Exhibit 10.13
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
     This AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”)
is entered into as of May 6, 2009, by and between Cornerstone Therapeutics Inc.,
a Delaware corporation (the “Company”), and Joshua Franklin (the “Executive”).
This Agreement shall be effective on the Closing Date (as such term is defined
in the Stock Purchase Agreement, dated the same date as this Agreement between
the Company and Chiesi Farmaceutici SpA (the “Effective Date”).
     WHEREAS, the Executive is currently employed by the Company pursuant to the
terms of an employment agreement between Cornerstone BioPharma, Inc. and the
Executive dated as of September 29, 2008 (the “Prior Agreement”);
     WHEREAS, the Company desires to continue such employment relationship and
enter into this Agreement, which will supersede the Prior Agreement and set
forth the terms and conditions under which the Executive will continue to serve
the Company and its affiliates; and
     WHEREAS, the Executive wishes to continue his employment with the Company
on the terms and conditions set forth herein.
     NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter contained, the parties hereto agree as follows:
          1. Term of Employment. The Company hereby agrees to employ the
Executive, and the Executive hereby accepts employment with the Company, upon
the terms set forth in this Agreement, for the period commencing on the
Effective Date (the “Commencement Date”) and ending on the one year anniversary
of the Effective Date (the “Initial Term”) unless renewed or sooner terminated
in accordance with the provisions of this Section 1 or Section 4, respectively.
Upon each subsequent anniversary of the Commencement Date, the term of this
Agreement shall automatically extend for an additional year (such period,
including the Initial Term and as it may be extended, the “Employment Period”)
unless (i) either the Company or the Executive gives at least ninety (90) days
notice of non-renewal prior to such anniversary or (ii) the Agreement is
terminated in accordance with the provisions of Section 4.
          2. Title; Capacity. The Executive shall serve as Vice President, Sales
and Marketing and in such other position as the Company or its Board of
Directors (the “Board”) may determine from time to time. The Executive shall be
based at the Company’s office in Cary, North Carolina. The Executive shall be
subject to the supervision of, and shall have such authority as is delegated to
him by, the President and Chief Executive Officer of the Company or his
designee.

 

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          The Executive hereby accepts such employment and agrees to undertake
the duties and responsibilities inherent in such position and such other duties
and responsibilities as the President and Chief Executive Officer or his
designee shall from time to time reasonably assign to him. The Executive agrees
to devote his entire business time, attention and energies to the business and
interests of the Company during the Employment Period; provided, however, that
the Executive may serve as a consultant or a member of an advisory board or a
board of directors with the prior consent of the Board. The Executive agrees to
abide by any rules, regulations, instructions, personnel practices and policies
of the Company that are applicable to him and any changes therein that may be
adopted from time to time by the Company.
          3. Compensation and Benefits.
               3.1. Salary. The Company shall pay the Executive a base salary
for the year starting January 1, 2009 in accordance with its regular payroll
practices at an annualized rate of $222,600, less lawful deductions. Such salary
shall be subject to adjustment thereafter as determined by the Board.
               3.2. Annual Target Cash Bonus. The Executive shall be eligible to
receive an annual target cash bonus of up to thirty-five (35) percent of his
then annual base salary (“Target Cash Bonus”). The Board (or a committee
thereof) shall determine the amount of the actual award, if any, based on
overall corporate performance and individual performance. Actual awards may be
greater than or less than the Executive’s Target Cash Bonus, depending in part
upon the extent to which actual performance exceeds or falls below the
performance goals. Any bonus shall be paid in a single lump sum, subject to
lawful deductions, at such time as bonuses are regularly paid to senior
executives of the Company, but in any event such bonus shall be paid on or
before March 15 of the year following the year to which the bonus relates.
Except as may be expressly provided below, the Executive must be employed on the
date that the bonus is paid to be eligible for any Target Cash Bonus. Each cash
bonus award that may become payable shall be paid solely from the general assets
of the Company.
               3.3. Annual Target Equity Awards. The Executive shall be eligible
to receive an annual target equity award in the form of an option to purchase,
in whole or in part, up to fifty thousand (50,000) shares of common stock of the
Company in each of the year 2010, 2011 and 2012. The Board (or a committee
thereof) shall determine the amount of the actual equity award, if any, based on
overall corporate performance and individual performance. Each grant of options
under Sections 3.3 and 3.4 shall vest over a four-year period, 25% per year,
pursuant to the terms of the terms of the Company Stock Plan.
               3.4. Grant of Options. Effective as of the date hereof, the
Executive shall be granted an option to purchase, in whole or in part, fifty
thousand (50,000) shares common stock. The option shall be on such terms and
conditions as are described on Appendix A hereto.

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               3.5. Fringe Benefits. The Executive shall be entitled to
participate in all bonus and benefit programs (excluding the Company’s Cash
Bonus Program for Employees (Other than Executive Officers)) that the Company
establishes and makes available to its employees or executives, if any, to the
extent that the Executive’s position, tenure, salary, age, health and other
qualifications make him eligible to participate; provided, however, the
Executive’s participation is subject to the applicable terms, conditions and
eligibility requirements of these plans as they may exist from time to time. The
Executive shall be entitled to three (3) weeks of paid vacation per year,
accrued at a rate of 1.25 days per month until the Executive has completed four
(4) years of service with the Company or any of its subsidiaries at which time
vacation shall accrue at 1.67 days per month (four (4) weeks per year), and, if
requested in writing by the Chief Executive Officer, such vacation time shall be
taken at such times as may be approved by the Chief Executive Officer or his
designee. Accrued but unused vacation at the end of each year will not carry
over to the next year.
               3.6. Reimbursement of Expenses. The Company shall reimburse the
Executive for all reasonable travel, entertainment and other expenses incurred
or paid by the Executive in connection with, or related to, the performance of
his duties, responsibilities or services under this Agreement, in accordance
with the Company’s expense reimbursement policy, including the Executive’s
presentation of documentation, expense statements, vouchers and/or such other
supporting information as the Company may request, provided, however, that the
amount available for such travel, entertainment and other expenses may be fixed
in advance by the Board. Notwithstanding the foregoing, (i) the expenses
eligible for reimbursement in any particular taxable year may not affect the
expenses eligible for reimbursement in any other taxable year, (ii) such
reimbursement must be made on or before the last day of the year following the
year in which the expense was incurred, and (iii) the right to reimbursement is
not subject to liquidation or exchange for another benefit.
               3.7. Car Allowance. The Executive will receive a monthly car
allowance in the amount of $850. Both a valid driver’s license, an acceptable
motor vehicle record and personal automobile insurance are required at all times
to operate a personal motor vehicle on Company business. The Company reserves
the right to change or discontinue its vehicle reimbursement program at any
time.

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          4. Employment Termination. The employment of the Executive by the
Company pursuant to this Agreement shall terminate upon the occurrence of any of
the following:
               4.1. Expiration of the Employment Period in accordance with
Section 1;
               4.2. At the election of the Company, for Cause (as defined in
Section 21), immediately upon written notice by the Company to the Executive;
               4.3. At the election of the Executive, for Good Reason (as
defined in Section 21), upon written notice by the Executive to the Company;
               4.4. At the election of the Company without Cause during a Change
of Control Period (as defined in Section 21) or at the election of the Executive
for Good Reason during a Change of Control Period;
               4.5. Upon the death or Disability (as defined in Section 21) of
the Executive;
               4.6. At the election of the Executive, without Good Reason, by
providing written notice to the Company; and
               4.7. At the election of the Company, without Cause, by providing
written notice to the Executive.
          5. Effect of Termination.
               5.1. Termination for Cause. In the event the Executive’s
employment is terminated for Cause pursuant to Section 4.2, the Company shall
pay to the Executive the compensation and benefits otherwise payable to him
under Section 3 through the last day of his actual employment by the Company.
               5.2. Termination at the Election of the Executive Without Good
Reason. In the event the Executive elects to terminate his employment pursuant
to Section 4.6, the Company shall pay the Executive the compensation and
benefits otherwise payable to him under Section 3 through the last day of his
actual employment by the Company.
               5.3. Termination for Death or Disability. If the Executive’s
employment is terminated by death or because of Disability pursuant to
Section 4.5, in addition to any disability or life insurance benefits for which
the Executive or the estate of the Executive may be eligible, the Company shall
pay to the estate of the Executive or to the Executive, as the case may be, the
compensation and benefits otherwise payable to him under Section 3 through the
last day of his actual employment by the Company. In addition, if the
Executive’s employment terminates as a

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result of his death, the Executive’s estate shall receive an amount equal to a
pro rata payment of the annual cash bonus for which he would have been eligible,
less lawful deductions, within ten (10) calendar days following the effective
date of the Release required by Section 5.6, but not later than ninety (90) days
following termination of employment. Notwithstanding the foregoing, if the
ninetieth (90th) day following the Executive’s termination from employment
occurs in the calendar year following the year of the Executive’s termination,
then the payment shall be made no earlier than January 1 of such subsequent
calendar year. No other benefits are payable upon the Executive’s termination
pursuant to Section 4.5.
               5.4. Termination Without Cause or for Good Reason and not during
a Change of Control Period. If the Executive’s employment is terminated without
Cause pursuant to Section 4.7, or for Good Reason pursuant to Section 4.3 and
such termination does not occur during a Change of Control Period, the Company
shall:
     (i) pay the Executive a lump sum payment equal to one (1) times his
annualized base salary, less lawful deductions, payable within ten (10) calendar
days following the effective date of the Release required by Section 5.6 but not
later than ninety (90) days following termination of employment. Notwithstanding
the foregoing, if the ninetieth (90th) day following the Executive’s termination
from employment occurs in the calendar year following the year of the
Executive’s termination, then the payment shall be made no earlier than January
1 of such subsequent calendar year;
     (ii) pay on behalf of the Executive, in accordance with the Company’s
regular payroll practices, on a monthly basis an amount equal to (a) one hundred
(100) percent of the Executive’s monthly health and dental COBRA premiums for
the Executive and his dependents, if any, if the Executive properly elects to
continue health and dental insurance under COBRA and (b) pay to the Executive on
the first business day of each applicable month one hundred (100) percent of the
cost of the monthly premiums paid by the Company to the insurance companies for
life insurance and disability insurance for the Executive in the month preceding
the Executive’s termination of employment, such payments under subsections
(a) and (b) to continue until the earlier of (x) twelve (12) months after the
termination of the Executive’s employment and (y) the last day of the first
month that the Executive is eligible for other employer-sponsored health
coverage. Notwithstanding the foregoing, to the extent such payments are
reimbursement to the Executive of medical expenses incurred by the Executive as
described in Reg. § 1.409A-1(b)(9)(v)(B), reimbursements may not be made beyond
the period of time during which the Executive would be entitled (or would, but
for such arrangement, be entitled) to COBRA continuation coverage under a group
health plan of the Company;

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     (iii) pay the Executive a lump sum payment in an amount equal to a pro rata
payment of the Target Cash Bonus for which he was eligible, less lawful
deductions; such payment shall be paid within ten (10) calendar days following
the effective date of the Release required by Section 5.6, but not later than
ninety (90) days following termination of employment. Notwithstanding the
foregoing, if the ninetieth (90th) day following the Executive’s termination
from employment occurs in the calendar year following the year of the
Executive’s termination, then the payment shall be made no earlier than January
1 of such subsequent calendar year; and
     (iv) accelerate vesting of all of the Executive’s outstanding unvested
stock options and restricted stock by one year.
               5.5. Termination Without Cause or for Good Reason during a Change
of Control Period. If the Executive’s employment is terminated without Cause
pursuant to Section 4.4, or for Good Reason pursuant to Section 4.4 and such
termination occurs during a Change of Control Period, the Company shall:
     (i) pay the Executive a lump sum payment equal to one (1) times his
annualized base salary, less lawful deductions, payable within ten (10) calendar
days following the effective date of the Release required by Section 5.6, but
not later than ninety (90) days following termination of employment.
Notwithstanding the foregoing, if the ninetieth (90th) day following the
Executive’s termination from employment occurs in the calendar year following
the year of the Executive’s termination, then the payment shall be made no
earlier than January 1 of such subsequent calendar year;
     (ii) pay on behalf of the Executive, in accordance with the Company’s
regular payroll practices, on a monthly basis an amount equal to (a) one hundred
(100) percent of the Executive’s monthly health and dental COBRA premiums for
the Executive and his dependents, if any, if the Executive properly elects to
continue health and dental insurance under COBRA and (b) pay to the Executive on
the first business day of each applicable month one hundred (100) percent of the
cost of the monthly premiums paid by the Company to the insurance companies for
life insurance and disability insurance for the Executive in the month preceding
the Executive’s termination of employment, such payments under subsections
(a) and (b) to continue until the earlier of (x) twelve (12) months after the
termination of the Executive’s employment and (y) the last day of the first
month that the Executive is eligible for other employer-sponsored health
coverage. Notwithstanding the foregoing, to the extent such payments are
reimbursement to the Executive of medical expenses incurred by the Executive as
described in Reg. § 1.409A-1(b)(9)(v)(B), reimbursements may not be made beyond
the period of time during which the Executive would be entitled (or would, but
for such arrangement, be entitled) to COBRA continuation coverage under a group
health plan of the Company;

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     (iii) pay the Executive a lump sum payment in an amount equal to a pro rata
payment of the Target Cash Bonus for which he was eligible, less lawful
deductions; such payment shall be paid ten (10) calendar days following the
effective date of the Release required by Section 5.6, but not later than ninety
(90) days following termination of employment. Notwithstanding the foregoing, if
the ninetieth (90th) day following the Executive’s termination from employment
occurs in the calendar year following the year of the Executive’s termination,
then the payment shall be made no earlier than January 1 of such subsequent
calendar year; and
     (iv) accelerate vesting of one hundred (100) percent of all of the
Executive’s outstanding unvested stock options and restricted stock.
               5.6 Release of Claims as a Condition of Payment. Notwithstanding
any provision of this Agreement to the contrary, the Company’s obligation to
provide the payments and benefits under Sections 5.2, 5.3, 5.4, and 5.5 is
conditioned upon the Executive’s, or the Executive’s estate, execution of a
severance agreement and full release of all claims against the Company and all
affiliated persons and entities, drafted by and satisfactory to counsel for the
Company (the “Release”) and the Executive’s compliance with Sections 7 and 8 of
this Agreement. The Release shall include clauses covering confidentiality,
non-disparagement, cooperation, and non-admissions, among other terms, all in a
form acceptable to the Company. If the Executive chooses not to execute such a
release or fails to comply with those Sections, then the Company’s obligation to
compensate the Executive ceases on the effective termination date except as to
base salary up through the termination date. The Release shall be provided to
the Executive within thirty (30) days of the Executive’s separation from service
and the Executive must execute it within the time period specified in the
Release (which shall not be longer than forty-five (45) days from the date of
receipt). Such Release shall not be effective until any applicable revocation
period specified therein has expired.
          6. Vesting of Stock Upon a Change of Control. One hundred
(100) percent of the Executive’s outstanding unvested stock options and
restricted stock will vest on a Change of Control (as defined in Section 21).
          7. Non-Compete.
               (a) During the Executive’s employment with the Company and for a
period of one year following the cessation thereof, the Executive will not
engage in any of the following on his own behalf or in any capacity on another’s
behalf:
                    (i) engage in any business activity (or assist others to
engage in any business activity) that directly competes with the Company; or

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                    (ii) have any interest in any business that directly
competes with the Company; or
                    (iii) be employed (or otherwise engaged) in (A) a management
capacity, (B) other capacity providing the same or similar services which
Executive provided to the Company, or (C) any capacity connected with
competitive business activities, by any person or entity that engages in the
same, similar or otherwise competitive business as the Company.
The restrictions set forth in subparagraphs 7(a)(i)–(iii) shall apply in the
following severable geographic areas: (i) the Raleigh-Cary-Durham-Chapel Hill,
NC metropolitan areas; (ii) any city, metropolitan area, county, state (or
similar political subdivisions in foreign countries) in which the Company is
located or does or, during the last twelve (12) months of Executive’s employment
with the Company, did business; (iii) any city, metropolitan area, county, or
state (or similar political subdivisions in foreign countries) in which
Executive’s services were provided, or for which Executive had responsibility,
or in which Executive worked on Company projects, during the last twelve
(12) months of Executive’s employment with the Company; or (iv) the entire
United States of America and its territories.
               (b) During Executive’s employment with the Company and for a
period of one (1) year following the cessation thereof (whether voluntary or
involuntary and regardless of the reason for, or party initiating, the
termination), Executive will not engage in any of the following on his own
behalf or in any capacity on another’s behalf, directly or indirectly:
                    (i) solicit, persuade, induce, encourage or attempt to
solicit, persuade, induce or encourage any person to leave his or her employment
with the Company or to refrain from providing services to the Company; or
                    (ii) induce or attempt to induce (including, without
limitation, by soliciting business from), or otherwise encourage or assist, any
customer, client, or business relation of the Company with which Executive had
contact on behalf of the Company (A) to cease doing business with the Company or
reduce the level of business it conducts with the Company, or (B) to purchase or
promote any prescription pharmaceutical product that competes directly with the
Company’s products for the treatment of any indication for which the Company has
received United States Food and Drug Administration (“FDA”) approval or for an
indication which the Company’s products are being developed or may be developed.
Upon cessation of Executive’s employment with the Company, the Executive will
sever all marketing and sales relationships with customers of the Company and
Executive agrees that any attempt to retain these customers for his or her own
or another’s benefit will be a material breach of this Agreement.
               (c) The Executive agrees that, if requested by the Company in
writing, he will give notice to the Company of each new business activity he
plans to undertake during the non-

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competition period, at least ten (10) business days prior to beginning any such
activity. The notice shall state the name and address of the individual,
corporation, association or other entity or organization (“Entity”) for whom
such activity is undertaken and the name of the Executive’s business
relationship or position with the entity. The Executive further agrees to
provide the Company with other pertinent information concerning such business
activity as the Company may reasonably request in order to determine the
Executive’s continued compliance with his obligations under this Agreement. The
Executive agrees that, if requested by the Company in writing, he will provide a
copy of Section 7 and 8 of this Agreement to all persons and Entities with whom
he seeks to be hired or do business before accepting employment or engagement
with any of them.
               (d) If any restriction set forth in this Section 7 is found by
any court of competent jurisdiction to be unenforceable because it extends for
too long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable.
               (e) The Executive acknowledges that the restrictions contained in
this Section are necessary for the protection of the business and goodwill of
the Company and in light of, among other things, the highly competitive market
in which the Company operates. The Executive agrees that any breach of this
Section will cause the Company substantial and irrevocable damage and therefore,
in the event of any such breach, in addition to such other remedies which may be
available, the Company shall have the right to seek specific performance and
injunctive relief without posting a bond.
               (f) If the Executive violates the provisions of this Section 7,
he shall continue to be held by the restrictions set forth in this Section,
until a period equal to the period of restriction has expired without any
violation.
          8. Proprietary Information and Developments.
               8.1. Proprietary Information.
               (a) The Executive agrees that all information and know-how,
whether or not in writing, of a private, secret or confidential nature
concerning the Company’s business or financial affairs (collectively,
“Proprietary Information”) is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary Information may
include inventions, products, processes, methods, techniques, formulas,
compositions, compounds, projects, developments, plans, research data, clinical
data, financial data, personnel data, computer programs, and customer and
supplier lists. Executive will disclose Proprietary Information solely to
employees, officers, and directors of the Company and only on a need-to-know
basis and will use the same solely for purposes of performing Executive’s duties
and responsibilities on behalf of Company as described in Section 2 hereof,
unless otherwise permitted by prior written approval of an officer of the
Company. Developments (defined in Section 8.2(a) below) shall constitute
Proprietary Information of Company for all purposes hereunder.

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               (b) The Executive agrees that all files, letters, memoranda,
reports, records, data, sketches, drawings, laboratory notebooks, program
listings, or other written, photographic, or other tangible material containing
Proprietary Information, whether created by the Executive or others, which shall
come into his custody or possession, shall be and are the exclusive property of
the Company to be used by the Executive only in the performance of his duties
for the Company.
               (c) The Executive agrees that his obligations set forth in
paragraphs (a) and (b) above also extend to such types of information, know-how,
records and tangible property of customers of the Company or suppliers to the
Company or other third parties who may have disclosed or entrusted the same to
the Company or to the Executive in the course of the Company’s business.
               8.2. Developments.
               (a) The Executive will make full and prompt disclosure to the
Company of all inventions, discoveries, processes, methods, developments,
software, and works of authorship, whether or not patentable or copyrightable,
which are created, made, conceived or reduced to practice by the Executive or
under his direction or jointly with others during his employment by the Company,
whether or not during normal working hours or on the premises of the Company
(all of which, along with all improvements, modifications, and derivative works
thereof and thereto and all proprietary know-how and other information
associated therewith, are collectively referred to in this Agreement as
“Developments”).
               (b) The Executive agrees to irrevocably and unconditionally
assign, and does hereby irrevocably and unconditionally assign, to the Company
(or any person or entity designated by the Company) and to forever waive and
never assert any and all his right, title and interest in and to all
Developments and all related patents, patent applications, copyrights, copyright
registration applications, and other intellectual property rights and moral
rights associated therewith. The rights assigned to Company herein shall
include, without limitation, the rights (i) to bring claims and causes of action
for damages and other relief by reason of all past and future infringements,
misappropriations, or other violations of any and all rights under such
Developments; (ii) to collect and enjoy damages, benefits, and other remedies
resulting therefrom; and (iii) to charge and collect royalties or other payments
arising out of or relating to the grant of licenses or similar rights under any
such Developments.
               (c) The Executive agrees to cooperate fully with the Company,
both during and after his employment with the Company, with respect to the
prosecution, procurement, maintenance and enforcement and/or defense of patents,
trademarks, copyrights, trade secrets and other means for protection of the
Developments (both in the United States and foreign countries). Executive shall
sign all papers, including, without limitation, copyright registration

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applications, patent applications, declarations, oaths, formal assignments,
assignment of priority rights, and powers of attorney, which the Company may
deem necessary or desirable in order to protect its rights and interests in any
Development. The Executive shall further execute and deliver all such
instruments and take all other actions as in the opinion of the Company and its
counsel shall be appropriate to vest in the Company (or in such person as the
Company may specify) all right, title and interest in said Developments and any
patents, trademarks, copyrights, trade secrets and other intellectual property
rights associated therewith.
               (d) Whenever requested to do so by the Company, both during and
after his employment with the Company, and at the expense of the Company, the
Executive shall cooperate fully and assist the Company in the defense or
prosecution of any claims or actions now in existence or which may be brought in
the future in connection with (i) any litigation commenced by the Company
against third parties, (ii) any litigation commenced by a third party against
the Company and (iii) any administrative hearing or administrative proceeding
involving the Company. The Executive’s full cooperation in connection with any
claims, actions or administrative proceedings shall include, but not be limited
to, his being available to meet with the Company’s counsel to prepare for trial,
discovery or an administrative hearing and to act as a witness when requested by
the Company at reasonable times designated by the Company.
               (e) The Executive hereby irrevocably appoints the Company to be
his attorney in fact and, in his name and on his behalf, to execute all such
instruments and take all other actions and generally to use his name for the
purpose of providing to the Company the full benefit of the provisions of this
Section 8 of the Agreement.
               (f) The Executive hereby waives and quitclaims to the Company any
and all claims, of any nature, which the Executive now or may hereafter have for
infringement, misappropriation, or other violation of any Development assigned
hereunder to the Company.
               (g) The Executive acknowledges and agrees that all original works
of authorship which are created by the Executive (solely or jointly with others)
within the scope of Executive’s employment and which are protectable by
copyright are “works made for hire,” as that term is defined in the United
States Copyright Act (17 U.S.C. Section 101).
               (h) The Executive represents and warrants that to the extent
applicable, the Executive has provided to the Company a list entitled “List of
Inventions,” that a true and complete list of all inventions, discoveries,
methods, processes, developments, software, and works of authorship, whether or
not patentable or copyrightable, which were created, made, conceived or reduced
to practice by the Executive, whether solely or jointly with others, prior to
his employment by the Company (collectively, “Inventions”). Any improvements to
or derivative works of any such Inventions, whether or not patentable or
copyrightable and whether or not reduced to practice, conceived or created after
commencement of the Executive’s employment by the Company shall constitute
Developments for all purposes hereunder to the extent arising out of or relating
to any use of or other reliance on any Proprietary Information by or on behalf
of the Executive.

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               8.3. Other Agreements. Other than as previously disclosed to the
Company by the Executive in writing, the Executive hereby represents that he is
not bound by the terms of any agreement with any previous employer or other
party to refrain from using or disclosing any trade secret or confidential or
proprietary information in the course of his employment with the Company or to
refrain from competing, directly or indirectly, with the business of such
previous employer or any other party. The Executive further represents that his
performance of all the terms of this Agreement and as an Executive of the
Company does not and will not breach any agreement to keep in confidence
proprietary information, knowledge or data acquired by him in confidence or in
trust prior to his employment with the Company.
          9. Lock-Up. For a period of two years following the Effective Date,
the Executive may not, directly or indirectly, Transfer any of his vested
Covered Shares except pursuant to an Exempt Transfer. During this two year
period, any Transfer or purported Transfer in violation of the foregoing
restrictions shall be void and of no effect and shall not be recognized by the
Company.
          10. Other Severance Arrangements. The benefits under this Agreement
will be provided in lieu of benefits under any severance plan of the Company or
under the Executive’s offer letter. The Executive acknowledges and agrees that
the acceleration of vesting of stock options and restricted stock under this
Agreement is in lieu of any acceleration of vesting of stock options and
restricted stock upon a change of control under the Company’s current and any
future stock option plans, including but not limited to, the Company’s 2000
Equity Incentive Plan, 2003 Stock Incentive Plan, 2004 Stock Incentive Plan, the
Cornerstone BioPharma Holdings, Inc. 2005 Stock Option Plan, and the Cornerstone
BioPharma Holdings, Inc. 2005 Stock Incentive Plan, each as amended from time to
time.
          11. Mitigation. The Executive has no obligation to mitigate amounts
payable under the Agreement by seeking other employment.
          12. Notices. All notices required or permitted under this Agreement
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed to the other party at the address shown above, or at
such other address or addresses as either party shall designate to the other in
accordance with this Section 12.
          13. Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
          14. Entire Agreement. This Agreement constitutes the entire
understanding between the parties hereto with respect to the subject matter
hereof, and this Agreement supersedes and renders null and void any and all
prior oral or written agreements, understandings or

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commitments pertaining to the subject matter hereof. The parties agree and
acknowledge that the Prior Agreement is hereby cancelled and shall have no
further force or effect. To the extent this Agreement is inconsistent or
conflicts with any other agreement entered into between Executive and the
Company, including any option or restricted stock award agreements, this
Agreement shall control.
          15. Amendment. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.
          16. Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of North Carolina without regard to
conflict of laws provisions. Any action, suit, or other legal proceeding which
is commenced to resolve any matter arising under or relating to any provision of
this Agreement shall be commenced only in a court of the State of North Carolina
(or, if appropriate, a federal court located within the State of North Carolina)
and the Company and the Executive each consents to the jurisdiction of such a
court.
          17. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company may be
merged or which may succeed to its assets or business, provided, however, that
the obligations of the Executive are personal and shall not be assigned by the
Executive.
          18. Dispute Resolution. Any claim or controversy arising out of or
relating to this Agreement, or any breach thereof, or otherwise arising out of
or relating to the Executive’s employment, compensation and benefits with the
Company or the termination thereof including any claim for discrimination under
any local, state or federal employment discrimination law, except as
specifically excluded herein, shall be brought in any court having jurisdiction
thereof. Both the Company and the Executive expressly waive any right that any
party either has or may have to a jury trial of any dispute arising out of or in
any way related to the Executive’s employment with or termination from the
Company. The Executive expressly acknowledges and agrees that he hereby waives
any right to claim or recover punitive damages.
          19. Acknowledgment. THE EXECUTIVE ACKNOWLEDGES THAT HE HAS HAD A
REASONABLE PERIOD SUFFICIENT TO STUDY, UNDERSTAND AND CONSIDER THIS AGREEMENT,
THAT HE HAS HAD AN OPPORTUNITY TO CONSULT WITH LEGAL COUNSEL OF HIS CHOICE, THAT
HE HAS READ THIS AGREEMENT AND UNDERSTANDS ALL OF ITS TERMS, THAT HE IS ENTERING

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INTO AND SIGNING THIS AGREEMENT KNOWINGLY AND VOLUNTARILY, AND THAT IN DOING SO
HE IS NOT RELYING UPON ANY STATEMENTS OR REPRESENTATIONS BY THE COMPANY OR ITS
AGENTS.
          20. Miscellaneous.
               20.1. No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
               20.2. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
               20.3. In case any provision of this Agreement shall be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
               20.4. Nothing in this Agreement should be construed to create a
trust or to establish or evidence Executive’s claim of any right to payment
other than as an unsecured general creditor with respect to any payment to which
Executive may be entitled.
               20.5. The provisions of Sections 7 and 8 shall survive the
termination of this Agreement.
               20.6. Upon termination of Executive’s employment by the Company
for any reason whatsoever whether voluntarily or involuntarily, or at any other
time upon the Company’s request, Executive agrees to promptly return to the
possession of the Company any materials or copies thereof, in hard copy or
electronically, containing and/or pertaining to Proprietary Information relating
to the Company or any of its subsidiaries or affiliates and shall not take any
material or copies thereof from the possession of the Company, or destroy any
such materials. In addition, Executive shall also return to the Company all
Company property and equipment in the Executive’s possession or control,
including but not limited to, all documents, product samples, tapes, notes,
computer files, equipment, phone, facsimile, printer, computer, physician lists,
employee lists, lab notebooks, files, computer equipment, security badges,
telephone calling cards, credit cards, and other information or materials (and
all copies) which contain confidential, proprietary or non-public information of
the Company. The Executive further agrees to leave intact all electronic Company
documents on the Company’s servers or computers, including those which Executive
developed or helped develop during Executive’s employment. Executive further
agrees to promptly return or make available to the Company or its agents any
motor vehicle provided to Executive by the Company.

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          21. Definitions.
               21.1. For the purposes of this Agreement, “Cause” for termination
shall be deemed to exist upon (a) the Executive’s use of alcohol or narcotics
which proximately results in the willful material breach or habitual willful
neglect of the Executive’s duties under this Agreement; (b) the Executive’s
criminal conviction of fraud, embezzlement, misappropriation of assets, or the
Executive’s conviction of any felony or other crime that brings embarrassment to
the Company, but in no event traffic or similar violations; (c) any act of the
Executive constituting willful misconduct which is materially detrimental to the
Company’s best interests, including but not limited to misappropriation of, or
intentional damage to, the funds, property or business of the Company; (d) the
Executive’s material violation of the Company’s policies, including but not
limited to violations of the Company’s policies prohibiting harassment or
discrimination; or (e) the Executive’s willful Material Breach (as defined
below) of this Agreement, if such willful Material Breach is not cured by the
Executive within thirty (30) days after the Company’s written notice thereof
specifying the nature of such willful Material Breach. “Material Breach” shall
mean (x) the substantial and continual willful nonperformance of the Executive’s
material duties under this Agreement resulting from the Executive’s gross
negligence or willful misconduct which the Board reasonably determines has
resulted in material injury to the Company or (y) the breach of Section 7 or
Section 8 of this Agreement.
               21.2. For purposes of this Agreement, a “Change of Control” shall
mean:
                    (a) the acquisition by an individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (as
defined below)) (a “Person”) of beneficial ownership of any capital stock of the
Company if, after such acquisition, such Person beneficially owns (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) 50% or more of the
combined voting power of the then-outstanding securities of the Company entitled
to vote generally in the election of directors (the “Outstanding Company Voting
Securities”); or
                    (b) such time as the Continuing Directors (as defined below)
do not constitute a majority of the Board (or, if applicable, the Board of
Directors of a successor corporation to the Company), where the term “Continuing
Director” means at any date a member of the Board (x) who was a member of the
Board on the date of the initial adoption of the Employment Agreement by the
Board or (y) who was nominated or elected subsequent to such date by at least a
majority of the directors who were Continuing Directors at the time of such
nomination or election or whose election to the Board was recommended or
endorsed by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election; provided, however, that there shall
be excluded from this clause (y) any individual whose initial assumption of
office occurred as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents, by or on behalf of a person other than the
Board; or
                    (c) the consummation of a merger, consolidation,
reorganization, recapitalization or share exchange involving the Company or a
sale or other disposition of all or substantially all of the assets of the
Company (a “Business Combination”), unless, immediately

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following such Business Combination, each of the following two conditions is
satisfied: (x) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of the combined voting power of the then-outstanding securities
entitled to vote generally in the election of directors, respectively, of the
resulting or acquiring corporation in such Business Combination (which shall
include, without limitation, a corporation which as a result of such transaction
owns the Company or substantially all of the Company’s assets either directly or
through one or more subsidiaries) (such resulting or acquiring corporation is
referred to herein as the “Acquiring Corporation”) in substantially the same
proportions as their ownership of the Outstanding Company Voting Securities
immediately prior to such Business Combination and (y) no Person (excluding any
Executive benefit plan (or related trust) maintained or sponsored by the Company
or by the Acquiring Corporation) beneficially owns, directly or indirectly, 50%
or more of the combined voting power of the then-outstanding securities of such
corporation entitled to vote generally in the election of directors (except to
the extent that such ownership existed prior to the Business Combination); or
                    (d) the liquidation or dissolution of the Company.
               21.3. For purposes of this Agreement, a “Change of Control
Period” shall consist of the period from three (3) months before until three
(3) months after the date on which a Change of Control occurs.
               21.4. As used in this Agreement, the term “Disability” means,
with respect to the Executive, that the Executive is unable to perform the
essential functions of his position with a reasonable accommodation if necessary
by reason of any medically determinable physical or mental impairment. A
determination of Disability shall be agreed upon by a physician satisfactory to
the Executive and a physician selected by the Company, provided that if these
physicians do not agree, the Executive and the Company shall each select a
physician and these two together shall select a third physician, whose
determination as to Disability shall be binding on all parties.
               21.5. As used in this Agreement, the term “Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended.
               21.6. For purposes of this Agreement, “Good Reason” shall be
deemed to exist upon (a) any material reduction in the annual base compensation
payable to the Executive (but exclusive of any Target Cash Bonus, annual equity
award or other similar cash bonus or equity plans for this purpose); (b) the
relocation of the place of business at which the Executive is principally
located to a location that is greater than thirty (30) miles from its current
location; (c) the failure of the Company to comply with a material term of this
Agreement; or (d) a material reduction in Executive’s level of responsibility to
that which is not consistent with to the position held by the Executive, as
defined in Section 2 herein, so long as notice of the Good Reason condition is
given within thirty (30) days of the condition’s initial existence, the

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Company is given thirty (30) days to remedy the condition, and the termination
from employment occurs within ninety (90) days following the initial existence
of one or more Good Reason conditions. By way of clarification, any change in
ownership of the outstanding capital stock of the Company, including but not
limited to, the fact that the Company is no longer registered pursuant to
Section 12 of the Securities Act of 1933, as amended, shall not constitute a
“good reason” within the context of this Agreement.
               21.7. For purposes of this Agreement, “pro rata payment” shall be
deemed to mean the calculation of a payment by the Company based on the
proportion of the calendar year completed, based on the nearest whole number of
months of Executive’s employment (for illustrative purposes only, if Executive
was terminated without Cause by the Company on April 13th of a given year,
Executive would be entitled to 1/4 of his Target Cash Bonus for such year under
Section 5.4(iii)).
               21.8. For purposes of this Agreement, “Transfer” means any sale,
assignment or other outright transfer, including transfers pursuant to a
domestic relations proceeding, testate or intestate transfers, transfers by
merger and transfers otherwise by operation of law, of Beneficial Ownership of
any shares of common stock of the Company. “Transferred” shall have a
correlative meaning.
               21.9. For purposes of this Agreement, “Covered Shares” means 66
and two thirds percent (66 2/3%) of the number the shares of common stock of the
Company Beneficially Owned by the Executive or shares of Common Stock that may
be issued pursuant to all options, warrants, rights, convertible or exchangeable
securities Beneficially Owned by him or her, so long as then exercisable or
exchangeable as of the date of this Agreement, as set forth on Appendix B of
this Agreement.
               21.10. For purposes of this Agreement, “Beneficially Owns” means,
with respect to any security, having the power to direct or control the voting
or disposition of such security, and “Beneficially Owned” shall have a
correlative meaning.
               21.11. For purposes of this Agreement, “Exempt Transfer” means
any direct or indirect Transfer of Beneficial Ownership of common stock of the
Company made:
                    (a) to any Trust Affiliate, Partnership Affiliate or
Corporate Affiliate of the transferor; provided, that after giving effect to
such Transfer, the transferor continues to own at least one share of Common
Stock and continues to be a party to this Agreement and bound by the terms and
provisions hereof; and further provided, that if on a later date the condition
in the foregoing proviso ceases to be satisfied or such Trust Affiliate,
Partnership Affiliate or Corporate Affiliate ceases to be a Trust Affiliate,
Partnership Affiliate or Corporate Affiliate of the transferor, a Transfer
(which shall not constitute an Exempt Transfer) of the amount of common stock of
the Company originally Transferred to such transferee shall be deemed to have
occurred; or

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                    (b) by operation of the laws of descent and distribution.
               21.12. For purposes of this Agreement, “Trust Affiliate” means a
trust established for the primary benefit of the Executive, so long as the only
persons entitled to direct the voting of any common stock of the Company held by
the trust are the transferor or a bank or other corporation having trust powers.
               21.13. For purposes of this Agreement, “Corporate Affiliate “
means a corporation of which all the capital stock is owned, directly or
indirectly, by the Executive.
               21.14. For purposes of this Agreement, “Partnership Affiliate “
means a limited partnership, the general partner of which is, or is under the
exclusive control of, and the majority of the limited liability partnership
interests of which are owned by the Executive.
          22. Non-Disparagement. The Executive understands and agrees that as a
condition to him of the monetary consideration provided in connection with this
Agreement, during the term of the Agreement and after the termination of his
employment with the Company for any reason, he shall not make any false,
disparaging or derogatory statements in public or private to any person or media
outlet regarding the Company or any of its directors, officers, employees,
agents, or representatives or the Company’s business affairs and financial
condition. Nothing in this Section shall prohibit the Executive from
communicating or testifying truthfully (i) to the extent required or protected
by law, (ii) to any federal, state, or local governmental agency, or (iii) in
response to a subpoena to testify issued by a court of competent jurisdiction.
          23. Section 409A.
               23.1 Parties’ Intent. The parties intend that the provisions of
this Agreement comply with the provisions of Section 409A and all provisions of
this Agreement shall be construed in a manner consistent with the requirements
for avoiding taxes or penalties under Section 409A. If any provision of this
Agreement (or of any award of compensation, including equity compensation or
benefits) would cause the Executive to incur any additional tax or interest
under Section 409A, the Company shall, upon the specific request of the
Executive, use its reasonable business efforts to in good faith reform such
provision to comply with Section 409A; provided, that to the maximum extent
practicable, the original intent and economic benefit to the Executive and the
Company of the applicable provision shall be maintained, and the Company shall
have no obligation to make any changes that could create any additional economic
cost or loss of benefit to the Company. The Company shall timely use its
reasonable business efforts to amend any plan or program in which the Executive
participates to bring it in compliance with Section 409A. Notwithstanding the
foregoing, the Company shall have no liability with regard to any failure to
comply with Section 409A so long as it has acted in good faith with regard to
compliance therewith.

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               23.2 Separation from Service. A termination of employment shall
not be deemed to have occurred for purposes of any provision of this Agreement
providing for the payment of any amounts or benefits upon or following a
termination of employment unless such termination also constitutes a “Separation
from Service” within the meaning of Section 409A and, for purposes of any such
provision of this Agreement, references to a “termination,” “termination of
employment,” “separation from service” or like terms shall mean Separation from
Service.
               23.3 Separate Payments. Each installment payment required under
this Agreement shall be considered a separate payment for purposes of
Section 409A.
               23.4 Delayed Distribution to Key Employees. If the Company
determines in accordance with Sections 409A and 416(i) of the Code and the
regulations promulgated thereunder, in the Company’s sole discretion, that the
Executive is a Key Employee of the Company on the date the Executive’s
employment with the Company terminates and that a delay in benefits provided
under this Agreement is necessary to comply with Code Section 409A(A)(2)(B)(i),
then any severance payments and any continuation of benefits or reimbursement of
benefit costs provided by this Agreement, and not otherwise exempt from
Section 409A, shall be delayed for a period of six (6) months following the date
of termination of the Executive’s employment (the “409A Delay Period”). In such
event, any severance payments and the cost of any continuation of benefits
provided under this Agreement that would otherwise be due and payable to the
Executive during the 409A Delay Period shall be paid to the Executive in a lump
sum cash amount in the month following the end of the 409A Delay Period. For
purposes of this Agreement, “Key Employee” shall mean an employee who, on an
Identification Date (“Identification Date” shall mean each December 31) is a key
employee as defined in Section 416(i) of the Code without regard to paragraph
(5) thereof. If the Executive is identified as a Key Employee on an
Identification Date, then the Executive shall be considered a Key Employee for
purposes of this Agreement during the period beginning on the first April 1
following the Identification Date and ending on the following March 31.
          24. Parachutes. If all, or any portion, of the payments provided under
this Agreement, either alone or together with other payments and benefits which
the Executive receives or is entitled to receive from the Company or an
affiliate, would constitute an excess “parachute payment” within the meaning of
Section 280G of the Code, the payments and benefits provided under this
Agreement shall be reduced to the extent necessary so that no portion thereof
shall fail to be tax-deductible under Section 280G of the Code.
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SIGNATURE PAGE TO EXECUTIVE EMPLOYMENT AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above.

              CORNERSTONE THERAPEUTICS INC.
 
       
 
  By:   /s/ Craig A. Collard
 
       
 
      Name: Craig A. Collard
 
      Title: President and Chief Executive Officer

EXECUTIVE

     
 
  /s/ Josh Franklin
 
  Josh Franklin

 

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Appendix A
Vesting — over 4 years.

 

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Appendix B
No. of Covered Shares: 47,617