***EXHIBIT 10.3***

POZEN INC. 

2000 EQUITY COMPENSATION PLAN, AS AMENDED AND RESTATED 

RESTRICTED STOCK UNIT AGREEMENT 

ThisRESTRICTED STOCK UNIT AGREEMENT (the “Agreement”), dated as of February 14, 2007 (the “Date of Grant”), is delivered by POZEN Inc. (“POZEN” or the “Company”), to John R. Plachetka (the“Grantee”). 

RECITALS 

The POZEN Inc. 2000 Equity Compensation Plan, as amended and restated (the “Plan”) provides for the grant of stock-based awards with respect to shares of common stock, par value $0.001 per share, of POZEN (the “CommonStock”), in accordance with the terms and conditions of the Plan. The Compensation Committee of the Board of Directors of POZEN (the “Committee”) has decided to make a stock-based award in the form of a grant of restricted stockunits, subject to the terms and conditions set forth in this Agreement and the Plan, as an inducement for the Grantee to promote the best interests of POZEN and its stockholders. The Grantee may receive a copy of the Plan by contacting theDepartment of Finance and Administration at POZEN. 

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby,agree as follows: 

1. Grant of Restricted Units. Subject to the terms and conditions set forth in this Agreement and the Plan, POZEN hereby grants tothe Grantee 6,200 stock units (the “Restricted Units”) under the Plan. The Grantee accepts the Restricted Units and agrees to be bound by the terms and conditions of this Agreement and the Plan with respect to the Restricted Units.

2. Restricted Unit Account. Restricted Units represent hypothetical shares of Common Stock, and not actual shares of stock. POZEN shall establishand maintain a Restricted Unit account, as a bookkeeping account on its records, for the Grantee and shall record in such account the number of Restricted Units granted to the Grantee. No shares of stock shall be issued to the Grantee at the timethe grant is made, and the Grantee shall not be, nor have any of the rights or privileges of, a stockholder of POZEN with respect to any Restricted Units recorded in the account. The Grantee shall not have the right to receive any dividends or otherdistributions with respect to hypothetical shares of stock recorded in the Restricted Unit account; provided, however, that the Committee shall appropriately adjust the number and kind of Restricted Units in the event of a stock split, stockdividend or other change in capitalization of POZEN, as described in the Plan. The Grantee shall not have any interest in any fund or specific assets of POZEN by reason of this award or the Restricted Unit account established for the Grantee.

3. Lapse of Restrictions. 

(a) The Restricted Units shall be subject to forfeiture until the restrictions on the Restricted Units lapse. The restrictions on the Restricted Units shall lapse, and the Restricted Units shall become vested,according to the following schedule, if the Grantee continues to be employed by, or provide service to, the Company (as defined in Section 5(e)(v)(A) of the Plan) from the Date of Grant until the applicable vesting date: 

(i) A total of seventy-five percent (75%), or 4,650 of the Restricted Units shall vest, and the restrictions on the Restricted Units shall lapse, on thefollowing dates: 

 

**Vesting Date**
  **Restricted Units**
January 1, 2008
  1,162.5
January 1, 2009
  1,162.5
January 1, 2010
  1,162.5
January 1, 2011
  1,162.5
(ii) A total of twenty-five percent (25%), or 1,550 of the Restricted Units (the “ContingentUnits”) shall vest, and the restrictions on the Restricted Units shall lapse, on the following dates, but only if the Company shall have received, on or before December 31, 2007, an action letter from the U.S. Food and Drug Administration(FDA) indicating approval of the New Drug Application (NDA) for Trexima, the proposed brand name for the combination of GlaxoSmithKline’s sumatriptan and naproxen sodium in a single tablet being developed by the Company for the acute treatmentof migraine pursuant to a development and commercialization agreement with GlaxoSmithKline (“FDA Approval”): 

 

**Vesting Date**
  **Restricted Units**
January 1, 2008
  387.5
January 1, 2009
  387.5
January 1, 2010
  387.5
January 1, 2011
  387.5
Notwithstanding the foregoing, if the FDA Approval is not received by the Company on or beforeDecember 31, 2007, the Contingent Units shall immediately and automatically be forfeited in their entirety. 

For purposes of thisAgreement, the “Final Vesting Date” shall mean January 1, 2011. 

The lapse of restrictions on the Restricted Units shall be cumulative, butshall not exceed 100% of the Restricted Units. If the foregoing schedule would produce fractional Units, the number of Restricted Units on which the restrictions lapse shall be rounded down to the nearest whole Unit, with all restrictions lapsing onthe fourth anniversary of the Date of Grant if the Grantee is then employed by, or providing service to, the Company. 

 

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(b) When the restrictions on Restricted Units lapse as described above, the Restricted Units shall bevested and shall no longer be subject to forfeiture. The Restricted Units shall continue to be credited to an account on the Company’s records (the “Restricted Unit Account”). When the Grantee ceases to be employed by, or provideservice to, the Company, the Company shall pay to the Grantee whole shares of Common Stock equal to the number of vested whole Restricted Units then credited to the Restricted Unit Account, as described in Paragraph 5 below. Any vested amountsrepresenting partial shares shall be paid in cash. 

4. Termination of Restricted Units. 

(a) If the Grantee ceases to be employed by, or provide service to, the Company for any reason before the restrictions on all the Restricted Units lapse,any Restricted Units for which the restrictions have not lapsed according to the vesting schedule above shall automatically terminate and shall be forfeited as of the date of the Grantee’s termination of employment or service. No payment shallbe made with respect to any Restricted Units that terminate as described in this Paragraph 4. 

(b) Notwithstanding the foregoing, if, priorto the Final Vesting Date, Grantee’s employment is terminated by the Company without Cause (as defined below), or Grantee terminates his employment with the Company for Good Reason (as defined below), and provided that Grantee executes and doesnot revoke a general release in a form acceptable to the Company (the “Release”), the number of Restricted Units which would have become vested on the next Vesting Date, according to the vesting schedules set forth in Paragraph 3(a) ifsuch termination had not occurred, shall vest and the restrictions on such Restricted Units shall lapse; provided, however, that if such termination occurs prior to December 31, 2007 and receipt of the Trexima Approval has not occurred, theContingent Units shall be forfeited in their entirety. If Grantee’s employment is terminated for Cause prior to the Final Vesting Date, Grantee shall immediately forfeit all rights to any Restricted Units that have not already vested. Forpurposes of this Paragraph 4, the terms “Cause” and “Good Reason” shall have the meanings given to such terms in that certain Second Amended and Restated Executive Employment Agreement dated as of March 14, 2006, by andbetween POZEN and Grantee (the “Executive Employment Agreement”). 

5. Payment of Restricted Units. 

(a)(i) It is intended that the Restricted Units will be distributed in accordance with Section 409A of the Internal Revenue Code of 1986, as amended(“Section 409A”). On the fifth business day after the Grantee separates from service with POZEN (as defined under Section 409A), or on the second business day following the eighth day after Grantee executes and does not revoke theRelease under the circumstances described in Paragraph 4(b), POZEN will issue to the Grantee one share of Common Stock for each whole vested Restricted Unit credited to the Restricted Unit Account pursuant to the terms of this Agreement, subject tosatisfaction of the Grantee’s tax withholding obligations as described below, and except as described below. 

 

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(ii) If a Change of Control (as defined in the Plan) occurs before the Grantee has separated from servicewith POZEN, on the closing date of the Change of Control, subject to and in accordance with Paragraph 6 below and the provisions of the Plan applicable to a Change of Control and provided that the event constituting such Change of Control is apermitted distribution event under Section 409A, POZEN will issue to the Grantee one share of Common Stock for each whole vested Restricted Unit credited to the Restricted Unit Account, subject to satisfaction of the Grantee’s taxwithholding obligations as described below. Any vested amounts representing partial shares shall be paid in cash. 

(iii) Notwithstandingthe foregoing, if and to the extent required in order to avoid the imposition on the Grantee of any tax under Section 409A, the foregoing shares of Common Stock shall not be issued by the Company until the first business day after the date thatis six (6) months after the date of Grantee’s separation from service with POZEN (as defined under Section 409A). 

(b) Allobligations of POZEN under this Agreement shall be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be withheld for applicable taxes. Subject to Committee approval, the Grantee may elect to satisfy anytax withholding obligation of the Company with respect to the Restricted Units by having shares of Common Stock withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state, and localtax liabilities. 

(c) The obligation of POZEN to deliver shares hereunder shall also be subject to the condition that if at any time theCommittee shall determine in its discretion that the listing, registration or qualification of the shares of Common Stock upon any securities exchange or under any state or federal law, or the consent or approval of any governmental regulatory body,is necessary or desirable as a condition of, or in connection with, the issue of shares, the shares may not be issued in whole or in part unless such listing, registration, qualification, consent or approval shall have been effected or obtained freeof any conditions not acceptable to the Committee. The issuance of shares of Common Stock to the Grantee pursuant to this Agreement is subject to any applicable taxes and other laws or regulations of the United States or of any state havingjurisdiction thereof. 

(d) The Grantee agrees to be bound by the Company’s policies regarding transfer of shares of Common Stock andunderstands that there may be certain times during the year in which the Grantee will be prohibited from selling, transferring, pledging, donating, assigning, mortgaging, hypothetically or encumbering shares. 

6. Change of Control. The provisions of the Plan applicable to a Change of Control (as defined in the Plan) shall apply to the Restricted Units, and, in the eventof a Change of Control, the Committee may take such actions as it deems appropriate pursuant to the Plan. 

7. Grant Subject to Plan Provisions. Thisgrant is made pursuant to the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan. The grant and payment of the Restricted Units are subject to interpretations,regulations and determinations concerning the Plan established from time to time by the 

 

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Committee in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (i) rights and obligations with respectto withholding taxes, (ii) the registration, qualification or listing of the shares issued under the Plan, (iii) changes in capitalization of POZEN and (iv) other requirements of applicable law. The Committee shall have the authorityto interpret and construe the Restricted Units pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder. 

8. No Employment or Other Rights. The grant of the Restricted Units shall not confer upon the Grantee any right to be retained by or in the employ or service of the Company and shall not interfere in any way with the right of theCompany to terminate the Grantee’s employment or service at any time. The right of the Company to terminate at will the Grantee’s employment or service at any time for any reason is specifically reserved. 

9. No Stockholder Rights. Neither the Grantee, nor any person entitled to receive payment in the event of the Grantee’s death, shall have any of the rightsand privileges of a stockholder with respect to shares of Common Stock, until certificates for shares have been issued upon payment of Restricted Units. 

10. Assignment and Transfers. Except as the Committee may otherwise permit pursuant to the Plan, the rights and interests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, inthe event of the death of the Grantee, by will or by the laws of descent and distribution. In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Restricted Units or any right hereunder,except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, POZEN may terminate the Restricted Units by notice to the Grantee, and theRestricted Units and all rights hereunder shall thereupon become null and void. The rights and protections of POZEN hereunder shall extend to any successors or assigns of POZEN and to POZEN’s parents, subsidiaries, and affiliates. ThisAgreement may be assigned by POZEN without the Grantee’s consent. 

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

12. Applicable Law. The validity, construction, interpretation and effect of this Agreement shall begoverned by and construed in accordance with the laws of the State of Delaware, without giving effect to the conflicts of laws provisions thereof. 

13.Notice. Any notice to POZEN provided for in this Agreement shall be addressed to POZEN in care of the Vice President, Finance and Administration, at the corporate headquarters of POZEN, and any notice to the Grantee shall be addressed to suchGrantee at the current address shown on the payroll of POZEN, or to such other address as the Grantee may designate to POZEN in writing. Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed asstated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service. 

 

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IN WITNESS WHEREOF, POZEN has caused its duly authorized officer to execute this Restricted Stock UnitAgreement, and the Grantee has placed his signature hereon, effective as of the Date of Grant. 

 
POZEN INC.
By:
 
/s/ William L. Hodges

Name:
 William L. Hodges
Title:
 Senior Vice President, Finance and Administration, and Chief Financial Officer
I hereby accept the award of Restricted Units described in this Agreement, and I agree to be bound by theterms of the Plan and this Agreement. I hereby agree that all of the decisions and determinations of the Committee with respect to the Restricted Units shall be final and binding. 

 

/s/ John R. Plachetka

Grantee

February 14, 2007
Date
 

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