exhibit10_1.htm


    Exhibit
      10.1

     

    

      FIRST
        AMENDMENT TO

      SECOND
        AMENDED AND RESTATED

      EXECUTIVE
        EMPLOYMENT AGREEMENT

      


      


      This
        FIRST AMENDMENT TO SECOND AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT
        (the “First Amendment”), is entered into as of September 28, 2007 (the
“Effective Date”), by and between POZEN Inc. (the “Company”) and John R.
        Plachetka (“Executive”).

      


      WITNESSETH:

      


      WHEREAS,
        the Company and Executive previously entered into a Second Amended and Restated
        Executive Employment Agreement dated March 14, 2006 (the “Employment
        Agreement”); and

      


      WHEREAS,
        the Company and Executive desire to amend certain terms of the Employment
        Agreement, as set forth herein, in order to facilitate compliance with Section
        409A of the Internal Revenue Code of 1986, as amended.

      


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

      


      1.  Any
        capitalized terms not defined herein shall have the meanings ascribed to
        such
        terms in the Employment Agreement.

       

      2.  Sections
        4(b) and (c) of the Employment Agreement are hereby amended and restated
        in
        their entirety as follows:

      


      “(b)           Bonus.  Executive
        shall be eligible to receive an annual cash incentive bonus (the “Annual Bonus”)
        based on performance. Executive’s annual target bonus shall be sixty-five
        percent (65%) of Executive’s annual base salary with the amount of the actual
        Annual Bonus anticipated to range between thirty-two and one-half percent
        (32.5%) and one hundred percent (100%) of Executive’s then-current annual base
        salary.  Executive’s entitlement to such Annual Bonus shall be based
        in part upon Executive’s achievement of certain performance goals to be mutually
        agreed upon by the Executive and the Board annually (the “Performance
        Goals”).  The determination of the actual Annual Bonus earned, if any,
        shall be determined in the discretion of the Committee and shall be based
        on the
        Committee’s assessment of Executive’s performance, the achievement of the
        Performance Goals and other relevant factors as determined by the
        Committee.  Nothing in this Section 4(b) shall be construed as
        granting or guaranteeing Executive a bonus in any amount.  The Annual
        Bonus shall be paid, in the year following the year for which it was
        earned, on or before March 15 of such year.


      
        
          
          

        

        
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      (c)           Long-Term
        Incentive Compensation.  Each year during the Term, Executive
        shall be eligible to participate in and to receive annual awards (the “Incentive
        Award”) under a long-term incentive program with a target value of One Million
        Seven Hundred Thousand Dollars $1,700,000 for the first year of the Term,
        subject to annual review by the Committee.  The determination of the
        actual Incentive Award earned, if any, shall be determined in the discretion
        of
        the Committee and shall be based on the Committee’s assessment of Executive’s
        overall performance, the achievement of the Performance Goals and other relevant
        factors as determined by the Committee.  Nothing in this Section 4(c)
        shall be construed as granting or guaranteeing Executive an Incentive Award
        in
        any amount.  Any such Incentive Awards shall be made or be paid, as
        applicable, in the year following the year to which such Incentive Awards
        relate, on or before March 15 of such year.

      


      3.           The
        final sentence of Section 4(e) of the Employment Agreement shall be amended
        and
        restated in its entirety as follows:

      


      “In
        the
        event that Executive does not qualify for any such life insurance, the Company
        shall pay directly to Executive an amount equal to such premiums that the
        Company would have paid to any insurance company to obtain such life insurance
        on an annual basis, such payment to be made no later than December 31 of
        each
        year in which payment would otherwise have been made to the insurance
        company.”

      


      4.           Sections
        4(h) and 4(i) of the Employment Agreement are hereby amended and restated
        in
        their entirety as follows:

      


      “(h)           Disability.  In
        each year during the Term of this Agreement, the Company will pay Executive
        as
        additional compensation, payable in accordance with the Company’s standard
        payroll schedule, an amount equal to the premium costs of an individual long
        term disability insurance plan.  The plan shall provide for a benefit
        indemnity payment schedule equal to 70% of Executive’s annual Base
        Salary.  The Company shall also pay Executive for such long term
        disability plan an amount as additional salary, payable in accordance with
        the
        Company’s standard payroll schedule, sufficient to cover the additional income
        taxes owed on such compensation payments.

      


      (i)           Estate
        Planning and Similar Costs.  During the term of this Agreement,
        the Company will reimburse Executive for legal fees and expenses incurred
        by
        Executive in connection with (A) estate and tax planning, and other legal
        expenses incurred by Executive, specifically including those associated with
        this Agreement, up to a maximum of $30,000 per calendar year, and (B) the
        establishment and administration of a Rule 10b5-1 securities selling program,
        up
        to a maximum of $15,000 per calendar year.  Executive shall provide
        evidence of such reimbursable expenditures by no later than forty-five (45)
        days
        after the end of the calendar year in which such expenditures were incurred,
        and
        the Company shall reimburse the Executive by no later than March 15 of the
        year
        following the year in which such expenditures were incurred.”


      
        
          
          

        

        
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      5.           Sections
        5(d)(iv), (v) and (vii) of the Employment Agreement are hereby amended and
        restated in their entirety as follows:

      


      “(iv)                 A
        reduction in Executive’s then Base Salary or a material reduction of any
        material employee benefit or perquisite enjoyed by him (other than as consented
        to by Executive or as part of an across-the-board change or reduction applicable
        to all senior executives of the Company); provided such reduction continues
        uncorrected for a period of thirty (30) calendar days after the Company shall
        have received written notice from Executive stating the nature of such
        reduction;

      


      (v)                 Failure
        of the Company to obtain the assumption in writing of its obligation to perform
        this Agreement by any purchaser of all or substantially all of the assets
        of the
        Company within fifteen (15) calendar days after a sale or transfer of such
        assets; provided such failure continues uncorrected for a period of thirty
        (30) calendar days after receipt of written notice of same from
        Executive;

      


      (vii)                 A
        relocation of Executive’s office location, as assigned to him by the Company, to
        a location more than fifty (50) miles from the current location of the Company
        in Chapel Hill, North Carolina, unless corrected within thirty (30) calendar
        days after the Company shall have received written notice from Executive
        notifying the Company of same. In the event that Executive elects not to
        terminate his employment under this Subsection 5(d)(vii), the Company shall,
        within thirty (30) days after receipt from Executive of evidence of such
        reimbursable expenses but in no event later than March 15th of the
        year
        following the year in which such expenses were incurred, reimburse Executive
        for
        the reasonable expenses he incurs in relocating from his then-current location
        to the location of his new office, including, without limitation, all moving
        expenses, reasonable legal expenses and commissions associated with selling
        his
        primary residence and all closing costs relating to his acquisition of a
        residence in the area of his new office.”

      


      6.           Section
        5(g) of the Employment Agreement is hereby amended and restated in its entirety
        as follows:

      


      “(g)           Change
        of Control.  For purposes of this Agreement, a “Change of Control”
shall be deemed to have occurred as of the first day any one or more
        of the
        following shall have occurred:


      
        
          
          

        

        
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      (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
        more than 50% 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), or (B) a sale or other
        disposition of all or substantially all of the assets of the
        Company.”

      


      7.           Sections
        6(a) and (b) of the Employment Agreement are hereby amended and restated
        in
        their entirety as follows:

      


      “(a)           Accrued
        Compensation and Benefits.  Upon termination of Executive’s
        employment by either party for any reason, Executive (or his heirs, successors,
        personal representatives or assigns) will receive from the
        Company:  (i) payment for any accrued, unpaid Base Salary through the
        termination date; (ii) payment for any accrued, unpaid vacation time through
        the
        termination date; (iii) reimbursement for any previously incurred
        unreimbursed expenses in accordance with the Company’s policies; and (iv)
        participation in any Company benefit plans or programs through the termination
        date.  Such amounts shall be paid on the Company’s next regularly
        scheduled payroll date unless any such amount is not then calculable, in
        which
        case payment of such amount shall be made on the first regularly scheduled
        payroll date after the amount is calculable, but no later than March 15 of
        the
        year following the year in which the Executive’s employment
        terminated.


      
        
          
          

        

        
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      (b)           Termination
        by the Company Without Cause or by Executive for Good Reason.  In
        addition to the compensation and benefits described in Section 6(a) hereof,
        if
        the Company terminates Executive’s employment without Cause during the Term
        (other than due to Executive’s death or disability) or if Executive terminates
        his employment for Good Reason (except pursuant to Section 5(d)(ii)), and,
        subject to Executive’s executing and not revoking a general release in a form
        acceptable to the Company (the “Release”), the Company will provide the
        following severance benefits to Executive, to be paid when and as described
        below, subject in each case to Section 6(g) hereof:

      


      (i)           The
        Company will make a lump sum payment equal to two (2) times the average of
        the
        Annual Bonuses actually awarded to Executive over the previous two years,
        less
        any required taxes and withholdings, with payment to be made within ninety
        (90)
        calendar days of the termination date; provided, however, that such payment
        shall in no event be made later than March 15 of the year following the year
        in
        which Executive’s employment terminated, or in the event of termination pursuant
        to Section 5(d)(ii), by no later than March 15 of the year following the
        year in
        which the Change of Control occurred;

      


      (ii)           The
        Company will continue paying Executive his annual Base Salary at the rate
        in
        effect on the termination date, less any required taxes and withholdings,
        for a
        period of twenty-four (24) months after the termination date.  Such
        Base Salary shall be paid, subject to Section 6(g), on the fifth business
        day of
        each month commencing with the second month following the month in which
        Executive’s termination of employment occurred;

      


      (iii)           The
        Company will continue Executive’s participation in the Company’s health benefits
        at the same level as in effect on the termination date for a period of eighteen
        (18) months after the termination date or until Executive is eligible for
        equivalent health benefits from another employer, whichever is
        sooner.  If the Company’s health benefit plans or programs do not
        allow for Executive’s continued participation in such plans or programs after
        termination of employment, the Company agrees to reimburse Executive for
        continuing coverage under the Consolidated Omnibus Budget Reconciliation
        Act of
        1985 (“COBRA”); provided, however, that such reimbursement will be
        conditioned upon Executive’s timely election of continued coverage under COBRA
        and payment of all such reimbursements shall be made to Executive within
        the
        applicable COBRA period; and

       

      (iv)    Executive
        will be entitled to twelve (12) months acceleration of the vesting of all
        shares
        subject to any stock option, such that all options will be exercisable
        and vested on Executive’s termination date as if Executive’s termination date
        were twelve (12) months later.  After giving effect to the
        acceleration provided for in the preceding sentence, any unvested shares
        will be
        forfeited as of the termination date.


      
        
          
          

        

        
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      Notwithstanding
        the foregoing, if Executive terminates his employment for Good Reason pursuant
        to Section 5(d)(ii), then Executive shall be entitled to the compensation
        and
        benefits described in Section 6(a) hereof, payable when and as described
        in
        Section 6(a), and, provided that Executive executes and does not revoke the
        Release, all of the benefits specified in Section 6(b), payable when and
        as
        described in Section 6(b), except that (i) he shall only be entitled to a
        lump
        sum payment equal to one (1) times the average of the Annual Bonus actually
        awarded to Executive over the previous two years and (ii) the Company shall
        continue paying his annual Base Salary at the rate in effect on the termination
        date (less any required taxes and withholdings) for a period of twelve (12)
        months after the termination date.

      


      All
        compensation and benefits to which Executive is entitled upon termination
        of
        employment pursuant to the succeeding subsections of this Section 6 shall
        be
        paid at such time and in such manner as is described in Section 6(a) or Section
        6(b), as applicable.”

      


      8.           Section
        6(g) of the Employment Agreement is hereby amended and restated in its entirety
        as follows:

       

      “(g)           Excise
        Tax.  Notwithstanding the foregoing provisions of this Section 6,
        if Executive is on the termination date a “specified employee” (as defined in
        Section 409A of the Internal Revenue Code, as amended (the “Code”), and the
        regulations promulgated under such Section 409A (“Code Section 409A”) and as
        determined in accordance with the permissible method then in use by the Company,
        or, if none, in accordance with the applicable default provisions of Code
        Section 409A, relating to “specified employees”), then, if and to the extent
        required in order to avoid the imposition on Executive of any excise tax,
        the
        payment of any severance or other payments under Sections 5 or 6 shall not
        commence until, and shall be made on, the first business day after the date
        that
        is six (6) months following the date of Executive’s termination of employment,
        and in such event the initial payment shall include a catch-up amount covering
        amounts that would otherwise have been paid during the six-month period
        following Executive’s termination date.”

      


       

      9.           Section
        7(d) of the Employment Agreement is hereby amended and restated in its entirety
        as follows:

       


      
        
          
          

        

        
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      “(d)           Any
        Gross-Up Payment, as determined pursuant to this Section 7, shall be paid
        by the Company to Executive as and when the Excise Tax is incurred on a Payment,
        or at such later date as mutually agreed by the parties hereto, but in no
        event
        later than the end of Executive’s taxable year next following the taxable year
        in which Executive remits the applicable Excise Tax to the IRS and any
        applicable state taxing authorities. The Gross-Up Payment shall be paid in
        accordance with Code Section 409A, to the extent applicable, including, to
        the
        extent applicable, subject to and in compliance with Section 6(g). As a result
        of the uncertainty in the application of Section 4999 of the Code at the
        time of the initial determination by the Accounting Firm hereunder, it is
        possible that Gross-Up Payments which will not have been made by the Company
        should have been made (“Underpayment”), consistent with the calculations
        required to be made hereunder. In the event that the Company exhausts its
        remedies pursuant to Section 7(e) and Executive thereafter is required to
        make a
        Payment of any Excise Tax, the Accounting Firm shall determine the amount
        of the
        Underpayment that has occurred and any such Underpayment shall be paid by
        the
        Company to or for the benefit of Executive within thirty (30) days after
        such
        determination, or at such later date as mutually agreed by the parties hereto,
        but in no event later than the end of Executive’s taxable year next following
        the taxable year in which Executive remits the applicable Excise Tax to the
        IRS
        and any applicable state taxing authorities.”

       

      10.           Section
        7(e) of the Employment Agreement is hereby amended to add the following sentence
        as the last sentence of such section:

       

      “Any
        payments required to be made pursuant to the Company’s indemnification
        obligations as set forth in this Section 7(e) shall be paid as and when any
        such
        Excise Tax or income or other tax is incurred, or at such later date as mutually
        agreed by the parties hereto, but in no event later than the end of Executive’s
        taxable year next following the taxable year in which Executive remits the
        applicable Excise Tax or income or other tax to the IRS and any applicable
        state
        taxing authorities.”

       

      11.           Except
        as herein amended, the terms and provisions of the Employment Agreement shall
        remain in full force and effect as originally executed.

       

      12.           This
        First Amendment shall be governed by and construed and enforced in accordance
        with the laws of the State of North Carolina, without reference to the choice
        of
        law provisions of such laws.

       

      13.           This
        First Amendment may be executed in any number of counterparts, each of which
        shall constitute one agreement binding on all parties hereto.

       

      14.           This
        First Amendment and the Employment Agreement, as amended and modified by
        this
        First Amendment, shall constitute and be construed as a single
        agreement.

      


      


      


      [Signature
        page follows.]

       


      
        
          
          

        

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

      


      
        	 	
                EMPLOYER:

              
	 	 	 
	 	
                POZEN
                  INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	 /s/
                William L. Hodges
	 	
                Name:

              	 William
                L. Hodges
	 	
                Title:

              	 Sr.
                Vice President & Chief Financial Officer
	 	 	 
	 	 	 
	 	
                EXECUTIVE:

              
	 	 	 
	 	 	 
	 	 	
                /s/
                  John R. Plachetka

              
	 	 	
                John
                  R. Plachetka, Pharm.D.

              
	 	 	 
	 	 	 


      

      



      
        
          
          

        

        
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