EXHIBIT 10.1

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”), is entered into as of
November 8, 2004, by and between POZEN Inc. (the “Company”), with offices
located at Suite 400, 1414 Raleigh Road, Chapel Hill, North Carolina 27517, and
Marshall E. Reese, Ph.D. (“Executive”), whose address is 306 Edinburgh, Cary,
North Carolina 27511.

 

WITNESSETH:

 

WHEREAS, the Company is engaged in certain pharmaceutical research, development
and marketing activities; and

 

WHEREAS, the Company wishes to continue to employ Executive in the position of
Executive Vice President, Product Development, and Executive desires to continue
such employment with the Company.

 

NOW, THEREFORE, in consideration of the foregoing and the provisions and mutual
promises herein contained and other good and valuable consideration, the parties
hereby agree as follows:

 

1. EMPLOYMENT. The Company hereby employs Executive, and Executive hereby
accepts employment, as Executive Vice President, Product Development of the
Company, with such duties and responsibilities as are normally related to such
position in accordance with the standards of the industry and as specified in
Exhibit A attached hereto and incorporated herein by reference, and any
additional duties as may be assigned to Executive from time to time by the
President or the Board of Directors of the Company.

 

2. TERM. Executive’s employment shall be deemed to have commenced on October 18,
2004 and shall continue until October 18, 2005 (the “Initial Term”), and
thereafter shall be automatically renewed with additional one (1) year terms to
follow consecutively, subject to the termination and severance provisions herein
later provided, unless amended or modified by mutual agreement of the parties.
As used herein, “Term” shall include the Initial Term and any renewals thereof
in accordance with this Agreement.

 

3. EXCLUSIVE SERVICE. Executive agrees to devote Executive’s full time and
attention to the performance of Executive’s duties and responsibilities on
behalf of the Company and to comply with all policies and regulations of the
Company.

 

4. COMPENSATION. During the Term of this Agreement, Executive’s compensation
shall be determined and paid as follows:

 

(a) Base Salary. Executive shall receive an annual base salary of at least Two
Hundred and Thirty Thousand Dollars ($290,000) payable in accordance with the
Company’s payroll practices. Annual increases will be made, if any, based upon

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performance, and in the sole discretion of the Board of Directors or the
Compensation Committee of the Board of Directors (each or collectively, the
“Committee”), such increases, if any, to be effective as of January 1 of each
year during the Term.

 

(b) Bonus. Executive shall be eligible to receive an annual cash incentive bonus
of up to forty percent (40%) of Executive’s annual base salary as may be set by
the Committee by March 31 of each year. The determination of the actual bonus
earned, if any, shall be at the sole discretion of the Committee and shall be
based upon the Committee’s assessment of Executive’s performance and the
achievement of certain objectives which shall be set by the Committee from time
to time. Executive’s performance shall be evaluated by the Committee on an
annual basis, and the Committee shall adjust Executive’s salary in its sole
discretion. Nothing in this section shall be construed as guaranteeing Executive
a bonus in any amount.

 

(c) Stock Options. Upon the commencement of Executive’s employment with the
Company, Executive was granted an option to purchase One Hundred Thousand
(100,000) shares of the common stock of the Company at a purchase price equal to
closing price of the common stock of the Company as quoted on the NASDAQ Stock
Market on the date of grant. Such shares vest in accordance with and are
governed by the terms of the Company’s 2000 Equity Compensation Plan, as amended
and restated, and an Incentive Stock Option Agreement issued in accordance
therewith.

 

(d) Benefits. Executive shall be eligible to participate in the Company’s
standard employee benefit programs made available to employees of the Company
from time to time, subject to appropriate premium contributions, benefit
elections, etc. In addition, Executive shall be entitled to three (3) weeks of
paid vacation per year.

 

(e) Business Expenses. The Company shall reimburse Executive for all reasonable
expenses incurred in the furtherance of the Company’s business and interests,
including travel and entertainment. Executive agrees to comply with the expense
reporting policies and procedures of the Company.

 

(f) Adequate Office Space. The Company shall provide to Executive adequate
office space, facilities, and administrative support appropriate to Executive’s
position.

 

5. TERMINATION. This Agreement shall or may be terminated, as the case may be,
upon the terms and conditions hereinafter provided.

 

(a) Voluntary Termination. This Agreement shall be considered voluntarily
terminated by the parties if either party provides written notice of such
party’s intent not to renew this Agreement, provided that such party shall
provide at least ninety (90) days’ written notice to the other party prior to
the last day of the Initial Term or any renewal term.

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(b) Involuntary Termination. The Company may terminate this Agreement upon
written notice to Executive (or Executive’s representative) in any of the
following events:

 

  (i) The death of Executive;

 

  (ii) Executive becomes permanently disabled; or

 

  (iii) For Cause, immediately upon written notice to Executive. “Cause” shall
be determined by the Board of Directors and shall mean: (A) breach by Executive
of the terms of this Agreement; (B) breach of the Nondisclosure, Inventions and
Non-Competition Agreement (described in Section 6 below); (C) material failure
by Executive to comply with the policies or directives of the Board of
Directors; (D) any illegal or dishonest action that is materially detrimental to
the Company; or (E) Executive’s failure to faithfully carry out the duties of
Executive’s position, provided that Executive shall be given a period of thirty
(30) days after receipt of written notice of such failure during which to
correct such failure; and (F) Executive’s violation of the Company’s policies
regarding harassment or unlawful discrimination.

 

(c) Obligations upon Certain Terminations. Upon voluntary termination of this
Agreement, or termination of Executive’s employment by the Company for Cause (as
defined above) or upon Executive’s death or disability, or termination by
Executive for other than Good Reason (as defined below), the Company shall have
no further obligations hereunder other than the payment of all compensation and
other benefits payable to Executive through the date of such termination.

 

(d) Severance. In the event of termination of Executive’s employment (i) by the
Company for reasons other than Cause or Executive’s death or disability, or (ii)
by Executive for Good Reason, and provided Executive executes and delivers a
Release and Settlement Agreement in a form acceptable to the Company, Executive
shall receive a severance benefit in an amount equal to one (1) year’s base
salary plus the average annual bonus awarded Executive over the previous two (2)
years (the “Severance Benefit”). The Severance Benefit will be payable in
accordance with the Company’s normal payroll policies over a period of twelve
(12) months from the date of termination. Executive shall also continue to be
entitled to receive all Company benefits to which Executive was entitled as of
the date of termination, subject to the terms of all applicable benefit plans
and to the extent such benefits can be provided to a non-employee (or to the
extent such benefits cannot be provided to non-employees, then the cash
equivalent thereof), at the same average level and on the same terms and
conditions which applied immediately prior to the date of Executive’s
termination, for the shorter of (i) one year following the date of such
termination or (ii) until Executive obtains comparable coverage from another
employer (the “Continuing Benefits”). At any time during the severance period,
the Company may elect to pay a lump sum amount to Executive which represents the
reasonable value of the Severance Benefit and/or the Continuing Benefits reduced
to their present value in lieu of continuing payment of such benefits.

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(e) Good Reason. For purposes of this Agreement, “Good Reason” shall mean, the
occurrence, without the consent of Executive, of any of the following events,
unless, in the case of (i), (ii) and (iii) below, such event is corrected within
thirty (30) days after written notification by Executive to the Company of the
same: (i) the office from which Executive performs Executive’s principal duties
is moved more that 50 miles from the current location of the Company’s offices
in Chapel Hill, North Carolina; (ii) Executive’s duties and responsibilities are
substantially reduced or diminished; (iii) the Company materially breaches its
obligations under this Agreement; or (iv) a Change of Control (as defined below)
occurs and Executive notifies the Company in writing within sixty (60) days of
the consummation of such Change of Control that Executive intends to terminate
Executive’s employment as a result of the Change of Control, in which event such
termination shall be effective not less than sixty (60) days after the date of
such written notice.

 

(f) Tax Gross-Up for Parachute Payments.

 

(A) If at any time or from time to time it shall be determined that any payment
to Executive pursuant to this Agreement or any other payment or benefit
hereunder or under any other plan or agreement or otherwise (“Potential
Parachute Payment”) would constitute an “excess parachute payment” within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
“Code”), and thus would be subject to the excise tax imposed by Section 4999 of
the Code, or any similar tax payable under any United States federal, state,
local, foreign or other law (“Excise Tax”), then Executive shall receive and the
Company shall pay or cause to be paid a Tax Gross-Up Payment with respect to all
Taxes as defined below. The Tax Gross-Up Payment is intended to compensate
Executive for all such excise taxes and federal, state, local, foreign or other
income, employment or excise taxes or other taxes (“Taxes”) payable by Executive
with respect to the Tax Gross-Up Payment and shall be in an amount such that
after payment of Taxes on such amount there remains a balance sufficient to pay
the taxes being reimbursed. For purposes of determining the amount of the Tax
Gross-Up Payment, Executive shall be deemed to pay federal income tax and
employment taxes at the highest marginal rate of federal income and employment
taxation in the calendar year in which the Tax Gross-Up Payment is to be made
and state and local income taxes at the highest marginal rate of taxation in the
state and locality of Executive’s residence (or, if greater, the state and
locality in which Executive is required to file a nonresident income tax return
with respect to the Potential Parachute Payment), net of the maximum reduction
in federal income taxes that may be obtained from the deduction of such state
and local taxes.

 

(B) The determinations to be made under this Section 5(f) shall be made by the
Company’s independent public accountants (the “Accounting Firm”), which firm
shall provide its determinations and any supporting calculations both to the
Company and to Executive. Any such determination by the Accounting Firm shall be

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binding upon the Company and Executive. All fees and expenses of the Accounting
Firm in performing the determinations referred to in this Section 5(f) shall be
borne solely by the Company, and the Company shall indemnify and hold harmless
the Accounting Firm of and from any and all claims, damages and expenses
resulting therefrom, except for claims, damages or expenses resulting from the
gross negligence or willful misconduct of the Accounting Firm.

 

(g) Disability. For purposes of this Agreement, Executive shall be considered
permanently disabled when a qualified medical doctor mutually acceptable to the
Company and Executive or Executive’s personal representative shall have
certified in writing that: (i) Executive is unable because of medically
determinable physical or mental disability to perform substantially all of
Executive’s duties for more than one hundred eighty (180) calendar days measured
from the last full day of work; or (ii) by reason of mental or physical
disability, it is unlikely that Executive will be able, within one hundred
eighty (180) calendar days, to resume substantially all business duties and
responsibilities in which Executive was previously engaged and otherwise
discharge Executive’s duties under this Agreement.

 

(h) Change of Control. For purposes of this Agreement, a “Change of Control”
shall be deemed to have occurred:

 

(i) If any person (as such term is used in sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than
the Company or any trustee or fiduciary holding securities under an employee
benefit plan of the Company) becomes a beneficial owner (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the voting power of the then outstanding
securities of the Company; provided that a Change of Control shall not be deemed
to occur as a result of a transaction in which the Company becomes a subsidiary
of another corporation and in which the stockholders of the Company, immediately
prior to the transaction, will beneficially own, immediately after the
transaction, shares entitling such stockholders to more than 50% of all votes to
which all stockholders of the parent corporation would be entitled in the
election of directors (without consideration of the rights of any class of stock
to elect directors by a separate class vote); or

 

(ii) Upon the consummation of (A) a merger or consolidation of the Company with
another corporation where the stockholders of the Company, immediately prior to
the merger or consolidation, will not beneficially own, immediately after the
merger or consolidation, shares entitling such stockholders to more than 50% of
all votes to which all stockholders of the surviving corporation would be
entitled in the election of directors (without consideration of the rights of
any class of stock to elect directors by a separate class vote), (B) a sale or
other disposition of all or substantially all of the assets of the Company, or
(C) a liquidation or dissolution of the Company.

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6. NON-DISCLOSURE, INVENTIONS AND NON COMPETITION. Executive acknowledges that
as a condition to Executive’s employment by the Company, Executive executed and
agreed to be bound by the terms of the Company’s standard non-disclosure,
inventions and non-competition agreement in the form attached hereto as Exhibit
B and incorporated herein by reference (the “Nondisclosure Agreement”).

 

7. NOTICES. Any notice required to be given shall be in writing personally
delivered by certified mail or registered mail or by facsimile (receipt
confirmed) to the address last shown in the Company’s records.

 

8. SEVERABILITY. The provisions of this Agreement shall be deemed severable, and
the invalidity or unenforceability of any provision (or part thereof) of this
Agreement shall in no way affect the validity or enforceability of any other
provision (or remaining part thereof).

 

9. GOVERNING LAW. This Agreement shall be governed by and construed according to
the laws of the State of North Carolina, without reference to the choice of law
provisions of such laws.

 

10. ENTIRE AGREEMENT. This Agreement, the Nondisclosure Agreement and, to the
extent provided in Exhibit A hereto, Exhibit B to the offer letter between the
Company and Executive dated October 7, 2004 (the “Offer Letter”) contain the
entire agreement of the parties relating to the subject matter hereof, and the
parties hereto have made no agreements, representations, or warranties relating
to the subject matter of this Agreement which are not set forth herein or
therein. In particular, without limiting the foregoing, this Agreement
supersedes in its entirety the Offer Letter, except to the extent expressly
provided in Exhibit A hereto. Both parties acknowledge and agree that
Executive’s employment with the Company commenced on October 18, 2004 and that
the terms of this Agreement shall be deemed to be effective as of such date. No
modification of this Agreement shall be valid unless made in writing and signed
by the parties hereto.

 

11. BENEFIT. This Agreement shall be binding upon and inure to the benefit of
both parties and their respective heirs, representatives, successors and
assigns, including any corporation or other entity with which or into which the
Company may be merged or which may succeed to its assets or business; provided,
however, that the obligations of Executive are personal and shall not be
assigned by Executive.

 

12. EXECUTIVE REPRESENTATIONS.

 

(a) Executive represents that his performance of this Agreement and as an
employee of the Company does not and will not breach any employment,
non-competition or other agreement to keep in confidence proprietary information
acquired by Executive in confidence or in trust prior to Executive’s employment
by the Company. Executive represents that he has not entered into, and agrees
not to enter into, any agreement that conflicts with or violates this Agreement
or would prevent or interfere with the Company’s employment of Executive on the
terms set forth herein.

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(b) Executive represents that he has not brought and shall not bring with
Executive to the Company, or use in the performance of Executive’s
responsibilities for the Company, any materials or documents of a former
employer which are not generally available to the public or which did not belong
to Executive prior to his employment with the Company, unless Executive has
obtained written authorization from the former employer or other owner for their
possession and use and provided the Company with a copy thereof.

 

13. INJUNCTIVE RELIEF. Executive understands and agrees that the Company will
suffer irreparable harm in the event that Executive breaches any of Executive’s
obligations under this Agreement and that monetary damages will be inadequate to
compensate the Company for such breach. Accordingly, Executive agrees that, in
the event of a breach or threatened breach by Executive of any of the provisions
of this Agreement, the Company, in addition to and not in limitation of any
other rights, remedies, or damages available to the Company at law or in equity,
shall be entitled to a permanent injunction in order to prevent or to restrain
any such breach by Executive, or by Executive’s partners, agents,
representatives, servants, employers, employees and/or any and all persons
directly or indirectly acting for or with Executive; provided such injunction
shall not affect Executive’s ownership rights in the Company or compensation
earned or due Executive.

 

[Signature page follows]

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IN WITNESS WHEREOF, the parties hereto have executed this Executive Employment
Agreement and affixed their seals as of the day and year first above written.

 

EMPLOYER: POZEN INC. By:  

/s/ John R. Plachetka

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Name:   John R. Plachetka, Pharm.D. Title:   Chairman, President and CEO
EXECUTIVE:

/s/ Marshall E. Reese

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Marshall E. Reese, Ph.D.

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EXHIBIT A

 

Executive Vice President, Product Development

Responsibility and Tasks List

 

Reporting to the President and CEO, the Executive Vice President, Product
Development shall have the following principal duties and responsibilities, as
further detailed in Exhibit B to the Offer Letter (the terms of which Exhibit B
continue in full force and effect):

 

  • Management and supervision of the Company’s product development activities

 

  • Creation and management of product development plans for the Company’s
product development projects

 

  • Review and approval of all documents subject to regulatory and medical
review

 

  • Support investor relations and business development functions as appropriate

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EXHIBIT B

 

NON-DISCLOSURE, INVENTION AND NON-COMPETITION AGREEMENT

 

THIS NON-DISCLOSURE, INVENTION AND NON-COMPETITION AGREEMENT (the “Agreement”)
is effective for all purposes and in all respects, by and between POZEN Inc., a
Delaware corporation (hereinafter referred to as “Employer”), and
                                              (hereinafter referred to as
“Employee”).

 

WHEREAS, Employer is about to employ Employee in a position of trust and
confidence to aid Employer in its business; and

 

WHEREAS, Employer desires to receive from Employee a covenant not to disclose
certain information relating to Employer’s business and certain other covenants;
and

 

WHEREAS, as a material inducement to Employer to employ Employee and to pay to
Employee compensation for such services, Employee has agreed to such covenants;
and

 

WHEREAS, Employer and Employee desire to set forth in writing the terms and
conditions of their agreements and understandings.

 

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein
contained, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending
legally to be bound, hereby agree as follows:

 

1. Disclosure of Information. Employee acknowledges that, in and as a result of
his employment by Employer, he will be making use of, acquiring and/or adding to
confidential information of a special and unique nature and value, including,
without limitation, Employer’s trade secrets, products, systems, programs,
procedures, manuals, guides (as periodically updated or supplemented),
confidential reports and communications (including, without limitation, customer
site information, technical information on the performance and reliability of
Employer’s products and the development or acquisition of future products or
product enhancements by Employer) and lists of customers, as well as the nature
and type of the services rendered by Employer and the fees paid by Employer’s
customers. Employee further acknowledges that any information and materials
received by Employer from third parties in confidence (or subject to
non-disclosure covenants) shall be deemed to be and shall be confidential
information within the meaning of this Section 1. As a material inducement to
Employer to employ Employee and to pay to Employee compensation for such
services to be rendered to Employer by Employee (it being understood and agreed
by the parties hereto that such compensation shall also be paid and received in
consideration hereof), Employee covenants and agrees that he shall not, except
with the prior written consent of the Board of Directors of Employer, at any
time during or following the term of his employment with Employer, directly or
indirectly, divulge, reveal, report, publish, transfer or disclose, for any
purpose whatsoever, any of such confidential information which has been obtained
by or disclosed to him as a result of his employment with Employer, including,
without limitation, any Proprietary Information, as

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defined in Section 2 hereof; Employee agrees further that upon termination of
his employment with Employer for any reason, he shall sign the Employee
Termination Statement, a form of which is attached hereto. The aforementioned
obligation of confidentiality and non-disclosure shall not apply when:

 

(a) Public Domain. The information disclosed to Employee was in the public
domain at the time of disclosure, or at any time after disclosure has become a
part of the public domain by publication or otherwise through sources other than
Employee, directly or indirectly, and without fault on the part of Employee in
failing to keep such information confidential; or

 

(b) Requirement of Law or Order. Disclosure is required by law or court order,
provided Employee gives Employer prior written notice of any such disclosure; or

 

(c) Agreement. Disclosure is made with the prior written agreement of the Board
of Directors of Employer; or

 

(d) Prior Information. The information is encompassed by the ideas and
inventions listed on Schedule A hereto or was in Employee’s possession at the
time of disclosure, as shown by written records in existence prior to such time,
and such information has not been transferred to Employer, and was not acquired,
directly or indirectly, from the Employer; or

 

(e) Third Party Disclosure. The information is lawfully disclosed to Employee
after the termination of his employment by a third party who is under no
obligation of confidentiality to Employer with respect to such information; or

 

(f) Independently Developed. Such information is independently developed by
Employee subsequent to the termination of his active participation in the
business of Employer, as demonstrated by written records of Employee which are
contemporaneously maintained.

 

2. Definition of Proprietary Information. For purposes of this Agreement, the
term “Proprietary Information” shall mean all of the following materials and
information (whether or not reduced to writing and whether or not patentable or
protectable by copyright) which Employee receives, receives access to, conceives
of or develops, in whole or in part, as a direct or indirect result of his
employment with Employer, in the course of his employment with Employer (in any
capacity, whether executive, managerial, planning, technical, sales, research,
development, manufacturing, engineering or otherwise) or through the use of any
of Employer’s facilities or resources:

 

(i) Manufactured products, assembled or unassembled, and any related goods or
systems and any and all future products, software or systems developed or
derived therefrom;

 

(ii) With respect to the items described in Section 2(i) above, all hardware and
software relating to design or manufacture; all source and object codes to such
hardware and software; all specifications, design concepts, documents and
manuals; all security systems relating to the product or procedures, including,
without limitation, software security systems;

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(iii) Trade secrets, production processes, marketing techniques, mailing lists,
purchasing information, price lists, pricing policies, quoting procedures,
financial information, customer and prospect names and requirements, customer
data, customer site information and other materials or information relating to
the manner in which Employer does business;

 

(iv) Discoveries, concepts and ideas, whether or not patentable or protectable
by copyright, including, without limitation, the nature and results of research
and development activities, technical information on product or program
performance and reliability, processes, formulas, techniques, “know-how”, source
codes, object codes, designs, drawings and specifications;

 

(v) Any other material or information related to the business or activities of
Employer which is not generally known to others engaged in similar businesses or
activities;

 

(vi) Any other material or information that has been created, discovered or
developed, or otherwise becomes known to Employer which has commercial value in
the business in which Employer is engaged; and

 

(vii) All ideas which are derived from or relate to Employee’s access to or
knowledge of any of the above-enumerated materials and information.

 

Failure to mark any of the Proprietary Information as confidential shall not
affect its status as part of the Proprietary Information under the terms of this
Agreement.

 

3. Ownership of Information.

 

(i) Employee hereby assigns to Employer all of Employee’s right, title and
interest in any idea (whether or not patentable or protectable by copyright),
product, invention, discovery, computer software program or other
computer-related equipment or technology, conceived or developed in whole or in
part, or in which Employee may have aided in its development, while employed by
Employer, including, without limitation, any Proprietary Information. If any one
or more of the aforementioned are deemed in any way to fall within the
definition of “work made for hire”, as such term is defined in 17 U.S.C. § 101,
such work shall be considered “work made for hire”, the copyright of which shall
be owned solely, completely and exclusively by Employer. If any of the
aforementioned are considered to be work not included in the categories of work
covered by the “work made for hire” definition contained in 17 U.S.C. § 101,
such work shall be owned solely by, or assigned or transferred completely and
exclusively to, Employer. Employee agrees to execute any instruments and to do
all other things reasonably requested by Employer (both during and after
Employee’s employment with Employer) in order to more fully vest in Employer all
ownership rights in those items thereby transferred by Employee to Employer.
Employee further agrees to disclose immediately to

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Employer all Proprietary Information conceived of or developed in whole or in
part by him during the term of his employment with Employer and to assign to
Employer any right, title or interest he may have in such Proprietary
Information.

 

(ii) Employee hereby represents and warrants that Employee has fully disclosed
to Employer on Schedule A hereto any idea, invention, product, improvement,
computer software program or other equipment or technology related to
therapeutic pharmaceuticals (an “Invention”) not covered in Section 3(i) above
which, prior to his employment with Employer, Employee conceived of or
developed, wholly or in part, and in which Employee has any right, title or
proprietary interest and which directly relate to Employer’s business, but which
has not been published or filed with the United States Patent or Copyright
Offices or assigned or transferred to Employer. If there is no such list of
Schedule A, Employee represents that Employee has made no such Inventions at the
time of signing this Agreement or Employee hereby assigns such Inventions to
Employer.

 

(iii) Notwithstanding anything in this Agreement to the contrary, the obligation
of Employee to assign or offer to assign his rights in an Invention to Employer
shall not extend or apply to an Invention that Employee developed entirely on
his own time without using Employer’s equipment, supplies, facility or trade
secret information unless such Invention (a) relates to Employer’s business or
actual or demonstrably anticipated research or development, or (b) results from
any work performed by Employee for Employer. Employee shall bear the burden of
proof in establishing that his Invention qualifies for exclusion under this
Section 3(iii). With respect to Section 3(iii), it is agreed and acknowledged
that during Employee’s employment, Employer may enter other lines of business,
which are related or unrelated to its current lines of business, in which case
this Agreement would be expanded to cover such new lines of business.

 

4. Injunctive Relief. Employee understands and agrees that Employer will suffer
irreparable harm in the event that Employee breaches any of his obligations
under this Agreement and that monetary damages will be inadequate to compensate
Employer for such breach. Accordingly, Employee agrees that, in the event of a
breach or threatened breach by Employee of any of the provisions of this
Agreement, Employer, in addition to and not in limitation of any other rights,
remedies or damages available to Employer at law or in equity, shall be entitled
to a permanent injunction in order to prevent or to restrain any such breach by
Employee, or any of employee’s partners, agents, representatives, servants,
employers, employees and/or any and all persons directly or indirectly acting
for or with him.

 

5. Records. All notes, data, tapes, reference materials, sketches, drawings,
memoranda, models and records in any way relating to any of the information
referred to in Sections 1, 2 and 3 hereof (including, without limitation, any
Proprietary Information) or to Employer’s business shall belong exclusively to
Employer, and Employee agrees to turn over to Employer all such materials and
all copies of such materials in his possession or then under his control at the
request of Employer or, in the absence of such a request, upon the termination
of Employee’s employment with Employer.

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6. Accounting for Profits. Employee covenants and agrees that, if he shall
violate any of his covenants or agreements under this Agreement, Employer shall
be entitled to an accounting and repayment of all profits, compensation,
commissions, remunerations or benefits which Employee directly or indirectly has
realized and/or may realize as a result of, growing out of or in connection with
any such violation; such remedy shall be in addition to and not in limitation of
any injunctive relief or other rights or remedies to which Employer is or may be
entitled at law, in equity or under this Agreement.

 

7. Covenant Not to Compete. It is recognized and understood by the parties
hereto that Employee, through Employee’s association with Employer as an
employee, shall acquire a considerable amount of knowledge and goodwill with
respect to the business of Employer, which knowledge and goodwill are extremely
valuable to Employer and which would be extremely detrimental to Employer if
used by Employee to compete with Employer. It is, therefore, understood and
agreed by the parties hereto that, because of the nature of the business of
Employer, it is necessary to afford fair protection to Employer from such
competition by Employee. Consequently, as a material inducement to employ
Employee in the aforementioned positions, Employee covenants and agrees to the
following:

 

(a) Except as otherwise approved in writing by Employer, Employee agrees:

 

(i) that Employee will not, directly or indirectly, with or through any family
member or former director, officer or employee of Employer, or acting alone or
as a member of a partnership or as an officer, holder of or investor in as much
as 5% of any security of any class, director, employee, consultant or
representative of any corporation or other business entity:

 

(1) at any time while engaged as an employee of Employer and for a period of two
(2) years following termination as an employee, interfere with, or seek to
interfere with, the relationship between Employer or any affiliate of Employer
and the following: (a) any of the employees of such entities; (b) any of the
customers of such entities then existing or existing at any time within three
(3) years prior to termination of Employee’s employment by Employer; or (c) any
of the suppliers of such entities then existing or existing at any time within
three (3) years prior to termination of Employee’s employment by Employer.

 

(b) The parties hereto agree that in the event that either the length of time or
the geographic area set forth in paragraph (a) is deemed too restrictive in any
court proceeding, that the court may reduce such restrictions to those which it
deems reasonable under the circumstances.

 

(c) Employee agrees and acknowledges that Employer does not have any adequate
remedy at law for the breach or threatened breach by him of this covenant and
agrees that Employer may in addition to the other remedies which may be
available to it under this Agreement, file a suit in equity to enjoin Employee
from such breach or threatened breach.

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8. Reasonableness of Restrictions.

 

(a) Employee has carefully read and considered the provisions of Sections 1
through 7 hereof and, having done so, agrees that the restrictions set forth
therein are fair and reasonable and are reasonably required for the protection
of the interests of Employer, its officers, directors, stockholders and
employees.

 

(b) In the event that, notwithstanding the foregoing, any part of the covenants
set forth in Sections 1 through 7 hereof shall be held to be invalid and
unenforceable, the court so deciding may reduce or limit the terms of such
provision to allow such provision to be enforced.

 

9. Burden and Benefit. This Agreement shall be binding upon, and shall inure to
the benefit of, Employer and Employee, and their respective heirs, personal and
legal representatives, and, in the case of Employer, its successors and assigns.

 

10. Governing Law. In view of the fact that the principal office of Employer is
located in the State of North Carolina, it is understood and agreed that the
construction and interpretation of this Agreement shall at all times and in all
respects be governed by the laws of the State of North Carolina.

 

11. Severability. The provisions of this Agreement shall be deemed severable,
and the invalidity or unenforceability of any one or more of the provisions
hereof shall not affect the validity or enforceability of the other provisions
hereof.

 

12. Employer. As used herein, the term “Employer” shall also include any
corporation which is at any time the parent or a subsidiary of Employer, or any
corporation or entity which is an affiliate of Employer by virtue of common
(although not identical) ownership, and for which Employee is providing services
in any form during his employment with Employer or any such other corporation or
entity.

 

13. Notices. Any notice required to be given hereunder shall be sufficient if in
writing, and sent by certified or registered mail, return receipt requested,
first-class postage prepaid, in the case of Employee, to his address as shown on
Employer’s records, and in the case of Employer, to its principal office in the
State of North Carolina.

 

14. Entire Agreement. This Agreement contains the entire agreement and
understandings by and between Employer and Employee with respect to the
covenants herein described, and no representations, promises, agreements or
understandings, written or oral, not herein contained shall be of any force or
effect. Nothing contained in this Agreement shall be deemed or construed to
constitute an agreement by Employer to employ or continue to employ Employee. No
change or modification hereof shall be valid or binding unless the same is in
writing and signed by the parties hereto. No waiver of any provision of this
Agreement shall be valid unless the same is in writing and signed by the party
against whom such waiver is sought to be enforced; moreover, no valid waiver of
any provision of this Agreement at any time shall be deemed a waiver of any
other provision of this Agreement at such time nor will it be deemed a valid
waiver of such provision at any other time.

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15. Headings. The headings and other captions in this Agreement are for
convenience and reference only and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.

 

16. Effective Date. This Agreement shall be effective as of
                    , 2004.

 

IN WITNESS WHEREOF, Employer and Employee have duly executed this Agreement as
of the day and year first above written.

 

EMPLOYER:

 

POZEN Inc.

By:

 

 

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Name:

   

Title:

   

 

EMPLOYEE:

 

 

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Date :  

 

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SCHEDULE A

 

Inventions, Ideas, Products, Etc. Not Covered in Section 3(i) of the Agreement

 

[Note: If Employee has no such items to disclose, write “NONE” on this line:
                    .]

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EMPLOYEE TERMINATION STATEMENT

 

1. I am cognizant of my legal obligations, as stated in that certain
Non-Disclosure, Invention and Non-Competition Agreement, dated
                    ,             , which I signed at the commencement of my
employment with respect to confidential information of POZEN Inc. (the
“Company”), and hereby specifically reaffirm all of the provisions stated
therein.

 

2. I understand that my obligation not to use or disclose Company confidential
information remains in effect after the termination of my employment with the
Company and that if, at any time in the future, I wish to utilize, disclose or
publish any Company confidential information, or if I should be in doubt as to
whether any such information may be confidential to the Company, I will, prior
to such use or disclosure, obtain the written consent of the Company to do so. I
further understand that such consent may be refused where Company confidential
information is involved.

 

3. I understand that, to the extent permitted by law, any idea, invention,
discovery, computer software program or other computer-related equipment or
technology, conceived or developed by me in whole or in part, or in which I may
have aided in its development during my employment with the Company, belongs
exclusively to the Company. I hereby certify that I have made full disclosure in
writing to the Company or have discussed with my supervisor at the Company all
of such ideas, inventions, discoveries, computer programs and computer-related
equipment or technology. I further understand that I still have an obligation
subsequent to termination of my employment with the Company to execute such
papers as the Company may reasonably request to more fully vest in the Company
all ownership rights in the items referenced in this paragraph.

 

4. I hereby certify that all materials related directly or indirectly to my
employment with the Company and all copies thereof, have been returned to my
supervisor at the Company. I further certify that no computer listings,
programs, object codes, source codes, product development guides, flow-charts or
other documents owned by the Company or provided to or used by me in connection
with my employment at the Company, whether in machine-readable form or
otherwise, have been retained by me or given to any other third person or entity
in anticipation of my employment termination or for any other reason, and
further certify that none of the aforementioned will be removed from the
Company’s premises by me.

 

ACCEPTED:

 

POZEN Inc.     By:  

 

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Date   Date