EXHIBIT 10.21  

FORM OF RESTRICTED STOCK AGREEMENT

                This Restricted Stock Agreement (the “Agreement”) memorializes
the grant by the Board of Directors to Daniel H. Movens, effective _________, of
restricted common stock (“Restricted Stock”) of Caraco Pharmaceutical
Laboratories, Ltd. (the “Company”). The grant was made under the Company’s 1999
Equity Participation Plan (the “Plan”) and is pursuant to that certain
Employment Agreement dated as of May 2, 2005 between the Company and Mr. Movens
(the “Employment Agreement”). The terms of the grant are as follows:

 

1.
Grant of Restricted Stock. Set forth below is the name of the Grantee and the
number of shares of Restricted Stock granted:
 

  Grantee Number of Restricted Shares    

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

         Daniel H. Movens _________          

2. Vesting.  

(a)
Except as otherwise provided in Paragraph 2(b) below, the Restricted Stock
granted under this agreement shall vest in accordance with the following
schedule, if as of each such date the Grantee is still employed with the
Company:
 

  Date Portion (and Amount) of
Restricted Stock Which
Vests    

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

        _-__-__ 33 1/3%     _-__-__ 33 1/3%     _-__-__ 33 1/3%  

     
Except for the vesting restriction which lapses as set forth above, there are no
other restrictions imposed by the Company on the Restricted Stock.
 

(b)
The Restricted Stock shall also vest (i.e., the vesting restrictions shall
lapse) at such times and upon the occurrence of such events as are set forth in
the Employment Agreement (but shall not automatically vest upon a Change in
Control as set forth in Section 8.3(e) of the Plan).
 

3.
Issuance of Shares.  The Restricted Stock shall be issued in three certificates
of ______ shares each in the name of Grantee. The certificates shall be held by
the Director-Human Resources, together with three assignments separate from
certificate signed in blank by Grantee, each with respect to ______ shares.

--------------------------------------------------------------------------------

 
However, as Restricted Stock vests, the certificate(s) representing the vested
shares (together with an applicable assignment separate from certificate) shall
be immediately delivered to Grantee.
 

4.
Rights of Shareholder.  Prior to delivery of shares of Restricted Stock to
Grantee at the time they vest as set forth in Section 3 above, Grantee shall
have voting rights and shall be entitled to receive dividends and other
distributions. Dividends on other distributions paid in any form other than
cash, however, shall be subject to the same vesting requirements as set forth in
Section 2 above (e.g., if a stock dividend of one share for every 100 shares is
declared, Grantee would be entitled to ___ additional shares with vesting on
each of __-__-__, _-__-__ and _-__-__. Such additional shares would be held in
the same manner as provided in Section 3 above, together with applicable
assignments separate from certificate.
  5. Transferability of the Restricted Stock.  

(a)
The Grantee shall not sell, transfer, assign, pledge or otherwise dispose of (a
“Transfer”) the Restricted Stock or any interest in the Restricted Stock prior
to the time it vests.
  (b)
At the time Restricted Stock vests, unless such Restricted Stock is registered
under the Securities Act, no holder thereof may Transfer any such shares without
first delivering to the Company an opinion of counsel (reasonably acceptable in
form and substance to the Company) that neither registration nor qualification
under the Securities Act and applicable state securities law is required in
connection with such Transfer. The Restricted Stock is currently registered on
Form S-8 under the Securities Act.
  (c)
The Company may assign its rights and delegate its duties under this Agreement.
 

6.
Conformity with Plan. The Restricted Stock is intended to conform in all
material respects with, and is subject to, the applicable provisions of the Plan
and the Employment Agreement. The provisions of the Plan, the Employment
Agreement and the Agreement are to be read in a broad and flexible manner to the
maximum extent possible so that their applicable provisions are deemed
consistent with each other. If any provisions are clearly inconsistent, the
terms of the Plan shall control. However, where the Plan includes language to
the effect, for example, that the Plan provides for the following unless the
Restricted Stock Agreement provides otherwise, the terms of the Agreement shall
control. The Company also agrees not to take any adverse action under Section
8.3(c) of the Plan and not to exercise its rights under Section 8.7 (entitled
“Forfeiture Provisions”) of the Plan.

2

--------------------------------------------------------------------------------

7.
Employment.  This Agreement shall not confer upon Grantee any right with respect
to continuance of employment by the Company, and notwithstanding any contrary
oral representation or promises made to the Grantee prior to or after the date
hereof, the Grantee and the Company acknowledge that such Grantee’s employment
with the Company is and will continue to be subject to the terms of the
Employment Agreement. Grantee agrees to render faithful and efficient service to
the Company
  8. Certificate Legend  

 
The certificates representing shares of Restricted Stock held by the
Director-Human Resources of the Company pursuant to Section 2 above shall bear
an “affiliate” legend and the following legend:
 

 
“The sale or other transfer of the shares of stock represented by this
certificate, whether voluntary, involuntary or by operation of law, is subject
to certain restrictions on transfer set forth in that certain Restricted Stock
Agreement.”
 

9.
Withholding and Taxes.  The Company shall have the right to withhold from
Grantee’s compensation or require Grantee to remit sufficient funds to satisfy
applicable withholding for income and employment taxes upon the vesting of
Restricted Stock.
  10.
Further Actions. The Parties agree to execute such further instruments and to
take such further actions as may reasonably be required to carry out the intent
of this Agreement.
  11.
Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
  12.
Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, any one of which need not contain the signatures of more than one
party, and all such counterparts taken together will constitute one and the same
Agreement.
  13.
Notices. Any notices to be given under this Agreement shall be in writing and
shall be (a) delivered in person, (b) mailed by certified mail or registered
mail, return receipt requested, postage prepaid, or (c) delivered by a
nationally recognized overnight courier, U.S. Post Office Express Mail, or
similar overnight courier, and addressed as follow:

3

--------------------------------------------------------------------------------

  Grantor’s Address       Caraco Pharmaceutical Laboratories, Ltd.   1150 Elijah
McCoy Drive   Detroit, Michigan 48202   Attention: CEO, President, COO, CFO or
Secretary     Grantee’s Address     Daniel H. Movens   _______________  
_______________  

 
The time of giving of any notice shall be the time of delivery in person, the
time of delivery by the applicable overnight courier or with respect to
registered or certified mail, the time of receipt thereof by the addressee or
any agent of the addressee, except that in the event the addressee or such agent
of the addressee shall refuse to receive any notice given by registered mail or
certified mail as above provided or there shall be no person available at the
time of the delivery thereof to receive such notice, the time of the giving of
such notice shall be the time of such refusal or the time of such delivery, as
the case may be. Any party hereto may, giving five (5) days written notice to
the other party hereto, designate any other address in substitution of the
foregoing address to which notice shall be given.
 

14.
Successors And Assigns. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company and, subject to the
restrictions on transfer herein set forth, be binding upon Grantee’s heirs,
executors, administrators, successors and permitted assigns.
  15.
Governing Law. This Agreement shall be administered, interpreted and enforced
under the internal laws of the State of Michigan without regard to conflicts of
laws thereof.

4

--------------------------------------------------------------------------------

                Please sign as Grantee in the space provided below and return
the Agreement to Tammy Bitterman, Director-Human Resources, to confirm your
understanding and acceptance of the agreements contained in this letter.

 

  Very truly yours,   CARACO PHARMACEUTICAL LABORATORIES, LTD.  

  By: _________________________               Tammy Bitterman    
           Director-Human Resources

 

THE UNDERSIGNED hereby acknowledges having read this Agreement and hereby agrees
to be bound by all provisions set forth herein.

 

GRANTEE:       _________________________   Daniel H. Movens

5

--------------------------------------------------------------------------------