Document:

Exhibit 10.18

 

MONOSOL Rx, INC. 

RESTRICTED STOCK AGREEMENT

 

AGREEMENT made as of the         
day of                           ,
20    , between Monosol Rx, Inc. (the “Company”) and                                     
(the “Executive”), pursuant to the Monosol Rx, Inc. 2007 Stock Incentive Plan
(the “Plan”).

 

1.             Restricted
Stock Award. The Company has awarded             
shares of its common stock (the “Shares”) to the Executive subject to the
provisions of this Agreement and the Plan. Inconsistencies between this
Agreement and the Plan will be governed by the applicable provisions of the
Plan. The Executive acknowledges receipt of a copy of the Plan.

 

2.             Vesting.

 

(a)           General. Except
as otherwise provided, the Shares will become vested (if at all) [upon the               
anniversary of the date of this Agreement/in accordance with the following
vesting schedule/upon attainment of the performance objectives set forth
below], provided the Executive remains continuously employed by the Company or
a subsidiary of the Company through the applicable vesting date[s].

 

(b)           Accelerated Vesting.
Any outstanding unvested Shares will become vested (1) upon the termination of
the Executive’s employment with the Company and its subsidiaries by reason of
the Executive’s death or “disability” (as defined below), or (2) immediately
prior to the occurrence of a “change in control” (as defined below), provided
that the Executive remains in the continuous employ of the Company or a
subsidiary until, or is terminated by the Company or a subsidiary within six
months before, such change in control (other than a termination for cause, as
determined in good faith by the Company’s board of directors).

 

(c)           Definitions. The
term “disability” means the inability of the Executive to perform the principal
duties of the Executive’s employment by reason of a physical or mental illness
or injury that is expected to last indefinitely or result in death, as
determined by a duly licensed physician selected by the Company. The term “change
in control” means a change in the ownership or effective control of the Company
or in the ownership of a substantial portion of the assets of the Company
within the meaning of Section 409A of the Internal Revenue Code of 1986.

 

3.             Termination
of Employment or Service. Except as otherwise provided in Section 2 above,
in the event of the termination of the Executive’s employment with the Company
and its subsidiaries, the Executive’s interest in any unvested Shares then held
by the Executive will be immediately forfeited and such Shares will be canceled
on the books of the Company.

 

4.             Restrictions
on Transfer. Unvested Shares held by the Executive under this Agreement may
not be sold, assigned, transferred,
pledged, hypothecated, encumbered or dispose of in any way, whether by
operation of law or otherwise, and may not be subjected to execution,
attachment or similar process, and any attempt to do so will be null and void.

 

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5.             Dividends
and Voting Rights. If cash dividends are paid by the Company with respect
to its common stock, the amount of the dividends payable with respect to
unvested Shares covered by this Agreement will be credited to a bookkeeping
account in the name of the Executive and will be paid by the Company to the
Executive if, as and when the corresponding Shares become vested. If Shares
covered by this Agreement are forfeited, then any dividends with respect to
such Shares that are credited to the Executive’s account will thereupon be
forfeited as well. The Executive will be entitled to exercise voting rights
with respect to the unvested Shares held by the Executive under this Agreement.

 

6.             Issuance
of Shares. The Executive is the record owner of the Shares on the Company’s
books, subject to the vesting conditions and restrictions set forth in this
Agreement. By executing this Agreement, the Executive expressly authorizes the
Company to cancel, reacquire, retire or retain, at its election, any unvested
Shares if and when they are forfeited in accordance with this Agreement. The
Executive will execute and deliver such other documents and take such other
actions, if any, as the Company may reasonably request in order to evidence
such action with respect to any unvested Shares that are forfeited. If, as and when Shares become vested,
subject to the satisfaction of applicable withholding and other legal
requirements, the vested Shares will no longer be subject to the transfer
restrictions contained in this Agreement and the Company’s books will be
updated accordingly. For the avoidance of doubt, if the Shares becomes
vested as a result of a change in control, the Executive will be entitled to
participate in the change in control transaction (if any) with respect to such
Shares (less any Shares withheld to satisfy applicable tax withholding) on the
same basis and in the same manner as other stockholders of the Company. The
Company may place such legends or notations on certificates or its books
relating to unvested Shares as it deems appropriate in connection with the
proper administration and enforcement of the vesting conditions and transfer
restrictions imposed by this Agreement.

 

7.             Tax
Withholding. By executing this Agreement, the Executive
authorizes the Company to deduct from
any compensation or any other payment of any kind (including withholding the
issuance of Shares) due to
the Executive the amount of any
federal, state, local or foreign taxes required by law to be withheld as a
result of the grant or vesting of the Shares in whole or in part; provided,
however, that the value of the Shares
and/or cash withheld may not exceed the statutory minimum withholding amount
required by law. In lieu of such deduction, the Company may condition the issuance of a
certificate or other evidence of ownership for vested Shares upon the Executive’s
payment of cash to the Company or making other arrangements satisfactory to the Committee for the
payment of such withholding obligation.

 

8.             Capital
Changes. In the event of a stock dividend, stock split, spin off or other
recapitalization with respect to the outstanding shares of the Company’s common
stock, the Company will make such adjustments to the Shares covered by this
Agreement as are made to outstanding shares of Company stock that are not
covered by this Agreement and any securities or other property issued or
distributed by the Company in connection with any such capital change will be
subject to the same vesting conditions and transfer restrictions applicable to
the Shares in respect of which such property or other securities will have been
issued or distributed.

 

9.             No
Service or Other Rights. Nothing contained in the Plan or this Agreement
shall confer upon the Executive any right with respect to the continuation of
the

 

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Executive’s employment or other service with the
Company or any subsidiary of the Company or interfere in any way with the right
of the Company or any subsidiary of the Company at any time to terminate such
relationship. Compensation attributable to the award of Shares shall not be
taken into account as compensation for purposes of determining the Executive’s
benefits or entitlements under any employee pension, savings, group insurance,
severance or other benefit plan or arrangement in which the Executive
participates, unless and except to the extent otherwise specifically provided
by such plan or arrangement.

 

10.           Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to its principles of conflict
of laws.

 

11.           Miscellaneous.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which shall constitute one and the same
instrument. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and may not be modified other than by
written instrument executed by the parties.

 

IN WITNESS WHEREOF, this
Agreement has been executed as of the date first above written.

 

	
   

  	
  MONOSOL Rx, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Executive

  

 

3Exhibit
10.19

 

MONOSOL RX LLC

AMENDED AND RESTATED

PERFORMANCE UNIT APPRECIATION PLAN

 

Monosol Rx LLC, a Delaware limited liability company (“LLC”), maintains
two performance unit plans (Plan A and Plan B), pursuant to which participating
employees and other service providers hold performance units, each representing
the right to receive the appreciation in value of a unit of membership interest
in Monosol Rx LLC from the date the performance unit is granted to the date the
performance unit is settled. It is contemplated that LLC will be merged into
MonoSol Rx, Inc., a newly formed Delaware corporation (the “Company”) and that,
immediately after the merger, the Company will issue shares of its common stock
pursuant to an initial public offering (the “IPO”). In order to properly
reflect the effect of the reorganization of LLC on outstanding performance unit
awards, the Company hereby amends and restates the performance unit plans into
a single plan (the “Plan”) upon the terms and conditions set forth herein, contingent
upon and effective at the time of the aforesaid merger transaction.

 

ARTICLE I

DEFINITIONS

 

1.1           “Base Price” shall mean the Fair Market Value of a unit of
membership interest in LLC on the date a Unit is granted, subject to adjustment
for capital changes in accordance with the Plan.

 

1.2           “Board” shall mean the board of directors of the Company.

 

1.3           “Committee” shall mean the compensation committee of the
Board.

 

1.4           “Company” shall mean MonoSol Rx, Inc. and any successor
thereto.

 

1.5           “Effective Time” shall mean the effective time of the
merger of LLC into the Company, as described in the introductory paragraph.

 

1.6           “Fair Market Value” shall mean, (a) with respect to a
Unit, the fair market value of a unit of membership interest in the Company, as
determined in good faith by the Advisory Board of LLC on the date the Unit is
granted, and (b) with respect to an SAR, the NASDAQ market closing price per
share of Company common stock on the date of reference or, if no shares of Company
common stock are traded on that day, the closing price per share on the next
preceding day on which such shares are traded, provided; however, that, for the
purpose of adjusting outstanding Units as of the Effective Time to reflect the
effect of the merger on outstanding holders of membership interests in the LLC,
the Fair Market Value per share of Company common stock will be deemed to be equal
to the per share IPO price.

 

1.7           “LLC” shall mean Monosol Rx LLC, a Delaware limited
liability company.

 

1.8           “Lock Lock-Up Period” shall mean the period beginning with
the Effective Time and ending on the 180th day after the Effective Time;
provided, that if (i) during the last 17 days of said 180-day period, the
Company issues an earnings release, or material news 

 

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or a material event relating to the Company
occurs, or (ii) before the expiration of said 180-day period, the Company
announces that it will release earnings results within 16 days after the end of
said 180-day period, then, in any of such events, the Lock-Up Period shall be
extended until the expiration of the 18-day period beginning on the issuance of
the earnings release or the occurrence of the material news or material event.

 

1.9           “Participant” shall mean an individual who, at the
Effective Time, holds Units which are adjusted as of the Effective Time in
accordance with the Plan.

 

1.10         “SARs” shall mean the stock appreciation rights resulting
from the Unit adjustments made under the Plan to reflect the effect on the holders
of outstanding LLC membership interests of the merger of LLC into the Company.

 

1.11         “Unit” shall mean the right to receive the increase in value
of a unit of membership interest in LLC from the date the Unit is granted to
the settlement date.

 

ARTICLE II

ADMINISTRATION

 

2.1           General. The Plan will be administered by the
Committee. Subject to the provisions hereof, the Committee shall have full
power in its discretion to construe and interpret the Plan and any award or
other agreement or instrument entered into or issued under the Plan; establish,
amend, or waive rules and regulations for the Plan’s administration; amend the
terms and conditions of any outstanding award; and determine whether and on
what terms and conditions outstanding awards will be adjusted in accordance
with the Plan.

 

2.2           Delegation of Authority. Subject to the
requirements of applicable law, the Committee may delegate to any person or
group or subcommittee of persons (who may, but need not be members of the Board)
such Plan-related functions within the scope of its responsibility, power and
authority as it deems appropriate.

 

2.3           Decisions Binding. All determinations and decisions
made by the Committee pursuant to the provisions of the Plan shall be final,
conclusive, and binding on all persons.

 

2.4           Indemnity of Committee. The Company shall indemnify
and hold harmless the members of the Committee and any employee of the Company
or other individual to whom the Committee delegates authority or responsibility
under the Plan against any and all claims, loss, damage, expense or liability
arising from any action or failure to act with respect to the Plan, except in
the case of gross negligence or willful misconduct.

 

ARTICLE III

PLAN AWARDS

 

3.1           Units. Immediately prior to the Effective Time, each
Participant is credited with the number of Units, each of which represents the
right, upon settlement, to receive the difference between the fair market value
of a unit of LLC membership interest on the applicable settlement date over the
fair market value per unit of LLC membership on the date the Unit was granted.
All outstanding Units are subject to adjustment in order to reflect capital
changes made 

 

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with respect to the LLC, consistent with adjustments
made to outstanding units of membership interests held by the members of the LLC.

 

3.2           Conversion to SARs. As of the Effective Time, all
outstanding Units will be converted into economically equivalent SARs. The
conversion will be made in accordance with the methodology described in Section
1.424-1 of the Treasury Regulations such that, with respect to each Unit award,
(a) the aggregate difference between the Fair Market Value and Base Price of
the Company shares covered by an SAR immediately after the Effective Time is
equal to the aggregate difference between the Fair Market Value and Base Price of
the Units covered by the award immediately prior to the Effective Time, and (b)
the ratio of the Base Price per share and the Fair Market Value per share of
Company common stock immediately after the Effective Time is equal to the ratio
of the Base Price per Unit and the Fair Market Value of a unit of membership
interest in the LLC immediately prior to the Effective Time. The Committee’s
determination as to the conversion of Unit awards into stock appreciation
rights shall be binding and conclusive on all persons.

 

3.3           Terms and Conditions of SARs.

 

3.3.1        General.
The Committee may establish such terms and conditions governing SARs as it
deems appropriate, subject to the terms of the Plan. The Committee may issue
certificates or agreements reflecting the terms and conditions of each
Participant’s SARs, provided, however, that the terms and provisions of the
Plan will govern in the event and to the extent that a provision in an
individual certificate or agreement is inconsistent with the Plan.

 

3.3.2        Vesting.
All SARs will be fully vested and exercisable (subject to any restrictions set
forth in the Plan) upon completion of the IPO.

 

3.3.3        Term.
Each SAR will expire if and to the extent it is not exercised before the tenth
anniversary of the date the corresponding Unit award was granted.

 

3.3.4        Manner
of Exercise. Subject to applicable law and uniform Company-imposed trading
restrictions, a vested SAR may be exercised at any time, other than during the
Lock-Up Period, prior to the expiration of the vested SAR by transmitting to
the Secretary of the Company (or other person designated for this purpose by
the Committee) a written notice of exercise specifying the number of shares
covered by the exercise and accompanied by payment in full of the withholding
taxes due in connection with the exercise, unless and except to the extent that
other arrangements satisfactory to the Company have been made for such payment.
The Board, acting in its discretion and subject to the provisions of applicable
law, may permit a Participant to elect to satisfy the withholding obligation
associated with the exercise of an SAR by directing that the Company withhold
shares of stock at the time of settlement with a fair market value sufficient
to cover the amount of the withholding tax obligation. The Committee may permit
the use of a broker-facilitated cashless exercise procedure in connection with
the exercise of SARs and the payment of applicable withholding taxes.

 

3.3.5        Settlement
of SARs. An SAR that is exercised will be settled in the form of shares of
Company stock having a Fair Market Value equal to the number of shares covered
by the exercise multiplied by the difference between the Fair Market Value per
share on the exercise date and the Base Price per share. Shares of Company
stock issued in settlement of an SAR may be subject to such legends,
restrictions, and other conditions as the Board, acting upon the advice of
counsel, deems necessary or advisable in order to comply with applicable law
and 

 

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the Plan. Participants will receive cash in lieu of fractional shares
that would otherwise be issued in settlement of an SAR exercise. As between the
Company and the Participants, the Company shall have the sole obligation to
issue shares of Company stock in settlement of an SAR. Notwithstanding the
preceding sentence, the persons who own the outstanding membership interests in
the LLC immediately prior to the merger will be solely responsible for providing
shares of Company common stock to the Company when and as necessary in order to
fund the settlement of the SARs.

 

3.4           Death of a Participant. If a Participant dies, the
deceased Participant’s beneficiary will be entitled to exercise the outstanding
SARs held by the Participant at the time of the Participant’s death, subject to
any limitations, restrictions or conditions applicable to such SARs prior to
the Participant’s death. Each Participant may designate a beneficiary by filing
a written beneficiary designation with the Company in such manner and subject
to such requirements as the Committee may prescribe. A previously-filed
beneficiary designation will be automatically revoked upon the filing of a new
beneficiary designation. If a deceased Participant does not designate a
beneficiary or no designated beneficiary survives the Participant, then the
deceased Participant’s beneficiary will be his or her estate.

 

3.5           Change in Control. If a “change in control” (as
defined below) occurs, then, unless the SARs are converted into equivalent
stock appreciation rights or stock options with respect to stock of the
acquiring or successor company, the Company will cause all then outstanding
SARs to be redeemed immediately before the change in control based upon the
value of the underlying Shares at the time of the change in control. For the
purpose hereof, the term “change in control” means the occurrence, after the
effective date of the Plan, in a single transaction or series of transactions,
of any one of the following events or circumstances: (i) merger, consolidation
or reorganization of the Company where the beneficial owners of the interests
or securities possessing the right to vote with respect to the Company
immediately preceding the merger, consolidation or reorganization beneficially
own less than 50% of the interests or securities possessing the right to vote
with respect to the survivor entity, after giving effect to such merger, consolidation,
or reorganization; (ii) acquisition by any person or group, as defined for
purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, of beneficial ownership of interests or securities possessing the
right to vote with respect to the Company where the beneficial owners of the
interests or securities possessing the right to vote with respect to the
Company immediately preceding such acquisition own less than 60% of the
interests or securities possessing the right to vote with respect to the
Company, after giving effect to such acquisition; (iii) approval by the
stockholders of the Company of a plan of liquidation or dissolution with
respect to the Company, provided such liquidation or dissolution is
consummated; or (iv) the sale, exchange, or contribution of all or
substantially all the Company’s assets to an entity where the beneficial owners
of the interests or securities possessing the right to vote with respect to the
Company immediately preceding the sale, exchange, or contribution beneficially
own less than 50% of the interests or securities possessing the right to vote
with respect to the acquiring entity.

 

ARTICLE IV

MISCELLANEOUS

 

4.1           Amendment or Termination. The Board may terminate
the Plan or amend the Plan or any agreement made under the Plan at any time and
from time to time; provided, 

 

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however, that no such action may adversely
affect the value of a Participant’s or Beneficiary’s accrued interest under the
Plan without the Participant’s or Beneficiary’s written consent.

 

4.2           Arbitration. Any dispute that arises with respect
to the rights of a Participant or Beneficiary under the Plan shall be resolved
by arbitration under the appropriate rules of the American Arbitration
Association. Any arbitration shall be conducted in the metropolitan area
closest to the location of the principal office of the Company in which the
Participant performs or last performed services for the Company. All
administrative fees connected with initiating a demand for arbitration shall be
advanced by the Company, subject, however, to final apportionment by the
arbitrator in his or her award. The arbitrator’s award shall be binding and may
be enforced in any court having jurisdiction thereof by filing a petition for
enforcement of such award.

 

4.3           No Right to Employment or Retention. Nothing herein
contained shall be construed as giving any Participant the right to be retained
in the employment or service of the Company or any other person.

 

4.4           No Assignment. Except as otherwise specified herein
with respect to deceased Participants, no SAR may be assigned, alienated,
transferred or subject to anticipation, either by voluntary or involuntary act
of any Participant or Beneficiary or by operation of law, nor shall any SAR be
subject to the demands or claims of any creditor of such person, nor be liable
in any way for such person’s debts, obligations or liabilities.

 

4.5           Applicable Law; Validity. The validity of the Plan
or any of its provisions shall be determined under and construed according to
the laws of the State of Delaware. If any provision of the Plan shall be held
illegal or invalid for any reason, such determination shall not affect the
remaining provisions of the Plan and it shall be construed as if said illegal
or invalid provision had never been included.

 

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