exhibit10_1.htm


    EXHIBIT
      10.1

    


    SECOND
      AMENDED AND RESTATED

    POZEN
      INC.2000 EQUITY COMPENSATION PLAN

    


    The
      purpose of the Second Amended and Restated POZEN Inc. 2000 Equity Compensation
      Plan (the “Plan”) is to provide (i) designated employees of POZEN Inc. (the
“Company”) and its subsidiaries, (ii) certain consultants and advisors who
      perform services for the Company or its subsidiaries, and (iii) non-employee
      members of the Board of Directors of the Company (the “Board”) with the
      opportunity to receive grants of incentive stock options, nonqualified stock
      options, stock awards, stock units, performance units and other stock-based
      awards.  The Company believes that the Plan will encourage the
      participants to contribute materially to the growth of the Company, thereby
      benefiting the Company's stockholders, and will align the economic interests
      of
      the participants with those of the stockholders.

    


    1.           Administration

    


    (a)           Committee.  The
      Plan shall be administered and interpreted by a committee appointed by the
      Board
      (the “Committee”), which may consist of two or more persons who are “outside
      directors” as defined under section 162(m) of the Internal Revenue Code of 1986,
      as amended (the “Code”), and related Treasury regulations and “non-employee
      directors” as defined under Rule 16b-3 under the Securities Exchange Act of
      1934, as amended (the “Exchange Act”). However, the Board may ratify or approve
      any grants, as it deems appropriate. The Committee may delegate authority to
      one
      or more subcommittees, as it deems appropriate. To the extent that the Board
      or
      a subcommittee administers the Plan, references in the Plan to the “Committee”
shall be deemed to refer to such Board or such subcommittee.  Unless
      otherwise determined by the Board, the Compensation Committee of the Board
      shall
      act as the Committee.

    


    (b)           Committee
      Authority.  The Committee shall have the authority to (i)
      determine the individuals to whom grants shall be made under the Plan, (ii)
      determine the type, size and terms of the grants to be made to each such
      individual, (iii) determine the time when the grants will be made and the
      duration of any applicable exercise or restriction period, including the
      criteria for exercisability and the acceleration of exercisability, (iv) amend
      the terms of any previously issued grant, and (v) deal with any other matters
      arising under the Plan.

    


    (c)           Committee
      Determinations.  The Committee shall have full power and authority
      to administer and interpret the Plan, to make factual determinations and to
      adopt or amend such rules, regulations, agreements and instruments for
      implementing the Plan and for the conduct of its business as it deems necessary
      or advisable, in its sole discretion.  The Committee’s interpretations
      of the Plan and all determinations made by the Committee pursuant to the powers
      vested in it hereunder shall be conclusive and binding on all persons having
      any
      interest in the Plan or in any awards granted hereunder.  All powers
      of the Committee shall be executed in its sole discretion, in the best interest
      of the Company, not as a fiduciary, and in keeping with the objectives of the
      Plan and need not be uniform as to similarly situated
      individuals.


    
      
        
        

      

      
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    (d)           Delegation
      of Authority. In addition to the delegation described in subsection (a) and
      subject to applicable law, the Board or the Committee may delegate to one or
      more officers of the Company the authority to designate Employees who shall
      receive grants under the Plan and to determine the number of grants to be
      received by such Employees. In that event, the Board or Committee shall specify
      the maximum number of grants that the officers may award and the prices (or
      a
      formula by which such prices shall be determined) at which the grants may be
      made. The Board or Committee may not authorize an officer to designate himself
      or herself as a recipient of a grant. To the extent that one or more officers
      administers the Plan, references in the Plan to the “Committee” shall be deemed
      to refer to such officers.

    


    2.           Grants

    


    Awards
      under the Plan may consist of grants of incentive stock options as described
      in
      Section 5 (“Incentive Stock Options”), nonqualified stock options as described
      in Section 5 (“Nonqualified Stock Options”) (Incentive Stock Options and
      Nonqualified Stock Options are collectively referred to as “Options”), stock
      awards as described in Section 6 (“Stock Awards”), stock units as described in
      Section 7 (“Stock Units”), performance units as described in Section 8
      (“Performance Units”) and other stock-based awards as described in Section 9
      (hereinafter collectively referred to as “Grants”).  All Grants shall
      be subject to the terms and conditions set forth herein and to such other terms
      and conditions consistent with this Plan as the Committee deems appropriate
      and
      as are specified in writing by the Committee to the individual in a grant
      instrument or an amendment to the grant instrument (the “Grant
      Instrument”).  Grants under a particular Section of the Plan need not
      be uniform as among the grantees.

    


    3.           Shares
      Subject to the Plan

    


    (a)           Shares
      Authorized.  Subject to adjustment as described below, the
      aggregate number of shares of common stock of the Company (“Company Stock”) that
      may be issued or transferred under the Plan pursuant to all Grants is 6,500,000
      shares, and of that number, the maximum aggregate number of shares of Company
      Stock that may be issued or transferred under the Plan pursuant to Grants other
      than Options is 2,000,000 shares.  The maximum aggregate number of
      shares of Company Stock that shall be subject to Grants made under the Plan
      to
      any individual during any calendar year shall be 1,000,000 shares, subject
      to
      adjustment as described below.  The shares may be authorized but
      unissued shares of Company Stock or reacquired shares of Company Stock,
      including shares purchased by the Company on the open market for purposes of
      the
      Plan.  If and to the extent Options granted under the Plan terminate,
      expire, or are canceled, forfeited, exchanged or surrendered without having
      been
      exercised or if any Stock Awards, Stock Units, Performance Units or other
      stock-based awards are forfeited or otherwise terminate, the shares subject
      to
      such Grants shall again be available for purposes of the Plan.


    
      
        
        

      

      
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    (b)           Adjustments.  If
      there is any change in the number or kind of shares of Company Stock outstanding
      (i) by reason of a stock dividend, spinoff, recapitalization, stock split,
      or
      combination or exchange of shares, (ii) by reason of a merger, reorganization
      or
      consolidation in which the Company is the surviving corporation, (iii) by reason
      of a reclassification or change in par value, or (iv) by reason of any other
      extraordinary or unusual event affecting the outstanding Company Stock as a
      class without the Company's receipt of consideration, or if the value of
      outstanding shares of Company Stock is substantially reduced as a result of
      a
      spinoff or the Company's payment of an extraordinary dividend or distribution,
      the maximum number of shares of Company Stock available for Grants, the maximum
      number of shares of Company Stock that any individual participating in the
      Plan
      may be granted in any year, the number and kind of shares covered by outstanding
      Grants, the kind of shares issued under the Plan, and the price per share or
      the
      applicable market value of such Grants shall be appropriately adjusted by the
      Committee to reflect any increase or decrease in the number of, or change in
      the
      kind or value of, issued shares of Company Stock to preclude, to the extent
      practicable, the enlargement or dilution of rights and benefits under such
      Grants; provided, however, that any fractional shares resulting from such
      adjustment shall be eliminated.  In addition, in the event of a Change
      of Control, the provisions of Section 13 shall apply.  Any adjustments
      to outstanding Grants shall be consistent with Section 409A or 422 of the
      Internal Revenue Code of 1986, as amended (the “Code”), to the extent
      applicable.  Any such adjustments as determined by the Committee shall
      be final, binding and conclusive.

    


    4.           Eligibility
      for Participation

    


    (a)           Eligible
      Persons.  All employees of the Company and any parent or
      subsidiary corporation, as defined in Section 424 of the Code (“Employees”),
      including Employees who are officers or members of the Board, and members of
      the
      Board who are not Employees (“Non-Employee Directors”) shall be eligible to
      participate in the Plan.  Consultants and advisors who perform
      services for the Company or any of its subsidiaries (“Key Advisors”) shall be
      eligible to participate in the Plan if the Key Advisors render bona fide
      services to the Company or its subsidiaries, the services are not in connection
      with the offer and sale of securities in a capital-raising transaction, and
      the
      Key Advisors do not directly or indirectly promote or maintain a market for
      the
      Company’s securities.

    


    (b)           Selection
      of Grantees.  The Committee shall select the Employees,
      Non-Employee Directors and Key Advisors to receive Grants and shall determine
      the number of shares of Company Stock subject to a particular Grant in such
      manner as the Committee determines.  Employees, Key Advisors and
      Non-Employee Directors who receive Grants under this Plan shall hereinafter
      be
      referred to as “Grantees”.

    


    5.           Granting
      of Options

    


    (a)           Number
      of Shares.  The Committee shall determine the number of shares of
      Company Stock that will be subject to each Grant of Options to Employees,
      Non-Employee Directors and Key Advisors.


    
      
        
        

      

      
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    (b)           Type
      of Option and Price.

    


    (i)           The
      Committee may grant Incentive Stock Options that are intended to qualify as
      “incentive stock options” within the meaning of section 422 of the Code or
      Nonqualified Stock Options that are not intended so to qualify or any
      combination of Incentive Stock Options and Nonqualified Stock Options, all
      in
      accordance with the terms and conditions set forth herein.  Incentive
      Stock Options may be granted only to Employees.  Nonqualified Stock
      Options may be granted to Employees, Non-Employee Directors and Key
      Advisors.

    


    (ii)  The
      purchase price (the “Exercise Price”) of Company Stock subject to an Option
      shall be determined by the Committee and may be equal to or greater than the
      Fair Market Value (as defined below) of a share of Company Stock on the date
      the
      Option is granted; provided, however, that an Incentive Stock Option may not
      be
      granted to an Employee who, at the time of grant, owns stock possessing more
      than 10 percent of the total combined voting power of all classes of stock
      of
      the Company or any parent or subsidiary of the Company, unless the Exercise
      Price per share is not less than 110% of the Fair Market Value of Company Stock
      on the date of grant.

    


    (iii)  If
      the
      Company Stock is publicly traded, then the Fair Market Value per share shall
      be
      determined as follows: (x) if the principal trading market for the Company
      Stock
      is a national securities exchange, the closing sale price thereof on the
      relevant date or (if there were no trades on that date) the latest preceding
      date upon which a sale was reported, or (y) if the Company Stock is not
      principally traded on such exchange or market, the mean between the last
      reported “bid” and “asked” prices of Company Stock on the relevant date, as
      reported on Nasdaq or, if not so reported, as reported by the National Daily
      Quotation Bureau, Inc. or as reported in a customary financial reporting
      service, as applicable and as the Committee determines.  If the
      Company Stock is not publicly traded or, if publicly traded, is not subject
      to
      reported transactions or “bid” or “asked” quotations as set forth above, the
      Fair Market Value per share shall be as determined by the
      Committee.

    


    (c)           Option
      Term.  The Committee shall determine the term of each
      Option.  The term of any Option shall not exceed ten years from the
      date of grant.  However, an Incentive Stock Option that is granted to
      an Employee who, at the time of grant, owns stock possessing more than 10
      percent of the total combined voting power of all classes of stock of the
      Company, or any parent or subsidiary of the Company, as defined in Section
      424
      of the Code, may not have a term that exceeds five years from the date of
      grant.

    


    (d)           Exercisability
      of Options.

    


    (i)           Options
      shall become exercisable in accordance with such terms and conditions,
      consistent with the Plan, as may be determined by the Committee and specified
      in
      the Grant Instrument.  The Committee may accelerate the exercisability
      of any or all outstanding Options at any time for any reason.


    
      
        
        

      

      
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    (ii)           The
      Committee may provide in a Grant Instrument that the Grantee may elect to
      exercise part or all of an Option before it otherwise has become
      exercisable.  Any shares so purchased shall be restricted shares and
      shall be subject to a repurchase right in favor of the Company during a
      specified restriction period, with the repurchase price equal to the lesser
      of
      the Exercise Price or the Fair Market Value per share of Company Stock at the
      time of repurchase, or such other restrictions as the Committee deems
      appropriate.

    


    (e)           Grants
      to Non-Exempt Employees.  Notwithstanding the foregoing, Options
      granted to persons who are non-exempt employees under the Fair Labor Standards
      Act of 1938, as amended, may not be exercisable for at least six months after
      the date of grant (except that such Options may become exercisable, as
      determined by the Committee, upon the Grantee’s death, Disability (as defined
      below) or retirement, or upon a Change of Control or other circumstances
      permitted by applicable regulations).

    


    (f)           Termination
      of Employment, Disability or Death.

    


    (i)           Except
      as provided below, an Option may only be exercised while the Grantee is employed
      by, or providing service to, the Company as an Employee, Key Advisor or member
      of the Board.

    


    (ii)           In
      the event that a Grantee ceases to be employed by, or provide service to, the
      Company for any reason other than Disability (as defined below), death, or
      termination for Cause (as defined below), any Option which is otherwise
      exercisable by the Grantee shall terminate unless exercised within 90 days
      after
      the date on which the Grantee ceases to be employed by, or provide service
      to,
      the Company (or within such other period of time as may be specified by the
      Committee), but in any event no later than the date of expiration of the Option
      term.  Except as otherwise provided by the Committee, any of the
      Grantee’s Options that are not otherwise exercisable as of the date on which the
      Grantee ceases to be employed by, or provide service to, the Company shall
      terminate as of such date.

    


    (iii)                      In
      the event the Grantee ceases to be employed by, or provide service to, the
      Company on account of a termination for Cause by the Company, any Option held
      by
      the Grantee shall terminate as of the date the Grantee ceases to be employed
      by,
      or provide service to, the Company.  In addition, notwithstanding any
      other provisions of this Section 5, if the Committee determines that the Grantee
      has engaged in conduct that constitutes Cause at any time while the Grantee
      is
      employed by, or providing service to, the Company or after the Grantee’s
      termination of employment or service, any Option held by the Grantee shall
      immediately terminate and the Grantee shall automatically forfeit all shares
      underlying any exercised portion of an Option for which the Company has not
      yet
      delivered the share certificates, upon refund by the Company of the Exercise
      Price paid by the Grantee for such shares.  Upon any exercise of an
      Option, the Company may withhold delivery of share certificates pending
      resolution of an inquiry that could lead to a finding resulting in a
      forfeiture.


    
      
        
        

      

      
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    (iv)           In
      the event the Grantee ceases to be employed by, or provide service to, the
      Company because the Grantee is Disabled, any Option which is otherwise
      exercisable by the Grantee shall terminate unless exercised within one year
      after the date on which the Grantee ceases to be employed by, or provide service
      to, the Company (or within such other period of time as may be specified by
      the
      Committee), but in any event no later than the date of expiration of the Option
      term.  Except as otherwise provided by the Committee, any of the
      Grantee’s Options which are not otherwise exercisable as of the date on which
      the Grantee ceases to be employed by, or provide service to, the Company shall
      terminate as of such date.

    


    (iii)                      If
      the Grantee dies while employed by, or providing service to, the Company or
      within 90 days after the date on which the Grantee ceases to be employed or
      provide service on account of a termination specified in Section 5(e)(i) above
      (or within such other period of time as may be specified by the Committee),
      any
      Option that is otherwise exercisable by the Grantee shall terminate unless
      exercised within one year after the date on which the Grantee ceases to be
      employed by, or provide service to, the Company (or within such other period
      of
      time as may be specified by the Committee), but in any event no later than
      the
      date of expiration of the Option term.  Except as otherwise provided
      by the Committee, any of the Grantee's Options that are not otherwise
      exercisable as of the date on which the Grantee ceases to be employed by, or
      provide service to, the Company shall terminate as of such date.

    


    (ivi)                      For
      purposes of this Section 5(f), and Sections 6 and 7:

     

                (A)           The
      term “Company” shall mean the Company and its parent and subsidiary corporations
      or other entities, as determined by the Committee.

                

    (B)           “Employed
      by, or provide service to, the Company” shall mean employment or service as an
      Employee, Key Advisor or member of the Board (so that, for purposes of
      exercising Options and satisfying conditions with respect to Stock Awards,
      Performance Units and other stock-based grants, a Grantee shall not be
      considered to have terminated employment or service until the Grantee ceases
      to
      be an Employee, Key Advisor and member of the Board), unless the Committee
      determines otherwise.

     

                (C)  “Disability”
      shall mean a Grantee’s becoming disabled within the meaning of section 22(e)(3)
      of the Code or the Grantee becomes entitled to receive long-term disability
      benefits under the Company’s long-term disability plan.


    
      
        
        

      

      
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    (D)           “Cause”
      shall mean, except to the extent specified otherwise by the Committee or in
      an
      agreement between the Grantee and the Company, a finding by the Committee that
      the Grantee (i) has breached his or her employment or service contract with
      the
      Company, (ii) has engaged in disloyalty to the Company, including, without
      limitation, fraud, embezzlement, theft, commission of a felony or proven
      dishonesty in the course of his or her employment or service, (iii) has
      disclosed trade secrets or confidential information of the Company to persons
      not entitled to receive such information, (iv) has breached any written
      confidentiality, non-competition or non-solicitation agreement with the Company,
      or (v) has engaged in such other behavior detrimental to the interests of the
      Company as the Committee determines.

    


    (g)           Exercise
      of Options.  A Grantee may exercise an Option that has become
      exercisable, in whole or in part, by delivering an irrevocable notice of
      exercise to the Company.  The Grantee shall pay the Exercise Price for
      an Option as specified by the Committee (w) in cash, (x) with the approval
      of
      the Committee, by delivering shares of Company Stock owned by the Grantee
      (including Company Stock acquired in connection with the exercise of an Option,
      subject to such restrictions as the Committee deems appropriate) and having
      a
      Fair Market Value on the date of exercise equal to the Exercise Price or by
      attestation (on a form prescribed by the Committee) to ownership of shares
      of
      Company Stock having a Fair Market Value on the date of exercise equal to the
      Exercise Price, or (y) by such other method as the Committee may
      approve.  Shares of Company Stock used to exercise an Option shall
      have been held by the Grantee for the requisite period of time to avoid adverse
      accounting consequences to the Company with respect to the
      Option.  The Grantee shall pay the Exercise Price and the amount of
      any withholding tax due prior to the issuance of the shares of Company Stock
      issuable upon such exercise.

    


    (h)           Limits
      on Incentive Stock Options.  Each Incentive Stock Option shall
      provide that, if the aggregate Fair Market Value of the stock on the date of
      the
      grant with respect to which Incentive Stock Options are exercisable for the
      first time by a Grantee during any calendar year, under the Plan or any other
      stock option plan of the Company or a parent or subsidiary, exceeds $100,000,
      then the Option, as to the excess, shall be treated as a Nonqualified Stock
      Option.  An Incentive Stock Option shall not be granted to any person
      who is not an Employee of the Company or a parent or subsidiary (within the
      meaning of section 424(f) of the Code).

    


    6.           Stock
      Awards

    


    The
      Committee may issue or transfer shares of Company Stock to an Employee,
      Non-Employee Director or Key Advisor under a Stock Award, upon such terms as
      the
      Committee deems appropriate.  The following provisions are applicable
      to Stock Awards:


    
      
        
        

      

      
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    (a)           General
      Requirements.  Shares of Company Stock issued or transferred
      pursuant to Stock Awards may be issued or transferred for consideration or
      for
      no consideration, and subject to restrictions or no restrictions, as determined
      by the Committee.  The Committee may, but shall not be required to,
      establish conditions under which restrictions on Stock Awards shall lapse over
      a
      period of time or according to such other criteria as the Committee deems
      appropriate, including, without limitation, restrictions based upon the
      achievement of specific performance goals.  The period of time during
      which the Stock Awards will remain subject to restrictions will be designated
      in
      the Grant Instrument as the “Restriction Period.”

    


    (b)           Number
      of Shares.  The Committee shall determine the number of shares of
      Company Stock to be issued or transferred pursuant to a Stock Award and the
      restrictions applicable to such shares.

    


    (c)           Requirement
      of Employment or Service.  If the Grantee ceases to be employed
      by, or provide service to, the Company (as defined in Section 5(e)) during
      a
      period designated in the Grant Instrument as the Restriction Period, or if
      other
      specified conditions are not met, the Stock Award shall terminate as to all
      shares covered by the Grant as to which the restrictions have not lapsed, and
      those shares of Company Stock must be immediately returned to the
      Company.  The Committee may, however, provide for complete or partial
      exceptions to this requirement as it deems appropriate.

    


    (d)           Restrictions
      on Transfer and Legend on Stock Certificate.  During the
      Restriction Period, a Grantee may not sell, assign, transfer, pledge or
      otherwise dispose of the shares of a Stock Award except to a Successor Grantee
      under Section 11(a).  Each certificate for a share of a Stock Award
      shall contain a legend giving appropriate notice of the restrictions in the
      Grant.  The Grantee shall be entitled to have the legend removed from
      the stock certificate covering the shares subject to restrictions when all
      restrictions on such shares have lapsed.  The Committee may determine
      that the Company will not issue certificates for Stock Awards until all
      restrictions on such shares have lapsed, or that the Company will retain
      possession of certificates for shares of Stock Awards until all restrictions
      on
      such shares have lapsed.

    


    (e)           Right
      to Vote and to Receive Dividends.  Unless the Committee determines
      otherwise, during the Restriction Period, the Grantee shall have the right
      to
      vote shares of Stock Awards and to receive any dividends or other distributions
      paid on such shares, subject to any restrictions deemed appropriate by the
      Committee, including, without limitation, the achievement of specific
      performance goals.

    


    (f)           Lapse
      of Restrictions.  All restrictions imposed on Stock Awards shall
      lapse upon the expiration of the applicable Restriction Period and the
      satisfaction of all conditions imposed by the Committee.  The
      Committee may determine, as to any or all Stock Awards, that the restrictions
      shall lapse without regard to any Restriction Period.


    
      
        
        

      

      
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    7.           Stock
      Units.

    


    The
      Committee may grant Stock Units, each of which shall represent one hypothetical
      share of Company Stock, to an Employee, Key Advisor or Non-Employee Director,
      for consideration or for no consideration and upon such other terms and
      conditions as the Committee deems appropriate.  The following
      provisions are applicable to Stock Units:

    


    (a)           Crediting
      of Units.  Each Stock Unit shall represent the right of the
      Grantee to receive a share of Company Stock or an amount of cash based on the
      value of a share of Company Stock, if and when specified conditions are
      met.  All Stock Units shall be credited to bookkeeping accounts
      established on the Company’s records for purposes of the Plan.

    


    (b)           Terms
      of Stock Units.  The Committee may grant Stock Units that are
      payable if specified performance goals or other conditions are met, or under
      other circumstances.  Stock Units may be paid at the end of a
      specified performance period or other period, or payment may be deferred to
      a
      date authorized by the Committee.  The Committee shall determine the
      number of Stock Units to be granted and the requirements applicable to such
      Stock Units.

    


    (c)           Requirement
      of Employment or Service.  If the Grantee ceases to be employed
      by, or provide service to, the Company (as defined in Section 5(e)) prior to
      the
      vesting of Stock Units, or if other conditions established by the Committee
      are
      not met, the Grantee’s Stock Units shall be forfeited.  The Committee
      may, however, provide for complete or partial exceptions to this requirement
      as
      it deems appropriate.

    


    (d)           Payment
      With Respect to Stock Units.  Payments with respect to Stock Units
      shall be made in cash, Company Stock or any combination of the foregoing, as
      the
      Committee shall determine.

    


    8.           Performance
      Units and Other Stock-Based Awards

    


    (a)           Performance
      Units.  The Committee may grant performance units (“Performance
      Units”) to an Employee, Non-Employee Director or Key Advisor.  Each
      Performance Unit shall represent the right of the Grantee to receive an amount
      based on the value of the Performance Unit, if performance goals established
      by
      the Committee are met.  The value of a Performance Unit shall equal
      the Fair Market Value of a share of Company Stock.  The Committee
      shall determine the number of Performance Units to be granted and the
      requirements applicable to such Units.

    


    (b)           Performance
      Period and Performance Goals.  When Performance Units are granted,
      the Committee shall establish the performance period during which performance
      shall be measured (the “Performance Period”), performance goals applicable to
      the Units (“Performance Goals”) and such other conditions of the Grant as the
      Committee deems appropriate.  Performance Goals may relate to the
      financial performance of the Company or its operating units, the performance
      of
      Company Stock, individual performance, or such other criteria as the Committee
      deems appropriate.


    
      
        
        

      

      
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    (c)           Payment
      with respect to Performance Units.  At the end of each Performance
      Period, the Committee shall determine to what extent the Performance Goals
      and
      other conditions of the Performance Units are met, the value of the Performance
      Units (if applicable), and the amount, if any, to be paid with respect to the
      Performance Units.  Payments with respect to Performance Units shall
      be made partly in cash, in Company Stock, or in a combination of the two, as
      determined by the Committee, provided that the cash portion does not exceed
      50%
      of the amount to be distributed.

    


    (d)           Requirement
      of Employment or Service.  If the Grantee ceases to be employed
      by, or provide service to, the Company (as defined in Section 5(f)) during
      a
      Performance Period, or if other conditions established by the Committee are
      not
      met, the Grantee's Performance Units shall be forfeited.  The
      Committee may, however, provide for complete or partial exceptions to this
      requirement as it deems appropriate.

    


    9.           Other
      Stock-Based Awards.  The Committee may grant other stock-based
      awards, which are other awards that are based on or measured by Company Stock
      (“Other Stock-Based Awards”), to any Employee, Non-Employee Director or Key
      Advisor, with such terms and conditions and in such amounts as the Committee
      determines.  Other Stock-Based Awards may be awarded subject to the
      achievement of performance goals or other conditions and may be payable in
      cash,
      Company Stock or any combination of the foregoing, as the Committee shall
      determine.

    


    10.           Qualified
      Performance-Based Compensation.

    


    (a)           Designation
      as Qualified Performance-Based Compensation.  The Committee may
      determine that Performance Units, Stock Awards, Stock Units or Other Stock-Based
      Awards granted to an Employee shall be considered “qualified performance-based
      compensation” under Section 162(m) of the Code.  The provisions of
      this Section 10 shall apply to Grants of Performance Units, Stock Awards, Stock
      Units and Other Stock-Based Awards that are to be considered “qualified
      performance-based compensation” under section 162(m) of the
      Code.


    
      
        
        

      

      
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    (b)           Performance
      Goals.  When Performance Units, Stock Awards, Stock Units or Other
      Stock-Based Awards that are to be considered “qualified performance-based
      compensation” are granted, the Committee shall establish in writing (i) the
      objective performance goals that must be met, (ii) the Performance Period during
      which the performance goals must be met, (iii) the threshold, target and maximum
      amounts that may be paid if the performance goals are met, and (iv) any other
      conditions that the Committee deems appropriate and consistent with the Plan
      and
      Section 162(m) of the Code.  The performance goals may relate to the
      Employee’s business unit or the performance of the Company and its subsidiaries
      as a whole, or any combination of the foregoing. The Committee shall use
      objectively determinable performance goals based on one or more of the following
      criteria:  stock price, earnings per share, net earnings, operating
      earnings, return on assets, stockholder return, return on equity, growth in
      assets, unit volume, sales, market share, scientific goals, pre-clinical or
      clinical goals, regulatory approvals, or other strategic business criteria
      consisting of one or more objectives based on meeting specified revenue goals,
      market penetration goals, geographic business expansion goals, cost targets,
      or
      goals relating to acquisitions or divestitures, or strategic
      partnerships.

    


    (c)           Establishment
      of Goals.  The Committee shall establish the performance goals in
      writing either before the beginning of the Performance Period or during a period
      ending no later than the earlier of (i) 90 days after the beginning of the
      Performance Period or (ii) the date on which 25% of the Performance Period
      has
      been completed, or such other date as may be required or permitted under
      applicable regulations under Section 162(m) of the Code.  The
      performance goals shall satisfy the requirements for “qualified
      performance-based compensation,” including the requirement that the achievement
      of the goals be substantially uncertain at the time they are established and
      that the goals be established in such a way that a third party with knowledge
      of
      the relevant facts could determine whether and to what extent the performance
      goals have been met.  The Committee shall not have discretion to
      increase the amount of compensation that is payable upon achievement of the
      designated performance goals.

    


    (d)           Maximum
      Payment.  Performance Units, Stock Awards, Stock Units and Other
      Stock-Based Awards under this Section 11 may be granted to an Employee with
      respect to not more than 1,000,000 shares of Company Stock for each year during
      a Performance Period.

    


    (e)           Announcement
      of Grants.  The Committee shall certify and announce the results
      for each Performance Period to all Grantees immediately following the
      announcement of the Company’s financial results for the Performance
      Period.  If and to the extent that the Committee does not certify that
      the performance goals have been met, the grants of Stock Awards, Stock Units,
      Performance Units or Other Stock-Based Awards for the Performance Period shall
      be forfeited or shall not be made, as applicable.

    


    (f)           Death,
      Disability or Other Circumstances.  The Committee may provide that
      Performance Units or Other Stock-Based Awards shall be payable or restrictions
      on Stock Awards or Stock Units shall lapse, in whole or in part, in the event
      of
      the Grantee’s death or Disability (as defined in Section 5(f) above) during the
      Performance Period, or under other circumstances consistent with the regulations
      and rulings under Section 162(m) of the Code.


    
      
        
        

      

      
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    11.           Deferrals

    


    The
      Committee may permit or require a Grantee to defer receipt of the payment of
      cash or the delivery of shares that would otherwise be due to such Grantee
      in
      connection with any Option, the lapse or waiver of restrictions applicable
      to
      Stock Awards, Stock Units or other stock-based awards or the satisfaction of
      any
      requirements or objectives with respect to Performance Units or other
      stock-based awards.  If any such deferral election is permitted or
      required, the Committee shall, in its sole discretion, establish rules and
      procedures for such deferrals.  Such rules and procedures shall be
      consistent with the applicable requirements of Section 409A of the
      Code.

    


    12.           Withholding
      of Taxes

    


    (a)           Required
      Withholding.  All Grants under the Plan shall be subject to
      applicable federal (including FICA), state and local tax withholding
      requirements.  The Company shall have the right to deduct from all
      Grants paid in cash, or from other wages paid to the Grantee, any federal,
      state
      or local taxes required by law to be withheld with respect to such
      Grants.  In the case of Grants paid in Company Stock, the Company may
      require that the Grantee or other person receiving or exercising Grants pay
      to
      the Company the amount of any federal, state or local taxes that the Company
      is
      required to withhold with respect to such Grants, or the Company may deduct
      from
      other wages paid by the Company the amount of any withholding taxes due with
      respect to such Grants.

    


    (b)           Election
      to Withhold Shares.  If the Committee so permits, a Grantee may
      elect to satisfy the Company’s income tax withholding obligation with respect to
      Grants paid in Company Stock by having shares withheld up to an amount that
      does
      not exceed the Grantee’s minimum applicable withholding tax rate for federal
      (including FICA), state and local tax liabilities.  The election must
      be in a form and manner prescribed by the Committee and may be subject to the
      prior approval of the Committee.

    


    13.           Transferability
      of Grants

    


    (a)           Nontransferability
      of Grants.  Except as provided below, only the Grantee may
      exercise rights under a Grant during the Grantee’s lifetime.  A
      Grantee may not transfer those rights except by will or by the laws of descent
      and distribution or, with respect to Grants other than Incentive Stock Options,
      if permitted in any specific case by the Committee, pursuant to a domestic
      relations order.  When a Grantee dies, the personal representative or
      other person entitled to succeed to the rights of the Grantee (“Successor
      Grantee”) may exercise such rights.  A Successor Grantee must furnish
      proof satisfactory to the Company of his or her right to receive the Grant
      under
      the Grantee's will or under the applicable laws of descent and
      distribution.


    
      
        
        

      

      
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    (b)           Transfer
      of Nonqualified Stock Options. Notwithstanding the foregoing, the Committee
      may provide, in a Grant Instrument, that a Grantee may transfer Nonqualified
      Stock Options to family members, or one or more trusts or other entities for
      the
      benefit of or owned by family members, consistent with the applicable securities
      laws, according to such terms as the Committee may determine; provided that
      the
      Grantee receives no consideration for the transfer of an Option and the
      transferred Option shall continue to be subject to the same terms and conditions
      as were applicable to the Option immediately before the transfer.

    


    14.           Change
      of Control of the Company

    


    As
      used
      herein, a “Change of Control” shall be deemed to have occurred if:

    


    (a)           Any
      “person” (as such term is used in sections 13(d) and 14(d) of 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

    


    (b)           Consummation
      of (i) 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), (ii) a sale or other disposition
      of all or substantially all of the assets of the Company, or (iii) a liquidation
      or dissolution of the Company.

    


    15.           Consequences
      of a Change of Control

    


    (a)  Notice
      and Acceleration.  Upon a Change of Control, unless the Committee
      determines otherwise, (i) the Company shall provide each Grantee with
      outstanding Grants written notice of such Change of Control, (ii) all
      outstanding Options shall automatically accelerate and become fully exercisable,
      (iii) restrictions and conditions on all outstanding Stock Awards shall
      immediately lapse, (iv) all Stock Units and Performance Units shall become
      fully
      vested and be paid at their target value, or in such other amounts as the
      Committee may determine, and (v) all Other Stock-Based Awards shall become
      fully
      exercisable, vested or payable in full, as the case may be.


    
      
        
        

      

      
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    (b)  Assumption
      of Grants.  Upon a Change of Control where the Company is not the
      surviving corporation (or survives only as a subsidiary of another corporation),
      unless the Committee determines otherwise, all outstanding Options that are
      not
      exercised shall be assumed by, or replaced with comparable options or rights
      by,
      the surviving corporation (or a parent of the surviving corporation), and other
      outstanding Grants shall be converted to similar grants of the surviving
      corporation (or a parent of the surviving corporation).

    


    (c)  Other
      Alternatives.  Notwithstanding the foregoing, in the event of a
      Change of Control, the Committee may take one or both of the following actions
      with respect to any or all outstanding Options:  the Committee may,
      (i) under such terms as the Compensation Committee may determine, require that
      Grantees surrender their outstanding Options in exchange for a payment or
      payments by the Company, in cash or Company Stock, as determined by the
      Committee, in an amount equal to the amount by which the then Fair Market Value
      of the shares of Company Stock subject to the Grantee’s unexercised Options
      exceeds the Exercise Price of the Options, or (ii) after giving Grantees an
      opportunity to exercise their outstanding Options, terminate any or all
      unexercised Options at such time as the Committee deems
      appropriate.  With respect to Grantees holding Stock Units,
      Performance Units and Other Stock-Based Awards, the Committee may determine
      that
      such Grantees shall receive a payment or payments in settlement of such Grants,
      in such form and amount and under such terms as shall be determined by the
      Committee. Such surrender, termination or settlement shall take place as of
      the
      date of the Change of Control or such other date as the Committee may
      specify.

    


    16.           Requirements
      for Issuance or Transfer of Shares

    


    (a)  Limitations
      on Issuance or Transfer of Shares.  No Company Stock shall be
      issued or transferred in connection with any Grant hereunder unless and until
      all legal requirements applicable to the issuance or transfer of such Company
      Stock have been complied with to the satisfaction of the
      Committee.  The Committee shall have the right to condition any Grant
      made to any Grantee hereunder on such Grantee's undertaking in writing to comply
      with such restrictions on his or her subsequent disposition of such shares
      of
      Company Stock as the Committee shall deem necessary or advisable, and
      certificates representing such shares may be legended to reflect any such
      restrictions.  Certificates representing shares of Company Stock
      issued or transferred under the Plan will be subject to such stop-transfer
      orders and other restrictions as may be required by applicable laws, regulations
      and interpretations, including any requirement that a legend be placed
      thereon.


    
      
        
        

      

      
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    (b)  Lock-Up
      Period.  If so requested by the Company or any representative of
      the underwriters (the “Managing Underwriter”) in connection with any
      underwritten offering of securities of the Company under the Securities Act
      of
      1933, as amended (the “Securities Act”), a Grantee (including any successors or
      assigns) shall not sell or otherwise transfer any shares or other securities
      of
      the Company during the 30-day period preceding and the 180-day period following
      the effective date of a registration statement of the Company filed under the
      Securities Act for such underwriting (or such shorter period as may be requested
      by the Managing Underwriter and agreed to by the Company) (the “Market Standoff
      Period”).  The Company may impose stop-transfer instructions with
      respect to securities subject to the foregoing restrictions until the end of
      such Market Standoff Period.

    


    17.           Amendment
      and Termination of the Plan

    


    (a)  Amendment.  The
      Board may amend or terminate the Plan at any time; provided, however, that
      the
      Board shall not amend the Plan without stockholder approval if (i) such approval
      is required in order for Incentive Stock Options granted or to be granted under
      the Plan to meet the requirements of section 422 of the Code, (ii) such approval
      is required in order to exempt compensation under the Plan from the deduction
      limit under Section 162(m) of the Code, or (iii) such approval is required
      by
      applicable stock exchange requirements.

    


    (b)  Stockholder
      Approval for “Qualified Performance-Based Compensation.”  If
      Performance Units, Stock Awards, Stock Units or other stock-based awards are
      granted as “qualified performance-based compensation” under Section 10 above,
      the Plan must be reapproved by the stockholders no later than the first
      stockholders meeting that occurs in the fifth year following the year in which
      the stockholders previously approved the provisions of Section 10, if required
      by Section 162(m) of the Code or the regulations thereunder.

    


    (c)  Termination
      of Plan.  The Plan shall terminate on the day immediately
      preceding the tenth anniversary of its effective date, unless the Plan is
      terminated earlier by the Board or is extended by the Board with the approval
      of
      the stockholders.

    


    (d)  Termination
      and Amendment of Outstanding Grants.  A termination or amendment
      of the Plan that occurs after a Grant is made shall not materially impair the
      rights of a Grantee unless the Grantee consents or unless the Committee acts
      under Section 23(c).  The termination of the Plan shall not impair the
      power and authority of the Committee with respect to an outstanding
      Grant.  Whether or not the Plan has terminated, an outstanding Grant
      may be terminated or amended under Section 23(c) or may be amended by agreement
      of the Company and the Grantee consistent with the Plan.


    
      
        
        

      

      
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    (e)  No
      Repricing Without Stockholder Approval.  Notwithstanding anything
      in the Plan to the contrary, the Committee may not reprice Options, nor may
      the
      Board amend the Plan to permit repricing of Options, unless the stockholders
      of
      the Company provide prior approval for such repricing.  The term
      "repricing" shall have the meaning given that term for purposes of the Nasdaq
      (or other applicable stock exchange) rules applicable to stockholder approval
      of
      equity compensation plans.  An adjustment to an Option pursuant to
      Section 3(b) shall not constitute a repricing of the Option.

    


    (f)  Governing
      Document.  The Plan shall be the controlling
      document.  No other statements, representations, explanatory materials
      or examples, oral or written, may amend the

    Plan
      in
      any manner.  The Plan shall be binding upon and enforceable against
      the Company and its successors and assigns.

    


    18.           Funding
      of the Plan

    


    This
      Plan
      shall be unfunded.  The Company shall not be required to establish any
      special or separate fund or to make any other segregation of assets to assure
      the payment of any Grants under this Plan.  In no event shall interest
      be paid or accrued on any Grant, including unpaid installments of
      Grants.

    


    19.           Rights
      of Participants

    


    Nothing
      in this Plan shall entitle any Employee, Key Advisor, Non-Employee Director
      or
      other person to any claim or right to be granted a Grant under this
      Plan.  Neither this Plan nor any action taken hereunder shall be
      construed as giving any individual any rights to be retained by or in the employ
      of the Company or any other employment rights.

    


    20.           No
      Fractional Shares

    


    No
      fractional shares of Company Stock shall be issued or delivered pursuant to
      the
      Plan or any Grant.  The Committee shall determine whether cash, other
      awards or other property shall be issued or paid in lieu of such fractional
      shares or whether such fractional shares or any rights thereto shall be
      forfeited or otherwise eliminated.

    


    21.           Headings

    


    Section
      headings are for reference only.  In the event of a conflict between a
      title and the content of a Section, the content of the Section shall
      control.

    


    22.           Effective
      Date of the Plan.

    


    The
      Plan
      (as amended and restated in this Second Amended and Restated POZEN Inc. 2000
      Equity Compensation Plan) shall be effective as of the date on which it is
      approved by the stockholders of the Company.


    
      
        
        

      

      
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    23.           Miscellaneous

    


    (a)  Grants
      in Connection with Corporate Transactions and Otherwise.  Nothing
      contained in this Plan shall be construed to (i) limit the right of the
      Committee to make Grants under this Plan in connection with the acquisition,
      by
      purchase, lease, merger, consolidation or otherwise, of the business or assets
      of any corporation, firm or association, including Grants to employees thereof
      who become Employees of the Company, or for other proper corporate purposes,
      or
      (ii) limit the right of the Company to grant stock options or make other awards
      outside of this Plan.  Without limiting the foregoing, the Committee
      may make a Grant to an employee of another corporation who becomes an Employee
      by reason of a corporate merger, consolidation, acquisition of stock or
      property, reorganization or liquidation involving the Company or any of its
      subsidiaries in substitution for a stock option or stock awards grant made
      by
      such corporation.  The terms and conditions of the substitute grants
      may vary from the terms and conditions required by the Plan and from those
      of
      the substituted stock incentives.  The Committee shall prescribe the
      provisions of the substitute grants.

    


    (b)  Employees
      Subject to Taxation Outside the United States.  With respect to
      Grantees who are subject to taxation in countries other than the United States,
      the Committee may make Grants on such terms and conditions, consistent with
      the
      Plan, as the Committee deems appropriate to comply with the laws of the
      applicable countries, and the Committee may create such procedures, addenda
      and
      subplans and make such modifications as may be necessary or advisable to comply
      with such laws.

    


    (c)  Compliance
      with Law.  The Plan, the exercise of Options and the obligations
      of the Company to issue or transfer shares of Company Stock under Grants shall
      be subject to all applicable laws and to approvals by any governmental or
      regulatory agency as may be required.  With respect to persons subject
      to section 16 of the Exchange Act, it is the intent of the Company that the
      Plan
      and all transactions under the Plan comply with all applicable provisions of
      Rule 16b-3 or its successors under the Exchange Act.  In addition, it
      is the intent of the Company that the Plan and applicable Grants under the
      Plan
      comply with the applicable provisions of Section 162(m) of the Code, Section
      422
      of the Code and Section 409A of the Code.  To the extent that any
      legal requirement of Section 16 of the Exchange Act or Section 162(m), 422
      or
      409A of the Code as set forth in the Plan ceases to be required under Section
      16
      of the Exchange Act or Section 162(m), 409A or 422 of the Code, that Plan
      provision shall cease to apply.  The Committee may revoke any Grant if
      it is contrary to law or modify a Grant to bring it into compliance with any
      valid and mandatory government regulation.  The Committee may also
      adopt rules regarding the withholding of taxes on payments to
      Grantees.  The Committee may, in its sole discretion, agree to limit
      its authority under this Section.

    


    (d)  Governing
      Law.  The validity, construction, interpretation and effect of the
      Plan and Grant Instruments issued under the Plan shall be governed and construed
      by and determined in accordance with the laws of the State of Delaware, without
      giving effect to the conflict of laws provisions thereof.

    


    [Approved
      by the stockholders on June 13, 2007]


    
      
        
        

      

      
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