Exhibit 10.1

CADENCE PHARMACEUTICALS, INC.

BONUS PLAN

Effective January 1, 2014

INTRODUCTION AND PURPOSE

The Cadence Pharmaceuticals, Inc. (“Cadence” or the “Company”) Bonus Plan (the
“Plan”) is designed to reward eligible employees for the achievement of
corporate objectives, as well as measured individual objectives that are
consistent with and support the overall corporate objectives. Since cooperation
between departments and employees will be required to achieve corporate
objectives that represent a significant portion of the Plan, the Plan should
help foster teamwork and build a cohesive management team.

The Plan is designed to:

 

  •   Encourage high performance by providing an incentive program to achieve
overall corporate objectives and to enhance shareholder value.

 

  •   Reward those individuals who significantly impact corporate results.

 

  •   Encourage increased teamwork among all disciplines within Cadence.

 

  •   Incorporate an incentive program in the Cadence overall compensation
program to help attract and retain employees.

 

  •   Provide an incentive for eligible employees to remain employed by Cadence
through and beyond the payout of any earned bonus.

ELIGIBILITY

All regular employees are eligible to participate in the Plan. Employees are not
eligible if included in a separate formal incentive plan provided by the
Company. In order to be eligible, a participant must have been in an eligible
position for at least three (3) full consecutive months prior to the end of the
Plan year, and the participant must remain employed through the end of the Plan
year and until awards are paid. If the participant is not employed on the date
awards are paid, the participant will not have earned any bonus. If the
participant has been subject to a performance improvement plan or other
disciplinary procedure during the Plan year, any award to such individual will
be at the discretion of the President and CEO or the Compensation Committee of
the Board of Directors (the “Compensation Committee”).

Change in Status During the Plan Period:

 

a. Participants hired during the Plan year:

 

  •   Participants hired during the Plan year are eligible for a prorated award
based on the number of months employed in an eligible position.

 

  •   Participants hired after the end of the third quarter are not eligible to
participate for the plan year.

 

b. Promotion/change in level:

 

  •   For promotions that occur after March 31 of the applicable Plan year but
prior to October 1 of the applicable Plan year, the calculation will be
prorated, based on the number of months at each bonus percentage level.

 

  •   If the promotion occurred on or after October 1st of the applicable Plan
year, the entire calculation will be based on the bonus percentage applicable
prior to the promotion.

 

c. Transfer to a position that is included in a separate formal Incentive Plan:
Awards will be prorated using the same discipline as outlined for promotions
above and in the formal Incentive Plan.

 

d. Termination of employment:

 

  •   If a participant’s employment is terminated voluntarily prior to the date
awards are paid, the participant will not be eligible to receive an award.

 

  •   If a participant’s employment is terminated involuntarily prior to the
date awards are paid, it will be at the absolute discretion of the Company
whether or not an award payment is made.

 

e. Leave of Absence: If a participant is on leave of absence for more than one
month during the Plan year, award will be prorated based on the number of months
of active work in the year.

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AWARD CALCULATION

Awards will be determined by applying a “bonus percentage” to the participant’s
base salary in effect at the end of the Plan year. While the Compensation
Committee may change the bonus percentage for any Plan year, the following bonus
percentages will initially be used for this purpose:

 

Position Title

   Bonus Percentage  

President/CEO

     75 % 

EVP, SVP

     45 % 

VP

     35 % 

Executive Director, Senior Director

     25 % 

Director

     20 % 

Medical Science Liaison

     15 % 

Associate Director, Senior Manager

     15 % 

Manager

     10 % 

Analyst/Specialist

     8 % 

Administrative/Accounting Associate

     6 % 

Corporate and Individual Performance Factors

The President and/or CEO will present to the Compensation Committee a list of
the overall corporate objectives for the applicable Plan year, which are subject
to approval by the Compensation Committee. All participants in the Plan whose
performance is measured in part based on individual performance factors will
then develop a list of key individual objectives, which must be approved by the
responsible Vice President, Senior Vice President, or President and/or CEO.

The relative weight between corporate and individual performance factors varies
based on the individual’s assigned level within the organization. The weighting
may be reviewed periodically and may be adjusted for any Plan year. The
weighting for the performance factors will initially be as follows:

 

     Corporate     Individual  

President/CEO

     100 %   

EVP/SVP

     100 %   

VP

     60 %      40 % 

Exec Dir/Sr Dir/Dir/Assoc Dir/Sr Mgr/MSL

     50 %      50 % 

Manager

     40 %      60 % 

Analyst/Specialist/Administrative

     30 %      70 % 

Performance Award Multiplier

 

a. President/CEO and EVP/SVP Plan Participants (“Executive Officers”): The award
multiplier for the corporate component will be determined by the Compensation
Committee each Plan year, in its sole discretion. The actual performance bonus
awarded to each Executive Officer in any year, if any, may be more or less than
the applicable target, depending primarily on the Compensation Committee’s
determination of the award multiplier for the corporate component and the
executive’s individual performance with respect to the corporate objectives.
Whether or not performance bonus is paid for any year is within the discretion
of the Compensation Committee (or the Board of Directors in the case of the
President/CEO) based on such achievement.

 

b. All Other Plan Participants: Separate award multipliers will be established
for both the corporate and the individual components of each award. The award
multiplier for the corporate component will be determined by the Compensation
Committee each Plan year, in its sole discretion. The same award multiplier for
the corporate component of the award shall be used for all such Plan
participants. The award multiplier for the individual component shall be
determined by the responsible Vice President, Senior Vice President, or
President and/or CEO.

 

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While the Compensation Committee may change the award multipliers for any Plan
year, the following scale will be used to determine the actual performance award
multiplier based upon the measurement of corporate and individual performance
objectives.

 

Performance Category

   Award Multiplier

1. Performance for the year met or exceeded objectives or was excellent in view
of prevailing conditions

   75% - 150%

2. Performance generally met the year’s objectives or was very acceptable in
view of prevailing conditions

   50% - 100%

3. Performance for the year met some, but not all, objectives

   25% - 50%

4. Performance for the year was not acceptable in view of prevailing conditions

   0%

Example

The example below shows a sample cash bonus award calculation under the Plan,
which is determined after the end of the performance period.

Step #1: A potential base bonus award is calculated by multiplying the
employee’s base salary by their assigned level bonus percentage.

Step #2: The calculated potential base bonus amount is then split between the
corporate and individual performance factors by the employee’s assigned level
(per the weighting above). This calculation establishes specific potential
dollar awards for the performance period based on both the individual and
corporate performance factor components.

Step #3: After the end of the performance period, corporate and individual award
multipliers will be established using the criteria described above. Awards are
determined by multiplying the potential bonus awards in Step #2 by the actual
corporate and individual award multipliers.

 

Example:

  Step # 1: Potential Bonus Award Calculation      Position:      Director     
Base salary:    $ 100,000      Target bonus percentage:      20 %    Potential
base bonus:    $ 20,000      Step # 2: Split award target amount based on
weighting of Performance Factors      Potential corporate performance bonus
(50%):    $ 10,000      Potential individual performance bonus (50%):    $
10,000      Step # 3: Actual Cash Incentive Award Calculation     

Assumed payment multipliers based on assessment of corporate and individual

performance:

  

  

  Corporate multiplier                 75%-performance generally met objectives
     Individual
multiplier                125%-performance generally exceeded objectives     

Cash Award:

    

        Corporate component

   $ 7,500 ($10,000 x 75%)   

        Individual component

   $ 12,500 ($10,000 x 125%)      

 

 

   

        Total Award

   $ 20,000   

AWARD PAYMENTS

Bonus award payments may be made in cash, through the issuance of stock, stock
options or another form of equity award, or by a combination of cash, stock,
stock options and/or another form of equity award, at the discretion of the
Compensation Committee. All bonus award payments are subject to applicable tax
withholdings. In the event that the Compensation Committee and/or the Board of
Directors elect to pay bonus awards in stock or stock options, the Compensation
Committee, in its sole

 

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discretion, will make a determination as to the number of shares of stock or
stock options to be issued to each Plan participant based, in part, upon the
overall corporate performance and each participant’s individual performance, as
described. The issuance of stock and stock options may also be subject to the
approval of the Company’s stockholders, and any stock options issued will be
subject to the terms and conditions of the Company’s Equity Incentive Award
Plan, as amended from time to time by the Company.

Payment of bonus awards will be made as soon as practicable after the issuance
of the Company’s year-end audited Financial Statements for the Plan year, but
not later than December 31 of the year following the Plan year. Payments will
not be impacted by any benefits, with the exception of elected 401(k)
contributions which will be applied.

PLAN PROVISIONS

Governance

The Plan will be governed by the Compensation Committee. The President and/or
CEO of Cadence will be responsible for the administration of the Plan. The
Compensation Committee will be responsible for recommending to the Board of
Directors a bonus amount for the President and/or CEO (unless such compensation
is intended to be qualified, performance-based compensation under Section 162(m)
of the Internal Revenue Code of 1986, as amended). Additionally, the
Compensation Committee will be responsible for approving any compensation or
incentive awards to other executive officers of the Company and all other
officers who are subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended. All determinations of the
Compensation Committee, under the Plan, shall be final and binding on all Plan
participants.

Compensation Committee’s Absolute Right to Alter or Abolish the Plan

The Compensation Committee reserves the right in its absolute discretion to
terminate the Plan, or any portion of the Plan, at any time or to alter the
terms and conditions under which a bonus will be paid. In the event of the
Plan’s termination prior to the payment of a bonus, such bonus will not be
payable under this Plan. Such discretion may be exercised any time before,
during, and after the Plan year is completed. No participant shall have any
vested right to receive any compensation hereunder until actual delivery of such
compensation. Participation in the Plan at any given time does not guarantee
ongoing participation.

Employment Duration/Employment Relationship

This Plan does not, and Cadence’s policies and practices in administering this
Plan do not, constitute an express or implied contract or other agreement
concerning the duration of any participant’s employment with the Company. The
employment relationship of each participant is “at will” and may be terminated
at any time by Cadence or by the participant, with or without cause.

Any questions pertaining to this plan should be directed to the Human Resources
Department.

 

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