EXHIBIT 10.4

POZEN INC.

LONG TERM INCENTIVE CASH AWARD AGREEMENT

This Long Term Incentive Cash Award Agreement (the “Agreement”) is executed
effective as of February 14, 2007 (the “Effective Date”), by and between POZEN
Inc. (“POZEN” or the “Company”) and John R. Plachetka (“Executive”).

WHEREAS, the Compensation Committee (the “Committee”) of the Board of Directors
of the Company has approved the grant to Executive of a cash award of up to an
aggregate amount of $1,000,000.00 (the “Award”), payable as and on the terms
described herein and subject to the fulfillment of certain conditions as set
forth herein, as an inducement for Executive to promote the best interests of
the Company and its stockholders; and

WHEREAS, POZEN and Executive desire to set forth certain agreements with respect
to such Award.

NOW THEREFORE, the parties hereto agree as follows:

 

1. Award; Vesting.

(a) Executive is hereby granted the Award, which shall vest and become payable
as follows:

 

  i. The Award shall vest and become payable in three equal installments on each
of January 2, 2008, January 2, 2009 and January 2, 2010 (each, a “Vesting
Date”), subject to Executive’s continuing to be employed by or provide service
to the Company through each such Vesting Date and, with respect to the
Contingent Portion (as defined below), the satisfaction of the performance
conditions set forth in subsection (ii) below. Payment of each vested
installment shall be made to Executive in a lump sum payment on the second
business day following each Vesting Date.

 

  ii. Notwithstanding the foregoing, the vesting and payment of 25% of the Award
(the “Contingent Portion”) shall be contingent upon receipt by the Company, on
or before December 31, 2007, of the Trexima Approval (as defined below). If the
Trexima Approval is received or before December 31, 2007, the Contingent Portion
shall vest and become payable on each Vesting Date as described in subsection
(i) above. If the Trexima Approval is not received on or before December 31,
2007 or if the Trexima Approval is received on or before December 31, 2007, but
Executive has ceased to be employed by or provide service to the Company on such
date, the entire Contingent Portion shall be immediately forfeited, and
Executive acknowledges and agrees that he shall have no right or entitlement to
receive the Contingent Portion in such event.

(b) For purposes of this Section 1, and Sections 2 and 3: (i) the term “Trexima
Approval” shall mean an action letter from the U.S. Food and Drug Administration
indicating approval of the New Drug Application for Trexima, the proposed brand
name for the combination of GlaxoSmithKline’s sumatriptan and naproxen sodium in
a single tablet being developed by the Company for the acute treatment of
migraine pursuant to a development and commercialization

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agreement with GlaxoSmithKline; and (ii) the term “employed by, or provide
service to the Company” shall have the meaning given to such term in the POZEN
Inc. 2000 Equity Compensation Plan, as amended and restated (the “Plan”).

 

2. Change of Control. Notwithstanding anything to the contrary herein, in the
event of and conditioned upon a Change of Control (as defined in the Plan) and
unless otherwise determined by the Committee, the Award, to the extent not
previously paid, shall accelerate and become payable in full, subject to
(i) Executive’s continuing to be employed by or provide service to the Company
to such date, and (ii) with respect to the Contingent Portion, the satisfaction
of the performance conditions set forth in Section 1(a)(ii) above, subject to
the discretion of the Committee. Notwithstanding the foregoing, if a Change of
Control occurs prior to December 31, 2007 and receipt of the Trexima Approval
has not occurred, the Contingent Portion shall accelerate and become payable in
full. Payment of any portion of the Award that becomes payable pursuant to this
Section 2 shall be made in a lump sum payment on the date of closing of the
Change of Control.

 

3. Continuous Employment; Termination.

(a) Payment of the Award is subject to Executive’s continuing to be employed by,
or provide service to, the Company; provided, however, that notwithstanding
anything to the contrary herein, if, prior to the final Vesting Date, Executive
is terminated by the Company without Cause, or Executive terminates employment
with the Company for Good Reason, and provided that Executive executes and does
not revoke a general release in a form acceptable to the Company (the
“Release”), Executive shall be entitled to receive an amount equal to the amount
of the Award which would have become vested on the next Vesting Date if such
termination had not occurred; provided, however, that if such termination occurs
prior to December 31, 2007 and receipt of the Trexima Approval has not occurred,
the Contingent Portion of such Award shall be forfeited in its entirety. If
Executive is terminated for Cause, Executive will immediately forfeit all rights
to any payment of the Award under this Agreement not already paid to him.

(b) Payment of any amounts payable pursuant to this Section 3 shall be made to
Executive in a lump sum payment on the second business day following the eighth
day after Executive executes and does not revoke the Release; provided, however,
that notwithstanding the foregoing, if and to the extent required in order to
avoid the imposition on Executive of any excise tax under Section 409A of the
Internal Revenue Code of 1986, as amended, such payment shall not be made until,
and shall be made on, the second business day after the date that is six
(6) months following the date of Executive’s termination of employment.

(c) For purposes of this Section 3, the terms “Cause” and “Good Reason” shall
have the meanings given to such terms in that certain Second Amended and
Restated Executive Employment Agreement dated as of March 14, 2006, by and
between POZEN and Executive (the “Executive Employment Agreement”).

 

4. Withholding; Taxes. All payments of the Award pursuant to this Agreement
shall be subject to applicable federal (including FICA), state and local tax
withholding requirements. The Company shall have the right to deduct from all
such payments any federal, state or local taxes required by law to be withheld
with respect to such payments. Executive shall be solely responsible for any tax
consequences arising from the grant or payment of the Award, and Executive is
hereby advised to should consult with his personal tax and/or financial advisors
regarding the tax effects of the Award and this Agreement.

 

5.

No Right to Employment. The grant of the Award and this Agreement shall not
confer upon Executive any right to be retained by or in the employ or service of
the Company and shall not

 

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interfere in any way with the right of the Company to terminate Executive’s
employment or service at any time. Other than such rights as may be granted to
Executive in the Executive Employment Agreement, the right of the Company to
terminate at will Executive’s employment or services at any time for any reason
is specifically reserved.

 

6. Assignment. This Agreement may not be assigned or transferred by Executive.

 

7. Unfunded Arrangement. Executive’s rights to receive payments under this
Agreement shall be no greater than the right of an unsecured general creditor of
the Company. All payments shall be made from the general assets of the Company,
and no special or separate fund shall be established and no segregation of
assets shall be made to assure payment.

 

8. Integration. This Agreement, as supplemented by the terms and conditions of
the Plan and the Executive Employment Agreement as expressly referenced and
incorporated herein, constitutes the entire understanding and agreement of POZEN
and Executive with respect to the subject matter contained herein, and there are
no other agreements, understandings, restrictions, representations, or
warranties, oral or written, between POZEN and Executive with respect to the
subject matter contained herein other than those as set forth or provided for
herein.

 

9. Governing Law. This Agreement shall be governed by the laws of the State of
Delaware as such laws are applied to agreements between Delaware residents
entered into and to be performed entirely within the State of Delaware.

 

10. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
hereof.

 

11. Amendment and Waiver. No provision of this Agreement, including the
provisions of this Section 11, may be amended, modified, deleted, or waived in
any manner except by a written agreement executed by the parties.

 

12. Effect. This Agreement shall be binding on and inure to the respective
benefit of the Company and its successors and assigns and Executive and his
personal representatives.

[Signature page follows]

 

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

 

POZEN INC.

By:

 

/s/ William L. Hodges

Name:

  William L. Hodges

Title:

  Senior Vice President, Finance and   Administration, and Chief Financial  
Officer

 

EXECUTIVE:

/s/ John R. Plachetka

John R. Plachetka

 

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