Document:

Exhibit 10.25

 

Execution Copy

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This
Executive Employment Agreement (the ‘Agreement”) is made and entered into as of
August 24, 2007, by and among Monosol Rx LLC (the “LLC”), MonoSol Rx, Inc. (the
“Company”), and Alexander Mark Schobel (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive is currently employed by LLC as its President and Chief
Executive Officer under an Executive Employment Agreement made as of November
17, 2005; and

 

WHEREAS, the parties contemplate that, before the end of 2007, the LLC will
merge with and into the Company and the Company will issue shares of its common
stock pursuant to an initial public offering (the “Company IPO”), as described
in the registration statement filed by the Company with the SEC on May 14,
2007, as amended; and

 

WHEREAS, the parties desire that, contingent upon and effective at the time of
the contemplated Company IPO (the “IPO Date”), the Executive will be employed
by the Company as its President and CEO upon the terms and conditions of this
Agreement and that this Agreement will supersede said November 17, 2005
Executive Employment Agreement.

 

NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein set forth, and for other good and valuable consideration,
the parties hereto, intending to be legally bound, hereby agree as follows:

 

1.             Employment. During the term of this Agreement, the
Executive agrees to be employed by and to serve the Company as its President
and Chief Executive Officer, and the Company agrees to employ and retain
Executive in such capacity. The Executive shall report directly to the board of
directors of the Company (the “Board’). The Company will use its reasonable
efforts to ensure that the Executive will be a member of the Board during the
term of this Agreement. The Executive shall: (i) devote his entire business
time, energy and skill to the affairs of the Company; (ii) faithfully, loyally,
and industriously perform all duties incident to the position of President and
Chief Executive Officer, as well as any other duties consistent with the
stature and responsibility of the Executive’s position as may from time to time
be assigned by the Board; and (iii) comply with Company policies in effect from
time to time. Notwithstanding any provision herein to the contrary, Executive
shall not be precluded from devoting reasonable periods of time required for
serving as a member of one or more advisory boards or boards of directors of
companies or organizations or engaging in other minor business activities, so
long as such memberships or activities do not interfere with the performance of
Executive’s duties hereunder and are not directly or indirectly competitive
with, nor contrary to, the business or other interests of the Company, subject
to prior approval by the Board, which approval shall be granted in the Board’s
reasonable sole discretion.

 

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2.             Employment  Term.. The Employment Term of the Executive under
this Agreement shall begin on the IPO Date and continue through December 31,
2010. Thereafter, the Employment Term will automatically renew for successive
one-year periods unless either party gives notice of non-renewal to the other
at least 90 days before the end of the initial term or then current renewal
term, as the case may be.

 

3.             Compensation.

 

A.            Base Salary. The Company shall pay Executive a base salary (the “Base Salary”) at
a rate of $350,000.00 per annum, payable in accordance with the standard
payroll practices of the Company. The Compensation Committee of the Board (the “Compensation
Committee”) will review Executive’s Base Salary at least annually and may
increase but not decrease the then current annual rate.

 

B.            Bonus.

 

(i)            Bonus for 2007. The Executive’s annual bonus for the
calendar year ending December 31, 2007 will be no less than the amount the
Executive would have been entitled to receive pursuant to the terms of his 2007
LLC bonus opportunity. Such bonus will be determined by the Compensation
Committee and will be payable by the Company by March 15, 2008, subject to
Executive’s continuing employment.

 

(ii)           Annual Bonus after 2007. For each calendar year after 2007,
Executive shall he eligible for a target bonus opportunity of at least 75% of
Executive’s Base Salary for such calendar year, provided the Company achieves
performance targets established by the Compensation Committee. It is
anticipated that the annual bonus amount, if any, for a calendar year will be
determined by the Compensation Committee and paid by the Company by March 15 of
the following year. Except as otherwise provided by this Agreement, the
Executive must be employed by the Company on the day any bonus payment is due
and payable in order to receive said bonus payment. If the Company exceeds established
performance targets, the Compensation Committee may, in its sole discretion,
increase the amount of the Annual Bonus.

 

C.            Initial Equity Participation Awards. Contingent upon and immediately prior to
the Company IPO, Executive will hold fully vested stock appreciation rights (“SARs”)
with respect to shares of the Company’s common stock pursuant to the conversion
of the LLC equity appreciation rights held by the Executive immediately prior
to the merger of the LLC into the Company. In addition, at the time of the
Company IPO, the Company will make the following awards to the Executive
pursuant to the Company’s 2007 Stock Incentive Plan (the “Stock Incentive Plan”):
(1) SARs covering a number of shares equal to the difference between 4% of the
number of outstanding shares of Company common stock upon completion of the
Company IPO (determined on a fully diluted

 

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basis
with regard to SARs outstanding immediately prior to the Company IPO) and the
number of shares of Company common stock covered by the SARs held by the
Executive immediately prior to the Company IPO, with a base price per share
equal to the Company IPO price per share, and (2) a restricted stock award for
a number of shares of Company common stock equal to .47% of the aggregate
number of outstanding shares of Company common stock upon completion of the
Company IPO (determined on a fully diluted basis with regard to the number
of shares authorized for issuance under the terms of the Stock Incentive Plan
in effect upon completion of the Company IPO). The newly awarded SARs will vest
in 36 equal monthly installments beginning on the last day of the month next
following the month in which the Company IPO is completed, and the restricted
stock award shall become vested on the third anniversary of the date the
Company IPO is completed, in each case subject to Executive’s continuing
employment on the applicable vesting date. Vesting of the SARs and the
restricted stock award will accelerate if and when Executive’s employment
terminates for any reason other than by the Company for “Cause” (as defined
below) or by the Executive without “Good Reason” (as defined below). The SARs
and the restricted shares will otherwise be subject to the terms and conditions
of the applicable award agreement and the Stock Incentive Plan except to the
extent inconsistent with the provisions hereof.

 

4.             Additional Benefits.

 

A.            Executive Benefits. During the Employment Term, Executive shall
be eligible to participate in such employee benefit plans as are generally
available to other senior executives of the Company.

 

B.            Paid Time Off. The Executive will be allowed to take up to
four weeks of vacation each year, and shall be eligible for such sick leave and
other paid time off in accordance with Company policies applicable to other
executives generally.

 

C.            Expense Reimbursement. The Company will pay or reimburse Executive
for reasonable expenses incurred by Executive in connection with the
performance of  his duties and responsibilities
under this Agreement, subject to presentation of vouchers and compliance with
generally applicable business expense reimbursement policies of the Company.

 

5.             Termination.

 

A.            Termination for Cause. The Company may terminate Executive’s
employment for “Cause” if Executive:

 

(i) is convicted of or pleads nolo contendre to a
felony;

 

(ii)
commits fraud or a material act or omission involving dishonesty with respect
to the Company or any of its respective employees, customers or affiliates;

 

(iii)
willfully and repeatedly fails or refuses to carry out the material
responsibilities of Executive’s employment by the Company (except where due to
physical or mental incapacity);

 

(iv)
engages in willful misconduct, or a pattern of behavior which has had or is
reasonably likely to have a significant adverse effect on the Company;

 

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(v)
willfully engages in any act or omission which is in material violation of
Company policy, including but not limited to engaging in insider trading
transactions or disseminating inside information; or

 

(vi)
commits a material breach of Executive’s material obligations under this
Agreement, including but not limited to Section 8.

 

A
decision to terminate the Executive’s employment for Cause must be made, if at
all, by the affirmative vote of a majority of the members of the Board (not
including Executive) at a meeting of the Board called and held for such purpose
(after reasonable notice to Executive and an opportunity for Executive,
together with counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, Executive engaged in conduct set forth above and
specifying the particulars thereof in reasonable detail. If the act or omission
giving rise to the termination for Cause is curable by Executive, the Board
will provide 30 days written notice to Executive of its intent to terminate
Executive for Cause, with an explanation of the reason(s) for the termination
for Cause, and if Executive cures the act or omission within the 30 day notice
period, the Board will rescind the notice of termination and Executive’s
employment will not be terminated for Cause at the end of the 30 day notice
period. If Executive has previously been afforded the opportunity to cure
particular behavior and successfully cured under this provision, the Board will
have no obligation to provide Executive with notice and an opportunity to cure
a recurrence of that behavior prior to a termination for Cause. Unless
Executive receives 30 days notice and an opportunity to cure under this
Section, Executive’s termination for Cause will be effective immediately upon
the Board’s mailing or transmitting written notice of such termination to
Executive. For purposes of this Section 5A., an action or inaction shall not be
treated as “willful misconduct” if authorized by the Board or taken in the good
faith belief that it was in, or not opposed to, the best interests of the
Company.

 

B.            Termination by Reason of Permanent Disability. In a manner consistent with the Americans
with Disabilities Act and the Family and Medical Leave Act, this Agreement may
be terminated at the Company’s option immediately upon notice to Executive if
Executive shall suffer a Permanent Disability. For purposes of this Agreement,
the term “Permanent Disability” shall mean the Executive’s inability to perform
the essential functions of his job under this Agreement, with or without
reasonable accommodation, for a period of 150 consecutive days or for an
aggregate of 180 days, whether or not consecutive, in any twelve (12) month
period, due to illness, accident or other physical or mental incapacity, as
determined by a duly licensed physician mutually agreed to by both the
Executive and the Company.

 

C.            Termination by Reason of Death. In the event of the Executive’s death, the
Executive’s employment shall be deemed to have terminated on the date of
Executive’s death.

 

D.            Voluntary Resignation. Executive may terminate this Agreement at
any time, subject to providing 90 days’ written notice to the Company. The
Company may waive such notice and/or set an earlier termination date, without
pay in lieu of notice.

 

E.             Termination without Cause. The Company may terminate Executive’s
employment under this Agreement at any time without Cause upon 90 days prior
written notice

 

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to
Executive. The Company, at its sole discretion, may relieve Executive of his
active duties during the notice period. The Company may also provide 90 days
pay in lieu of notice. Executive’s termination without Cause will be effective
upon the expiration of the 90-day notice period. For purposes of this
Agreement, (1) a termination of employment by the Company that purports to be
for Cause, but is not in full compliance with all of the substantive and
procedural requirements relating to a termination for Cause under this
Agreement, shall be treated as a termination of employment without Cause; and
(2) the Executive will be deemed to have been terminated by the Company without
Cause if the term of this Agreement expires by reason of non-renewal by the
Company pursuant to Section 2.

 

F.             Termination for Good Reason The Executive may terminate his employment
under this agreement at any time for Good Reason upon the occurrence of any one
or more of the following acts or omissions which, if curable, is not cured
within 30 days after notice of the occurrence is provided by Executive: (1) any
action by the Company which results in a material diminution in Executive’s
position, authority, duties or responsibilities (including status, offices,
titles and reporting requirements contemplated by this Agreement); (2) a
material breach by the Company of its obligations under this Agreement,
including, without limitation, a reduction of Executive’s Base Salary or target
bonus opportunity in violation of this Agreement; or (3) the Company’s
requiring the Executive to be based at any office location that is more than 50
miles from its current headquarters in Warren, New Jersey, except for travel
reasonably required in connection with the performance of the Executive’s
responsibilities hereunder. Notwithstanding the foregoing, if a “Change in
Control” occurs, the Executive will not have “Good Reason” to terminate his
employment under this Agreement merely by reason of the fact that he no longer
serves as the Chief Executive Officer of a publicly traded company or merely
because he reports to the senior executive officer of a company that acquires
the Company.

 

6.             Obligations of the Company
Upon Termination.

 

A.            Termination for Cause. In the event that the Executive’s
employment under this Agreement is terminated for Cause, the Company shall have
no obligation to pay the Base Salary or any other compensation provided under
this Agreement, to or for the benefit of the Executive for any period after the
effective date of such termination, or to pay the Target Bonus or any other
bonus or incentive compensation for the fiscal year in which such termination
occurs; provided, however, that the Company shall promptly provide: (i) all
base salary earned by the Executive through the effective date of such
termination; and (ii) any benefits under any plans of the Company in which the
Executive is a participant, to the full extent of the Executive’s rights under such
plans.

 

B.            Termination by Reason of Death or Permanent
Disability. In the event
that the Executive’s employment under this Agreement terminates due to his
death or is terminated by the Company due to the Executive’s Permanent
Disability, the Company shall promptly provide to the Executive (or his estate
or other beneficiaries, as the case may be): (i) a cash payment equal to the
sum of any previously unpaid Base Salary earned by the Executive through the
date on which his employment terminates, any unpaid bonus earned by the
Executive for the year preceding the year in which his employment terminates,
and any accrued and unused vacation pay for the year in which his employment
terminates; (ii) any benefits under any plans

 

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of
the Company in which the Executive is a participant, to the full extent of the
Executive’s (or his beneficiaries’) rights under such plans; (iii) a cash
payment equal to the Executive’s Target Bonus for the year of termination, pro-rated
for the number of days Executive is employed during the calendar year in which
his employment terminates (“Pro Rata Bonus”); and (iv) accelerated vesting of
outstanding unvested stock options, SARs, restricted stock and other
equity-based compensation awards as if the Executive’s employment had continued
through the end of the year in which his employment terminates or, in the case
of any such award that is subject to “cliff vesting,” pro rata accelerated
vesting based upon the numerator of months in the vesting period that have
elapsed as of the date his employment terminates. Stock options and SARs that
are or become vested upon termination of the Executive’s employment due to
death or Permanent Disability will be exercisable for at least one year after
the date of such termination or, if earlier, until the expiration of the stated
term of the award.

 

C.            Voluntary Resignation. In the event that the Executive voluntarily
resigns from his employment with the Company, the Company may, at its
discretion, continue the Executive’s employment with the Company for the full
duration of the 90-day notice period. In the event of said termination, the
Company shall have no obligation to pay the Base Salary or any other
compensation provided under this Agreement to or for the benefit of the
Executive for any period after the end of said notice period; provided,
however, that the Company shall promptly provide: (i) all Base Salary earned by
the Executive through the date of such termination; (iii) any unpaid bonus earned
by the Executive for the year preceding the year in which his employment
terminates, and (iii) any benefits under any plans of the Company in which
Executive is a participant, to the full extent of the Executive’s rights under
such plans.

 

D.            Termination by Company Without Cause or by
Executive for Good Reason—Unrelated to Change in Control. In the event that the Executive’s
employment under this Agreement is terminated by the Company without Cause
(pursuant to Section 5E) or by the Executive for Good Reason (pursuant to
Section 5F), the Company shall provide to the Executive: (i) a cash payment
equal to the sum of any previously unpaid Base Salary earned by the Executive
through the date on which his employment terminates, any unpaid bonus earned by
the Executive for the year preceding the year in which his employment
terminates, and any accrued and unused vacation pay for the year in which his
employment terminates; (ii) any benefits under any plans of the Company in
which the Executive is a participant, to the full extent of the Executive’s (or
his beneficiaries’) rights under such plans; (iii) a cash payment equal to the
Executive’s Pro Rata Bonus for the year of termination; (iv) monthly payments
for a period (the “Severance Period”) of 18 months following the termination of
Executive’s or, if longer, until the expiration of the Employment Term, equal
to 1/12 of the sum of Executive’s Base Salary and Target Bonus (in each case
determined without regard to any reduction prior to the termination of Executive’s
employment); (v) continuing coverage under the Company’s group health and life
insurance plans in which the Executive is a participant immediately before the
termination of his employment (or any successor plans), at the same levels and
on the same terms and conditions as are provided to similarly situated
executives during the Severance Period (or, if such coverage is not permitted
by law or the applicable plan, the cash equivalent of such coverage, grossed up
if and to the extent necessary to negate the tax impact of such payment and to
negate the gross-up payment); and (vi) full and immediate vesting of
outstanding unvested stock options, SARs, restricted stock and other
equity-based compensation awards, with any such stock options and SARs remaining
exercisable for at least one year after the date the

 

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Executive’s
employment terminates or, if earlier, until the expiration of the stated term
of the award. The payments and benefits described in parts (iv) – (vi) of this
subsection shall be conditioned upon and subject to the Executive’s continuing
compliance with his obligations under Section 8 of this Agreement, and the
Executive’s execution and delivery of a general release substantially in the
form annexed hereto as Exhibit A. 

 

E.             Termination in Conjunction with a Change in
Control.

 

1.             Severance Protection Upon Involuntary
Termination. In the event
that, during the period beginning one hundred and eighty (180) days before the
effective date of a Change in Control (as defined below) and ending twenty four
(24) months following the effective date of a Change in Control, the Executive’s
employment is terminated by the Company without Cause (pursuant to Section 5E)
or by the Executive for Good Reason (pursuant to Section 5F), the Executive
shall be entitled to the payments and benefits described in the preceding
Section 6D except (1) in lieu of the severance payments described in part (iv)
of Section 6D, Executive will be entitled to receive an immediate cash payment
of an amount equal to 3.0 times the sum of the Executive’s Base Salary and
Target Bonus (in each case determined without regard to any reduction prior to
the termination of Executive’s employment); and (2) the benefit continuation
period described in part (v) of Section 6D will be three years from the date
the Executive’s employment terminates. The payments and benefits described in
the preceding sentence and in parts (v) and (vi) of Section 6D and the single
sum severance payment described in the preceding sentence shall be conditioned
upon and subject to the Executive’s continuing compliance with his obligations
under Section 8 of this Agreement, and the Executive’s execution and delivery
of a general release substantially in the form annexed hereto as Exhibit A. 

 

2.             Definition of Change in Control. For the purposes of this Agreement, a “Change
in Control” shall be deemed to have occurred if (a) any person (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (“Exchange Act”)) becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of the
combined voting power of the then outstanding voting securities of the Company;
or (b) there shall have been consummated a consolidation, merger or
reorganization of the Company, unless (1) the stockholders of the Company
immediately before such consolidation, merger or reorganization own, directly
or indirectly, at least a majority of the combined voting power of the
outstanding voting securities of the corporation or other entity resulting from
such consolidation, merger or reorganization, (2) individuals who were members
of the Board immediately prior to the execution of the agreement providing for such
consolidation, merger or reorganization constitute a majority of the board of
directors of the surviving corporation or of a corporation directly or
indirectly beneficially owning a majority of the voting securities of the
surviving corporation, and (3) no person beneficially owns more than 40% of the
combined voting power of the then outstanding voting securities of the
surviving corporation (other than a person who is (A) the Company or a
subsidiary of the Company, (B) an employee benefit plan maintained by the
Company, the surviving corporation or any subsidiary, or (C) the beneficial
owner of 40% or more of the combined voting power of the outstanding voting
securities of the Company immediately prior to such consolidation, merger or
reorganization); or (c)  individuals who,
as of the date following the IPO Date, constitute the entire Board (the “Incumbent
Board”) cease for any reason to constitute a majority of the Board,

 

7

 

provided
that any individual becoming a director subsequent to the IPO Date whose
appointment or nomination for election by the Company’s stockholders, was
approved by a vote of at least two-thirds of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board; or (d) the stockholders of the Company approve the
complete liquidation or dissolution of the Company, or a sale or other
disposition of all or substantially all of the assets of the Company (other
than to an entity described in (b) above).

 

F.             409A Compliance. The Company shall take all reasonable
actions to ensure that none of the amounts earned or payable under this
Agreement and the Plan will violate Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”). To the extent necessary to comply with the
restriction in Section 409A(a)(2)(B) of the Code concerning payments to “specified
employees,” any amounts payable on account of the Executive’s separation from
service shall be paid (or commence to be paid in the case of any payments to be
made in installments) on the first business day of the seventh month following
Executive’s date of termination (or death, if earlier) and the first such
payment shall include the cumulative amount of any payments that would have
been made prior to such date if not for such restriction, together with
interest at an annual rate equal to the minimum rate required by the Code in
order to avoid the imputation of interest on short-term loans between employers
and employees.

 

7.             Excise Tax Gross Up. If Executive becomes entitled to one or more
payments (with a “payment” including, without limitation, payments in
connection with a Change In Control or the vesting of a stock option or other
equity award or other non-cash benefit or property), whether pursuant to the
terms of this Agreement or any other plan, arrangement, or agreement with the
Company or any affiliated company (the “Total Payments”), which are or become
subject to the tax imposed by Section 4999 of the Code or a successor provision
of the Code (the “Excise Tax”), the Company shall pay to Executive at the time
specified below an additional amount (the “Gross-up Payment”) (which shall
include, without limitation, reimbursement for any penalties and interest that
may accrue in respect of such Excise Tax) such that the net amount retained by
Executive, after reduction for any Excise Tax (including any penalties or
interest thereon) on the Total Payments and any federal, state and local income
or employment tax and Excise Tax on the Gross-up Payment provided for by this
Section, but before reduction for any federal, 
state, or local income or employment tax on the Total Payments, shall be
equal to the sum of (a) the Total Payments, and (b) an amount equal to the
product of any deductions by the Executive disallowed for federal, state, or
local income tax purposes because of the inclusion of the Gross-up Payment in
Executive’s adjusted gross income multiplied by the highest applicable marginal
rate of federal, state, or local income taxation, respectively, for the
calendar year in which the Gross-up Payment is to be made. For purposes of
determining whether any of the Total Payments will be subject to the Excise Tax
and the amount of such Excise Tax:

 

(i)            The Total Payments shall be treated as “parachute
payments” within the meaning of Section 
280G(b)(2) of the Code, and all “excess parachute payments” within the
meaning of Section 280G(b)(1) of the Code shall be treated as subject to the
Excise Tax, unless, and except to the extent that, in the written opinion of
independent compensation consultants, counsel or auditors of nationally
recognized standing (“Independent 
Advisors”) selected by the

 

8

 

Company
and reasonably acceptable to Executive, the Total Payments (in whole or in
part) do not constitute parachute payments, or such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code in excess of the
base amount within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax;

 

(ii)           The amount of the Total Payments which shall be treated as subject to
the Excise Tax shall be equal to the lesser of (A) the total amount of the
Total Payments or (B) the total amount of excess parachute payments within the
meaning of Section 280G(b)(1) of the Code (after applying clause (i) above);
and

 

(iii)          The value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Independent Advisors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.

 

For
purposes of determining the amount of 
the Gross-up Payment, Executive shall be deemed (A) to pay federal
income taxes at the highest marginal rate of federal income taxation for the
calendar year in which the Gross-up Payment is to be made; (B) to pay any
applicable state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Gross-up Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and  local taxes
if paid in such year (determined without regard to limitations on deductions
based upon the amount of Executive’s adjusted gross income); and (C) to have
otherwise allowable deductions for federal, state, and local income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-up Payment in Executive’s adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, Executive shall
repay to the Company at the time that the amount of such reduction in Excise
Tax is finally determined (but, if previously paid to the taxing authorities,
not prior to the time the amount of such reduction is refunded to Executive or
otherwise realized as a benefit by Executive) (the “Repayment Date”) the portion
of the Gross-up Payment that would not have been paid if such Excise Tax had
been applied in initially calculating the Gross-up Payment, plus interest on
the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of
the Code from the Repayment Date until paid. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at the time the
Gross-up Payment is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Gross-up Payment), the
Company shall make an additional Gross-up Payment in respect of such excess
(plus any interest and penalties payable with respect to such excess) at the
time that the amount of such excess is finally determined.

 

The
Gross-up Payment provided for above shall be paid to the Executive (or to the
IRS on behalf of the Executive) on the 30th day (or such earlier date as the
Excise Tax becomes due and payable to the taxing authorities) after it has been
determined that the Total Payments (or any portion thereof) are subject to the
Excise Tax; provided, however, that if the amount of such Gross-up Payment or
portion thereof cannot be finally determined on or before  such day, the Company shall pay to Executive
on such day an estimate, as determined by the Independent Advisors, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code),

 

9

 

as
soon as the amount thereof can be determined. In the event that the amount of
the estimated payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to Executive, payable
on the fifth day after demand by the Company (together with interest at the
rate provided in Section 1274(b)(2)(B) of the Code). If more than one Gross-up
Payment is made, the amount of each Gross-up Payment shall be computed so as
not to duplicate any prior Gross-up Payment subject to the Company’s compliance
with the provisions of this Section. The Company shall have the right to
control all proceedings with the Internal Revenue Service that may arise in
connection with the determination and assessment of any Excise Tax and, at its
sole option, the Company may pursue or forego any and all administrative
appeals, proceedings, hearings, and conferences with any taxing authority in
respect of such Excise Tax (including any interest or penalties thereon); provided,
however, that the Company’s control over any such proceedings shall be limited
to issues with respect to which a Gross-up Payment would be payable hereunder,
and Executive shall be entitled to settle or contest any other issue raised by
the Internal Revenue Service or any other taxing authority. Executive shall
cooperate with the Company in any proceedings relating to the determination and
assessment of any Excise Tax and shall not take any position or action that
would materially increase the amount of any Gross-up Payment hereunder.

 

8.             Covenants of the Executive.

 

In
order to induce the Company to enter into this Agreement and employ the
Executive hereunder, the Executive hereby covenants and agrees as follows. For
all purposes under this Section 8 herein, the Company’s “business” shall mean
film based delivery systems to deliver drug actives, nutraceuticals,
cosmaceuticals or flavors, and soluble film based packaging systems and such
other lines of business in which the Company is actively engaged or actively
pursuing and with respect to which Executive has oversight responsibility or is
otherwise substantively involved.

 

A.            Non-Competition. During the Employment Term, including any
extensions thereof, and for a period of 18 months immediately following the
termination of Executive’s employment under this Agreement for any reason other
than death (the “Restrictive Period”), except as provided herein, Executive
shall not directly or indirectly: (a) engage in or in any manner be connected
or concerned, whether as an officer, director, stockholder, partner, owner,
employee, advisor, creditor, or otherwise with the development, operation,
management, or conduct of any business in the United States that competes with
the business of the Company being conducted at the time of such termination;
(b) solicit or otherwise attempt to divert business from or interfere in the
Company’s relationship with any supplier of the Company or any customer served
by the Company or and potential customer identified by Company during the
period of Executive’s employment hereunder; or (c) solicit, hire or otherwise
interfere with the Company’s relationship with any person then or previously
employed by Company; provided, however, that, after the termination of
Executive’s employment, Executive shall not be bound by the Covenant set forth
in this subparagraph following a material breach by the Company of any of its
obligations to the Executive hereunder or in the event of the cessation or
dissolution of the Company’s business. As used herein, “cessation or
dissolution” means total liquidation of the Company and does not include a
cessation of business due to any Change in Control. Nothing contained herein
shall prohibit Executive from owning up to 3% of the stock of

 

10

 

a
publicly traded company that competes with the business of the Company or,
following the termination of his employment with the Company, prevent the
Executive from being employed by or otherwise affiliated with a line of
business of another company that engages in multiple lines of business so long
as the Executive is not employed by, does not provide services with respect to
and is not otherwise involved in the line or lines of business of such other
company that compete with the Company.

 

B.            Confidentiality. During the Employment Term, and following
the termination of this Agreement for any reason for as long as the information
remains confidential, Executive shall not make any use, for his own benefit or
for the benefit of a business or entity other than Company, of any verbal or
written secret or confidential information. Such confidential information shall
include, but not be limited to, customer lists, trade secrets, sales, marketing
or consignment information, vendor lists or operational resource information,
forms, processes or procedures, budget and financial statements or information,
files, records, documents, compilation of data, engineering drawings, computer
print-outs, or any other data of or pertaining to the Company, its business,
customers and financial affairs, or its services not generally known within the
Company’s trade and which was acquired by him during his affiliation with the
Company. Executive shall not remove from the Company premises or retain without
the Company’s written consent any of the Company’s confidential information as
defined herein, or copies thereof or extracts therefrom. Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge, or data of the Company or its business or
production operations obtained by Executive during his employment by the
Company, which shall not be generally known to the public or recognized as
standard practice (whether or riot developed by Executive) and shall not,
during his employment hereunder or after the termination of such employment,
communicate or divulge any such information, knowledge or data to any person,
firm or corporation other than the Company or persons, firms or corporations designated
by the Company. Executive acknowledges that this information is treated as
confidential by the Company, that the Company takes meaningful steps to protect
the confidentiality of this information, and that Company has at all times
directed Executive to maintain the confidentiality of this information.
Immediately upon termination of this Agreement, Executive shall return all of
the Company’s property to it, including any and all copies of said property.

 

C.            Ownership of Work Product. Executive agrees that Company shall own all
intellectual property including trade secrets, patents, patentable inventions,
discoveries and improvements that relate to Company’s business that Executive
conceives, develops during the period of his employment with the Company or
delivers to the Company while performing services pursuant to this Agreement (“Work
Product”). Executive further agrees to deliver to the Company, and that the
Company shall thereafter own for all purposes, all Work Product conceived or
developed by the Executive relating to the business of the Company which does
not otherwise belong to Employee’s former employer or to which the former
employer has no legal right or claim. Executive hereby irrevocably extinguishes
for the benefit of the Company and its assigns any moral right to the Work
Product recognized by applicable law. All Work Product shall be considered a
work made for hire by Executive and owned by Company. If any of the Work
Product may not, by operation of law, be considered work made for hire by
Executive for Company, or if ownership of all right, title and interest of the
intellectual property rights therein shall not otherwise vest exclusively in
the Company, Executive agrees to assign, and upon

 

11

 

creation
thereof automatically assign, without further consideration, the ownership of
all trade secrets, copyrights, patentable inventions, and other intellectual
property rights therein to Company, its successors and assigns. Company, its
successors, and assigns, shall have the right to obtain and hold in its or
their own name copyrights, patents, registrations and any other protection
available in the foregoing. For purposes hereof, a “trade secret” shall mean
any information, including, but not limited to, technical or nontechnical data,
formulae, patterns, compilations, programs, devices, methods, techniques,
drawings. processes, financial data, financial plans, product plans or lists of
actual or potential customers or suppliers that derive economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from their disclosure or use and are the subject of efforts that are reasonable
under the circumstances to maintain their secrecy. Executive agrees to perform,
upon the reasonable request of Company and at no cost to the Company (other
than travel out of pocket costs where applicable), during or after the
period(s) that this Agreement remains in effect, such further acts as may be
necessary or desirable to transfer, perfect and defend the Company’s ownership
of Work Product, or to enforce the Company’s Work Product against third
parties. When requested, Executive shall promptly and at no cost to the Company
(other than travel out of pocket costs, where applicable): (a) execute,
acknowledge and deliver any requested affidavits and documents of assignment
and conveyance; (b) obtain and aid in the enforcement of copyright and, if
applicable, patents with respect to the Work Product in any countries; (c)
provide testimony in connection with any enforcement proceeding or any
proceeding affecting the right, title or interest of Company in any Work
Product; and (d) perform any other acts deemed necessary or desirable to carry
out the purposes of this Agreement.

 

D.            Inventions. All discoveries, designs, improvements, ideas and inventions, whether
patentable or not, relating to (or suggested by or resulting from) products,
services, or other technology of Company or relating to (or suggested by or
resulting from) methods or processes used or usable in connection with the
business of Company that have been, or may be, conceived, developed or made by
Executive during the Employment Term (hereinafter “Inventions”), either solely
or jointly with others, shall automatically become the sole property of
Company. Executive shall immediately disclose to Company all such Inventions
and shall, without additional compensation, execute all assignments and other
documents deemed necessary by Company to perfect Company’s title thereto, or to
the patents issued thereon, or to otherwise secure and protect Company’s
property rights therein. These obligations shall continue beyond the
termination of Executive’s employment with respect to Inventions conceived,
developed or made by Executive during employment with Company. The Company
acknowledges and agrees that the provisions of this paragraph shall not apply
to any invention for which no equipment, supplies, facilities or trade secret
(or proprietary) information of Company is used by Executive and which is
developed entirely on Executive’s own time, unless (a) such invention related
to the business of Company or to Company’s actual or demonstrably anticipated
research or development; or (b) such invention results from any work performed
by Executive for Company.

 

E.             Acknowledgment. Executive acknowledges that all of the
restrictions set forth in this Section entitled “Covenants of the Executive”
are reasonable in scope, both individually and in the aggregate, and essential
to the preservation of Company’s business and proprietary interests and that
the enforcement thereof will not in any manner preclude Executive, 

 

12

 

in
the event of Executive’s termination of employment with Company for any reason,
from becoming gainfully employed in such manner and to such extent as to provide
a standard of living for himself, the members of his family, and those
dependent upon him of at least the sort and fashion to which he and they have
become accustomed and may expect. The Company and the Executive further agree
that if any particular provision or portion of this Section 8 shall be
adjudicated to be invalid or unenforceable, such adjudication shall apply only
with respect to the operation of such provision in the particular jurisdiction
in which such adjudication is made. The Company and Executive also agree that
in the event that any restriction herein shall be found to be void or unenforceable
if some part or parts thereof were deleted or the period or area of application
reduced, such restriction shall apply with such modification as may be
necessary to make it valid and enforceable to the fullest extent possible
consonant with applicable law.

 

G.            Representations and Warranties. Executive represents and warrants to the
Company as follows: (a) Executive is under no contractual or other restriction
or obligation which may conflict with or be inconsistent with the execution of
this Agreement or with the performing of any duties for Company, or any other
rights of Company; (b) neither Company nor any of its affiliates nor any of
their respective officers, directors, employees, agents or employees has
requested that Executive communicate or otherwise make available to any such
parties at any time any proprietary information, data, trade secrets, or other
confidential information belonging to Executive’s former employers or others.

 

H.            Severability. All of the covenants of Executive contained
in this Section entitled “Covenants of the Executive” shall each be construed
as an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Executive against Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by Company of such covenants. Both parties hereby expressly
agree that it is not the intention of either party to violate any public
policy, statutory or common law. If any sentence, paragraph, clause or
combination of the same of this Agreement is in violation of the law of any
state where applicable, such sentence, paragraph, clause or combination of the
same shall be void in the jurisdictions where it is unlawful, and the remainder
of such paragraph and this Agreement shall remain binding on the parties to the
extent that it may be lawfully done under existing applicable laws. In the
event that any part of any covenant of this Agreement is determined by a court
of law to be overly broad thereby making the covenant unenforceable, the
parties hereto agree, and it is their desire that such court shall substitute a
judicially enforceable limitation in its place, and that as so modified the
covenant shall be binding upon the parties as if originally set forth herein.

 

I.              Remedies. The Executive agrees that irreparable harm would result from any
breach by Executive of the covenants of this Section 8 in particular, and this
Agreement in general, and that monetary damages alone would not provide the
Company adequate relief for any such breach. Accordingly, if Executive breaches
any covenant in this Section 8, the parties acknowledge that equitable or
injunctive relief in favor of the Company is a proper remedy, and nothing in
this Agreement shall be construed as precluding the Company from seeking such
equitable or injunctive relief in a court of competent jurisdiction for
Executive’s violations of Section 8. Any award of equitable or injunctive
relief shall not preclude the Company from seeking or recovering any lawful
compensatory damages that may have resulted from a breach of

 

13

 

the
covenants of this Agreement. Any waiver or failure to seek enforcement or
remedy for any breach or suspected breach of any covenant of Executive in this
Agreement shall not be deemed a waiver of such provision in the future.
Furthermore, the existence of any claim of Executive against the Company,
whether based upon this Agreement or otherwise, shall not operate as a defense
to the Company’s enforcement of any provision of this Agreement. Proceedings
seeking equitable and injunctive relief to enforce the terms of this Section 8
may be brought in any court of competent jurisdiction.

 

9              Indemnification. Subject to the Company’s by-laws, to the
fullest extent allowed or permitted under any provision of applicable law, the
Company shall indemnify Executive against any losses, claims, damages or
liabilities incurred by Executive arising out of any claim based upon acts
performed or omitted to be performed by Executive in connection with his
employment with the Company.

 

10.           Attorneys’ Fees. In any action brought by any party under
this Agreement to enforce any of its terms, or any appeal therefrom, each party
shall bear its own costs and expenses, including its own attorneys’ fees;
provided, however, that the Executive (or his beneficiary, as the case may be)
will be entitled to reimbursement for reasonable costs and expenses, including
reasonable attorneys’ fees, with respect to such action if and to the extent
that the Executive (or beneficiary) is the prevailing party.

 

11.           Cooperation. Executive agrees that, after the termination
of his employment, he shall cooperate on a reasonable basis in the truthful and
honest prosecution and/or defense of any claim in which the Company, its
affiliates and/or its subsidiaries may have an interest (subject to reasonable
limitations and the Executive’s other commitments concerning time and place),
which may include, without limitation, making himself available on a reasonable
basis to participate in any proceeding involving the Company, its affiliates
and/or its subsidiaries, appearing for depositions and testimony without
requiring a subpoena, and producing and/or providing any documents or names of
other persons with relevant information. The Company agrees to reimburse
Executive for all expenses reasonably incurred by him and to pay reasonable
compensation to Executive for and in connection with services provided by him
pursuant to this section.

 

12.           Travel Restrictions. As is reasonable, Executive has the right
to refuse travel to destinations deemed politically unstable or otherwise
hostile and/or those that may represent a danger to the Executive’s health and
well-being.

 

13.           Notices. Any notices permitted or required under
this Agreement shall be deemed given upon the date of personal delivery or
forty-eight (48) hours after deposit in the United States mail, postage fully
paid, certified mail, return receipt requested, addressed to the following
address:

 

	
  If
  to the Company:

  	
   

  	
  Chairman
  of the Board of Directors

  
	
   

  	
   

  	
  c/o
  MonoSol Rx, Inc.

  
	
   

  	
   

  	
  30
  Technology Drive

  
	
   

  	
   

  	
  Warren
  Township, NJ 07059

  

 

14

 

	
  With
  copies to:

  	
   

  	
  Compensation
  Committee Chairperson

  
	
   

  	
   

  	
  c/o
  MonoSol Rx, Inc.

  
	
   

  	
   

  	
  30
  Technology Drive

  
	
   

  	
   

  	
  Warren
  Township, NJ 07059; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  John
  Cochran

  
	
   

  	
   

  	
  201
  Main Street, Suite 1900

  
	
   

  	
   

  	
  Fort
  Worth, Texas 76102

  
	
   

  	
   

  	
   

  
	
  If
  to the Executive:

  	
   

  	
  Alexander
  Mark Schobel

  
	
   

  	
   

  	
  6
  Demott Drive

  
	
   

  	
   

  	
  Whitehouse
  Station, NJ 08889

  

 

Either
party may change the address to which notices to such party shall be delivered
personally or mailed by giving notice thereof to the other party hereto.

 

14.           Venue; Jurisdiction. The validity, construction, interpretation,
and enforceability of this Agreement shall be determined and governed by the
laws of the State of New Jersey without giving effect to the principles of
conflicts of law. For the purpose of litigating any dispute that arises under
this Agreement, the parties hereby consent to exclusive jurisdiction of, and
agree that such litigation shall be conducted in, any state or federal court
located in the State of New Jersey.

 

15.           Binding Effect; Assignment. Executive shall not, without the prior
written consent of the Company, assign, transfer, or otherwise convey this
Agreement, or any right or interest herein. This Agreement, and all rights and
obligations of the Company or any of its successors, may be assigned or
otherwise transferred to any of its successors and shall be binding upon and
inure to the benefit of its successors. As used herein, the term “successor”
shall mean any person, corporation or other entity that, by merger,
consolidation, purchase of stock, assets, liquidation, voluntary or involuntary
assignment, or otherwise, acquires all or a substantial part of the assets of
the Company or succeeds to one or more lines of business of the Company.

 

16.           Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, understandings and arrangements, both oral
and written, between the parties hereto with respect to such subject matter, it
being understood that this Agreement shall not supersede the Executive’s
existing employment agreement with LLC unless and until the Executive’s
employment by the Company pursuant to this Agreement becomes effective in
accordance with Section 2 hereof. This Agreement may not be modified, amended,
altered or rescinded in any manner, except by written instrument signed by all
of the parties hereto; provided, however, that any waiver by either party with
respect to any provision hereof, or the breach of any provision hereof by the
other party, need be signed only by the party waiving such provision or breach;
and provided, further, that the waiver by either party hereto of a breach or
compliance with any

 

15

 

provision
of this Agreement shall not operate nor be construed as a waiver of any
subsequent breach or compliance.

 

17.           Severability. In case any one or more of the provisions
of this Agreement shall be held by any court of competent jurisdiction to be
illegal, invalid or unenforceable in any respect, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it is held to be illegal, invalid, or unenforceable,
shall not he affected thereby.

 

I8.            Section Headings  The
section headings contained in this Agreement are for reference purposes only
and shall not affect in any manner the meaning or interpretation of this
Agreement.

 

19.           Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.

 

20.           Survival. The provisions of Sections 6-11 of this
Agreement shall survive any termination of this Agreement and the termination
of Executive’s employment by either party for any reason.

 

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

 

	
   

  	
  MONOSOL
  RX, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John S. Cochran

  
	
   

  	
   

  
	
   

  	
  MONOSOL
  RX, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John S. Cochran

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Alexander Mark Schobel

  
	
   

  	
  Alexander
  Mark Schobel

  
				

 

16

 

Execution Copy

 

EXHIBIT A

GENERAL RELEASE

 

In
exchange for certain payments and benefits to be provided to me by MonoSol Rx,
Inc. pursuant to the Employment Agreement dated as of              ,
2007, between the undersigned executive (the “Executive”), Monosol LLC and
MonoSol Rx, Inc., the Executive hereby knowingly and voluntarily waives,
releases and discharges MonoSol Rx, Inc., its predecessors, successors, parent
corporations, subsidiaries, affiliates and each of their employees, officers
and directors, agents, trustees, and fiduciaries (the “Company”) from any and
all claims, liabilities, demands, and causes of action, which he may have or
claim to have against the Company, including any and all claims arising out of
or relating in any way to the Executive’s employment and/or separation of
employment from the Company. This General Release specifically waives and
releases all rights, claims, causes of action, demands, and liabilities which
may arise up to and including the date the Executive signs this General
Release. This General Release does not, however, waive or release any rights or
claims which may arise after the date the Executive signs this General Release.

 

This
General Release of claims includes, but is not limited to:

 

a.             all State and Federal statutory claims
including, but not limited to, claims arising under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Older Worker
Benefit Protection Act, the Americans with Disabilities Act, the Family and
Medical Leave Act, the Sarbanes-Oxley Act, the Employee Retirement Income
Security Act, the Fair Labor Standards Act, the Worker Adjustment and
Retraining Notification Act, the New Jersey Law Against Discrimination, the New
Jersey Civil Rights Act, the New Jersey Civil Union Act, the New Jersey Wage
and Hour Law, the New Jersey Conscientious Employee Protection Act, the New
Jersey Domestic Partnership Act, and the New Jersey Family Leave Act;

 

b.             All claims arising under the United States
and New Jersey Constitutions;

 

c.             All claims arising under any Executive Order
or derived from or based upon any State or Federal regulations;

 

d.             All common law claims including, but not
limited to, claims for wrongful or constructive discharge, public policy
claims, retaliation claims, claims for breach of an express or implied
contract, claims for breach of an implied covenant of good faith and fair
dealing, intentional infliction of emotional distress, defamation, fraud,
conspiracy, loss of consortium, tortious interference with contract or
prospective economic advantage, promissory estoppel and negligence;

 

e.             All claims for any compensation including,
but not limited to, back wages, front pay, overtime pay, bonuses or awards,
fringe benefits, reinstatement, retroactive seniority, pension benefits, or any
other form of economic loss;

 

f.              All claims for personal injury including, but
not limited to, physical injury, mental anguish, emotional distress, pain and
suffering, embarrassment, 

 

1

 

humiliation, damage to name or reputation, liquidated damages, and
punitive damages; and

 

g.             All claims for costs and attorneys’ fees.

 

The
Executive hereby acknowledges that the Company is advising him in writing that
he should consult with an attorney prior to executing this General Release. The
Executive hereby states that he has had the opportunity to discuss this General
Release with whomever the Executive wished, including an attorney of his own
choosing. The Executive further states that he has had the opportunity to read,
review, and consider all of the provisions of this General Release; that the
Executive understands its provisions and its binding effect on him; and that
the Executive is entering into this General Release freely, voluntarily, and
without duress or coercion. The Executive acknowledges that he has not relied
upon the Company’s employees, officers or directors, counsel, agents or
accountants for any legal, tax or other advice, and the Executive has, to the
extent the Executive deems necessary, consulted with his own advisors as to
these matters.

 

The
Executive represents that he has not filed any grievance, charge, claim, or
complaint of any kind seeking personal recovery or personal injunctive relief
against the Company or any of its owners, officers, directors, employees or
agents, with respect to any matter, including but not limited to, his
employment with the Company and/or the separation of that employment. Nothing
contained in this paragraph shall prohibit the Executive from (a) bringing any
action to enforce the terms of this Agreement and General Release; (b) filing a
timely charge or complaint with the Equal Employment Opportunity Commission (“EEOC”)
regarding the validity of this Agreement and General Release; (c) filing a
timely charge or complaint with the EEOC or participating in any investigation
or proceeding conducted by the EEOC regarding any claim of employment
discrimination (although the Executive has waived any right to personal
recovery or personal injunctive relief in connection with any such charge or
complaint).

 

The
Executive understands that he has twenty-one (21) calendar days within which to
consider this General Release before signing it. The Executive also understands
that he is free to use as much of the twenty-one (21) calendar day period as he
wishes or considers necessary before deciding to sign this General Release. The
Executive may revoke his signature of this General Release within seven (7)
calendar days of signing it by delivering written notice of revocation to
Theresa Wood, Director of Human Resources, 30 Technology Drive, Warren, New
Jersey 07059. If Executive has not revoked his signature of this Agreement by
written notice delivered within the seven (7) calendar day period, it becomes
effective immediately thereafter.

 

The
Executive understands that his failure or refusal to execute this General
Release or his timely revocation of this General Release will result in
forfeiture of any severance payments and benefits.

 

BY
SIGNING THIS GENERAL RELEASE, EXECUTIVE ACKNOWLEDGES THAT:

 

HE
HAS READ IT;

 

HE
UNDERSTANDS IT AND KNOWS HE IS GIVING UP IMPORTANT RIGHTS;

 

2

 

HE
AGREES WITH EVERYTHING IN IT;

 

HE
HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS GENERAL
RELEASE; AND

 

HE
HAS SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY.

 

 

	
   

  	
   

  
	
   

  	
  Executive

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MONOSOL
  RX, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  

 

3Exhibit 10.26

 

Execution Copy

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This
Executive Employment Agreement (the ‘Agreement”) is made and entered into as of
August 24, 2007, by and among Monosol Rx LLC (the “LLC”), MonoSol Rx, Inc. (the
“Company”), and Keith J. Kendall (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Executive is currently employed by LLC as its Senior Vice
President and Chief Financial Officer under an Executive Employment Agreement
dated June 16, 2006; and

 

WHEREAS, the parties contemplate that, before the end of 2007, the LLC will
merge with and into the Company and the Company will issue shares of its common
stock pursuant to an initial public offering (the “Company IPO”), as described
in the registration statement filed by the Company with the SEC on May 14,
2007, as amended; and

 

WHEREAS, the parties desire that, contingent upon and effective at the time of
the contemplated Company IPO (the “IPO Date”), the Executive will be employed
by the Company as its Executive Vice President and Chief Financial Officer upon
the terms and conditions of this Agreement and that this Agreement will
supersede said June 16, 2006 Executive Employment Agreement.

 

NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein set forth, and for other good and valuable
consideration, the parties hereto, intending to be legally bound, hereby agree
as follows:

 

1.             Employment. During the term of this Agreement, the
Executive agrees to be employed by and to serve the Company as its Executive
Vice President and Chief Financial Officer, and the Company agrees to employ
and retain Executive in such capacity. The Executive shall report directly to
the President and CEO (hereafter the “CEO”). The Executive shall also serve as
the Company’s Corporate Secretary and Treasurer unless and until the Company
re-assigns those positions to one or more other persons. The Executive shall:
(i) devote his entire business time, energy and skill to the affairs of the
Company; (ii) faithfully, loyally, and industriously perform all duties
incident to the position of Executive Vice President and Chief Financial
Officer and, as applicable, Corporate Secretary and Treasurer, as well as any
other duties consistent with the stature and responsibility of the Executive’s
position as may from time to time be assigned by the CEO; and (iii) comply with
Company policies in effect from time to time. Notwithstanding any provision
herein to the contrary, Executive shall not be precluded from devoting
reasonable periods of time required for serving as a member of one or more
advisory boards or boards of directors of companies or organizations or
engaging in other minor business activities, so long as such memberships or
activities do not interfere with the performance of Executive’s duties
hereunder and are not directly or indirectly competitive with,

 

1

nor
contrary to, the business or other interests of the Company, subject to prior
approval by the Board, which approval shall be granted in the Board’s
reasonable sole discretion.

 

2.             Employment  Term.. The Employment Term of the Executive under
this Agreement shall begin on the IPO Date and continue through December 31,
2010. Thereafter, the Employment Term will automatically renew for successive
one-year periods unless either party gives notice of non-renewal to the other
at least 90 days before the end of the initial term or then current renewal
term, as the case may be.

 

3.             Compensation.

 

A.            Base Salary. The Company shall pay Executive a base salary (the “Base Salary”) at
a rate of $325,000.00 per annum, payable in accordance with the standard
payroll practices of the Company. The Compensation Committee of the Board (the
“Compensation Committee”) will review Executive’s Base Salary at least annually
and may increase but not decrease the then current annual rate.

 

B.            Bonus.

 

(i)            Bonus for 2007. The Executive’s annual bonus for the
calendar year ending December 31, 2007 will be no less than the amount the
Executive would have been entitled to receive pursuant to the terms of his 2007
LLC bonus opportunity. Such bonus will be determined by the Compensation
Committee and will be payable by the Company by March 15, 2008, subject to
Executive’s continuing employment.

 

(ii)           Annual Bonus after 2007. For each calendar year after 2007,
Executive shall he eligible for a target bonus opportunity of at least 75% of
Executive’s Base Salary for such calendar year, provided the Company achieves
performance targets established by the Compensation Committee. It is
anticipated that the annual bonus amount, if any, for a calendar year will be
determined by the Compensation Committee and paid by the Company by March 15 of
the following year. Except as otherwise provided by this Agreement, the
Executive must be employed by the Company on the day any bonus payment is due
and payable in order to receive said bonus payment. If the Company exceeds
established performance targets, the Compensation Committee may, in its sole
discretion, increase the amount of the Annual Bonus.

 

C.            Initial Equity Participation Awards. Contingent upon and immediately prior to
the Company IPO, Executive will hold fully vested stock appreciation rights
(“SARs”) with respect to shares of the Company’s common stock pursuant to the
conversion of the LLC equity appreciation rights held by the Executive
immediately prior to the merger of the LLC into the Company. In addition, at
the time of the Company IPO, the Company will make the following awards to the
Executive pursuant to the Company’s 2007 Stock Incentive Plan (the “Stock
Incentive Plan”): (1) SARs covering a number of shares equal to the difference
between 3% of the number of outstanding shares of Company common stock upon
completion of the Company IPO (determined on a fully diluted basis with regard
to SARs outstanding immediately

 

2

 

prior
to the Company IPO) and the number of shares of Company common stock covered by
the SARs held by the Executive immediately prior to the Company IPO, with a
base price per share equal to the Company IPO price per share, and (2) a
restricted stock award for a number of shares of Company common stock equal to
..24% of the aggregate number of outstanding shares of Company common stock upon
completion of the Company IPO (determined on a fully diluted basis with regard
to the number of shares authorized for issuance under the terms of the Stock
Incentive Plan in effect upon completion of the Company IPO). The newly awarded
SARs will vest in 36 equal monthly installments beginning on the last day of
the month next following the month in which the Company IPO is completed, and
the restricted stock award shall become vested on the third anniversary of the
date the Company IPO is completed, in each case subject to Executive’s continuing
employment on the applicable vesting date. Vesting of the SARs and the
restricted stock award will accelerate if and when Executive’s employment
terminates for any reason other than by the Company for “Cause” (as defined
below) or by the Executive without “Good Reason” (as defined below). The SARs
and the restricted shares will otherwise be subject to the terms and conditions
of the applicable award agreement and the Stock Incentive Plan except to the
extent inconsistent with the provisions hereof.

 

4.             Additional Benefits.

 

A.            Executive Benefits. During the Employment Term, Executive shall
be eligible to participate in such employee benefit plans as are generally
available to other senior executives of the Company.

 

B.            Paid Time Off. The Executive will be allowed to take up to
four weeks of vacation each year, and shall be eligible for such sick leave and
other paid time off in accordance with Company policies applicable to other
executives generally.

 

C.            Expense Reimbursement. The Company will pay or reimburse Executive
for reasonable expenses incurred by Executive in connection with the
performance of  his duties and
responsibilities under this Agreement, subject to presentation of vouchers and
compliance with generally applicable business expense reimbursement policies of
the Company.

 

5.             Termination.

 

A.            Termination for Cause. The Company may terminate Executive’s
employment for “Cause” if Executive:

 

(i)
is convicted of or pleads nolo contendre to a felony;

 

(ii)
commits fraud or a material act or omission involving dishonesty with respect
to the Company or any of its respective employees, customers or affiliates;

 

(iii)
willfully and repeatedly fails or refuses to carry out the material
responsibilities of Executive’s employment by the Company (except where due to
physical or mental incapacity);

 

3

 

(iv)
engages in willful misconduct, or a pattern of behavior which has had or is
reasonably likely to have a significant adverse effect on the Company;

 

(v)
willfully engages in any act or omission which is in material violation of
Company policy, including but not limited to engaging in insider trading
transactions or disseminating inside information; or

 

(vi)
commits a material breach of Executive’s material obligations under this
Agreement, including but not limited to Section 8.

 

A
decision to terminate the Executive’s employment for Cause must be made, if at
all, by the affirmative vote of a majority of the members of the Board (not
including Executive) at a meeting of the Board called and held for such purpose
(after reasonable notice to Executive and an opportunity for Executive,
together with counsel, to be heard before the Board) finding that, in the good
faith opinion of the Board, Executive engaged in conduct set forth above and
specifying the particulars thereof in reasonable detail. If the act or omission
giving rise to the termination for Cause is curable by Executive, the Board
will provide 30 days written notice to Executive of its intent to terminate
Executive for Cause, with an explanation of the reason(s) for the termination
for Cause, and if Executive cures the act or omission within the 30 day notice
period, the Board will rescind the notice of termination and Executive’s
employment will not be terminated for Cause at the end of the 30 day notice
period. If Executive has previously been afforded the opportunity to cure
particular behavior and successfully cured under this provision, the Board will
have no obligation to provide Executive with notice and an opportunity to cure
a recurrence of that behavior prior to a termination for Cause. Unless
Executive receives 30 days notice and an opportunity to cure under this
Section, Executive’s termination for Cause will be effective immediately upon
the Board’s mailing or transmitting written notice of such termination to
Executive. For purposes of this Section 5A., an action or inaction shall not be
treated as “willful misconduct” if authorized by the Board or taken in the good
faith belief that it was in, or not opposed to, the best interests of the
Company.

 

B.            Termination by Reason of Permanent Disability. In a manner consistent with the Americans
with Disabilities Act and the Family and Medical Leave Act, this Agreement may
be terminated at the Company’s option immediately upon notice to Executive if
Executive shall suffer a Permanent Disability. For purposes of this Agreement,
the term “Permanent Disability” shall mean the Executive’s inability to perform
the essential functions of his job under this Agreement, with or without
reasonable accommodation, for a period of 150 consecutive days or for an
aggregate of 180 days, whether or not consecutive, in any twelve (12) month
period, due to illness, accident or other physical or mental incapacity, as
determined by a duly licensed physician mutually agreed to by both the
Executive and the Company.

 

C.            Termination by Reason of Death. In the event of the Executive’s death, the
Executive’s employment shall be deemed to have terminated on the date of Executive’s
death.

 

4

 

D.            Voluntary Resignation. Executive may terminate this Agreement at
any time, subject to providing 90 days’ written notice to the Company. The
Company may waive such notice and/or set an earlier termination date, without
pay in lieu of notice.

 

E.             Termination without Cause. The Company may terminate Executive’s
employment under this Agreement at any time without Cause upon 90 days prior
written notice to Executive. The Company, at its sole discretion, may relieve
Executive of his active duties during the notice period. The Company may also
provide 90 days pay in lieu of notice. Executive’s termination without Cause
will be effective upon the expiration of the 90-day notice period. For purposes
of this Agreement, (1) a termination of employment by the Company that purports
to be for Cause, but is not in full compliance with all of the substantive and
procedural requirements relating to a termination for Cause under this
Agreement, shall be treated as a termination of employment without Cause; and
(2) the Executive will be deemed to have been terminated by the Company without
Cause if the term of this Agreement expires by reason of non-renewal by the
Company pursuant to Section 2.

 

F.             Termination for Good Reason The Executive may terminate his employment
under this agreement at any time for Good Reason upon the occurrence of any one
or more of the following acts or omissions which, if curable, is not cured
within 30 days after notice of the occurrence is provided by Executive: (1) any
action by the Company which results in a material diminution in Executive’s
position, authority, duties or responsibilities as Executive Vice President and
Chief Financial Officer of the Company (including status, offices, titles and
reporting requirements contemplated by this Agreement); (2) a material breach
by the Company of its obligations under this Agreement, including, without
limitation, a reduction of Executive’s Base Salary or target bonus opportunity
in violation of this Agreement; or (3) the Company’s requiring the Executive to
be based at any office location that is more than 50 miles from its current
headquarters in Warren, New Jersey, except for travel reasonably required in
connection with the performance of the Executive’s responsibilities hereunder.
Notwithstanding the foregoing, a re-assignment by the Company to one or more
other persons of the position and responsibilities of Corporate Secretary
and/or Treasurer will not be grounds for a Good Reason termination by the
Executive; and if a “Change in Control” occurs, the Executive will not have
“Good Reason” to terminate his employment under this Agreement merely by reason
of the fact that he no longer serves as the Chief Financial Officer of a
publicly traded company or merely because he reports to the senior executive
officer of a company that acquires the Company.

 

6.             Obligations of the Company
Upon Termination.

 

A.            Termination for Cause. In the event that the Executive’s
employment under this Agreement is terminated for Cause, the Company shall have
no obligation to pay the Base Salary or any other compensation provided under
this Agreement, to or for the benefit of the Executive for any period after the
effective date of such termination, or to pay the Target Bonus or any other
bonus or incentive compensation for the fiscal year in which such termination
occurs; provided, however, that the Company shall promptly provide: (i) all
base salary earned by the Executive through the effective date of such termination;
and (ii) any

 

5

 

benefits
under any plans of the Company in which the Executive is a participant, to the
full extent of the Executive’s rights under such plans.

 

B.            Termination by Reason of Death or Permanent
Disability. In the event
that the Executive’s employment under this Agreement terminates due to his
death or is terminated by the Company due to the Executive’s Permanent
Disability, the Company shall promptly provide to the Executive (or his estate
or other beneficiaries, as the case may be): (i) a cash payment equal to the
sum of any previously unpaid Base Salary earned by the Executive through the
date on which his employment terminates, any unpaid bonus earned by the
Executive for the year preceding the year in which his employment terminates,
and any accrued and unused vacation pay for the year in which his employment
terminates; (ii) any benefits under any plans of the Company in which the
Executive is a participant, to the full extent of the Executive’s (or his
beneficiaries’) rights under such plans; (iii) a cash payment equal to the
Executive’s Target Bonus for the year of termination, pro-rated for the number
of days Executive is employed during the calendar year in which his employment
terminates (“Pro Rata Bonus”); and (iv) accelerated vesting of outstanding
unvested stock options, SARs, restricted stock and other equity-based
compensation awards as if the Executive’s employment had continued through the
end of the year in which his employment terminates or, in the case of any such
award that is subject to “cliff vesting,” pro rata accelerated vesting based
upon the numerator of months in the vesting period that have elapsed as of the
date his employment terminates. Stock options and SARs that are or become
vested upon termination of the Executive’s employment due to death or Permanent
Disability will be exercisable for at least one year after the date of such
termination or, if earlier, until the expiration of the stated term of the award.

 

C.            Voluntary Resignation. In the event that the Executive voluntarily
resigns from his employment with the Company, the Company may, at its
discretion, continue the Executive’s employment with the Company for the full
duration of the 90-day notice period. In the event of said termination, the
Company shall have no obligation to pay the Base Salary or any other
compensation provided under this Agreement to or for the benefit of the
Executive for any period after the end of said notice period; provided, however,
that the Company shall promptly provide: (i) all Base Salary earned by the
Executive through the date of such termination; (iii) any unpaid bonus earned
by the Executive for the year preceding the year in which his employment
terminates, and (iii) any benefits under any plans of the Company in which
Executive is a participant, to the full extent of the Executive’s rights under
such plans.

 

D.            Termination by Company Without Cause or by
Executive for Good Reason—Unrelated to Change in Control. In the event that the Executive’s
employment under this Agreement is terminated by the Company without Cause
(pursuant to Section 5E) or by the Executive for Good Reason (pursuant to
Section 5F), the Company shall provide to the Executive: (i) a cash payment equal
to the sum of any previously unpaid Base Salary earned by the Executive through
the date on which his employment terminates, any unpaid bonus earned by the
Executive for the year preceding the year in which his employment terminates,
and any accrued and unused vacation pay for the year in which his employment
terminates; (ii) any benefits under any plans of the Company in which the
Executive is a participant, to the full extent of the Executive’s (or his
beneficiaries’) rights under such plans; (iii) a cash payment

 

6

 

equal
to the Executive’s Pro Rata Bonus for the year of termination; (iv) monthly
payments for a period (the “Severance Period”) of 18 months following the
termination of Executive’s or, if longer, until the expiration of the
Employment Term, equal to 1/12 of the sum of Executive’s Base Salary and Target
Bonus (in each case determined without regard to any reduction prior to the
termination of Executive’s employment); (v) continuing coverage under the
Company’s group health and life insurance plans in which the Executive is a
participant immediately before the termination of his employment (or any
successor plans), at the same levels and on the same terms and conditions as
are provided to similarly situated executives during the Severance Period (or,
if such coverage is not permitted by law or the applicable plan, the cash
equivalent of such coverage, grossed up if and to the extent necessary to
negate the tax impact of such payment and to negate the gross-up payment); and
(vi) full and immediate vesting of outstanding unvested stock options, SARs,
restricted stock and other equity-based compensation awards, with any such
stock options and SARs remaining exercisable for at least one year after the date
the Executive’s employment terminates or, if earlier, until the expiration of
the stated term of the award. The payments and benefits described in parts (iv)
– (vi) of this subsection shall be conditioned upon and subject to the
Executive’s continuing compliance with his obligations under Section 8 of this
Agreement, and the Executive’s execution and delivery of a general release
substantially in the form annexed hereto as Exhibit A.

 

E.             Termination in Conjunction with a Change in
Control.

 

1.             Severance Protection Upon Involuntary
Termination. In the event
that, during the period beginning one hundred and eighty (180) days before the
effective date of a Change in Control (as defined below) and ending twenty four
(24) months following the effective date of a Change in Control, the
Executive’s employment is terminated by the Company without Cause (pursuant to
Section 5E) or by the Executive for Good Reason (pursuant to Section 5F), the
Executive shall be entitled to the payments and benefits described in the
preceding Section 6D except (1) in lieu of the severance payments described in
part (iv) of Section 6D, Executive will be entitled to receive an immediate
cash payment of an amount equal to 2.75 times the sum of the Executive’s Base
Salary and Target Bonus (in each case determined without regard to any
reduction prior to the termination of Executive’s employment); and (2) the
benefit continuation period described in part (v) of Section 6D will be 33
months from the date the Executive’s employment terminates. The payments and
benefits described in the preceding sentence and in parts (v) and (vi) of
Section 6D and the single sum severance payment described in the preceding
sentence shall be conditioned upon and subject to the Executive’s continuing
compliance with his obligations under Section 8 of this Agreement, and the
Executive’s execution and delivery of a general release substantially in the
form annexed hereto as Exhibit A. 

 

2.             Definition of Change in Control. For the purposes of this Agreement, a “Change
in Control” shall be deemed to have occurred if (a) any person (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (“Exchange Act”)) becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of the
combined voting power of the then outstanding voting securities of the Company;
or (b) there shall have been consummated a consolidation, merger or
reorganization of the Company, unless (1) the stockholders of the Company
immediately before

 

7

 

such
consolidation, merger or reorganization own, directly or indirectly, at least a
majority of the combined voting power of the outstanding voting securities of
the corporation or other entity resulting from such consolidation, merger or
reorganization, (2) individuals who were members of the Board immediately prior
to the execution of the agreement providing for such consolidation, merger or
reorganization constitute a majority of the board of directors of the surviving
corporation or of a corporation directly or indirectly beneficially owning a
majority of the voting securities of the surviving corporation, and (3) no
person beneficially owns more than 40% of the combined voting power of the then
outstanding voting securities of the surviving corporation (other than a person
who is (A) the Company or a subsidiary of the Company, (B) an employee benefit
plan maintained by the Company, the surviving corporation or any subsidiary, or
(C) the beneficial owner of 40% or more of the combined voting power of the
outstanding voting securities of the Company immediately prior to such
consolidation, merger or reorganization); or (c)  individuals who, as of the date following the
IPO Date, constitute the entire Board (the “Incumbent Board”) cease for any
reason to constitute a majority of the Board, provided that any individual
becoming a director subsequent to the IPO Date whose appointment or nomination
for election by the Company’s stockholders, was approved by a vote of at least
two-thirds of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board; or
(d) the stockholders of the Company approve the complete liquidation or
dissolution of the Company, or a sale or other disposition of all or
substantially all of the assets of the Company (other than to an entity
described in (b) above).

 

F.             409A Compliance. The Company shall take all reasonable
actions to ensure that none of the amounts earned or payable under this
Agreement and the Plan will violate Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”). To the extent necessary to comply with the
restriction in Section 409A(a)(2)(B) of the Code concerning payments to
“specified employees,” any amounts payable on account of the Executive’s
separation from service shall be paid (or commence to be paid in the case of
any payments to be made in installments) on the first business day of the
seventh month following Executive’s date of termination (or death, if earlier)
and the first such payment shall include the cumulative amount of any payments
that would have been made prior to such date if not for such restriction,
together with interest at an annual rate equal to the minimum rate required by
the Code in order to avoid the imputation of interest on short-term loans
between employers and employees.

 

7.             Excise Tax Gross Up. If Executive becomes entitled to one or more
payments (with a “payment” including, without limitation, payments in
connection with a Change In Control or the vesting of a stock option or other
equity award or other non-cash benefit or property), whether pursuant to the
terms of this Agreement or any other plan, arrangement, or agreement with the
Company or any affiliated company (the “Total Payments”), which are or become
subject to the tax imposed by Section 4999 of the Code or a successor provision
of the Code (the “Excise  Tax”), the
Company shall pay to Executive at the time specified below an additional amount
(the “Gross-up Payment”) (which shall include, without limitation,
reimbursement for any penalties and interest that may accrue in respect of such
Excise Tax) such that the net amount retained by Executive, after reduction for
any Excise Tax (including any penalties or interest thereon) on the Total
Payments and any federal, state and local income or employment tax and Excise
Tax on the Gross-up Payment provided for by this

 

8

 

Section,
but before reduction for any federal, 
state, or local income or employment tax on the Total Payments, shall be
equal to the sum of (a) the Total Payments, and (b) an amount equal to the
product of any deductions by the Executive disallowed for federal, state, or
local income tax purposes because of the inclusion of the Gross-up Payment in
Executive’s adjusted gross income multiplied by the highest applicable marginal
rate of federal, state, or local income taxation, respectively, for the
calendar year in which the Gross-up Payment is to be made. For purposes of
determining whether any of the Total Payments will be subject to the Excise Tax
and the amount of such Excise Tax:

 

(i)            The Total Payments shall be treated as
“parachute payments” within the meaning of Section  280G(b)(2) of the Code, and all “excess
parachute payments” within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless, and except to the extent that,
in the written opinion of independent compensation consultants, counsel or
auditors of nationally recognized standing (“Independent  Advisors”) selected by the Company and
reasonably acceptable to Executive, the Total Payments (in whole or in part) do
not constitute parachute payments, or such excess parachute payments (in whole
or in part) represent reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4) of the Code in excess of the base
amount within the meaning of Section 280G(b)(3) of the Code or are otherwise
not subject to the Excise Tax;

 

(ii)           The amount of the Total Payments which shall be treated as subject to
the Excise Tax shall be equal to the lesser of (A) the total amount of the
Total Payments or (B) the total amount of excess parachute payments within the
meaning of Section 280G(b)(1) of the Code (after applying clause (i) above);
and

 

(iii)          The value of any non-cash benefits or any deferred payment or benefit
shall be determined by the Independent Advisors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.

 

For
purposes of determining the amount of 
the Gross-up Payment, Executive shall be deemed (A) to pay federal
income taxes at the highest marginal rate of federal income taxation for the
calendar year in which the Gross-up Payment is to be made; (B) to pay any
applicable state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Gross-up Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and  local taxes
if paid in such year (determined without regard to limitations on deductions
based upon the amount of Executive’s adjusted gross income); and (C) to have
otherwise allowable deductions for federal, state, and local income tax
purposes at least equal to those disallowed because of the inclusion of the
Gross-up Payment in Executive’s adjusted gross income. In the event that the
Excise Tax is subsequently determined to be less than the amount taken into
account hereunder at the time the Gross-up Payment is made, Executive shall
repay to the Company at the time that the amount of such reduction in Excise
Tax is finally determined (but, if previously paid to the taxing authorities, not
prior to the time the amount of such reduction is refunded to Executive or
otherwise realized as a benefit by Executive) (the “Repayment Date”) the
portion of the Gross-up Payment that would not have been paid if such Excise
Tax had been applied in initially calculating the Gross-up Payment, plus
interest on the amount of such repayment at the rate

 

9

 

provided
in Section 1274(b)(2)(B) of the Code from the Repayment Date until paid. In the
event that the Excise Tax is determined to exceed the amount taken into account
hereunder at the time the Gross-up Payment is made (including by reason of any
payment the existence or amount of which cannot be determined at the time of
the Gross-up Payment), the Company shall make an additional Gross-up Payment in
respect of such excess (plus any interest and penalties payable with respect to
such excess) at the time that the amount of such excess is finally determined.

 

The
Gross-up Payment provided for above shall be paid to the Executive (or to the
IRS on behalf of the Executive) on the 30th day (or such earlier date as the
Excise Tax becomes due and payable to the taxing authorities) after it has been
determined that the Total Payments (or any portion thereof) are subject to the
Excise Tax; provided, however, that if the amount of such Gross-up Payment or
portion thereof cannot be finally determined on or before  such day, the Company shall pay to Executive
on such day an estimate, as determined by the Independent Advisors, of the
minimum amount of such payments and shall pay the remainder of such payments
(together with interest at the rate provided in Section 1274(b)(2)(B) of the
Code), as soon as the amount thereof can be determined. In the event that the
amount of the estimated payments exceeds the amount subsequently determined to
have been due, such excess shall constitute a loan by the Company to Executive,
payable on the fifth day after demand by the Company (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code). If more than one
Gross-up Payment is made, the amount of each Gross-up Payment shall be computed
so as not to duplicate any prior Gross-up Payment subject to the Company’s
compliance with the provisions of this Section. The Company shall have the
right to control all proceedings with the Internal Revenue Service that may
arise in connection with the determination and assessment of any Excise Tax
and, at its sole option, the Company may pursue or forego any and all
administrative appeals, proceedings, hearings, and conferences with any taxing
authority in respect of such Excise Tax (including any interest or penalties
thereon); provided, however, that the Company’s control over any such
proceedings shall be limited to issues with respect to which a Gross-up Payment
would be payable hereunder, and Executive shall be entitled to settle or
contest any other issue raised by the Internal Revenue Service or any other
taxing authority. Executive shall cooperate with the Company in any proceedings
relating to the determination and assessment of any Excise Tax and shall not
take any position or action that would materially increase the amount of any
Gross-up Payment hereunder.

 

8.             Covenants of the Executive.

 

In
order to induce the Company to enter into this Agreement and employ the
Executive hereunder, the Executive hereby covenants and agrees as follows. For
all purposes under this Section 8 herein, the Company’s “business” shall mean
film based delivery systems to deliver drug actives, nutraceuticals,
cosmaceuticals or flavors, and soluble film based packaging systems and such
other lines of business in which the Company is actively engaged or actively
pursuing and with respect to which Executive has oversight responsibility or is
otherwise substantively involved.

 

A.            Non-Competition. During the Employment Term, including any
extensions thereof, and for a period of 18 months immediately following the
termination of

 

10

 

Executive’s
employment under this Agreement for any reason other than death (the
“Restrictive Period”), except as provided herein, Executive shall not directly
or indirectly: (a) engage in or in any manner be connected or concerned,
whether as an officer, director, stockholder, partner, owner, employee,
advisor, creditor, or otherwise with the development, operation, management, or
conduct of any business in the United States that competes with the business of
the Company being conducted at the time of such termination; (b) solicit or otherwise
attempt to divert business from or interfere in the Company’s relationship with
any supplier of the Company or any customer served by the Company or and
potential customer identified by Company during the period of Executive’s
employment hereunder; or (c) solicit, hire or otherwise interfere with the
Company’s relationship with any person then or previously employed by Company;
provided, however, that, after the termination of Executive’s employment,
Executive shall not be bound by the Covenant set forth in this subparagraph
following a material breach by the Company of any of its obligations to the
Executive hereunder or in the event of the cessation or dissolution of the
Company’s business. As used herein, “cessation or dissolution” means total liquidation
of the Company and does not include a cessation of business due to any Change
in Control. Nothing contained herein shall prohibit Executive from owning up to
3% of the stock of a publicly traded company that competes with the business of
the Company or, following the termination of his employment with the Company,
prevent the Executive from being employed by or otherwise affiliated with a
line of business of another company that engages in multiple lines of business
so long as the Executive is not employed by, does not provide services with
respect to and is not otherwise involved in the line or lines of business of
such other company that compete with the Company.

 

B.            Confidentiality. During the Employment Term, and following
the termination of this Agreement for any reason for as long as the information
remains confidential, Executive shall not make any use, for his own benefit or
for the benefit of a business or entity other than Company, of any verbal or
written secret or confidential information. Such confidential information shall
include, but not be limited to, customer lists, trade secrets, sales, marketing
or consignment information, vendor lists or operational resource information,
forms, processes or procedures, budget and financial statements or information,
files, records, documents, compilation of data, engineering drawings, computer
print-outs, or any other data of or pertaining to the Company, its business,
customers and financial affairs, or its services not generally known within the
Company’s trade and which was acquired by him during his affiliation with the
Company. Executive shall not remove from the Company premises or retain without
the Company’s written consent any of the Company’s confidential information as
defined herein, or copies thereof or extracts therefrom. Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret or
confidential information, knowledge, or data of the Company or its business or
production operations obtained by Executive during his employment by the
Company, which shall not be generally known to the public or recognized as
standard practice (whether or riot developed by Executive) and shall not,
during his employment hereunder or after the termination of such employment, communicate
or divulge any such information, knowledge or data to any person, firm or
corporation other than the Company or persons, firms or corporations designated
by the Company. Executive acknowledges that this information is treated as
confidential by the Company, that the Company takes meaningful steps to protect
the confidentiality of this information, and that Company has at all times
directed Executive to maintain the confidentiality of this information.
Immediately upon termination of

 

11

 

this
Agreement, Executive shall return all of the Company’s property to it,
including any and all copies of said property.

 

C.            Ownership of Work Product. Executive agrees that Company shall own all
intellectual property including trade secrets, patents, patentable inventions,
discoveries and improvements that relate to Company’s business that Executive
conceives, develops during the period of his employment with the Company or
delivers to the Company while performing services pursuant to this Agreement
(“Work Product”). Executive further agrees to deliver to the Company, and that
the Company shall thereafter own for all purposes, all Work Product conceived
or developed by the Executive relating to the business of the Company which
does not otherwise belong to Employee’s former employer or to which the former
employer has no legal right or claim. Executive hereby irrevocably extinguishes
for the benefit of the Company and its assigns any moral right to the Work
Product recognized by applicable law. All Work Product shall be considered a
work made for hire by Executive and owned by Company. If any of the Work
Product may not, by operation of law, be considered work made for hire by
Executive for Company, or if ownership of all right, title and interest of the
intellectual property rights therein shall not otherwise vest exclusively in
the Company, Executive agrees to assign, and upon creation thereof
automatically assign, without further consideration, the ownership of all trade
secrets, copyrights, patentable inventions, and other intellectual property
rights therein to Company, its successors and assigns. Company, its successors,
and assigns, shall have the right to obtain and hold in its or their own name
copyrights, patents, registrations and any other protection available in the
foregoing. For purposes hereof, a “trade secret” shall mean any information,
including, but not limited to, technical or nontechnical data, formulae,
patterns, compilations, programs, devices, methods, techniques, drawings.
processes, financial data, financial plans, product plans or lists of actual or
potential customers or suppliers that derive economic value, actual or
potential, from not being generally known to, and not being readily ascertainable
by proper means by, other persons who can obtain economic value from their
disclosure or use and are the subject of efforts that are reasonable under the
circumstances to maintain their secrecy. Executive agrees to perform, upon the
reasonable request of Company and at no cost to the Company (other than travel
out of pocket costs where applicable), during or after the period(s) that this
Agreement remains in effect, such further acts as may be necessary or desirable
to transfer, perfect and defend the Company’s ownership of Work Product, or to
enforce the Company’s Work Product against third parties. When requested,
Executive shall promptly and at no cost to the Company (other than travel out
of pocket costs, where applicable): (a) execute, acknowledge and deliver any
requested affidavits and documents of assignment and conveyance; (b) obtain and
aid in the enforcement of copyright and, if applicable, patents with respect to
the Work Product in any countries; (c) provide testimony in connection with any
enforcement proceeding or any proceeding affecting the right, title or interest
of Company in any Work Product; and (d) perform any other acts deemed necessary
or desirable to carry out the purposes of this Agreement.

 

D.            Inventions. All discoveries, designs, improvements, ideas and inventions, whether
patentable or not, relating to (or suggested by or resulting from) products,
services, or other technology of Company or relating to (or suggested by or
resulting from) methods or processes used or usable in connection with the
business of Company that have been, or may be, conceived, developed or made by
Executive during the Employment Term (hereinafter

 

12

 

“Inventions”),
either solely or jointly with others, shall automatically become the sole
property of Company. Executive shall immediately disclose to Company all such
Inventions and shall, without additional compensation, execute all assignments
and other documents deemed necessary by Company to perfect Company’s title
thereto, or to the patents issued thereon, or to otherwise secure and protect
Company’s property rights therein. These obligations shall continue beyond the
termination of Executive’s employment with respect to Inventions conceived,
developed or made by Executive during employment with Company. The Company
acknowledges and agrees that the provisions of this paragraph shall not apply
to any invention for which no equipment, supplies, facilities or trade secret
(or proprietary) information of Company is used by Executive and which is
developed entirely on Executive’s own time, unless (a) such invention related
to the business of Company or to Company’s actual or demonstrably anticipated
research or development; or (b) such invention results from any work performed
by Executive for Company.

 

E.             Acknowledgment. Executive acknowledges that all of the
restrictions set forth in this Section entitled “Covenants of the Executive”
are reasonable in scope, both individually and in the aggregate, and essential
to the preservation of Company’s business and proprietary interests and that
the enforcement thereof will not in any manner preclude Executive, in the event
of Executive’s termination of employment with Company for any reason, from
becoming gainfully employed in such manner and to such extent as to provide a
standard of living for himself, the members of his family, and those dependent
upon him of at least the sort and fashion to which he and they have become
accustomed and may expect. The Company and the Executive further agree that if
any particular provision or portion of this Section 8 shall be adjudicated to
be invalid or unenforceable, such adjudication shall apply only with respect to
the operation of such provision in the particular jurisdiction in which such
adjudication is made. The Company and Executive also agree that in the event
that any restriction herein shall be found to be void or unenforceable if some
part or parts thereof were deleted or the period or area of application
reduced, such restriction shall apply with such modification as may be
necessary to make it valid and enforceable to the fullest extent possible
consonant with applicable law.

 

G.            Representations and Warranties. Executive represents and warrants to the
Company as follows: (a) Executive is under no contractual or other restriction
or obligation which may conflict with or be inconsistent with the execution of
this Agreement or with the performing of any duties for Company, or any other
rights of Company; (b) neither Company nor any of its affiliates nor any of
their respective officers, directors, employees, agents or employees has
requested that Executive communicate or otherwise make available to any such
parties at any time any proprietary information, data, trade secrets, or other
confidential information belonging to Executive’s former employers or others.

 

H.            Severability. All of the covenants of Executive contained
in this Section entitled “Covenants of the Executive” shall each be construed
as an agreement independent of any other provision in this Agreement, and the
existence of any claim or cause of action of Executive against Company, whether
predicated on this Agreement or otherwise, shall not constitute a defense to
the enforcement by Company of such covenants. Both parties hereby expressly
agree that it is not the intention of either party to violate any public
policy, statutory or

 

13

 

common
law. If any sentence, paragraph, clause or combination of the same of this Agreement
is in violation of the law of any state where applicable, such sentence,
paragraph, clause or combination of the same shall be void in the jurisdictions
where it is unlawful, and the remainder of such paragraph and this Agreement
shall remain binding on the parties to the extent that it may be lawfully done
under existing applicable laws. In the event that any part of any covenant of
this Agreement is determined by a court of law to be overly broad thereby
making the covenant unenforceable, the parties hereto agree, and it is their
desire that such court shall substitute a judicially enforceable limitation in
its place, and that as so modified the covenant shall be binding upon the
parties as if originally set forth herein.

 

I.              Remedies. The Executive agrees that irreparable harm would result from any
breach by Executive of the covenants of this Section 8 in particular, and this
Agreement in general, and that monetary damages alone would not provide the
Company adequate relief for any such breach. Accordingly, if Executive breaches
any covenant in this Section 8, the parties acknowledge that equitable or
injunctive relief in favor of the Company is a proper remedy, and nothing in
this Agreement shall be construed as precluding the Company from seeking such
equitable or injunctive relief in a court of competent jurisdiction for
Executive’s violations of Section 8. Any award of equitable or injunctive
relief shall not preclude the Company from seeking or recovering any lawful
compensatory damages that may have resulted from a breach of the covenants of
this Agreement. Any waiver or failure to seek enforcement or remedy for any
breach or suspected breach of any covenant of Executive in this Agreement shall
not be deemed a waiver of such provision in the future. Furthermore, the
existence of any claim of Executive against the Company, whether based upon
this Agreement or otherwise, shall not operate as a defense to the Company’s
enforcement of any provision of this Agreement. Proceedings seeking equitable
and injunctive relief to enforce the terms of this Section 8 may be brought in
any court of competent jurisdiction.

 

9              Indemnification. Subject to the Company’s by-laws, to the
fullest extent allowed or permitted under any provision of applicable law, the
Company shall indemnify Executive against any losses, claims, damages or
liabilities incurred by Executive arising out of any claim based upon acts
performed or omitted to be performed by Executive in connection with his
employment with the Company.

 

10.           Attorneys’ Fees. In any action brought by any party under
this Agreement to enforce any of its terms, or any appeal therefrom, each party
shall bear its own costs and expenses, including its own attorneys’ fees;
provided, however, that the Executive (or his beneficiary, as the case may be)
will be entitled to reimbursement for reasonable costs and expenses, including
reasonable attorneys’ fees, with respect to such action if and to the extent
that the Executive (or beneficiary) is the prevailing party.

 

11.           Cooperation. Executive agrees that, after the termination
of his employment, he shall cooperate on a reasonable basis in the truthful and
honest prosecution and/or defense of any claim in which the Company, its
affiliates and/or its subsidiaries may have an interest (subject to reasonable
limitations and the Executive’s other commitments concerning time and place),
which may include, without limitation, making himself available on a

 

14

 

reasonable
basis to participate in any proceeding involving the Company, its affiliates
and/or its subsidiaries, appearing for depositions and testimony without
requiring a subpoena, and producing and/or providing any documents or names of
other persons with relevant information. The Company agrees to reimburse
Executive for all expenses reasonably incurred by him and to pay reasonable
compensation to Executive for and in connection with services provided by him
pursuant to this section.

 

12.           Travel Restrictions. As is reasonable, Executive has the right
to refuse travel to destinations deemed politically unstable or otherwise
hostile and/or those that may represent a danger to the Executive’s health and
well-being.

 

13.           Notices. Any notices permitted or required under
this Agreement shall be deemed given upon the date of personal delivery or
forty-eight (48) hours after deposit in the United States mail, postage fully
paid, certified mail, return receipt requested, addressed to the following
address:

 

	
   

  	
  If
  to the Company:

  	
  Chairman
  of the Board of Directors

  
	
   

  	
   

  	
  c/o
  MonoSol Rx, Inc.

  
	
   

  	
   

  	
  30
  Technology Drive

  
	
   

  	
   

  	
  Warren
  Township, NJ 07059

  
	
   

  	
   

  	
   

  
	
   

  	
  With
  copies to:

  	
  Compensation
  Committee Chairperson

  
	
   

  	
   

  	
  c/o
  MonoSol Rx, Inc.

  
	
   

  	
   

  	
  30
  Technology Drive

  
	
   

  	
   

  	
  Warren
  Township, NJ 07059; and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  John
  Cochran

  
	
   

  	
   

  	
  201
  Main Street, Suite 1900

  
	
   

  	
   

  	
  Fort
  Worth, Texas 76102

  
	
   

  	
   

  	
   

  
	
   

  	
  If
  to the Executive:

  	
  Keith
  J. Kendall

  
	
   

  	
   

  	
  195
  Beaumonte Way

  
	
   

  	
   

  	
  Bridgewater,
  NJ 08807

  

 

Either
party may change the address to which notices to such party shall be delivered
personally or mailed by giving notice thereof to the other party hereto.

 

14.           Venue; Jurisdiction. The validity, construction, interpretation,
and enforceability of this Agreement shall be determined and governed by the
laws of the State of New Jersey without giving effect to the principles of
conflicts of law. For the purpose of litigating any dispute that arises under
this Agreement, the parties hereby consent to exclusive jurisdiction of, and
agree that such litigation shall be conducted in, any state or federal court located
in the State of New Jersey.

 

15

 

15.           Binding Effect; Assignment. Executive shall not, without the prior
written consent of the Company, assign, transfer, or otherwise convey this
Agreement, or any right or interest herein. This Agreement, and all rights and
obligations of the Company or any of its successors, may be assigned or
otherwise transferred to any of its successors and shall be binding upon and
inure to the benefit of its successors. As used herein, the term “successor”
shall mean any person, corporation or other entity that, by merger,
consolidation, purchase of stock, assets, liquidation, voluntary or involuntary
assignment, or otherwise, acquires all or a substantial part of the assets of
the Company or succeeds to one or more lines of business of the Company.

 

16.           Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements, understandings and arrangements, both oral
and written, between the parties hereto with respect to such subject matter, it
being understood that this Agreement shall not supersede the Executive’s
existing employment agreement with LLC unless and until the Executive’s employment
by the Company pursuant to this Agreement becomes effective in accordance with
Section 2 hereof. This Agreement may not be modified, amended, altered or
rescinded in any manner, except by written instrument signed by all of the
parties hereto; provided, however, that any waiver by either party with respect
to any provision hereof, or the breach of any provision hereof by the other
party, need be signed only by the party waiving such provision or breach; and
provided, further, that the waiver by either party hereto of a breach or
compliance with any provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or compliance.

 

17.           Severability. In case any one or more of the provisions
of this Agreement shall be held by any court of competent jurisdiction to be
illegal, invalid or unenforceable in any respect, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it is held to be illegal, invalid, or unenforceable,
shall not he affected thereby.

 

I8.            Section Headings  The
section headings contained in this Agreement are for reference purposes only
and shall not affect in any manner the meaning or interpretation of this
Agreement.

 

19.           Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.

 

[The remainder of this page is intentionally left blank.]

 

16

 

20.           Survival. The provisions of Sections 6-11 of this
Agreement shall survive any termination of this Agreement and the termination
of Executive’s employment by either party for any reason.

 

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

 

	
   

  	
  MONOSOL
  RX, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John S. Cochran

  
	
   

  	
   

  
	
   

  	
  MONOSOL
  RX, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John S. Cochran

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Keith J. Kendall

  
	
   

  	
  Keith
  J. Kendall

  

 

17

 

Execution Copy

 

EXHIBIT A

GENERAL RELEASE

 

In
exchange for certain payments and benefits to be provided to me by MonoSol Rx,
Inc. pursuant to the Employment Agreement dated as of                    ,
2007, between the undersigned executive (the “Executive”), Monosol LLC and
MonoSol Rx, Inc., the Executive hereby knowingly and voluntarily waives,
releases and discharges MonoSol Rx, Inc., its predecessors, successors, parent
corporations, subsidiaries, affiliates and each of their employees, officers
and directors, agents, trustees, and fiduciaries (the “Company”) from any and
all claims, liabilities, demands, and causes of action, which he may have or
claim to have against the Company, including any and all claims arising out of
or relating in any way to the Executive’s employment and/or separation of
employment from the Company. This General Release specifically waives and
releases all rights, claims, causes of action, demands, and liabilities which
may arise up to and including the date the Executive signs this General
Release. This General Release does not, however, waive or release any rights or
claims which may arise after the date the Executive signs this General Release.

 

This
General Release of claims includes, but is not limited to:

 

a.                                       all State and Federal statutory claims
including, but not limited to, claims arising under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act, the Older Worker
Benefit Protection Act, the Americans with Disabilities Act, the Family and
Medical Leave Act, the Sarbanes-Oxley Act, the Employee Retirement Income
Security Act, the Fair Labor Standards Act, the Worker Adjustment and
Retraining Notification Act, the New Jersey Law Against Discrimination, the New
Jersey Civil Rights Act, the New Jersey Civil Union Act, the New Jersey Wage
and Hour Law, the New Jersey Conscientious Employee Protection Act, the New
Jersey Domestic Partnership Act, and the New Jersey Family Leave Act;

 

b.                                      All claims arising under the United States
and New Jersey Constitutions;

 

c.                                       All claims arising under any Executive Order
or derived from or based upon any State or Federal regulations;

 

d.                                      All common law claims including, but not
limited to, claims for wrongful or constructive discharge, public policy
claims, retaliation claims, claims for breach of an express or implied
contract, claims for breach of an implied covenant of good faith and fair
dealing, intentional infliction of emotional distress, defamation, fraud,
conspiracy, loss of consortium, tortious interference with contract or
prospective economic advantage, promissory estoppel and negligence;

 

e.                                       All claims for any compensation including,
but not limited to, back wages, front pay, overtime pay, bonuses or awards,
fringe benefits, reinstatement, retroactive seniority, pension benefits, or any
other form of economic loss;

 

f.                                         All claims for personal injury including, but
not limited to, physical injury, mental anguish, emotional distress, pain and
suffering, embarrassment,

 

1

 

humiliation, damage to name or reputation, liquidated damages, and
punitive damages; and

 

g.                                      All claims for costs and attorneys’ fees.

 

The
Executive hereby acknowledges that the Company is advising him in writing that
he should consult with an attorney prior to executing this General Release. The
Executive hereby states that he has had the opportunity to discuss this General
Release with whomever the Executive wished, including an attorney of his own
choosing. The Executive further states that he has had the opportunity to read,
review, and consider all of the provisions of this General Release; that the
Executive understands its provisions and its binding effect on him; and that
the Executive is entering into this General Release freely, voluntarily, and
without duress or coercion. The Executive acknowledges that he has not relied
upon the Company’s employees, officers or directors, counsel, agents or
accountants for any legal, tax or other advice, and the Executive has, to the
extent the Executive deems necessary, consulted with his own advisors as to
these matters.

 

The
Executive represents that he has not filed any grievance, charge, claim, or
complaint of any kind seeking personal recovery or personal injunctive relief
against the Company or any of its owners, officers, directors, employees or
agents, with respect to any matter, including but not limited to, his
employment with the Company and/or the separation of that employment. Nothing
contained in this paragraph shall prohibit the Executive from (a) bringing any
action to enforce the terms of this Agreement and General Release; (b) filing a
timely charge or complaint with the Equal Employment Opportunity Commission
(“EEOC”) regarding the validity of this Agreement and General Release; (c)
filing a timely charge or complaint with the EEOC or participating in any
investigation or proceeding conducted by the EEOC regarding any claim of
employment discrimination (although the Executive has waived any right to
personal recovery or personal injunctive relief in connection with any such
charge or complaint).

 

The
Executive understands that he has twenty-one (21) calendar days within which to
consider this General Release before signing it. The Executive also understands
that he is free to use as much of the twenty-one (21) calendar day period as he
wishes or considers necessary before deciding to sign this General Release. The
Executive may revoke his signature of this General Release within seven (7)
calendar days of signing it by delivering written notice of revocation to
Theresa Wood, Director of Human Resources, 30 Technology Drive, Warren, New
Jersey 07059. If Executive has not revoked his signature of this Agreement by
written notice delivered within the seven (7) calendar day period, it becomes
effective immediately thereafter.

 

The
Executive understands that his failure or refusal to execute this General
Release or his timely revocation of this General Release will result in
forfeiture of any severance payments and benefits.

 

BY
SIGNING THIS GENERAL RELEASE, EXECUTIVE ACKNOWLEDGES THAT:

 

HE
HAS READ IT;

 

HE
UNDERSTANDS IT AND KNOWS HE IS GIVING UP IMPORTANT RIGHTS;

 

HE
AGREES WITH EVERYTHING IN IT;

 

2

 

HE
HAS BEEN ADVISED TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS GENERAL
RELEASE; AND

 

HE
HAS SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY.

 

 

	
   

  	
   

  
	
   

  	
  Executive

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MONOSOL
  RX, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  

 

3

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