Document:

Exhibit 10.3

AMENDED AND RESTATED

EXECUTIVE EMPLOYMENT AGREEMENT

 

                This Amended and Restated Executive Employment
Agreement (“Amended Agreement”), made and entered into as of this 12th day
of May, 2007 (“Effective Date”), constitutes a voluntary and negotiated
modification of the September 14, 2006 Executive Employment Agreement by and between
MonoSol RX, LLC (the “Company”) and Joseph M. Fuisz, Esq., an individual (the “Executive”)
(the “September 14th Agreement”).

WITNESSETH:

WHEREAS, the Company desires to
continue to employ the Executive as its Senior Vice President of Business
Development and Licensing, and Executive is willing to accept such employment
by the Company, on the terms and subject to the conditions set forth in this
Amended Agreement;

WHEREAS, the September 14th Agreement replaced
and superseded the prior consulting agreement between the Company and the
Executive;

WHEREAS, the September 14th
Agreement shall be replaced and superseded by this Amended Agreement as of the
Effective Date;

WHEREAS, the parties agree that this Amended Agreement
constitutes a written instrument signed by them, as required by Section 13
hereof, which is sufficient to effectuate the modifications set forth herein;
and

WHEREAS, the parties understand that
the Company, through its successor by merger, Monosol Rx Inc., intends to file
a registration statement with the Securities and Exchange Commission and to
become a publicly held company pursuant to U.S. securities laws.  This Amended Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their heirs, legatees,
personal representatives, successors, and assigns.  In the event of any merger of the Company
with and into Monosol Rx Inc., all rights of the Company under this Amended
Amendment shall survive such merger and shall become the rights of Monosol Rx
Inc.

NOW,
THEREFORE, in consideration of the promises 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. Emplovment.  During
the term of this Amended Agreement, the Executive agrees to be employed by and
to serve the Company as its Senior Vice President of Business Development and
Licensing, 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: (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 Senior Vice
President of Business Development and Licensing, 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 of MonoSol RX, LLC; and (iii)
diligently follow and implement all policies, practices, procedures, and rules
of the Company. The Executive shall be based in Washington, D.C.

 

                2. Emplovment Term.  The employment term (the “Employment
Term”) of the Executive

 

 

 

under this Amended Agreement
shall be for a period of eight (8) months, concluding December 31, 2007.  The Employment Term shall commence on the
Effective Date and shall not extend beyond December 31, 2007 for any reason.

 

                Upon conclusion
of the Employment Term, the Executive shall continue to provide services to the
Company as an independent contractor pursuant to the Consulting Agreement
attached hereto as Exhibit A, provided that the Executive’s employment is not
otherwise terminated in 2007 pursuant to Section 5(A) or 5(D) hereof.  In the event the Executive’s employment is
terminated during the Employment Term pursuant to Section 5(A) or 5(D) hereof,
the Consulting Agreement attached as Exhibit A shall immediately become null
and void and shall have no further force or effect, even if signed by the
parties, and the terms of this Agreement shall remain valid and enforceable.
If, however, the Consulting Agreement commences on its effective date of
January 1, 2008, the Consulting Agreement shall supersede this Amended
Agreement, with the exception of Section 8 hereof which shall survive any
termination of this Amended Agreement or the Executive’s employment or
consultancy. The term of the Consulting Agreement shall be for a one (1) year
period, from January 1, 2008 through December 31, 2008, provided the Consulting
Agreement is not revoked, rescinded or otherwise terminated pursuant to the
terms of that Agreement.

 

                If, during the Employment Term,
the Executive’s employment is terminated pursuant to Section 5(A) or 5(D) hereof, the Executive understands and agrees that such termination shall
extinguish all of his rights to or interests in any Consulting Agreement with
the Company, including those set forth in the Consulting Agreement attached
hereto as Exhibit A. The Executive further understands and agrees that he shall
not be entitled to any payments, compensation, or benefits other than those set
forth in Section 6(A) or 6(D), whichever may be applicable.

 

                If, during the Employment Term,
the Executive’s employment is terminated for any reason other than those set
forth in Section 5(A) or 5(D) hereof, the
Executive shall remain eligible for the applicable payments and benefits set
forth in Section 6 for the duration of the Employment Term, which ends on
December 31, 2007.  The Executive shall
also remain eligible to return to the Company on January 1, 2008 to provide
services as an independent contractor pursuant to the Consulting Agreement attached
hereto as Exhibit A. The Executive understands that, under those circumstances,
health care coverage following his termination of employment with the Company
would be through COBRA, if elected by the Executive, and that the Company would
reimburse the Executive for the COBRA premiums required to maintain the same
level and type of health care coverage he had during his employment with
MonoSol RX, LLC.  The Executive
understands and agrees that COBRA coverage is usually limited to a maximum of
eighteen (18) months and that, therefore, his COBRA coverage may be exhausted
prior to or shortly after completion of his one (1) year assignment as a
consultant and that the Company shall have no further obligation once COBRA is
exhausted. A termination of employment during the Employment Term for any reason
other than those set forth in Section 5(A) or 5(D) hereof shall not effect the
vesting schedule of Executive’s Performance Units pursuant to the Performance
Unit Plan.  The Company agrees that a
such a break in service shall be bridged for purposes of the Executive’s
Performance Units. This bridging will not occur if the termination is pursuant
to Section 5(A) or 5(D) hereof.

 

                3. Compensation.

A. Base Salary. As compensation for services
rendered to the Company pursuant to this

 

2

Amended Agreement, the Company
shall pay to Executive a base salary (the “Base Salary”) at a rate of
$280,000.00 per annum, payable at a rate of $23,333.33 per month. The Base
Salary will be paid in accordance with the standard payroll policies of the
Company as from time to time are in effect, from which shall be deducted
federal and, if applicable, state income taxes, social security taxes, and such
other and similar payroll taxes and charges as may be required or appropriate
under applicable law. The Base Salary shall be considered by the CEO for
increase based upon performance and other considerations as appropriately
determined by the CEO, including without limitation performance assessment,
market assessment for comparable executive and employment terms and awards as
may be deemed appropriate from time to time.

B. Annual Bonus. In addition to the Base Salary,
on December 31, 2007, Executive shall become eligible, if then employed with
the Company, for a bonus (the “Annual Bonus”) of fifty percent (50%) of
Executive’s Base Salary, provided Company achieves established performance
targets. Executive must be employed by the Company on the day any bonus payment
is due and payable under this Amended Agreement in order to receive said bonus
payment. The bonus shall be paid in cash and/or performance units (or other
form of equity in the event of any merger of the Company with and into Monosol
Rx Inc.), as determined by the Company. If the Company exceeds established
performance targets, the Company may, in its sole discretion, increase the
amount of the Annual Bonus.

                4. Additional Benefits.

A. Executive Benefits. During the Employment Term,
Executive shall receive such benefits and participate in such executive benefit
plans as set forth in the MonoSol RX, LLC, Benefit Summary, attached hereto as
Exhibit B and incorporated herein by reference.

B. Vacation: Sick Leave. The Executive shall,
during the Employment Term, be allowed to take up to four (4) weeks of vacation
(minus any vacation time already taken in 2007), and shall be eligible for such
sick leave each year as shall be established by the Company for senior
executives of the Company.

                5. Termination. 

A. Termination for Cause. Notwithstanding anything
to the contrary contained in this Amended Agreement, Termination for Cause may
be effected by the Company at any time during the term of this Amended
Agreement by written notification to the Executive in accordance with Section
7(A) of this Amended Agreement. For purposes of this Amended Agreement, “Termination
for Cause” shall mean:

                                 (1)
           the willful and continued
failure of such Executive to perform his duties,

including, without limitation,
such Executive’s failure or refusal to follow the legitimate directions of the
Company and/or of any of the persons to whom such Executive reports (other than
any such failure resulting from his death or permanent disability); or

                                 (2)
          the engaging by such Executive
in willful, reckless or negligent conduct in

connection
with his employment or other relationship which is materially detrimental to
the Company; or,

                                (3)
           the conviction of such
Executive of any felony or any crime involving

 

3

moral
turpitude; or,

 

                                (4)           such Executive’s reporting to work
impaired by or under the influence of

alcohol or illegal drugs; or,

                                  (5)
           such Executive’s engaging in
the unlawful use (including being under the

influence) or possession of
illegal drugs on the Company’s premises; or,

                                 (6)
           such Executive’s engaging in
sexual harassment or other violation of any

harassment or discrimination
law; or,

                                 (7)
          Executive’s commission of fraud
in connection with Executive’s

employment or theft,
misappropriation or embezzlement of the Company’s funds; or,

                                 (8)
          the demonstrated use or
disclosure by Executive of any confidential

proprietary or trade secret
information of Executive’s former employer or that Executive learned or
obtained through his former employer; or,

                                 (9)
           the demonstrated use or
disclosure by the Executive of any confidential

information of the Company
except when such disclosure is made pursuant to the directions of the Company
or in accordance with Company policy; or,

(10) such Executive’s engaging in competitive behavior
against the Company, purposely aiding a competitor of the Company, or
misappropriating or aiding in misappropriating a material opportunity of the
Company.

All determinations of “Cause” shall be made by the Board
of Managers of the Company (the “Board”). If the Company elects to terminate
Executive’s employment for Cause pursuant to clause (1) of the definition of “Cause”
and the action or inaction prompting such termination is capable of cure, the
Company shall first give Executive written notice thereof, including a
description of the evidence upon which the Board has relied to support such
finding and a period of thirty (30) days (the “Cause Notice Period”) from the
date of such notice to cure the action or inaction giving rise to the written
notice. If such action or inaction is not cured by Executive by the end of the
Cause Notice Period, as determined by the Board and communicated to the
Executive in writing, such termination shall be effective upon the first day
after the expiration of the Cause Notice Period.

B. Termination bv Reason of Disabilitv. In a
manner consistent with the Americans with Disabilities Act and the Family and
Medical Leave Act, this Amended 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 Amended Agreement, the term “Permanent
Disability” shall mean the Executive’s inability to perform the essential
functions of his job under this Amended Agreement, with or without reasonable
accommodation, for a period of ninety (90) consecutive days or for an aggregate
of one hundred twenty (120) 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 board certified 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 Amended Agreement at any

 

4

time,
subject to providing sixty (60) days’ written notice to the Company in
accordance with Section 7(B) of this Amended Agreement; provided, however, that
Executive’s covenants and obligations under Section 8 herein shall survive
Executive’s voluntary resignation.

E. Involuntary Termination. Notwithstanding
anything to the contrary contained in this Amended Agreement, involuntary
termination may be effected by the Company by giving written notification to
the Executive in accordance with Section 7(A) of this Amended Agreement. For
purposes of this Amended Agreement, the term “Involuntary Termination” shall
mean termination by the Company of the Executive’s employment with the Company
other than: (i) Termination for Cause; (ii) Termination by Reason of
Disability; or (iii) Termination by Reason of Death.

F. Termination for Good Reason. The Executive may
terminate this Amended Agreement for “Good Reason” at any time during the term
of this Amended Agreement by providing written notification to the Company in
accordance with Section 7(B) of this Amended Agreement. For purposes of this
Amended Agreement, “Good Reason” shall mean (l) any action by the Company which
results in a substantial diminution in Executive’s position, authority, duties
or responsibilities (including status, offices, titles and reporting
requirements contemplated by this Amended Agreement), or (2) material breach by
the Company of its obligations under this Amended Agreement.

                6. Obligations of the Company Upon Termination.

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

                        B.
Termination by Reason of Disability. 
In the event that the Executive’s employment under this Amended
Agreement is terminated by Reason of Disability, the Company shall have no
obligation to pay the Base Salary provided under this Amended Agreement to or
for the benefit of the Executive for any period after the date of such
termination; provided, however, that the Company shall promptly pay: (i) all
Base Salary earned by the Executive prior to the date of such termination; (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 plan;
(iii) a cash payment equal to the Annual Bonus received by the Executive for
the previous year, pro-rated for the number of days employed during the year of
termination up to the date of termination; and (iv) accrued, unused vacation
pay.

 

C. Termination
by Reason of Death. If the employment of the Executive hereunder shall
terminate because of death of the Executive, the Company shall have no
obligation to pay the Base Salary provided under this Amended Agreement to or
for the benefit of the Executive for any period after the date of such
termination; provided, however, that the Company shall promptly pay: (i) all
Base Salary earned by the Executive prior to the date of such termination; (ii)
any benefits under any plans of the Company in which the Executive was a
participant to the full extent of the Executive’s rights under such plans;
(iii) accrued, unused vacation pay; and (iv) a cash payment equal to the Annual
Bonus received by the Executive for the previous year, pro­rated for the 

 

5

 

number of days employed during
the year of termination up to the date of termination.

D. 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 amount of the notice period. In the event of said termination, the
Company shall have no obligation to pay the Base Salary provided under this
Amended 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 pay: (i) all salary earned by the Executive prior to the date of such
termination as well as Base Salary for the notice period; and (ii) 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 (with the exception of any
bonus and/or incentive compensation).

E. Involuntary Termination or Termination for Good
Reason. In the event that the Executive’s employment under this Amended
Agreement is involuntarily terminated as defined in Section 5(E) of this
Amended Agreement, the Company shall: (i) continue to pay the Executive the
Base Salary for the remainder of the Employment Term (the “Severance Period”),
at such intervals as the same would have been paid had the Executive remained
in the active service of the Company; and (ii) pay 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 for the remainder of the Severance
Period. If, during the Severance Period, the Executive materially breaches his
obligations under Section 8 of this Amended Agreement, the Company may, upon
written notice to the Executive, terminate the Severance Period and cease to
make any further payments to Executive.

                7. Notice of Termination.

A. The Company may effect a termination of this Amended
Agreement pursuant to the provisions of Section 5 of this Amended Agreement upon giving
thirty (30) days’ written notice to the Executive of such termination;
provided, however, that a Termination for Cause under Section 5(A) shall take
effect immediately, at the option of the CEO.

B. The Executive may effect a termination of this Amended
Agreement pursuant to the provisions of Section 5(D) of this Amended Agreement upon
giving sixty (60) days’ written notice to the Company.

                8. Covenants of the Executive.

                In order to induce the Company to enter into this Amended 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.

A. Non-Competition. During the Employment Term,
Executive shall not, without the prior written consent of Company, which
consent may be withheld at the sole discretion of Company, engage in or in any
manner be connected or concerned, directly or indirectly, whether as an
officer, director, stockholder, partner, owner, employee, advisor, creditor, or
otherwise, with the operation, management, or conduct of any business that
competes with Company. Executive shall not in any manner disrupt or attempt to
disrupt any relationships which Company may have with any of its

 

6

employees,
suppliers, customers, lessors, banks, consultants, or other persons or entities
with whom business dealings or ongoing relationships exist, nor induce any such
parties to terminate or otherwise alter the manner in which such relationships
are being conducted with Company.

B. Confidentiality. During the Employment Term,
and following the termination of this Amended 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 Company, its business, customers and financial affairs, or its
services not generally known within Company’s trade and which was acquired by
him during his affiliation with Company. Executive shall not remove from
Company premises or retain without the Company’s written consent any of Company’s
confidential information as defined herein, or copies of or extracts therefrom.
Executive shall hold in a fiduciary capacity for the benefit of Company all
secret or confidential information, knowledge, or data of Company or its
business or production operations obtained by Executive during his employment
by Company, which shall not be generally known to the public or recognized as
standard practice (whether or not 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 Company or persons, firms or corporations
designated by Company. Executive acknowledges that this information is treated
as confidential by Company, that 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 Amended Agreement, Executive shall return all of 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 Employment
Term or delivers to the Company while performing services pursuant to this
Amended 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

 

7

 

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 Amended 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 Amended 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. Intellectual Property Rights Agreement.  The terms of the Company’s
Intellectual Property Rights Agreement are hereby incorporated into this
Amended Agreement and any subsequent Consulting Agreement.  Executive agrees to voluntarily execute and
deliver to the Company the Intellectual Property Rights Agreement as a
condition of his continued employment and in exchange for the offer to continue
to provide services to the Company as a consultant after the conclusion of the
Employment Term.  To the extent the terms
of the Intellectual Property Rights Agreement conflict with this Amended Agreement
or any Consulting Agreement, the terms of the Intellectual Property Rights
Agreement shall govern on any issues involving or affecting intellectual
property rights.

F. Competition Following Termination. Within the
two (2) year period immediately following termination of this Amended Agreement,
regardless of the cause therefor, except as provided herein, Executive shall
not, without the prior written consent of Company, which consent may be
withheld at the sole discretion of Company: (a) engage in or in any manner be
connected or concerned, directly or indirectly, whether as an officer,
director, stockholder, partner, owner,

 

8

 

employee,
advisor, creditor, or otherwise with the operation, management, or conduct of
any business in the United States that is or was a customer of Company, or that
competes with the business of Company being conducted at the time of such
termination; (b) solicit, contact, interfere with, or divert any customer
served by Company or potential customer identified by Company during the period
of Executive’s employment hereunder; or (c) solicit any person then or
previously employed by Company to join Executive, whether as a partner, agent,
employee, or otherwise, in any enterprise engaged in a business that competes
with business of the Company at the time of such termination. Provided,
however, that Executive shall not be bound by the Covenant set forth in this
paragraph 8(E) in the event that the Company breaches 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.

G. Acknowledgment. Executive acknowledges that all
of the restrictions set forth in this Section entitled “Covenants of the
Executive” are reasonable in scope and essential to the preservation of Company’s
business and proprietary properties and that the enforcement thereof will not
in any manner preclude Executive, in the event of Executive’s termination of
employment with Company, 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.

H. 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 Amended 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.

I. 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 Amended
Agreement, and the existence of any claim or cause of action of Executive
against Company, whether predicated on this Amended 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 Amended 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 Amended 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 Amended
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.

J. 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 Amended Agreement in general, and that monetary
damages alone would not provide the Company adequate relief for any

 

9

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

In
the event that, on or before September 30, 2009, (i) the Executive breaches any
of his obligations under this Amended Agreement, any Consulting Agreement, or
any other agreement between Executive and the Company, Bios-Pharma, LLC or
Monosol Rx Inc., or (ii) the Executive’s father, Dr. Richard Fuisz, breaches
any of his obligations under the father’s May 2007 Agreement, the Company’s or
Bios-Pharma, LLC’s Limited Liability Company Agreement, his Consulting
Agreement, or any other agreement between Dr. Fuisz and the Company,
Bios-Pharma, LLC or Monosol Rx Inc., then, in addition to any
other remedies specifically enumerated herein or therein or otherwise provided
by law, the Executive shall immediately forfeit, and shall immediately assign,
transfer and convey to the Company or its designees, all of the portion of his
father’s initial 55% membership interest in Bios-Pharma, LLC that was issued or
transferred to him, without any recourse whatsoever; and the Executive shall
also cause his father, Dr. Fuisz, to immediately forfeit, and to immediately
assign, transfer and convey to the Company or its designees all of Dr. Fuisz’s
initial 55% membership interest in Bios-Pharma, LLC, without any recourse
whatsoever.

In
the event that, after September 30, 2009 but on or prior to September 30, 2010,
(i) the Executive breaches any of his obligations under this Amended Agreement,
any Consulting Agreement, or any other agreement between Executive and the
Company, Bios-Pharma, LLC or Monosol Rx Inc., or (ii) the Executive’s father,
Dr. Richard Fuisz, breaches any of his obligations under the father’s May 2007
Agreement, the Company’s or Bios-Pharma, LLC’s Limited Liability Company
Agreement, his Consulting Agreement, or any other agreement between Dr. Fuisz
and the Company, Bios-Pharma, LLC or Monosol Rx Inc., then, in
addition to any other remedies specifically enumerated herein or therein or
otherwise provided by law, the Executive shall immediately forfeit, and shall
immediately assign, transfer and convey to the Company or its designees, 50% of
the portion of his father’s initial 55% membership interest in Bios-Pharma, LLC
that was issued or transferred to him, without any recourse whatsoever; and the
Executive shall also cause his father, Dr. Fuisz, to immediately forfeit, and
to immediately assign, transfer and convey to the Company or its designees 50%
of Dr. Fuisz’s initial 55% membership interest in Bios-Pharma, LLC, without any
recourse whatsoever. For the avoidance of doubt, the Executive and Dr. Fuisz
shall retain the non-forfeited portion (i.e., 50%) of Dr. Fuisz’s initial 55%
membership interest in Bios-Pharma, LLC in such event, subject to the option to
purchase set forth in Exhibit B to Dr. Fuisz’s May 2007 Agreement.

In
the event that, after September 30, 2010 but on or prior to September 30, 2011,
(i) 

 

10

the Executive breaches any
of his obligations under this Amended Agreement, any Consulting Agreement, or
any other agreement between Executive and the Company, Bios-Pharma, LLC or
Monosol Rx Inc., or (ii) the Executive’s father, Dr. Richard Fuisz, breaches
any of his obligations under the father’s May 2007 Agreement, the Company’s or
Bios-Pharma, LLC’s Limited Liability Company Agreement, his Consulting
Agreement, or any other agreement between Dr. Fuisz and the Company,
Bios-Pharma, LLC or Monosol Rx Inc., then, in addition to any
other remedies specifically enumerated herein or therein or otherwise provided
by law, the Executive shall immediately forfeit, and shall immediately assign,
transfer and convey to the Company or its designees, 25% of the portion of his
father’s initial 55% membership interest in Bios-Pharma, LLC that was issued or
transferred to him, without any recourse whatsoever; and the Executive shall
also cause his father, Dr. Fuisz, to immediately forfeit, and to immediately
assign, transfer and convey to the Company or its designees 25% of Dr. Fuisz’s
initial 55% membership interest in Bios-Pharma, LLC, without any recourse
whatsoever. For the avoidance of doubt, the Executive and Dr. Fuisz shall
retain the non-forfeited portion (i.e., 75%) of Dr. Fuisz’s initial 55%
membership interest in Bios-Pharma, LLC in such event, subject to the option to
purchase set forth in Exhibit B to Dr. Fuisz’s May 2007 Agreement.

In
addition, in the event that the Executive breaches any of his obligations under
this Amended Agreement, any Consulting Agreement, or any other agreement
between Executive and the Company, Bios-Pharma, LLC or Monosol Rx Inc., then, in
addition to any of the other remedies specifically enumerated herein or therein
or otherwise provided by law, this Amended Agreement, any
Consulting Agreement, and/or any other agreement between the Executive and the
Company, Bios-Pharma, LLC or Monosol Rx Inc. shall be immediately terminated
and shall have no further force or effect (provided, however, that the
Executive’s surviving obligations under those agreements shall remain in full
force and effect and shall survive such termination indefinitely) and the
Company shall have no further obligations thereunder.

9. Attorneys’ Fees.              In any action brought by any party
under this Amended Agreement to enforce any of its terms, or any appeal
therefrom the prevailing party shall be entitled to an award of its reasonable
attorneys’ fees.

10. Notices.           Any notices permitted or required under this
Amended 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:

  	
   

  	
  MonoSol Rx LLC

  
	
   

  	
   

  	
   

  	
   

  	
  30 Technology Drive

  
	
   

  	
   

  	
   

  	
   

  	
  Warren Township, NJ 07059

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  	
   

  	
  Doug Bratton

  
	
   

  	
   

  	
   

  	
   

  	
  201 Main Street, Suite 1900

  
	
   

  	
   

  	
   

  	
   

  	
  Fort Worth, Texas 76102

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If to the Executive:

  	
   

  	
  Joseph M. Fuisz, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
  1100 Connecticut Avenue, Suite 440

  
	
   

  	
   

  	
   

  	
   

  	
  Washington, D.C.

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

11

 

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.

11. Venue:
Jurisdiction.  Any suit
concerning this Amended Agreement shall be filed solely in the courts of
Somerset County, New Jersey. In any action brought concerning or arising from
this Amended Agreement, Executive hereby agrees that he shall be subject to the
jurisdiction of the state and federal courts of New Jersey. This Amended
Agreement and all matters relating to the meaning, validity or enforceability
thereof and the performance of the services hereunder shall be governed by the
laws of the State of New Jersey, exclusive of its conflict of laws rules.

12. Binding Effect:
Assignment.  Executive shall not, without the prior
written consent of the Company, assign, transfer, or otherwise convey this
Amended Agreement, or any right or interest herein. This Amended 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.

It
is expressly understood by the parties that in the event of any merger of the
Company with and into Monosol Rx Inc., all rights of the Company under this
Amended Amendment shall survive such merger and shall become the rights of
Monosol Rx Inc.

13. Entire
Agreement.  This Amended 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, with the exception of the Intellectual Property Rights Agreement. This
Amended Agreement may not be modified, amended, altered or rescinded in any
manner, except by written instrument signed by all of the parties hereto; 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; provided, further, that the waiver by either
party hereto of a breach or compliance with any provision of this Amended
Agreement shall not operate nor be construed as a waiver of any subsequent
breach or compliance.

14. Severability.  In
case anyone or more of the provisions of this Amended Agreement shall be held
by any court of competent jurisdiction to be illegal, invalid or unenforceable
in any respect, the remainder of this Amended 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 be affected thereby.

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

16. Counterparts.  This
Amended 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.

17. Survival.  The
provisions of Section 8 of this Amended Agreement shall survive any termination
of this Amended Agreement and the termination of Executive’s employment.

 

12

 

[Signature Page Follows]

 

13

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

 

	
   

  	
   

  	
  MonoSol RX, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/ John
  Cochran

  
	
   

  	
   

  	
   

  	
   

  
	
  Date

  	
         May
  12, 2007

  	
   

  	
  John Cochran, as Vice
  President of Bratton Capital,

  
	
   

  	
   

  	
  Inc., the general partner
  of Monosol RX Genpar, L.P.

  
	
   

  	
   

  	
  as manager of MonoSol Rx,
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Joseph M. Fuisz, Esq.,
  Individually

  
	
   

  	
   

  	
   

  
	
  Date

  	
         May
  12, 2007

  	
   

  	
    /s/ Joseph M.
  Fuisz, Esq.

  

 

 

14

EXHIBIT
A

 

Form of
Consulting Agreement

 

 

CONSULTING
AGREEMENT

THIS CONSULTING AGREEMENT (the “Agreement”) is made and entered
into on this 1st day of January 2008 (“Effective Date”), by
and between Monosol Rx, LLC, a Delaware limited liability company (the “Company”),
and Joseph M. Fuisz, Esq. (“Consultant”).

RECITALS:

A.            Consultant has considerable
knowledge and experience relating to certain aspects of the Company’s business;

B.            The Company desires to engage
Consultant to render consulting services;

C.            The Company and Consultant wish to memorialize the terms
and conditions upon which Consultant is engaged to provide consulting services
to the Company; and

D.            The parties understand that the Company, through its
successor by merger, Monosol Rx Inc., has or intends to file a registration
statement with the Securities and Exchange Commission and has become or will
become a publicly held company pursuant to U.S. securities laws. This Agreement
shall be binding upon and shall insure to the benefit of the parties hereto and
their heirs, legatees, personal reprsentatives, successors and assigns. In the
event of any merger of the Company with and into Monosol Rx Inc., all rights of
the Company under this Agreement shall survive such merger and shall become the
rights of Monosol Rx Inc.

NOW, THEREFORE, the parties hereto, intending to be
legally bound, agree as follows:

1.             SERVICES AND NATURE OF
RELATIONSHIP

1.1           Engagement.  The Company hereby retains Consultant and
Consultant hereby accepts such appointment and agrees to perform the services
covered by this Agreement with all due skill and care on the terms and
conditions set forth in this Agreement.

                                Consultant
shall serve as a business advisor to the Company’s manager and those employees
or representatives of the Company designated by the Company’s manager.  His services shall include, without
limitation, activities directed at assisting the Company with securing research
funding and commercial contracts, providing guidance on pharmaceutical
development, acting as an advisor to the Company’s president and chief
executive officer, and providing advice on the Company’s overall commercial
business development. In no event, however, shall Consultant be required to
perform more than 25 hours per month of services on behalf of the Company.

                                Consultant
acknowledges and agrees that he shall have no right or authority to (a)
participate in, control or influence the day to day operations of the Company, (b) act on
behalf of the Company in any manner whatsoever (including, without limitation,
with respect to the Company’s employees, customers, vendors, etc.) without the
express written consent of either Mark Schobel or Keith Kendall; or (c)
initiate communication about the Company’s business in any manner whatsoever
with the Company’s employees, customers or vendors without the 

 

1

express written consent of
either Mark Schobel or Keith Kendall (provided, however, that Consultant shall
be in breach of his obligations under this subclause (c) only after written
notice of such breach is given by the Company to Consultant followed by at
least one subsequent breach thereof by Consultant (provided the Company gives
written notice to Consultant of such subsequent breach)).

1.2           Method of Performing
Services.  Consultant, as
an independent contractor, shall determine the method, details, and means of
performing any services furnished pursuant to this Agreement, but the services
contemplated herein shall meet the approval of the Company’s manager or
representative of the Company designated by the Company’s manager, and be
subject to the right of inspection for the Company to secure satisfactory
completion thereof.  Consultant agrees to
perform the services in a good and workmanlike manner.  Consultant will devote sufficient time, attention
and energies to the business and interests of the Company and diligently and to
the best of his ability perform such duties incident to this Agreement, and
perform such other duties as requested commensurate with the terms of this
Agreement.

Consultant shall comply
with all applicable safety, health and other rules of the Company and its
affiliates, together with all applicable U.S. or other provisions of federal,
state or local safety and health laws, rules, regulations or orders.  This clause will not require the Company to
police Consultant’s compliance with any rules, laws, regulations or orders and
shall not impose any obligation on the part of the Company or its affiliates
under such rules, laws, regulations or orders. 
Nothing contained in this provision shall be interpreted as enlarging
the legal duty of the Company or its affiliates to Consultant or alter the
status of Consultant as set forth in this Agreement.

The preceding paragraphs
of this provision are agreed to by both the Company and Consultant to be of the
highest importance.  A breach or
violation of any of the terms of this provision by Consultant will be
considered to be a material breach of this Agreement.

1.3           No Authority to Bind.  Notwithstanding anything contained herein to
the contrary, Consultant shall have no authority to obligate the Company in any
manner whatsoever in the absence of specific prior written authority from the
manager of the Company or a representative of the Company designated by the
Company’s manager permitting Consultant to do so, including without limitation
incurring expenses or entering into contracts.

1.4           Status as Independent Contractor.  Consultant acknowledges and agrees that, in
performing services pursuant to this Agreement, Consultant shall be serving as
an independent contractor.  Consultant
agrees that Consultant is not and will not become an employee of the Company or
any of its affiliates while this Agreement is in effect.  Consultant agrees that the provision of
services pursuant to this Agreement will not entitle Consultant to any rights
or benefits afforded to the employees of the Company or its affiliates,
including such benefits as Worker’s Compensation insurance, health insurance,
sick leave, retirement benefits or any other employment benefit.

1.5           Payment of Taxes.  Consultant agrees that he is solely
responsible for paying when due all income taxes, including estimated taxes,
payroll taxes, national insurance 

 

 

2

and other taxes incurred
as a result of or in connection with the compensation paid by the Company to
Consultant for services rendered under this Agreement.  The Company shall issue an Internal Revenue
Service Form 1099 to Consultant with respect to the compensation paid pursuant
to this Agreement.  Consultant hereby
indemnifies, and undertakes to defend and hold the Company free and harmless
from and against any demands or claims for any taxes, interest or penalties
assessed by any taxing authority with respect to sums paid to Consultant
pursuant to this Agreement.

1.6           Nonexclusive Services.  Subject to the provisions of this Agreement,
during the term of this Agreement, Consultant may represent, perform services
for, or be retained by such additional persons or entities as Consultant deems
appropriate; provided, however, that none of such activities shall interfere
with Consultant’s ability to perform his obligations under this Agreement or
adversely affect the business, operations or financial condition of the Company
and its affiliates.

2.             TERM

The term of this
Agreement shall commence on the date hereof, and shall continue for a period of
one (1) year, ending on December 31, 2008, unless sooner terminated as provided
in Section 5 below.

3.             FEES AND EXPENSES

The Company shall
compensate Consultant for services rendered pursuant to this Agreement as
follows:

3.1           Monthly Fee.  The Company agrees to compensate Consultant
for services provided pursuant to this Agreement at the rate of U.S. $23,333.33 per month.  Such fees shall be payable from the Company’s
offices to Consultant on a monthly basis, in accordance with the Company’s
standard practices.

                                3.2           Benefits.                During the term of this
Agreement, the Company agrees to reimburse Consultant for the COBRA premiums
required to maintain the same level and type of health care benefits he had
during his employment with MonoSol RX, LLC. 
This reimbursement shall allow the Consultant to continue his coverage
during the term of this Agreement at the active employee rates, subject to any
changes in the terms, conditions, or rates of those plans, or the cancelation
of those plans, provided that there is no gap of six (6) months or more between
the term of this Agreement and the Consultant’s prior employment with the
Company.  In the event of a gap of six
(6) months or more, the Consultant understands and agrees that COBRA coverage
may be exhausted prior to December 31, 2008 and that the Company shall have no
further obligation once COBRA is exhausted.

                During
the term of this Agreement, the Company further agrees to issue a separate
payment to the Consultant equivalent to the 401(k) matching payment it made to
him during his employment.

                During
the term of this Agreement, the Company shall also continue to provide life
insurance and disability coverage to the Consultant under the same policies
that the Consultant

 

3

 

had during his employment with MonoSol RX, LLC.  Should the same life and disability policies
not be available to Consultant during the term of this Agreement, comparable
policies or reimbursement for the purchase of comparable policies
shall be provided to Consultant.

At
the conclusion of the term of this Agreement, provided it is not otherwise
terminated prior to December 31, 2008 by either party in accordance with
Section 5 below, the outstanding unvested portion of Consultant’s Performance
Units shall automatically vest.

                                3.3           Expense Reimbursements.  In addition, the Company agrees to reimburse
Consultant for reasonable business expenses incurred by Consultant in
performing services pursuant to this Agreement as approved by the Company’s
manager or a representative of the Company designated by the Company’s manager,
in accordance with the Company’s then-current reimbursement policy.

3.4           Monthly Statement.  Within 10 days after the end of each calendar
month, Consultant shall provide the Company an invoice for his services and
expenses for such calendar month.  The
Company shall pay Consultant for his approved services and expenses for such month
within 10 days of its receipt of that statement.

4.             ADDITIONAL COVENANTS BY
CONSULTANT

4.1           Property of the Company.

4.1.1        Consultant covenants and agrees that
upon the termination of this Agreement for any reason or, if earlier, upon the
Company’s request, he shall promptly return all Property which had been
entrusted or made available to Consultant by the Company.  Consultant further agrees to assign all right
and title in interest in any invention insofar as it relates to the Company’s
business, and he agrees to participate to the best of his ability in the
enforcement of any Company patent against a third party. The Company
agrees to reimburse the Consultant for the reasonable expenses incurred by him
related to his involvement in the retention of Company inventions and
enforcement of Company patents.

4.1.2        The term “Property” shall mean all
records, files, memoranda, reports, price lists, drawing, plans, sketches,
keys, codes, computer hardware and software and other property of any kind or
description prepared, used or possessed by Consultant during the term of this
Agreement  relating to the Company or its
business, operations or prospects (and any duplicates of any such property)
together with any and all information, ideas, concepts, discoveries, and
inventions and the like conceived, made, developed or acquired at any time by
Consultant individually or with others during the term of this Agreement
relating to the Company’s business, operations or prospects.

4.2           Trade Secrets.

4.2.1        In consideration for the promises made
in Section 4.3 of this Agreement, the Company promises that it shall provide
and make available to Consultant certain confidential, proprietary information
and trade secrets deemed to be necessary for the Consultant to provide services
under this Agreement.

 

4

4.2.2        Consultant covenants and agrees that he
shall hold in a fiduciary capacity for the benefit of the Company and each of
its affiliates, and shall not directly or indirectly use or disclose, any Trade
Secret that Consultant may have acquired pursuant to this Section 4.2 during
the term of this Agreement for so long as such information remains a trade
secret.

4.2.3        The term “Trade Secret” shall mean
information, including, but not limited to, technical or non-technical data, a
formula, a compilation, a program, a device, a method, a technique, a drawing,
a process, financial data, financial plans, product plans, or that (a) derives
economic value, actual or potential, from not being generally known to, and not
being generally readily ascertainable by proper means by, other persons who can
obtain economic value from its disclosures or use and (b) is the subject of
reasonable efforts by the Company and its affiliates to maintain its secrecy.

4.2.4        This Section 4.2 is intended to provide
rights to the Company which are in addition to those rights the Company has
under the common law or applicable statutes for the protection of trade
secrets.

4.3           Confidential Information.

4.3.1        Consultant covenants and agrees that
during the term of this Agreement and thereafter during the Restricted Period
he shall hold in a fiduciary capacity for the benefit of the Company and each
of its affiliates, and shall not directly or indirectly use or disclose, any of
the Confidential or Proprietary Information of the Company or its affiliates
that Consultant may have acquired (whether or not developed or compiled by
Consultant and whether or not Consultant is authorized to have access to such
information) during the term of, and in the course of, or as a result of this
Agreement.

4.3.2        The term “Confidential or Proprietary
Information” shall mean any secret, confidential or proprietary information
that the Company or an affiliate (not otherwise included in the definition of a
Trade Secret under this Agreement) that has not generally become available to
the public by the act of one who has the right to disclose such information
without violation of any right of the Company or its affiliates.

4.4           Non-Competition.  During the term of this Agreement and any
Restricted Period, Consultant covenants and agrees that he shall not, directly
or indirectly, own any interest in, manage, control, participate in, consult
with, render services for, or in any manner engage in any businesses competing
with Company (unless the President of the Company shall have authorized such
activity in writing as provided below). 
Investments in less than 5% of the outstanding securities of any class
of a corporation subject to the reporting requirements of Section 13 or Section
15(d) of the Securities Exchange Act of 1934, as amended, shall not be
prohibited by this section. For purposes of this Article 4, the term “business”
shall mean any enterprise, commercial venture, or project involving film based
delivery systems to deliver drug actives, nutraceuticals, cosmaceuticals or
flavors, and soluble film based packaging systems.  Consultant may notify the manager of the
Company in writing that he desires to own an interest in, manage, control, participate
in, consult with, render services for, or otherwise engage in a business which
may compete with Company within the meaning of this Agreement, and request 

 

5

that the manager of the
Company authorize such activity.  The
manager of the Company shall have fifteen (15) business days to notify
Consultant in writing of such authorization or denial of such
authorization.  The failure of the
manager of the Company to provide such notification within this fifteen (15)
business day period will conclusively be deemed to be denial of such
authorization.

Further, during the term
of this Agreement and the Restricted Period, Consultant covenants and agrees
that he will not directly or indirectly induce or otherwise attempt to
influence any employee of the Company to leave the Company’s employment or in
any way interfere with the relationship between the Company and any employee
thereof.

Further, during the term
of this Agreement and the Restricted Period, Consultant will not induce or
attempt to induce any customer, supplier, licensee, joint venture partner,
shareholder, licensor or other business relation of the Company to cease doing
business with the Company or in any way interfere with the relationship between
any such customer, supplier, licensee, joint venture partner, shareholder,
licensor or business relation of the Company.

To the extent this
Section and the definition of Restricted Period in this Agreement conflicts
with, or is more restrictive upon the Consultant than, the Non-Competition
obligations from his prior Executive Employment Agreement with the Company, the
terms of this Section of this Agreement shall govern.

                4.5           Conflict of Interest.  Consultant covenants and agrees that he will
not receive and has not received any payments, gifts or promises and Consultant
will not engage in any employment or business enterprises that in any way
conflict with his ability to provide services for, or conflict with the
interests of, the Company or its affiliates under this Agreement.  Consultant shall make all reasonable efforts
consistent with the terms of this Agreement to prevent occurrences of and
eliminate conditions which could result in a conflict with the best interest of
the Company or its affiliates.  Consultant
shall make all reasonable efforts to prevent conflicts of interest from arising
out of relationships between Consultant, agents or employees of Consultant and
agents or employees of the Company or its affiliates.  In addition, Consultant agrees to comply with
the laws or regulations of any country, including, without limitation, the
United States of America, having jurisdiction over Consultant or the Company or
its affiliates.

Consultant shall not make
any payments, loans, gifts or promises or offers of payments, loans or gifts,
directly or indirectly, to or for the use or benefit of any official or
employee of any government or to any other person if Consultant knows, or has
reason to believe, that any part of such payments, loans or gifts, or promise or
offer, would violate the laws or regulations of any country having jurisdiction
over Consultant or the Company or its affiliates.  Consultant’s efforts shall include the
establishment of precautions to prevent Consultant and his agents and
employees, if any, from giving or receiving gifts or entertainment, other than
an ordinary social amenity, or make any payments, loans or other consideration
for the purpose of procuring business or inducing any person to act contrary to
the best interest of the Company or its affiliates.

By signing this
Agreement, Consultant acknowledges that he has not made any payments, loans,
gifts, promises of payments, loans or gifts to or for the use or benefit of any

6

official or employee of any government or to any other
person which would violate the laws or regulations of any country having
jurisdiction over Consultant or the Company or its affiliates.

4.6           Restricted Period.  The term “Restricted Period” shall mean the two (2) year
period which starts on the date that this Agreement is terminated, without
regard to reason for
such termination.

4.7           Reasonable and Continuing
Obligations.  Consultant
agrees that Consultant’s obligations under Sections 4.1, 4.2, 4.3, 4.4, and 4.5
are obligations which will continue beyond the date this Agreement terminates,
that such obligations are reasonable and necessary to protect the Company’s
legitimate business interests.  The
Company additionally shall have the right to take such other action as the
Company deems necessary or appropriate to compel compliance with the provisions
of Section 4 (including, without limitation, seeking a court order for specific
performance).

5.             TERMINATION OF AGREEMENT

This Agreement may be
terminated by either party at any time for material breach by the other party,
upon fifteen (15) calendar days’ written notice, if the breaching party has
failed to remedy the breach leading to the termination during that fifteen
(15)-day period.  If this Agreement is
terminated under this provision by Consultant, Consultant shall continue to be
entitled to receive, and the Company shall continue to be obligated to pay, any
and all compensation to which Consultant is otherwise entitled under the terms
of this Agreement as of the date of the termination of this Agreement.  If this Agreement is terminated under this
provision by Company, then the Company shall not be obligated to pay any
further amounts to Consultant.

6.             GENERAL PROVISIONS

6.1           Notice.  Any notice required to be given under this
Agreement by one party to the other may be effected by personal delivery in
writing, by telefax (with receipt of delivery and copy mailed by first class
mail), by overnight courier or by regular United States mail Registered or
Certified, postage pre-paid, with return receipt requested to the address of
the recipient party specified on the signature page of this Agreement.  Notices delivered personally or via telefax
will be deemed communicated as of the date of delivery.  Notices sent via overnight courier shall be
deemed communicated three days after dispatch. 
Notice sent via regular United States mail shall be deemed communicated
as of the day of delivery.  Either party
may change its/his address by providing notice to the other party consistent
with the terms of this section.

6.2           Assignment/Subcontracting.  This Agreement, and all duties and
obligations hereunder are personal in nature, and Consultant shall not assign
this Agreement, or any portion thereof, voluntarily or involuntarily by operation
of law, or enter into any subcontract for the performance of any services under
this Agreement, or any portion thereof, without the Company’s prior written
approval.

6.3           INDEMNIFICATION.  TO THE EXTENT PERMITTED BY LAW, CONSULTANT
AGREES TO PROTECT, INDEMNIFY, DEFEND (INCLUDING PAYMENT

7

OF ALL COSTS, EXPENSES,
AND ATTORNEY’S FEES), AND HOLD HARMLESS THE COMPANY, ITS OFFICERS, AGENTS,
SERVANTS AND EMPLOYEES AND THE COMPANY SUBSIDIARIES AND AFFILIATES AND THEIR
RESPECTIVE DIRECTORS, OFFICERS, AGENTS, SERVANTS AND EMPLOYEES FROM AND AGAINST
ALL CLAIMS, DEMANDS AND CAUSES OF ACTION ASSERTED BY ANY PERSON FOR PERSONAL
INJURY, ILLNESS, OR DEATH OR FOR THE LOSS OF OR DAMAGE TO PROPERTY, OR ANY
CIVIL FINES OR PENALTIES WHICH A GOVERNMENTAL AGENCY, OFFICER OR COURT OF LAW
IMPOSES IN ANY WAY RESULTING FROM THE WILLFUL MISCONDUCT OR NEGLIGENT ACTS OR
OMISSIONS OF CONSULTANT, OR HIS AGENTS, EMPLOYEES, REPRESENTATIVES OR
SUBCONTRACTORS.

TO THE EXTENT PERMITTED
BY LAW, THE COMPANY AGREES TO PROTECT, INDEMNIFY, DEFEND (INCLUDING PAYMENT OF
ALL COSTS, EXPENSES, AND ATTORNEY’S FEES), AND HOLD HARMLESS CONSULTANT, HIS
AGENTS, SERVANTS AND EMPLOYEES AND HIS SUBCONTRACTORS AND THEIR RESPECTIVE
DIRECTORS, OFFICERS, AGENTS, SERVANTS AND EMPLOYEES FROM AND AGAINST ALL
CLAIMS, DEMANDS AND CAUSES OF ACTION ASSERTED BY ANY PERSON FOR PERSONAL
INJURY, ILLNESS, OR DEATH OR FOR THE LOSS OF OR DAMAGE TO PROPERTY, OR ANY
CIVIL FINES OR PENALTIES WHICH A GOVERNMENTAL AGENCY, OFFICER OR COURT OF LAW
IMPOSES IN ANY WAY RESULTING FROM THE WILLFUL MISCONDUCT OR NEGLIGENT ACTS OR
OMISSIONS OF THE COMPANY, ITS AGENTS, EMPLOYEES, REPRESENTATIVES, SUBSIDIARIES,
AFFILITATES OR SUBCONTRACTORS.

WHERE SUCH PERSONAL
INJURY, ILLNESS, DEATH, CIVIL FINES OR PENALTIES, OR LOSS OF OR DAMAGE TO
PROPERTY IS THE RESULT OF THE JOINT OR CONCURRENT NEGLIGENCE OR WILLFUL
MISCONDUCT OF CONSULTANT AND THE COMPANY OR THEIR RESPECTIVE AGENTS, EMPLOYEES,
AFFILIATES, REPRESENTATIVES, SUBCONTRACTORS, OR ANY THIRD PARTY, CONSULTANT’S
DUTY OF INDEMNIFICATION SHALL BE IN THE SAME PROPORTION THAT THE NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE CONSULTANT, ITS AGENTS, EMPLOYEES OR REPRESENTATIVES
OR SUBCONTRACTORS CONTRIBUTED HERETO.

6.4           Governing Law.  This Agreement and all matters relating to
the meaning, validity or enforceability thereof and the performance of the
services hereunder shall be governed by the laws of the State of New Jersey,
exclusive of its conflict of laws rule.

6.5           Arbitration.  SUBJECT TO THE PROVISIONS OF SECTION 4.6 OF
THIS AGREEMENT, ANY UNRESOLVED DISPUTE OR CONTROVERSY BETWEEN CONSULTANT AND
THE COMPANY ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT SHALL BE SETTLED
EXCLUSIVELY BY ARBITRATION, CONDUCTED IN ACCORDANCE WITH THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT.  THE ARBITRATOR SHALL NOT HAVE THE AUTHORITY
TO ADD TO, DETRACT FROM, OR MODIFY ANY PROVISION HEREOF.  A DECISION BY THE ARBITRATOR SHALL BE IN
WRITING AND WILL BE 

8

FINAL AND BINDING.  JUDGMENT MAY BE ENTERED ON THE ARBITRATOR’S
AWARD IN ANY COURT HAVING JURISDICTION. 
THE ARBITRATION PROCEEDING SHALL BE HELD IN SOMERSET, NEW JERSEY.

6.6           Computer Facilities.  If required for Consultant to perform the
services under this Agreement, Consultant will have access to certain parts of
the Company’s and its affiliates’ computer facilities and programs.  Consultant agrees that such access shall be
subject to the following conditions:

(a)           Access to the Company’s or its
affiliates’ computers shall be made only in the manner prescribed by the
Company.  Access shall be made using only
terminals owned or controlled by the Company and its affiliates and only by
Consultant.

(b)           Any user identification code provided
by the Company or its affiliates shall be used solely for access to the
computers for conduct of the services for the Company or its affiliates and
only by Consultant.

(c)           Consultant shall not access software
or data on the Company’s or its affiliates’ computer system, other than
Consultant’s software or data, without the Company’s prior written consent.

(d)           In the event that Consultant should
accidentally or inadvertently access any the Company or the Company affiliate
software or data which Consultant is not authorized to access, then Consultant
shall immediately inform the Company and shall deliver to the Company or
destroy as the Company may advise any tangible materials (and all copies
thereof) resulting from such improper access.

(e)           the Company or its affiliates may
copy, use, disclose, distribute, dispose of or destroy anything placed on the
Company’s or its affiliates computer systems by Consultant.

6.7           Entire Agreement and
Modification.  This
Agreement supersedes any and all agreements, either oral or written, between
the parties with respect to the rendering of consulting services by Consultant
for the Company, and contains all representations, covenants and agreements
between the parties with respect to the rendering of such services by
Consultant, with the exception of the Intellectual Property Rights Agreement
and any surviving provisions of the Consultant’s prior Executive Employment
Agreement.  Any modification of this
Agreement will be effective only if it is in writing and signed by the party to
be charged.

6.8           Captions, Headings,
Exhibits and Abbreviations. 
The captions and headings of this Agreement are for convenience only and
have no force and effect in the interpretation or construction of this
Agreement.  Words indicated in parenthesis
signify an abbreviation for the previous set of words or terms, so that when
the abbreviation is used within the Agreement, it shall have the same meaning
as a full statement of the words or terms.

6.9           Severability.  If any term, provision, covenant or condition
of this Agreement shall be or become illegal, null, void, or against public
policy, or shall be held by any court of competent jurisdiction to be illegal,
null or void or against public policy, the remaining

9

provisions of this
Agreement shall remain in full force and effect and shall not be affected,
impaired or invalidated thereby.  The
term, provision, covenant or condition that is so invalidated, voided or held
to be unenforceable shall be modified or changed by the parties to the extent
possible to carry out the intentions and directives set forth in this
Agreement.

6.10         Successors and Assigns.  Except as restricted herein, this Agreement
shall be binding on and shall inure to the benefit of the parties and their
respective heirs, legal representatives, successors and permitted assigns.

6.11         Waiver.  No waiver of any provision or consent to any
action shall constitute a waiver of any other provision or consent to any other
action, whether or not similar.  No
waiver or consent shall constitute a continuing waiver or consent or commit a
party to provide a waiver in the future except to the extent specifically set
forth in writing.  Any waiver given by a
party shall be null and void if the party requesting such waiver has not provided
a full and complete disclosure of all material facts relevant to the waiver
requested.  No waiver shall be binding
unless executed in writing by the party making the waiver.

 

 

[Signature
Page Follows]

 

 

10

 

IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date(s) set forth below.

 

	
   

  	
   

  	
  JOSEPH M. FUISZ, ESQ.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Address for Notice:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MONOSOL RX, LLC

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address for Notice:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

 

11

EXHIBIT B

Benefits
Summary

 

 

12

 

 

New
Hire

Benefits
Summary

Effective
2/1/07

 

Medical Dental and Vision Care

•                  Medical
& Dental Care Plan

•                  Network Provider is Great
West Healthcare

•                  Coverage starts on first day
of the month, following hire date

•                  Vision
Care Plan

•                  Coverage is bundled with
Medical and Dental Plans (no additional premiums)

•                  Network Provider is VSP

•                  Coverage starts on first day
of the month, following hire date

 

Life Insurance, Accidental Death
& Dismemberment (AD&D), Short & Long Term Disability Coverage

•                  Company covers employee at
1.5x annual salary for Life and AD&D ($500,000 max)

•                  Short - term disability is
company paid (60% of weekly earnings, $500 per week max)

•                  Long-term disability is
company paid (60% of monthly earnings, $6000 max)

•                  Voluntary term life coverage
is available at employee expense. Coverage can include:

•                   Employee — up to 5x annual
salary, $250k max;

•                   Spouse — up to 50% of
employee benefit/$50k max;

•                   Dependent child(ren) — up
to 50% of employee benefit/$10k max

•                  Program is administered through
Mutual of Omaha

 

Paid vacation

•                  20 days vacation annually,
prorated based on hire date

 

401k

•                  Eligibility begins
immediately

•                  Company matches 100% of
employee contribution up to 6%

Administered
through John Hancock

2007Exhibit 10.4

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment
Agreement (the “Agreement”) is made and entered into as of this 1st day
of August, 2006 (the “Effective Date”), by and between MonoSol RX, LLC (the “Company”),
and Pradeep Sanghvi, an individual (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the
Company desires to employ the Executive as its Vice President – Pharmaceutical
Development, and Executive is willing to accept such employment by the Company,
on the terms and subject to the conditions set forth in this Agreement; and

 

WHEREAS, the
Company and the Executive desire that the terms of this Agreement begin on the
Effective date set forth above; and

 

WHEREAS, the
Company and the Executive desire to enter into this Agreement so that the
rights, duties, benefits, and obligations of each regarding the Executive’s
employment for and by the Company will be fully set forth in this Agreement;

 

NOW, THEREFORE,
in consideration of the premises and the mutual covenants herein set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, 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 Vice President – Pharmaceutical Development. The Executive shall report
directly to the President and CEO (hereafter the “CEO”). 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
Vice President – Pharmaceutical Development, 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 of MonoSol RX, LLC; and (iii) diligently
follow and implement all policies, practices, procedures, and rules of the
Company.

 

2.                                       Employment Term. This Agreement
shall commence on the Effective Date and continue for a period of three (3) years
(the “Employment Term”), unless this Agreement is earlier terminated in
accordance with Section 5 hereof. The Employment Term shall be
automatically extended for additional twelve-month terms without further action
of either party, unless written notice of either party’s intention not to
extend has been given to the other party at least sixty (60) days prior to the
then-effective Employment Term. Non-extension of this Agreement shall not
constitute a termination pursuant to Section 5 hereof and shall not
trigger any of the obligations set forth in Section 6 hereof. In the event
that either party timely decides not to extend this Agreement, the Executive
shall receive his Base Salary and a pro-rated Annual Bonus of 50% of his Base
Salary (provided that he and the Company satisfy the performance targets)
through the last day of the Employment Term, as well as 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 plan.

 

1

 

3.                                       Compensation.

 

A.                                   Base
Salary. As compensation for services rendered to the Company pursuant to
this Agreement, the Company shall pay to Executive a base salary (the “Base
Salary”) at a rate of $280,000.00 per annum, payable at a rate of $23,333.33
per month. The Base Salary will be paid in accordance with the standard payroll
policies of the Company as from time to time are in effect, subject to all
applicable withholdings and deductions to cover Executive contributions to, and
payments under, applicable benefit and welfare plans and programs. The Base
Salary shall be considered by the CEO for increase based upon the Executive’s
performance and other considerations as appropriately determined by the CEO,
including without limitation performance assessment, market assessment for
comparable executive and employment terms and awards as may be deemed
appropriate from time to time.

 

B.                                     Bonus.

 

(i)                                     Annual Bonus. In addition to the Base
Salary, at the end of each twelve (12) month calendar year during the
Employment Term, Executive shall be eligible, if then employed with the
Company, for a bonus of 50 percent (50%) of Executive’s Base Salary, provided
the Executive and the Company achieve established performance targets.
Executive must be employed by the Company on the day any bonus payment is
payable under this Agreement in order to receive said bonus payment. The bonus
shall be paid in a single lump sum payment subject to all applicable
withholdings and deductions. If the Executive and the Company exceed
established performance targets, the Company may, in its sole discretion,
increase the amount of the Annual Bonus. During the first calendar year of the
Employment Term, seven-twelfths (7/12) of the Annual Bonus shall be based on
the Executive’s base salary prior to the Effective Date and five-twelfths
(5/12) Annual Bonus shall be based on the Executive’s Base Salary pursuant to
this Agreement.

 

4.                                       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
executive level employees of the Company. All employee benefit plans are
subject to change or cancellation, from time to time, at the Company’s
discretion.

 

B.                                     Vacation.
During the Employment Term, the Executive shall be allowed to take up to four (4) weeks
of vacation each calendar year. Eligibility to carry-over unused vacation days
to the next year of the Employment Term shall be governed by the policies
established from time to time by the Company for senior executives. The
Executive shall not receive pay for any unused vacation days at the end of any
year of the Employment Term or upon Termination, unless otherwise specified in Section 6.

 

C.                                     Sick
Leave. During the Employment Term, the Executive shall be eligible for such
sick leave each year of the Employment Term, commencing on the Effective Date,
as shall be established from time to time by the Company for senior executives.
Sick days shall not be carried over to the next year of the Employment Term.
The Executive shall not receive pay 

 

2

 

for any unused sick days at the end of any Employment
Term or upon any termination as described in Section 5.

 

D.                                    Performance
Units Plan. During the Employment Term, the Executive’s eligibility,
rights, obligations, and requirements for participation in the Performance Unit
Plan shall be governed exclusively by the terms and conditions of the
Performance Units Plan Agreement.

 

5.                                       Termination.

 

A.                                   Termination
for Cause. Notwithstanding anything to the contrary contained in this
Agreement, Termination for Cause may be effected by the Company at any
time during the term of this Agreement by written notification to the Executive.
For purposes of this Agreement, “Termination for Cause” shall mean:

 

(1)                                  the
willful and continued failure of such Executive to perform his duties,
including, without limitation, such Executive’s failure or refusal to follow
the legitimate directions of the Company and/or of any of the persons to whom
such Executive reports (other than any such failure resulting from his death or
permanent disability); or

 

(2)                                  the
engaging by such Executive in willful, reckless or negligent conduct in
connection with his employment or other relationship which is materially
detrimental to the Company; or,

 

(3)                                  the
Executive has materially breached his obligations under Section 7 of this
Agreement; or,

 

(4)                                  the
conviction of such Executive of any felony or any crime involving moral
turpitude; or,

 

(5)                                  such
Executive’s reporting to work impaired by or under the influence of alcohol or
illegal drugs; or,

 

(6)                                  such
Executive’s engaging in the unlawful use (including being under the influence)
or possession of illegal drugs on the Company’s premises; or,

 

(7)                                  such
Executive’s engaging in sexual harassment or other violation of any harassment
or discrimination law; or,

 

(8)                                  Executive’s
commission of fraud in connection with Executive’s employment or theft,
misappropriation or embezzlement of the Company’s funds, property, data, or
equipment; or,

 

(9)                                  the
use or disclosure by Executive of any confidential proprietary or trade secret
information of Executive’s former employer or that Executive learned or
obtained through his former employer; or,

 

3

 

(10)                            the
use or disclosure by the Executive of any confidential proprietary or trade
secret information of the company except when such disclosure is made pursuant
to the directions of the Company or in accordance with Company policy; or,

 

(11)                            such
Executive’s engaging in competitive behavior against the Company, purposely
aiding or attempting to aid a competitor of the Company, or misappropriating or
aiding in misappropriating a material opportunity of the Company.

 

All determinations of “Cause”
shall be approved by the Board. If the Company elects to terminate Executive’s
employment for Cause pursuant to clause (1) of the definition of “Cause”
and the action or inaction prompting such termination is capable of cure, the
Company shall first give Executive written notice thereof and a period of
thirty (30) days (the “Cause Notice Period”) from the date of such notice to
cure the action or inaction giving rise to the written notice. If such action
or inaction is not cured by Executive by the end of the Cause Notice Period, as
determined by the Board and communicated to the Executive in writing, such
termination shall be effective upon the first day after the expiration of the
Cause Notice Period. If Executive’s conduct falls within any clause of the
definition of Cause other than clause (1) or it falls within clause (1) and
is not curable, no notice need be given by the Company before terminating the Executive
for Cause.

 

B.                                     Termination
by Reason of Disability. This Agreement and the Executive’s employment with
the Company shall terminate upon the Executive having 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
ninety-one (91) consecutive days or for an aggregate of one hundred twenty
(120) 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
board certified 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, this Agreement
and 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 and his employment
with the Company at any time, subject to providing sixty (60) days’ written
notice to the Company.

 

E.                                      Termination
Without Cause. Notwithstanding anything to the contrary contained in this
Agreement, Executive’s employment may be terminated by the Company for any
reason other than for Cause, Disability, or Death upon thirty (30) days written
notification to the Executive.

 

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, 

 

4

 

the Executive for any period after the effective date
of such termination, or to pay the Annual 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 plan (with
the exception of any bonus and/or incentive compensation). All payments shall
be subject to applicable withholdings and deductions.

 

B.                                     Termination
By Reason of Disability. In the event that the Executive’s employment under
this Agreement is terminated because of a Permanent Disability, 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 date of such termination; provided, however, that the Company shall
promptly provide: (i) all Base Salary earned by the Executive through the
effective date of such termination; (ii) payment equal to the Annual Bonus
received by the Executive for the previous year, pro-rated for the number of
days the Executive is employed during the year of termination up to the date of
termination; (iii) 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 plan; and (iv) unused vacation pay for the year in which the
termination occurs.

 

C.                                     Termination
by Reason of Death. If the employment of the Executive hereunder shall
terminate because of death of the Executive, 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
date of such termination; provided, however, that the Company shall promptly
provide: (i) all Base Salary earned by the Executive through the effective
date of such termination; (ii) payment equal to the Annual Bonus received
by the Executive for the previous year, pro-rated for the number of days the
Executive is employed during the year of termination up to the date of
termination; (iii) any benefits under any plans of the Company in which
the Executive was a participant to the full extent of the Executive’s rights
under such plans; and (iv) unused vacation pay for the year in which the
termination occurs.

 

D.                                    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 amount of the sixty (60)
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; 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
Executive is a participant, to the full extent of the Executive’s rights under
such plans (with the exception of any bonus and/or incentive compensation). All
payments shall be subject to applicable withholdings and deductions.

 

E.                                      Termination
Without Cause. In the event that the Executive’s employment under this
Agreement is involuntarily terminated as defined in Section 5(E) of
this Agreement, the Company shall continue to provide: (i) the Base Salary
for the remainder of the 

 

5

 

Employment Term (the “Severance Period”), at such
intervals as the same would have been paid had the Executive remained in the
active service of the Company; (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 (with the exception of the Annual Bonus and
any other bonus and/or incentive compensation) for the Severance Period. In
order to receive the payment described in this subsection 6E(i), the
Executive agrees to execute a Release in the form prescribed by the
Company. No payments subject to the Release shall be paid unless and until the
Executive voluntarily signs and returns the Release and does not revoke same.

 

7.                                       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 7
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.

 

A.                                   Non-Competition/Non-Solicitation.
During the Employment Term and any extensions thereof and during the Severance
Period or for two (2) years following the Executive’s termination of
employment by either party for any reason, whichever is longer, Executive shall
not, without the prior written consent of Company, which consent may be
withheld at the sole discretion of Company: (a) engage or participate in
or in any manner be connected or concerned, directly or indirectly, whether as
an officer, director, stockholder, partner, owner, employee, advisor, creditor,
or otherwise with the operation, management, or conduct of any Competitor of
the Company; (b) solicit, contact, interfere with, or divert, or attempt
to solicit, contact, interfere with, or divert, any customer or vendor of the
Company or potential customer or vendor identified by Company during the
Executive’s employment and with whom the Executive had any dealings or
relationship and from whom the Executive gained confidential information; or (c) solicit
or attempt to solicit, directly or indirectly, any person employed by the
Company at any time during the one year period prior to the Executive’s
termination to resign from the Company or to join the Executive, whether as a
partner, agent, employee, or otherwise, with any Competitor. The term “Competitor”
as used in Sections 7(A) and 7(B) refers to any business or entity which
is or plans to develop, manufacture, market, or sell any system or product
designed to compete directly with the systems and products of the Company and
its subsidiaries and affiliates which are under active development or are
manufactured, marketed or sold.

 

B.                                     Confidentiality.
During the Employment Term and following the termination of this Agreement for
any reason the Executive shall hold in a fiduciary capacity for the benefit of
the Company all Confidential Information of the Company and its business and
production operations that is obtained, observed, available or accessible to
Executive during his employment, which shall not be generally known to the
public (other than through the breach of this Agreement by the Executive) or
recognized as standard practice (whether or not developed by Executive). 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 

 

6

 

print-outs, employee information, vendor and
contractor information, confidential and proprietary information from third
parties, strategic plans, methods of business, source data, research plans,
system or product research, or any other data of or pertaining to the Company,
its business, its systems, customers and financial affairs, or its services not
generally known within Company’s trade and which was obtained by, observed by,
available to, or accessible to him during his affiliation with Company Executive
shall not, during his employment hereunder or after the termination of such
employment, communicate or divulge any such Confidential Information to any
Competitor or to any other person, firm or corporation other than Company
without the express written consent of the CEO or the Board. Executive shall
not make any use whatsoever of such Confidential Information, except to the
extent required in order to carry out his duties as an Executive. Executive
acknowledges that Confidential Information is treated as confidential by the
Company, that the Company takes meaningful steps to protect the confidentiality
of Confidential Information, and that Company has at all times directed
Executive to maintain the confidentiality of Confidential Information. In the
event the Executive is compelled by a subpoena or a valid order of a court or
other governmental body to disclose Confidential information, he shall do so
only to the extent of and for the purposes of such order; provided, however,
that the Executive shall first notify the Company in writing of the order
within a reasonable time to allow the Company to seek an appropriate protective
order.

 

During the Employment
Term, the Executive shall not remove from Company premises or retain (except to
the extent required to carry out his duties as an Executive) without the
express written consent of the CEO or the Board any of the Company’s
Confidential Information or copies of or extracts therefrom. Immediately upon
termination of this Agreement and/or the Executive’s employment, the Executive
shall return all Company property, Confidential Information or copies or
extracts therefrom, passwords, security or access cards, security or access
codes, keys, and equipment.

 

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 Employment Term 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, 

 

7

 

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 properties 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 7
shall be adjudicated to be invalid or unenforceable, such adjudication shall
apply only with respect to the 

 

8

 

operation of such provision in the particular
jurisdiction in which such adjudication is made. The Company and Executive also
agree that in the even 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.

 

F.                                      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.

 

G.                                     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.

 

H.                                    Remedies.
The Executive agrees that irreparable harm would result from any breach by
Executive of the covenants of this Section 7 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 7, 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 7. 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 7 may be brought in any
court of competent jurisdiction.

 

9

 

8.                                       Attorneys’ Fees. In any action
brought by any party under this Agreement to enforce any of its terms, or any
appeal therefrom, the prevailing party shall be entitled to an award of its
reasonable attorneys’ fees.

 

9.                                       Cooperation. Executive agrees that
during the Employment Term and any extension, and after his termination of
employment for any reason, whether initiated by the Company or by the
Executive, 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 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.

 

10.                                 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:                                             Keith
Kendall

Chief Financial Officer

MonoSol Rx LLC

30 Technology Drive

Warren Township, NJ 07059

 

If to the
Executive:                                             Pradeep
Sanghvi

7409 Bell Street

Schererville, IN 46375

 

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.

 

11.                                 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.

 

12.                                 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.

 

10

 

13.                                 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. This Agreement may not be modified, amended, altered
or rescinded in any manner, except by written instrument signed by all of the
parties hereto; 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; 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.

 

14.                                 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 be affected thereby.

 

15.                                 Construction. This Agreement was
freely negotiated and shall not be construed against either party.

 

16.                                 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.

 

17.                                 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.

 

18.                                 Survival. The provisions of
Sections 7-11 of this Agreement shall survive any termination of this Agreement
and/or the Executive’s employment by either party. The provisions of Sections
7-11 shall also survive any party’s decision not to extend this Agreement as
provided in Section 2.

 

[Signature Page to
Follow]

 

11

 

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

 

	
   

  	
  MonoSol RX, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:  

  	
   

  	
  /s/ Keith Kendall

  	
   

  
	
   

  	
   

  	
  Keith Kendall

  
	
  Date:  

  	
  9/14/06

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Pradeep Sanghvi, Individually

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date:  

  	
  September 13, 2006

  	
   

  	
  /s/ Pradeep Sanghvi

  	
   

  
	
   

  	
   

  	
   

  	
  Pradeep Sanghvi

  	
   

  

 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]