any reason, by action of the Board; provide, however, that any such
amendment, modification, or termination will comply with applicable requirements of Code Section
409A.

Article 8. Miscellaneous Provisions

     8.1 Severability. If any provisions of this Plan shall be held illegal or invalid, the
illegality or invalidity shall not affect its remaining parts. The Plan shall be construed and
enforced as if it did not contain the illegal or invalid provision.

     8.2 Applicable Law. Except to the extent preempted by applicable Federal law, this
Plan shall be governed by and construed in accordance with the laws of the State of Arizona without
regard to conflict of laws provisions.

Dated: February 9, 2006.

	 	 	 	 	 
	 	ALLIED WASTE INDUSTRIES, INC.,

A Delaware corporation

 	 
	 	By:  	 	 
	 	 	 	 
	 	Title:  	 	 
	
"Company" 	 

5

 

Allied Waste Industries, Inc.

Supplemental Executive Retirement Plan

Schedule A

As Amended Effective January 1, 2006

	 	 	 
	Participant	 	Participation Date
	 
	 	 
	Edward A. Evans

	 	September 19, 2005
	James E. Gray

	 	January 1, 2005
	Peter S. Hathaway

	 	January 1, 2004
	Steven M. Helm

	 	January 1, 2004
	Donald W. Slager

	 	January 1, 2004
	Donald A. Swierenga

	 	June 1, 2004
	John S. Quinn

	 	January 1, 2005
	Thomas W. Ryan

	 	August 1, 2003
	James G. Van Weelden

	 	June 1, 2004
	John J. Zillmer

	 	May 27, 2005Exhibit 10.1

                           COGENCO INTERNATIONAL, INC.
                           Suite 1840, Plaza Tower One
                        6400 South Fiddler's Green Circle
                           Greenwood Village, CO 80111
                   Telephone: 303-758-1357; Fax: 303-759-3553
                        e-mail: DavidBrenman@comcast.net

February 10, 2006
As of January 30, 2006

Bruce G. Miller, CEO & President
DMI BioSciences, Inc.
3601 South Clarkson St., Suite 420
Englewood, CO 80113-3948

         Re:  Restated Letter of Intent ("Restated LOI") relating to (1)
              Proposed Novated & Restated Co-Development Agreement
              ("Novated CODA") and (2) Proposed Cogenco-DMI Merger ("Merger")
              ---------------------------------------------------------------

Dear Bruce:

1. General Matters:
   ----------------

The purpose of this Restated Letter of Intent ("Restated LOI") is to set forth
the principal terms pursuant to which Cogenco International, Inc. ("Cogenco")
proposes to modify its relationship and enter into certain transactions with DMI
BioSciences, Inc. ("DMI").

(a) The parties specifically agree that upon execution of this Restated LOI, the
prior Amended Letter of Intent between the parties dated November 5, 2004 and
all prior LOIs and subsequent extensions thereto ("Amended LOI") are hereby (and
as of the effective date hereof, January 30, 2006), terminated and of no legal
effect. The parties further specifically agree that upon execution of the
Novated and Restated Co-Development Agreement relating to Multiple Sclerosis, as
defined and further described in Paragraph 2 below (the "Novated CODA"), the
Original Co-Development Agreement between the parties relating to asthma dated
November 21, 2004 (the "CODA") shall be thereby terminated and of no legal
effect as of the effective date of the Novated CODA.

(b) To clarify the foregoing statements and as more fully set forth herein, the
parties acknowledge that they intend to negotiate and execute the Novated CODA
and a Merger Agreement (as defined and further described in Paragraph 2 below)
as set forth herein. If the Novated CODA is not executed by February 28, 2006 or
if Cogenco fails to make its first Cogenco Mandatory Payment under such Novated
CODA by February 28, 2006 (or such other date as determined by DMI herein), then
this Restated LOI shall terminate as more fully set forth in Paragraph 8 herein.

(c) Except as specifically set forth herein, this Restated LOI merely
constitutes a statement of the mutual intentions of the parties. This Restated
LOI does not contain all matters upon which agreement must be reached for the
proposed transactions to be consummated and, therefore, does not constitute a
binding commitment with respect to the proposed transactions themselves, except
as specifically stated herein.

<PAGE>

DMI BioSciences, Inc.
February 10, 2006

(d) The parties wish to avoid any misunderstandings and disputes that might
otherwise occur in the event that definitive agreements are not fully negotiated
and fully executed. While the parties intend to work toward reaching definitive
agreements as set forth herein, in the event definitive agreements are not
executed and delivered by the parties, then any party may abandon these
negotiations and be relieved of all liabilities and obligations with respect
thereto, except with respect to any definitive agreement already concluded by
the parties as contemplated herein (such as the Novated CODA). This Restated LOI
also does not create a duty on the part of any party to negotiate in good faith
toward a binding contract, and may not be relied upon by any party as the basis
for a contract by estoppel or otherwise, except to the extent specifically
identified herein as binding upon the parties.

(e) The parties acknowledge and agree that the subject matter of the
negotiations involve numerous interrelated business and technical factors, and
that, except as set forth in this Restated LOI, neither party shall be bound to
the other for any performance, payment, license, right, or reliance with respect
to the subject matter, unless and until all material terms have been set forth
in the definitive agreement(s) described herein or a subsequent definitive
agreements (the "Agreements"). All proposals, letters, agreements, points of
proposed or actual agreements, "term sheets," memos and charts used or exchanged
in the negotiations either shall be reflected in this Restated LOI or a
subsequent Agreement(s) or shall be deemed rejected, rescinded and void upon the
end of negotiations. Nothing contained in this Restated LOI shall be deemed to
limit the scope of the negotiations or the content of any subsequent
co-development agreement or Merger Agreement or ancillary agreement.
Notwithstanding the foregoing, upon acceptance hereof as described below, the
provisions of Paragraph 6 (Disclosure) and Paragraph 7 (Confidentiality) of this
Restated LOI shall be legally binding and enforceable in accordance with their
terms.

2. Proposed Structure of the Transactions.
   ---------------------------------------

Cogenco and DMI intend to enter into a multi-phase series of transactions as set
forth below:

(a) Novated and Restated Co-Development Agreement. Not later than February 28,
2006, Cogenco and DMI shall enter into a definitive co-development agreement
with DMI effective as of January 30, 2006 to fund certain ongoing development
activities of DMI relating to the treatment of Multiple Sclerosis (the "Novated
CODA"). Cogenco and DMI shall enter into the Novated CODA after reaching mutual
agreement on the terms and conditions of the Novated CODA including, among
others, the following terms:

     (1)  Previous Cogenco Payments Already Made to DMI ("Cogenco Payments
          Made"):
          ----------------------------------------------------------------

          (i)  Cogenco paid DMI a non-refundable standstill fee of $100,000 in
               or before September 2004, which payment DMI has received and will
               credit to the Novated CODA pursuant to this paragraph;

          (ii) Cogenco paid DMI a non-refundable payment of $500,000
               representing reimbursement of some of the research costs incurred
               by DMI, which payment DMI has received and will credit to the
               Novated CODA pursuant to this paragraph; and

         (iii) Cogenco paid DMI non-refundable payments totaling $2,500,000,
               plus an additional non-refundable fee of $150,000, which payments
               DMI has received and will credit to the Novated CODA pursuant to
               this paragraph.

                                       2

<PAGE>

DMI BioSciences, Inc.
February 10, 2006

     (2)  Cogenco Mandatory Payments to be Made to DMI under the Novated CODA
          ("Cogenco Mandatory Payments"):
          --------------------------------------------------------------------

          (i)  Cogenco will pay DMI a non-refundable payment of $1,000,000 on or
               before February 28, 2006;
          (ii) Cogenco will pay DMI a non-refundable payment of $1,000,000 on or
               before March 31, 2006;
         (iii) Cogenco will pay DMI a non-refundable payment of $1,000,000 on
               or before July 31, 2006;
          (iv) Cogenco will pay DMI a non-refundable payment of $1,000,000 on or
               before August 31, 2006;
          (v)  Cogenco will pay DMI a non-refundable payment of $1,000,000 on or
               before September 30, 2006;
          (vi) Cogenco will pay DMI a non-refundable payment of $1,000,000 on or
               before October 31, 2006; and
         (vii) Cogenco will pay DMI a non-refundable payment of $1,000,000 on
               or before November 30, 2006.

     (3)  Cogenco Research, Development and Milestone Payments to DMI under the
          Novated CODA ("Cogenco R&D and Milestone Payments") (as will be
          specifically defined in Novated CODA):
          ---------------------------------------------------------------------

          (i)  Cogenco will pay DMI for preclinical research and other
               development work (as will be defined in the Novated CODA)- actual
               cost of work plus reasonable overhead, payable in advance on
               terms to be agreed before the work commences;
          (ii) Cogenco will pay DMI for Phase 1, Phase 2, Phase 2a, Phase 2b,
               and Phase 3 preclinical and clinical Trials of Product candidates
               and Phase 4 post-marketing studies of Products (all as will be
               defined in the Novated CODA) - actual cost of work plus
               reasonable overhead, payable in advance on terms to be agreed
               before the work commences;
         (iii) Cogenco will pay DMI a non-refundable milestone payment of
               $1,000,000 no later than five (5) days after the commencement of
               the first Phase 1 Clinical Trial of a Product suitable for a
               Major Market Country (all as will be defined in the Novated
               CODA);
          (iv) Cogenco will pay DMI a non-refundable milestone payment of
               $2,500,000 no later than five (5) days after the commencement of
               the first Phase 2a or Phase 2 Clinical Trial of a Product
               suitable for a Major Market Country (all as will be defined in
               the Novated CODA);
          (v)  Cogenco will pay DMI a non-refundable milestone payment of
               $5,000,000 no later than five (5) days after the filing of the
               first NDA or equivalent for a Product in a Major Market Country
               (all as will be defined in the Novated CODA); and
          (vi) Cogenco will pay DMI a non-refundable milestone payment of
               $10,000,000 no later than five (5) days after the first
               Regulatory Approval or equivalent of a Product in a Major Market
               Country(all as will be defined in the Novated CODA).

                                       3
<PAGE>

DMI BioSciences, Inc.
February 10, 2006

     (4)  Sharing of Revenues: As will be more fully and specifically set forth
          in the Novated CODA, Cogenco and DMI will share Profits on Sales made
          by either one of them of Products and will share all payments received
          from third-party licensees and sublicensees, including licensing fees,
          sublicensing fees, milestone payments and royalties ("Third Party
          Payments"). If the parties receive Third Party Payments under the
          Novated CODA (as a single payment or as an aggregate of payments made)
          during the period between the execution of the Novated CODA and
          November 30, 2006 (the date on which the final Cogenco Mandatory
          Payment is due to be paid to DMI), Cogenco shall share in such Third
          Party Payments to the extent of its profit share in the Novated CODA
          at the time of such Third Party Payments (which is based on the amount
          of Cogenco Mandatory Payments made to date). Any such Third Party
          Payments shall have no effect on Cogenco's obligations to make Cogenco
          Mandatory Payments under the Novated CODA. However, Cogenco's
          obligations to make R&D and Milestone Payments under the Novated CODA
          may be relieved or reduced as a result of the Third party Payments, as
          will be more fully set forth in the Novated CODA.

     (5)  Effect of Merger and Merger Failure on Novated CODA and Sharing of
          Revenues:

          (a)  Merger: If the Merger described herein occurs after the execution
               of the Novated CODA, the rights and duties of the Parties under
               the Novated CODA shall be assumed and performed by post-Merger
               Cogenco and its management as will be set forth in the Merger
               Agreement.

          (b)  Merger Failure: If the Merger between DMI and Cogenco fails to
               occur for any reason after the execution of the Novated CODA, and
               if Cogenco Payments Made and/or Cogenco Mandatory Payments
               hereunder are subsequently converted to shares of DMI Common
               Stock, then the amount of Cogenco's cumulative payments in the
               schedule that will be set forth in Section 8.1 of the Novated
               CODA shall be reduced by the amount of the payment that is
               converted into Common Stock, with the result that Cogenco's share
               of Revenues under the Novated CODA will be reduced and DMI's
               share of Revenues under this Agreement will be increased
               accordingly.

(b)  Cogenco-DMI Merger and Definitive Merger Agreement. After the execution of
     this Restated LOI and the Novated CODA, on or before October 30, 2006 (the
     "Initial Merger Closing Date"), but no later than December 15, 2006 (the
     "Final Merger Closing Date"), Cogenco and DMI shall complete a merger
     pursuant to which DMI will become a wholly-owned subsidiary of Cogenco,
     which the parties currently intend will be structured on a tax free basis
     pursuant to Internal Revenue Code Sections 368(a)(1)(A) and 368(a)(2)(E) or
     other appropriate mutually acceptable provision or financing structure
     ("Merger"). In accordance therewith, it is anticipated that the following
     shall occur:

     (1)  Immediately following the execution of this Restated LOI and the
          Novated CODA, the parties shall commence preparation of the definitive
          Merger Agreement in accordance herewith. Such Merger Agreement shall
          contain mutually agreeable terms, including, but not limited to, the
          following:

                                       4
<PAGE>

DMI BioSciences, Inc.
February 10, 2006

          (i)  investment by Cogenco of between $25-50 million in new funds in
               exchange for DMI common stock as further described in subsections
               (2)-(5) below;
          (ii) approval of a management agreement with current DMI management
               for minimum of four (4) years and related updated or new
               employment agreements from the post-Merger entity;
         (iii) approval of a new post-Merger Cogenco/DMI Equity Incentive Plan
               which includes options, warrants, stock appreciation rights or
               other mechanisms equivalent to 18% of the Post-Merger Cogenco
               Shares for all post-Merger Cogenco/DMI employees, management and
               consultants;
          (iv) approval of the post-Merger Board of Directors and officer
               compositions; (v) approval of customary covenants,
               representations and warranties of Cogenco and DMI and their board
               of directors, management and principal shareholders; and
          (vi) reasonable indemnification and other provisions from the parties.

     (2)  Cogenco will form a wholly-owned subsidiary ("NewSub"), which will be
          funded by Cogenco on or before the Merger Closing with between $25-50
          million (or such other amount greater than $25 million mutually agreed
          upon by the parties) in immediately available funds free and clear of
          any debts, liens, claims or obligations (the "Cogenco Minimum
          Funding");

     (3)  Cogenco will provide DMI with independent written confirmation of the
          existence of the mutually agreed upon funding in a mutually agreeable
          escrow account on or before the Initial Merger Closing Date, including
          verification that such funds will be available upon the Merger Closing
          free and clear of all liens, claims, obligations, and the like;

     (4)  At the Merger Closing, NewSub will be merged into DMI, with the
          Cogenco Minimum Funding injected by NewSub at such Merger Closing; and

     (5)  The shareholders of DMI as a group on a fully diluted basis at the
          time of the Merger Closing (the "DMI Shareholders") shall receive in
          consideration for the surrender of their DMI stock, and the Cogenco
          shareholders as a group on a fully diluted basis at the time of the
          Merger Closing (the "Cogenco Shareholders") shall be left with issued
          and outstanding shares of Cogenco common stock after the Merger (the
          "Post-Merger Cogenco Shares") equivalent to the percentages set forth
          below (excluding any effect from a post-Merger Equity Incentive Plan):

          (i)  If Cogenco through NewSub injects Cogenco Minimum Funding in the
               amount of $25 million at the Merger Closing in exchange for DMI
               shares, then Cogenco Shareholders shall own approximately 37.9%
               of the Post-Merger Cogenco Shares, and DMI Shareholders shall own
               approximately 62.1% of Post-Merger Cogenco Shares;
          (ii) If Cogenco through NewSub injects Cogenco Minimum Funding in the
               amount of $40 million at the Merger Closing in exchange for DMI
               shares, then Cogenco Shareholders shall own approximately 48.6%
               of Post-Merger Cogenco Shares, and DMI Shareholders shall own
               approximately 51.4% of Post-Merger Cogenco Shares;

                                       5

<PAGE>

DMI BioSciences, Inc.
February 10, 2006

         (iii) If Cogenco through NewSub injects Cogenco Minimum Funding in the
               amount of $50 million at the Merger Closing in exchange for DMI
               shares, then Cogenco Shareholders shall own approximately 53.8%
               of Post-Merger Cogenco Shares, and DMI Shareholders shall own
               approximately 46.2% of Post-Merger Cogenco Shares; and
          (iv) If Cogenco through NewSub injects Cogenco Minimum Funding in a
               mutually agreed upon amount other than $25, $40 or $50 million at
               the Merger Closing in exchange for DMI shares, then the ownership
               percentages of the respective Cogenco Shareholders and DMI
               Shareholders of Post-Merger Cogenco Shares shall be determined by
               the parties using the same calculations and assumptions used to
               obtain the percentages in subsections (i)-(iii) above.

     (6)  Both parties further intend that the post-Merger NewSub and parent
          Cogenco shall use any cash in pre-Merger and post-Merger Cogenco and
          NewSub for its ongoing bio-pharmaceutical developmental and
          operational activities as set forth in the DMI business plan as of the
          date of the Merger Closing, as revised and supplemented by the DMI and
          the post-Merger Cogenco Management Team and Board of Directors
          approved by the parties in the definitive Merger Agreement.

     (7)  Within one year after the conclusion of the Merger, the parties intend
          that post-Merger Cogenco shall undertake discussions with investment
          banking firms in connection with a possible secondary offering and/or
          file an application for listing of its shares for trading on a
          national stock exchange, such as the New York Stock Exchange, American
          Stock Exchange or NASDAQ National Market, or the NASDAQ Capital Market
          or other exchange as the post-Merger Board of Directors may determine.

(c) Special Circumstances in the event of Merger Failure Regarding the Cogenco
Payments Made. In the event Cogenco and DMI do not complete the Merger by the
Final Merger Closing Date for any reason, or if this Restated LOI terminates for
any reason set forth in Paragraph 8, then the total of the Cogenco Payments Made
shall be convertible at Cogenco's option into One Million (1,000,000) Shares of
DMI Common Stock, no par value ("DMI Conversion Shares"), subject to the
provisions set forth below:

     (1)  Within ten (10) business days after the Final Merger Closing Date, DMI
          will issue and deliver to Cogenco a Conversion Certificate entitling
          Cogenco to convert the Cogenco Payments Made to 1,000,000 DMI
          Conversion Shares. No fractional shares or scrip representing
          fractional shares shall be issued in connection with such conversion
          of the Cogenco Payments Made. Cogenco shall not be entitled to any
          voting rights or other rights as a stockholder of DMI prior to the
          time of conversion.

     (2)  During the period beginning May 1, 2007 and ending September 28, 2007,
          Cogenco shall provide thirty (30) days written notice of Cogenco's
          intent to exercise its Cogenco Payments Made Conversion Certificate to
          obtain DMI Conversion Shares, and DMI will issue and deliver to
          Cogenco within thirty (30) days thereafter a stock certificate

                                       6

<PAGE>

DMI BioSciences, Inc.
February 10, 2006

          representing 1,000,000 DMI Conversion Shares. Unless such notice of
          conversion is given by Cogenco to DMI on or before 5:00 p.m. on
          Friday, September 28, 2007, such conversion option will expire and DMI
          will have no further obligation to Cogenco regarding Cogenco Payments
          Made.

     (3)  The issuance by DMI of the DMI Conversion Shares will be made in
          reliance upon Cogenco's representations to DMI as more fully set forth
          in Paragraph 2(e) below and the additional provisions as more fully
          set forth in Paragraph 2(f) below.

(d) Special Circumstances in the event of Merger Failure Regarding Cogenco
Mandatory Payments. In the event Cogenco and DMI do not complete the Merger on
or before the Final Merger Closing Date for any reason, then the total Cogenco
Mandatory Payments previously made to DMI shall be convertible at Cogenco's
option to up to Two Million (2,000,000) DMI Conversion Shares, subject to the
provisions set forth below:

     (1)  Within ten (10) business days after the Final Merger Closing Date, DMI
          will issue and deliver to Cogenco a Conversion Certificate entitling
          Cogenco to convert the Cogenco Mandatory Payments to a specified
          number of DMI Conversion Shares based on the amount of Cogenco
          Mandatory Payments paid to DMI before the Final Merger Closing Date,
          in the specific amounts as more fully set forth below.

          (i)  $1,000,000 Cogenco Mandatory Payments = 285,715 DMI Conversion
               Shares
          (ii) $2,000,000 Cogenco Mandatory Payments = 571,430 DMI Conversion
               Shares
         (iii) $3,000,000 Cogenco Mandatory Payments = 857,145 DMI Conversion
               Shares
          (iv) $4,000,000 Cogenco Mandatory Payments = 1,142,860 DMI Conversion
               Shares
          (v)  $5,000,000 Cogenco Mandatory Payments = 1,428,575 DMI Conversion
               Shares
          (vi) $6,000,000 Cogenco Mandatory Payments = 1,714,290 DMI Conversion
               Shares
         (vii) $7,000,000 Cogenco Mandatory Payments = 2,000,000 DMI Conversion
               Shares

          No fractional shares or scrip representing fractional shares shall be
          issued in connection with such conversion of the Cogenco Mandatory
          Payments. Cogenco shall not be entitled to any voting rights or other
          rights as a stockholder of DMI prior to the time of conversion.

     (2)  During the period beginning May 1, 2007 and ending September 28, 2007,
          Cogenco shall provide thirty (30) days written notice of Cogenco's
          intent to exercise its Cogenco Mandatory Payments Conversion
          Certificate to obtain DMI Conversion Shares, and DMI will issue and
          deliver to Cogenco within thirty (30) days thereafter a stock
          certificate representing such DMI Conversion Shares. Unless such
          notice of conversion is given by Cogenco to DMI on or before 5:00 p.m.
          on Friday, September 28, 2007, such conversion option will expire, and
          DMI shall have no further obligation to Cogenco regarding Cogenco
          Mandatory Payments.

     (3)  The issuance by DMI of the DMI Conversion Shares will be made in
          reliance upon Cogenco's representations to DMI as more fully set forth
          in Paragraph 2(e) below and the additional provisions as more fully
          set forth in Paragraph 2(f) below.

                                        7

<PAGE>

DMI BioSciences, Inc.
February 10, 2006

(e) Securities Act Representations by Cogenco in Connection with Potential
    Issuance of DMI Conversion Shares.
    -----------------------------------------------------------------------

     (1)  The issuance by DMI of the DMI Conversion Shares will be made in
          reliance upon Cogenco's representation to DMI, which by Cogenco's
          execution of the Novated CODA and the relevant Conversion Certificate
          it hereby confirms or will confirm, that the DMI Conversion Shares, if
          any, purchased by Cogenco will be acquired for investment for
          Cogenco's own account, not as a nominee or agent, and not with a view
          to the resale or distribution of any part thereof, and that Cogenco
          has no present intention of selling, granting any participation in, or
          otherwise distributing the same. By executing this Restated LOI, the
          Novated CODA and the relevant Conversion Certificate, Cogenco further
          represents that it does not have any contract, undertaking, agreement
          or arrangement with any person to sell, transfer or grant
          participation to such person or to any third person, with respect to
          the DMI Conversion Shares, if issued. Cogenco has received all the
          information that it has requested and that it considers necessary or
          appropriate for deciding whether to enter into this Restated LOI and
          the Novated CODA. Cogenco further represents that it has had an
          opportunity to ask questions and receive answers from DMI regarding
          the terms and conditions of the offering of the DMI Conversion Shares.
          Cogenco is an investor in securities of companies in the development
          stage and acknowledges that it is able to fend for itself, can bear
          the economic risk of its investment and has such knowledge and
          experience in financial or business matters that it is capable of
          evaluating the merits and risks of the investment in the DMI
          Conversion Shares, if issued. Cogenco also represents it has not been
          organized solely for the purpose of acquiring the DMI Conversion
          Shares.

     (2)  The issuance by DMI of the DMI Conversion Shares will be made in
          further reliance upon Cogenco's representation to DMI, which by
          Cogenco's execution of this Restated LOI, the Novated CODA and the
          relevant Conversion Certificate it hereby confirms or will confirm,
          that Cogenco is an investor that has such knowledge and experience in
          financial and business matters that it is capable of evaluating the
          merits and risks of the acquisition of the DMI Conversion Shares as
          set forth in Rule 506(b)(2)(ii) of the General Rules and Regulations
          prescribed by the SEC pursuant to the Securities Act. Cogenco further
          represents that it did not receive notification of the opportunity to
          acquire any interest in DMI through any form of public advertising or
          general solicitation. Cogenco understands that (i) the DMI Conversion
          Shares will not be registered under the Securities Act by reason of a
          specific exemption therefrom, that such securities must be held by it
          indefinitely and that the Cogenco must, therefore, bear the economic
          risk of such investment indefinitely, unless a subsequent disposition
          thereof is registered under the Securities Act or is exempt from such
          registration; (ii) each certificate representing the DMI Conversion
          Shares, if issued, will be endorsed with the following legends:

               (x)  THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
                    UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
                    OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
                    HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
                    UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
                    SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
                    REGISTRATION IS NOT REQUIRED; and

               (y)  Any legend required to be placed thereon by DMI's Bylaws or
                    under applicable state securities laws.

                                       8

<PAGE>

DMI BioSciences, Inc.
February 10, 2006

     (3)  Cogenco understands that the DMI Conversion Shares, when issued, will
          be restricted securities under the federal securities laws inasmuch as
          they are being acquired from DMI in a transaction not involving a
          public offering and that under such laws and applicable regulations
          such securities may be resold without registration under the
          Securities Act only in certain limited circumstances. In this
          connection, Cogenco is familiar with Rule 144 promulgated under the
          Securities Act, as presently in effect, and understands the resale
          limitations imposed thereby and by the Securities Act. Without in any
          way limiting the representations set forth above, Cogenco further
          represents, warrants and agrees that it will not make any disposition
          of all or any portion of the Shares unless:

          (i)  there is then in effect a registration statement under the
               Securities Act (a "Registration Statement"), covering such
               proposed disposition and such disposition is made in accordance
               with such Registration Statement;
          (ii) the disposition is made pursuant to Rule 144 or similar
               provisions of federal securities laws as in effect from time to
               time; or
         (iii) it shall have (i) notified DMI of the proposed disposition and
               (ii) if requested by DMI, furnished DMI with an opinion of
               counsel, reasonably satisfactory to DMI, that such disposition
               will not require registration of such Securities under the
               Securities Act.

     (4)  Cogenco, if requested by DMI or the managing underwriter of an
          offering by DMI of Common Stock or other securities of DMI pursuant to
          a Registration Statement, shall agree not to sell publicly or
          otherwise transfer or dispose of the Securities or any securities of
          DMI held by Cogenco for a specified period of time (not to exceed 180
          days, except under circumstances in which all other current
          stockholders of DMI are similarly restricted) following the effective
          date of such Registration Statement.

(f)  Additional ProvisionsRegarding DMI Conversion Shares Issuable upon Merger
     Failure.
     -------------------------------------------------------------------------

     (1)  The number of DMI Conversion Shares issuable to Cogenco hereunder
          assumes that 18,000,000 shares of DMI Common Stock are issued and
          outstanding as of the conversion date. Moreover, as will be more fully
          set forth in the Merger Agreement and ancillary documents, the number
          of DMI Conversion Shares issuable after a Merger Failure will be
          subject to adjustment from time to time upon the happening of certain
          events such as dividend payments or distributions, subdivisions,
          combination or recapitalization (including any such reclassification
          in connection with a consolidation or merger in which DMI is the
          continuing corporation).

                                       9

<PAGE>

DMI BioSciences, Inc.
February 10, 2006

     (2)  If Cogenco elects after the failure of the Merger to convert any
          Cogenco Payments Made or Cogenco Mandatory Payments into DMI
          Conversion Shares, then the amount of Cogenco's cumulative payments in
          the schedule to be set forth in Section 8.1 of the Novated CODA shall
          be reduced by the amount of the payment that is converted into DMI
          Conversion Shares, with the result that Cogenco's share of Revenues
          under the Novated CODA will be reduced and DMI's share of Revenues
          under this Agreement will be increased accordingly; and

3. Due Diligence and Access to Information. Cogenco and DMI shall continue their
due diligence investigations. Each party to this agreement intends to continue
to provide the other party, its counsel, accountants and investment bankers and
their respective agents complete access to facilities, books and records and
cause its employees, accountants, and other representatives to cooperate fully
with the other party, its investment bankers and their respective agents in
connection with the other party's due diligence investigation. DMI and Cogenco
shall provide each other and their respective counsel, accountants and
investment bankers with all information which may be necessary to prepare any
registration statement or other filings or documents which may be required in
connection with the proposed transactions.

4.       Expenses. Cogenco and DMI shall each be responsible for and bear all of
         its own costs and expenses (including any broker's or finder's fees)
         incurred in connection with the proposed transactions described herein,
         including expenses of its representatives, incurred at any time in
         connection with the proposed transactions.

5.       Contingencies and Conditions. The proposed Merger transaction
         contemplated by this Restated LOI on or before the Final Merger Closing
         Date is subject to and shall be contingent on:

(a)  the absence of any material adverse change in DMI's or Cogenco's business,
     financial condition, prospects, assets or operations since December 31,
     2005 except as is already known by the parties as of the date hereof,
     assuming that the parties have obtained full cooperation from each other
     regarding information prior to December 31, 2005;

(b)  the results of DMI's and Cogenco's due diligence investigations being
     satisfactory to each of them in all material respects and in each party's
     sole discretion;

(c)  the execution of irrevocable and timely undertakings to accept the proposed
     transactions by the shareholders of each party representing the required
     percentage of shares outstanding necessary to approve the transaction, as
     provided in the respective articles of incorporation and/or by-laws of the
     parties;

(d)  timely approval of the transactions by the respective boards of directors
     of the parties;

(e)  assuming execution of the Novated CODA, continued compliance with the
     Novated CODA prior to the Merger Closing, including the making of Cogenco
     Mandatory Payments to DMI as described herein and in the Novated CODA;

                                       10

<PAGE>

DMI BioSciences, Inc.
February 10, 2006

(f)  the lack of any material lines of credit, loans, liens, debts or
     obligations of any kind on the books of Cogenco or NewSub prior to the
     proposed Merger;

(g)  receipt of all necessary United States regulatory approvals;

(h)  completion of all necessary audits for DMI for the periods through
     September 30, 2005 and the filing of any necessary regulatory disclosures
     by Cogenco through the date of the proposed Merger; and

(i)  other matters to be mutually agreed upon by the parties and set forth in
     the definitive agreement.

Until the Novated CODA has been consummated or withdrawn and the Restated LOI
has been terminated, DMI and Cogenco each intend to conduct their respective
businesses only in the ordinary course.

6. Disclosure. The parties shall not disclose to anyone (unless required by law
or by any regulatory authority) the existence of discussions regarding the
transactions contemplated hereunder or their terms, except to employees of DMI
and Cogenco, counsel and other advisers who have a need to know and agree to
maintain such confidentiality. No announcements shall be made regarding the
contents of this Restated LOI or the Merger Agreement (or any aspect of the
same) with or without information as to the parties hereto, without prior
consultation between the parties and mutual agreement as to the terms thereof.
To the extent practicable, Cogenco shall continue to seek confidential treatment
in Cogenco's public filings for the terms of the Novated CODA or other DMI
proprietary information, with the cooperation of DMI.

7. Confidentiality. Any information disclosed by either party to the other in
connection with the respective due diligence investigations or the negotiation
of the proposed transactions, which information is not public information or
otherwise known to the party to whom it is disclosed, shall be deemed to be the
confidential information of the disclosing party and shall be used by the party
to whom it is disclosed only for purposes of evaluating the transactions
described in this Restated LOI and the preparation of any registration statement
or other private placement documents or filings which may be required in
connection with the proposed transactions.

8. Termination. This Restated LOI may be terminated:

(a)  by mutual written consent of DMI and Cogenco; or

(b)  if the Novated CODA has not been executed by February 28, 2006; or

(c)  upon written notice by DMI to Cogenco that Cogenco has failed to make
     timely Cogenco Mandatory Payments pursuant to an executed Novated CODA, and
     Cogenco's failure to cure such failure within five days after such written
     notice (or such other longer time as may determined by DMI in its sole
     discretion in a written notice); or

(d)  upon written notice by DMI to Cogenco that the Merger Closing has not
     occurred on or before the Final Merger Closing Date, unless extended by DMI
     in its sole discretion; or

                                       11

<PAGE>

DMI BioSciences, Inc.
February 10, 2006

(e)  upon written notice by either party, if it determines, in its discretion,
     that one or more of the contingencies set forth herein cannot be satisfied
     within the time provided or if some other unsatisfactory material
     information has come to either party's attention that, in the sole
     discretion of such party, requires the termination of this Restated LOI.

Upon termination of this Restated LOI, the parties shall have no further
obligations hereunder, except as specifically stated herein, including the
issuance of DMI Conversion Shares to Cogenco pursuant to the procedures set
forth in Paragraph 2(c)-(f) above.

9. Other Provisions. This Restated LOI may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement. This Restated LOI will be governed
by and construed in accordance with the internal laws of the State of Colorado.
Each party acknowledges that it has been represented by counsel in connection
with this Restated LOI and the transactions contemplated by this Restated LOI.
Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Restated LOI against the party
that drafted this Restated LOI has no application and is expressly waived. This
Restated LOI embodies the entire agreement and understanding of the parties and
as noted herein, supersedes all prior agreements or understandings with respect
to the subject matter of this Restated LOI, other than the Confidentiality
Agreement dated March 1, 2004, which shall continue to remain in effect.

If you are agreeable to proceeding on this basis, please sign and date this
Restated LOI in the space provided below and return a signed copy to the
undersigned.

Very truly yours,

COGENCO INTERNATIONAL, INC., a Colorado corporation

By:    /s/  David W. Brenman
       ---------------------------
       David W. Brenman, President

Acknowledged and agreed to effective as of the 30th day of January, 2006:

DMI BIOSCIENCES, INC., a Colorado corporation

By:    /s/  Bruce G. Miller
       --------------------------------
       Bruce G. Miller, CEO & President

                                       12

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