Exhibit 10.4
KOS INCENTIVE PLAN
RESTRICTED SHARE AWARD AGREEMENT
     This Restricted Share Award Agreement (the “Agreement”) is effective as of
___2006 (the “Date of Grant”) and is made between Kos Pharmaceuticals, Inc., a
Florida corporation (the “Company”) and ___(the “Recipient”).
Preliminary Statements
     The Recipient accepts the Restricted Share Award grant and agrees to be
bound by the terms and conditions of the Plan and this Agreement. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Agreement.
Agreement
     1. Restricted Shares. Subject to the terms and conditions provided in this
Agreement and the Plan, the Company hereby grants to the Recipient ___shares of
Common Stock (the “Restricted Shares”). The extent to which the Restricted
Shares become vested and non-forfeitable shall be determined in accordance with
the provisions of Sections 2 and 3 of this Agreement.
     2. Vesting. Each Restricted Share shall become vested according to the
following schedule based on the anniversary of the Date of Grant, provided that
the Recipient remains continuously employed by, or provides continuous service
to, the Company or a Subsidiary until such anniversary date:

     
Anniversary of Date of Grant
  Percent Vested
 
   
 
   
Prior to 1st Anniversary
      0%
1st
    25%
2nd
    50%
3rd
    75%
4th
  100%

     Notwithstanding the following, the Committee, in its sole and absolute
discretion, may accelerate the vesting of a Restricted Share at any time.
     The unvested portion of the Restricted Shares will automatically fully vest
upon the death of the Recipient if as of the date of the Recipient’s death the
Recipient was either an active or retired employee and had five (5) years of
service with the Company. If the Recipient is either an active or retired
employee of the Company and dies prior to his/her fifth (5th) year of employment
with the Company, a pro rata portion (representing the actual length of service
divided by five (5) years) of the unvested portion of the Retirement Shares will
automatically vest.

 

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     3. Change in Control. Contingent upon the occurrence of a Change in
Control, as defined in the Plan, the Board may, but is not required to,
accelerate the vesting of Restricted Shares that are not yet vested on the date
such Change in Control is determined to have occurred.
     4. Restrictions on Transfer. The Recipient shall not have the right to make
or permit to occur any transfer, pledge or hypothecation of all or any portion
of unvested Restricted Shares, whether outright or as security, with or without
consideration, voluntary or involuntary. Any transfer, pledge or hypothecation
not made in accordance with this Agreement shall be deemed null and void.
     5. Forfeiture. In the event that the Recipient’s employment or service, as
the case may be, with the Company or a Subsidiary terminates for any reason
other than death before all of the Restricted Shares become vested in accordance
with Section 2 or Section 3 of this Agreement, the unvested Restricted Shares
shall be forfeited as of the Recipient’s last day of employment or service, as
the case may be, with the Company or a Subsidiary. The Company shall have the
right to determine, in its sole discretion, whether a leave of absence results
in a termination of employment or service under this Agreement.
     6. Death of Recipient. In the event of the death of the Recipient, the
Recipient’s Restricted Shares, to the extent unvested on the date immediately
preceding the date of death, shall thereupon automatically be forfeited.
     7. Tax Payment Upon Vesting.
          (a) At such time as the Recipient becomes vested pursuant to Section 2
or Section 3 above in the Restricted Shares, the Recipient (or his/her personal
representative) shall deliver to the Company, within ten (10) days after the
occurrence of the vesting event specified in Section 2 or Section 3 above (or in
the event of death, within ten (10) days of the appointment of the personal
representative) (a “Vesting Date”), either a certified check payable to the
Company in the amount of all withholding tax obligations (whether federal,
state, local or foreign income or social insurance tax), imposed on the
Recipient and the Company by reason of the vesting of the Restricted Shares, or
a withholding election form to be provided by the Company upon request by the
Recipient (or personal representative). Failure to tender either the required
certified check or withholding election form will result in a delay of the
delivery of the Restricted Shares. Upon receipt of payment in full of all
withholding tax obligations, the Company shall cause a certificate representing
the vested Restricted Shares (which then will be unrestricted) to be issued and
delivered to the Recipient.
          (b) In the event the Recipient or his personal representative elects
to satisfy the withholding obligation by executing the withholding election
form, the Recipient’s actual number of vested shares of Restricted Shares shall
be reduced by the smallest number of whole shares of Common Stock of the Company
which, when multiplied by the fair market value of the Common Stock on the
Vesting Date, is sufficient to satisfy the amount of the withholding tax

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obligations imposed on the Company by reason of the vesting of the Restricted
Shares. Once made, the withholding election shall be irrevocable.
          (c) In the event the Recipient or his personal representative fails to
timely decide between the use of a certified check or the execution of a
withholding election form, the Recipient or his personal representative shall be
deemed to have elected and executed the withholding election form, and the
Company shall thereafter deliver to the Recipient or his beneficiary the net
amount of the vested Restricted Shares (which then will be unrestricted).
     8. Dividends. The Recipient shall have a right to receive cash dividends,
to the extent declared by the Board of Directors, which are paid with respect to
his/her Restricted Shares after the Date of Grant until the date on which the
Recipient’s interest in such Restricted Shares has been forfeited.
     9. Voting. The Recipient shall have a right to vote the Shares related to
his/her Restricted Share Award after the Date of Grant until the date on which
the Recipient’s interest in such Restricted Shares has been forfeited.
     10. No Effect on Employment. Nothing in the Plan or this Agreement shall
confer upon the Recipient the right to continue in the employment of the Company
or affect any right which the Company may have to terminate the employment of
the Recipient regardless of the effect of such termination of employment on the
rights of the Recipient under the Plan or this Agreement.
     11. Applicable Law. The validity, interpretation, and enforcement of this
Agreement are governed in all respects by the laws of Florida, without giving
effect to its conflict of laws principles, and by the laws of the United States
of America.
     12. Successors. This Agreement shall inure to the benefit of, and be
binding upon, the Company and the Recipient and their heirs, legal
representatives, successors and permitted assigns.
     13. Severability. In the event that any one or more of the provisions or
portion thereof contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the same shall not invalidate
or otherwise affect any other provisions of this Agreement, and this Agreement
shall be construed as if the invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
     14. Entire Agreement. Subject to the terms and conditions of the Plan,
which are incorporated herein by reference, this Agreement expresses the entire
understanding and agreement of the parties hereto with respect to such terms,
restrictions and limitations.
     15. Headings. Section headings used herein are for convenience of reference
only and shall not be considered in construing this Agreement.
     16. Acknowledgement. By their signatures below, the Recipient and the
Company agree that the Restricted Shares are granted under and governed by the
terms and conditions of the Plan and this Agreement. Recipient has had an
opportunity to obtain the advice of counsel prior to executing this Agreement
and fully understands all provisions of the Plan and this

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Agreement. Recipient hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Committee upon any questions relating to
the Plan and this Agreement.
     IN WITNESS WHEREOF, the Company and the Recipient have executed this
Agreement as of the Date of Grant set forth above.

            KOS PHARMACEUTICALS, INC.
      By:   /s/         Title:                RECIPIENT:
      /s/                  

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