Exhibit 10.37
CORNERSTONE BIOPHARMA HOLDINGS, INC.
2005 STOCK INCENTIVE PLAN
(as Amended and Restated Effective October 31, 2008)
1. Purpose
     The purpose of this 2005 Stock Incentive Plan (as Amended and Restated
Effective October 31, 2008) (the “Plan”) of Cornerstone BioPharma Holdings,
Inc., a Delaware corporation (the “Company”), is to advance the interests of the
Company’s stockholders by enhancing the Company’s ability to attract, retain and
motivate persons who are expected to make important contributions to the Company
and by providing such persons with equity ownership opportunities and
performance-based incentives that are intended to align their interests with
those of the Company’s stockholders. Except where the context otherwise
requires, the term “Company” shall include any of the Company’s present or
future parent or subsidiary corporations as defined in Sections 424(e) or (f) of
the Internal Revenue Code of 1986, as amended, and any regulations promulgated
thereunder (the “Code”) and any other business venture (including, without
limitation, joint venture or limited liability company) in which the Company has
a controlling interest, as determined by the Board of Directors of the Company
(the “Board”).
2. Eligibility
     All of the Company’s employees, officers, directors, and consultants and
advisors who are natural persons and who provide bona fide services to the
Company not connected to a capital raising transaction or the promotion or
creation of a market for the Company’s securities are eligible to receive
options, restricted stock, restricted stock units and other stock-based awards
(each, an “Award”) under the Plan. Each person who receives an Award under the
Plan is deemed a “Participant”.
3. Administration and Delegation
     (a) Administration by Board of Directors. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to adopt, amend
and repeal such administrative rules, guidelines and practices relating to the
Plan as it shall deem advisable. The Board may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award in the manner
and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. All decisions by the Board
shall be made in the Board’s sole discretion and shall be final and binding on
all persons having or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by the Board shall
be liable for any action or determination relating to or under the Plan made in
good faith.
     (b) Appointment of Committees. To the extent permitted by applicable law,
the Board may delegate any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a “Committee”). All references in the
Plan to the “Board” shall

 

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mean the Board or a Committee of the Board or the officers referred to in
Section 3(c) to the extent that the Board’s powers or authority under the Plan
have been delegated to such Committee or officers.
     (c) Delegation to Officers. To the extent permitted by applicable law, the
Board may delegate to one or more officers of the Company the power to grant
Awards to employees of the Company or any of its present or future subsidiary
corporations and to exercise such other powers under the Plan as the Board may
determine, provided that the Board shall fix the terms of the Awards to be
granted by such officers (including the exercise price of such Awards, which may
include a formula by which the exercise price will be determined) and the
maximum number of shares subject to Awards that the officers may grant; provided
further, however, that no officer shall be authorized to grant Awards to any
“executive officer” of the Company (as defined by Rule 3b-7 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) or to any “officer” of
the Company (as defined by Rule 16a-l under the Exchange Act).
4. Stock Available for Awards. Subject to adjustment under Section 8, Awards may
be made under the Plan for a maximum of 10,000,000 shares of common stock,
$0.0001 par value per share, of the Company (“Common Stock”). Notwithstanding
any other terms of the Plan or individual Award Agreements to the contrary, if
any Award expires or is terminated, surrendered or canceled without having been
fully exercised or is forfeited in whole or in part or results in any Common
Stock not being issued after October 31, 2008, the unused Common Stock covered
by such Award shall be immediately canceled and no longer available for granting
additional Awards under the Plan. Further, shares of Common Stock tendered to
the Company by a Participant to exercise an Award after October 31, 2008 shall
not be added to the number of shares of Common Stock available for the grant of
Awards under the Plan. At no time while there is any Option (as defined below)
outstanding and held by a Participant who was a resident of the State of
California on the date of grant of such Option, shall the total number of shares
of Common Stock issuable upon exercise of all outstanding options and the total
number of shares provided for under any stock bonus or similar plan of the
Company exceed the applicable percentage as calculated in accordance with the
conditions and exclusions of Section 260.140.45 of the California Code of
Regulations (the “California Regulations”), based on the shares of the Company
which are outstanding at the time the calculation is made.
5. Stock Options
     (a) General. The Board may grant options to purchase Common Stock (each, an
“Option”) and determine the number of shares of Common Stock to be covered by
each Option, the exercise price of each Option and the conditions and
limitations applicable to the exercise of each Option, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable. An Option which is not intended to be an Incentive Stock
Option (as hereinafter defined) shall be designated a “Nonstatutory Stock
Option”.
     (b) Incentive Stock Options. An Option that the Board intends to be an
“incentive stock option” as defined in Section 422 of the Code (an “Incentive
Stock Option”) shall only be granted to employees of Cornerstone Biopharma
Holdings, Inc., any of Cornerstone Biopharma Holdings, Inc. present or future
parent or subsidiary corporations as defined in Sections 424(e) or

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(f) of the Code, and any other entities the employees of which are eligible to
receive Incentive Stock Options under the Code, and shall be subject to and
shall be construed consistently with the requirements of Section 422 of the
Code. The Company shall have no liability to a Participant, or any other party,
if an Option (or any part thereof) that is intended to be an Incentive Stock
Option is not an Incentive Stock Option or for any action taken by the Board
pursuant to Section 9(f), including without limitation the conversion of an
Incentive Stock Option to a Nonstatutory Stock Option.
     (c) Exercise Price. The Board shall establish the exercise price of each
Option and specify such exercise price in the applicable option agreement.
     (d) Duration of Options. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Board may specify in the applicable
option agreement.
     (e) Exercise of Option. Options may be exercised by delivery to the Company
of a written notice of exercise signed by the proper person or by any other form
of notice (including electronic notice) approved by the Board together with
payment in full as specified in Section 5(f) for the number of shares for which
the Option is exercised. Shares of Common Stock subject to the Option will be
delivered by the Company following exercise either as soon as practicable or,
subject to such conditions as the Board shall specify, on a deferred basis (with
the Company’s obligation to be evidenced by an instrument providing for future
delivery of the deferred shares at the time or times specified by the Board).
     (f) Payment Upon Exercise. Common Stock purchased upon the exercise of an
Option granted under the Plan shall be paid for as follows:
          (1) in cash or by check, payable to the order of the Company;
          (2) except as the Board may otherwise provide in an option agreement,
by (i) delivery of an irrevocable and unconditional undertaking by a
creditworthy broker to deliver promptly to the Company sufficient funds to pay
the exercise price and any required tax withholding or (ii) delivery by the
Participant to the Company of a copy of irrevocable and unconditional
instructions to a creditworthy broker to deliver promptly to the Company cash or
a check sufficient to pay the exercise price and any required tax withholding;
          (3) when the Common Stock is registered under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), by delivery of shares of Common
Stock owned by the Participant valued at their fair market value as determined
by (or in a manner approved by) the Board (“Fair Market Value”), provided
(i) such method of payment is then permitted under applicable law, (ii) such
Common Stock, if acquired directly from the Company, was owned by the
Participant for such minimum period of time, if any, as may be established by
the Board in its discretion and (iii) such Common Stock is not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements;
          (4) to the extent permitted by applicable law and by the Board, by
(i) delivery of a promissory note of the Participant to the Company on terms
determined by the Board;

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provided, however, that the aggregate par value of the shares being purchased
must be paid in cash, or (ii) payment of such other lawful consideration as the
Board may determine; or
          (5) by any combination of the above permitted forms of payment.
     (g) Substitute Options. In connection with a merger or consolidation of an
entity with the Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for any options or
other stock or stock-based awards granted by such entity or an affiliate
thereof. Substitute Options may be granted on such terms as the Board deems
appropriate in the circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in Section 2. Substitute
Options shall not count against the overall share limit set forth in
Section 4(a), except as may be required by reason of Section 422 and related
provisions of the Code.
6. Restricted Stock; Restricted Stock Units
     (a) General. The Board may grant Awards entitling recipients to acquire
shares of Common Stock (“Restricted Stock”), subject to the right of the Company
to repurchase all or part of such shares at their issue price or other stated or
formula price (or to require forfeiture of such shares if issued at no cost)
from the recipient in the event that conditions specified by the Board in the
applicable Award are not satisfied prior to the end of the applicable
restriction period or periods established by the Board for such Award. Instead
of granting Awards for Restricted Stock, the Board may grant Awards entitling
the recipient to receive shares of Common Stock to be delivered at the time such
shares of Common Stock vest (“Restricted Stock Units”) (Restricted Stock and
Restricted Stock Units are each referred to herein as a “Restricted Stock
Award”).
     (b) Terms and Conditions. The Board shall determine the terms and
conditions of a Restricted Stock Award, including the conditions for repurchase
(or forfeiture) and the issue price, if any.
     (c) Stock Certificates. Any stock certificates issued in respect of a
Restricted Stock Award shall be registered in the name of the Participant and,
unless otherwise determined by the Board, deposited by the Participant, together
with a stock power endorsed in blank, with the Company (or its designee). At the
expiration of the applicable restriction periods, the Company (or such designee)
shall deliver the certificates no longer subject to such restrictions to the
Participant or if the Participant has died, to the beneficiary designated, in a
manner determined by the Board, by a Participant to receive amounts due or
exercise rights of the Participant in the event of the Participant’s death (the
“Designated Beneficiary”). In the absence of an effective designation by a
Participant, “Designated Beneficiary” shall mean the Participant’s estate.
7. Other Stock-Based Awards
     Other Awards of shares of Common Stock, and other Awards that are valued in
whole or in part by reference to, or are otherwise based on, shares of Common
Stock or other property, may be granted hereunder to Participants (“Other Stock
Unit Awards”), including without

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limitation stock appreciation rights and Awards entitling recipients to receive
shares of Common Stock to be delivered in the future. Such Other Stock Unit
Awards shall also be available as a form of payment in the settlement of other
Awards granted under the Plan or as payment in lieu of compensation to which a
Participant is otherwise entitled. Other Stock Unit Awards may be paid in shares
of Common Stock or cash, as the Board shall determine. Subject to the provisions
of the Plan, the Board shall determine the conditions of each Other Stock Unit
Award, including any purchase price applicable thereto.
8. Adjustments for Changes in Common Stock and Certain Other Events
     (a) Changes in Capitalization. In the event of any stock split, reverse
stock split, stock dividend, recapitalization, combination of shares,
reclassification of shares, spin-off or other similar change in capitalization
or event, or any distribution to holders of Common Stock other than an ordinary
cash dividend, (i) the number and class of securities available under this Plan,
(ii) the number and class of securities and exercise price per share of each
outstanding Option, (iii) the repurchase price per share subject to each
outstanding Restricted Stock Award, and (iv) the terms of each other outstanding
Award shall be appropriately adjusted by the Company (or substituted Awards may
be made, if applicable) to the extent determined by the Board.
     (b) Liquidation or Dissolution. In the event of a proposed liquidation or
dissolution of the Company, the Board shall upon written notice to the
Participants provide that all then unexercised Options will (i) become
exercisable in full as of a specified time at least 10 business days prior to
the effective date of such liquidation or dissolution and (ii) terminate
effective upon such liquidation or dissolution, except to the extent exercised
before such effective date. The Board may specify the effect of a liquidation or
dissolution on any Restricted Stock Award or other Award granted under the Plan
at the time of the grant of such Award.
     (c) Reorganization and Change in Control Events.
          (1) Definitions.

  a)   A “Reorganization Event” shall mean:

  (i)   any merger or consolidation of the Company with or into another entity
as a result of which all of the Common Stock of the Company is converted into or
exchanged for the right to receive cash, securities or other property; or    
(ii)   any exchange of all of the Common Stock of the Company for cash,
securities or other property pursuant to a share exchange transaction.

  b)   A “Change in Control Event” shall mean:

  (i)   the acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange

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      Act) (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 either
(x) the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (y) 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”); provided, however, that
for purposes of this subsection (i), the following acquisitions shall not
constitute a Change in Control Event: (A) any acquisition directly from the
Company or (B) any acquisition by any corporation pursuant to a Business
Combination (as defined below) which complies with clauses (x) and (y) of
subsection (iii) of this definition; or     (ii)   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 this
Plan 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     (iii)   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 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 Common Stock and Outstanding

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      Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of the then-outstanding
shares of common stock and 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 Common Stock and Outstanding Company Voting Securities,
respectively, immediately prior to such Business Combination and (y) no Person
(excluding the Acquiring Corporation or any employee 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 then-outstanding
shares of common stock of the Acquiring Corporation, or 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).

  (c)   “Good Reason” shall mean a significant diminution in the Participant’s
title, authority, or responsibilities from and after such Reorganization Event
or Change in Control Event, as the case may be, or a reduction in the annual
cash compensation payable to the Participant from and after such Reorganization
Event or Change in Control Event, as the case may be, or the relocation of the
place of business at which the Participant is principally located to a location
that is greater than 50 miles from the current site.     (d)   “Cause”, as
determined by the Board, shall mean any (i) willful failure by the Participant,
which failure is not cured within 30 days of written notice to the Participant
from the Company, to perform his or her material responsibilities to the Company
or (ii) willful misconduct by the Participant which affects the business
reputation of the Company.

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          (2) Effect on Options

  (a)   Reorganization Event. Upon the occurrence of a Reorganization Event
(regardless of whether such event also constitutes a Change in Control Event),
or the execution by the Company of any agreement with respect to a
Reorganization Event (regardless of whether such event will result in a Change
in Control Event), the Board shall provide that all outstanding Options shall be
assumed, or equivalent options shall be substituted, by the acquiring or
succeeding corporation (or an affiliate thereof); provided that if such
Reorganization Event also constitutes a Change in Control Event, except to the
extent specifically provided to the contrary in the instrument evidencing any
Option or any other agreement between a Participant and the Company, such
assumed or substituted options shall become immediately exercisable in full if,
on or prior to the twelve-month anniversary of the date of the consummation of
the Reorganization Event, the Participant’s employment with the Company or the
acquiring or succeeding corporation is terminated for Good Reason by the
Participant or is terminated without Cause by the Company or the acquiring or
succeeding corporation. For purposes hereof, an Option shall be considered to be
assumed if, following consummation of the Reorganization Event, the Option
confers the right to purchase, for each share of Common Stock subject to the
Option immediately prior to the consummation of the Reorganization Event, the
consideration (whether cash, securities or other property) received as a result
of the Reorganization Event by holders of Common Stock for each share of Common
Stock held immediately prior to the consummation of the Reorganization Event
(and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares of
Common Stock); provided, however, that if the consideration received as a result
of the Reorganization Event is not solely common stock of the acquiring or
succeeding corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for the
consideration to be received upon the exercise of Options to consist solely of
common stock of the acquiring or succeeding corporation (or an affiliate
thereof) equivalent in fair market value to the per share consideration received
by holders of outstanding shares of Common Stock as a result of the
Reorganization Event.

     Notwithstanding the foregoing, if the acquiring or succeeding corporation
(or an affiliate thereof) does not agree to assume, or substitute for, such
Options, then the Board shall, upon written notice to the Participants, provide
that all then unexercised

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Options will become exercisable in full as of a specified time prior to the
Reorganization Event and will terminate immediately prior to the consummation of
such Reorganization Event, except to the extent exercised by the Participants
before the consummation of such Reorganization Event; provided, however, in the
event of a Reorganization Event under the terms of which holders of Common Stock
will receive upon consummation thereof a cash payment for each share of Common
Stock surrendered pursuant to such Reorganization Event (the “Acquisition
Price”), then the Board may instead provide that all outstanding Options shall
terminate upon consummation of such Reorganization Event and that each
Participant shall receive, in exchange therefor, a cash payment equal to the
amount (if any) by which (A) the Acquisition Price multiplied by the number of
shares of Common Stock subject to such outstanding Options (whether or not then
exercisable), exceeds (B) the aggregate exercise price of such Options.

  (b)   Change in Control Event that is not a Reorganization Event. Upon the
occurrence of a Change in Control Event that does not also constitute a
Reorganization Event, except to the extent specifically provided to the contrary
in the instrument evidencing any Option or any other agreement between a
Participant and the Company, each then-outstanding Option shall continue to
become vested in accordance with the original vesting schedule set forth in such
Option; provided, however, that each such Option shall become immediately
exercisable in full if, on or prior to the twelve-month anniversary of the date
of the consummation of the Change in Control Event, the Participant’s employment
with the Company or the acquiring or succeeding corporation is terminated for
Good Reason by the Participant or is terminated without Cause by the Company or
the acquiring or succeeding corporation.

          (3) Effect on Restricted Stock Awards

  (a)   Reorganization Event that is not a Change in Control Event. Upon the
occurrence of a Reorganization Event that is not a Change in Control Event, the
repurchase and other rights of the Company under each outstanding Restricted
Stock Award shall inure to the benefit of the Company’s successor and shall
apply to the cash, securities or other property which the Common Stock was
converted into or exchanged for pursuant to such Reorganization Event in the
same manner and to the same extent as they applied to the Common Stock subject
to such Restricted Stock Award.     (b)   Change in Control Event. Upon the
occurrence of a Change in Control Event (regardless of whether such event also
constitutes a

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      Reorganization Event), except to the extent specifically provided to the
contrary in the instrument evidencing any Restricted Stock Award or any other
agreement between a Participant and the Company, each then-outstanding
Restricted Stock Award shall continue to become free from conditions or
restrictions in accordance with the original schedule set forth in such
Restricted Stock Award; provided however, that each such Restricted Stock Award
shall immediately become free from all conditions or restrictions if, on or
prior to the twelve-month anniversary of the date of the consummation of the
Change in Control Event, the Participant’s employment with the Company or the
acquiring or succeeding corporation is terminated for Good Reason by the
Participant or is terminated without Cause by the Company or the acquiring or
succeeding corporation.

          (4) Effect on Other Awards

  (a)   Reorganization Event that is not a Change in Control Event. The Board
shall specify the effect of a Reorganization Event that is not a Change in
Control Event on any other Award granted under the Plan at the time of the grant
of such Award.     (b)   Change in Control Event. Upon the occurrence of a
Change in Control Event (regardless of whether such event also constitutes a
Reorganization Event), except to the extent specifically provided to the
contrary in the instrument evidencing any other Award or any other agreement
between a Participant and the Company, each such then-outstanding Award shall
continue to become exercisable, realizable, vested or free from conditions or
restrictions in accordance with the original schedule set forth in such Award;
provided, however, that each such Award shall immediately become fully
exercisable, realizable, vested or free from conditions or restrictions if, on
or prior to the twelve-month anniversary of the date of the consummation of the
Change in Control Event, the Participant’s employment with the Company or the
acquiring or succeeding corporation is terminated for Good Reason by the
Participant or is terminated without Cause by the Company or the acquiring or
succeeding corporation.

9. General Provisions Applicable to Awards
     (a) Transferability of Awards. Except as the Board may otherwise determine
or provide in an Award, Awards shall not be sold, assigned, transferred, pledged
or otherwise encumbered by the person to whom they are granted, either
voluntarily or by operation of law, except by will or the laws of descent and
distribution or, other than in the case of an Incentive Stock Option, pursuant
to a qualified domestic relations order, and, during the life of the

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Participant, shall be exercisable only by the Participant. References to a
Participant, to the extent relevant in the context, shall include references to
authorized transferees.
     (b) Documentation. Each Award shall be evidenced by a written agreement in
such form and with such terms as the Board shall determine (the “Award
Agreement”). Each Award may contain terms and conditions in addition to but not
inconsistent with those set forth in the Plan.
     (c) Board Discretion. Except as otherwise provided by the Plan, each Award
may be made alone or in addition or in relation to any other Award. The terms of
each Award need not be identical, and the Board need not treat Participants
uniformly.
     (d) Termination of Status. The Board shall determine the effect on an Award
of the disability, death, retirement, authorized leave of absence or other
change in the employment or other status of a Participant and the extent to
which, and the period during which, the Participant, or the Participant’s legal
representative, conservator, guardian or Designated Beneficiary, may exercise
rights under the Award.
     (e) Withholding. Each Participant shall pay to the Company, or make
provision satisfactory to the Company for payment of, any taxes required by law
to be withheld in connection with an Award to such Participant. Except as the
Board may otherwise provide in an Award, for so long as the Common Stock is
registered under the Exchange Act, Participants may satisfy such tax obligations
in whole or in part by delivery of shares of Common Stock, including shares
retained from the Award creating the tax obligation, valued at their Fair Market
Value; provided, however, except as otherwise provided by the Board, that the
total tax withholding where stock is being used to satisfy such tax obligations
cannot exceed the Company’s minimum statutory withholding obligations (based on
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such supplemental taxable
income). Shares surrendered to satisfy tax withholding requirements cannot be
subject to any repurchase, forfeiture, unfulfilled vesting or other similar
requirements. The Company may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to a Participant.
     (f) Amendment of Award. The Board may amend, modify or terminate any
outstanding Award, including but not limited to, substituting therefor another
Award of the same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a Nonstatutory Stock
Option, provided that the Participant’s consent to such action shall be required
unless the Board determines that the action, taking into account any related
action, would not materially and adversely affect the Participant.
     (g) Conditions on Delivery of Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to remove
restrictions from shares previously delivered under the Plan until (i) all
conditions of the Award have been met or removed to the satisfaction of the
Company, (ii) in the opinion of the Company’s counsel, all other legal matters
in connection with the issuance and delivery of such shares have been satisfied,
including any applicable securities laws and any applicable stock exchange or
stock

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market rules and regulations, and (iii) the Participant has executed and
delivered to the Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any applicable laws, rules
or regulations.
     (h) Acceleration. The Board may at any time provide that any Award shall
become immediately exercisable in full or in part, free of some or all
restrictions or conditions, or otherwise realizable in full or in part, as the
case may be.
     (i) Restrictions on Transfer of Shares. Any shares of Common Stock issued
pursuant to an Award shall be subject to such special forfeiture conditions,
rights of repurchase, rights of first refusal and other transfer restrictions as
the Board of Directors may determine. Such restrictions shall be set forth in
the applicable Award Agreement and shall apply in addition to any restrictions
that may apply to holders of shares of Common Stock generally.
10. Miscellaneous
     (a) No Right To Employment or Other Status. No person shall have any claim
or right to be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to continued employment or any other
relationship with the Company. The Company expressly reserves the right at any
time to dismiss or otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly provided in the
applicable Award.
     (b) No Rights As Stockholder. Subject to the provisions of the applicable
Award, no Participant or Designated Beneficiary shall have any rights as a
stockholder with respect to any shares of Common Stock to be distributed with
respect to an Award until becoming the record holder of such shares.
Notwithstanding the foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price of and the
number of shares subject to such Option are adjusted as of the date of the
distribution of the dividend (rather than as of the record date for such
dividend), then an optionee who exercises an Option between the record date and
the distribution date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the shares of Common
Stock acquired upon such Option exercise, notwithstanding the fact that such
shares were not outstanding as of the close of business on the record date for
such stock dividend.
     (c) Effective Date and Term of Plan. The Plan originally became effective
on the date on which it was first adopted by the Board. The effective date of
the Plan as Amended and Restated is October 31, 2008. No Awards shall be granted
under the Plan after the completion of 10 years from the earlier of (i) the date
on which the Plan was originally adopted by the Board or (ii) the date the Plan
was approved by the Company’s stockholders, but Awards previously granted may
extend beyond that date.
     (d) Amendment of Plan. The Board may amend, suspend or terminate the Plan
or any portion thereof at any time.

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     (e) Authorization of Sub-Plans. The Board may from time to time establish
one or more sub-plans under the Plan for purposes of satisfying applicable blue
sky, securities or tax laws of various jurisdictions. The Board shall establish
such sub-plans by adopting supplements to this Plan containing (i) such
limitations on the Board’s discretion under the Plan as the Board deems
necessary or desirable or (ii) such additional terms and conditions not
otherwise inconsistent with the Plan as the Board shall deem necessary or
desirable. All supplements adopted by the Board shall be deemed to be part of
the Plan, but each supplement shall apply only to Participants within the
affected jurisdiction and the Company shall not be required to provide copies of
any supplement to Participants in any jurisdiction which is not the subject of
such supplement.
     (f) Compliance with Code Section 409A. No Award shall provide for deferral
of compensation that does not comply with Section 409A of the Code, unless the
Board, at the time of grant, specifically provides that the Award is not
intended to comply with Section 409A of the Code.
     (g) Governing Law. The provisions of the Plan and all Awards made hereunder
shall be governed by and interpreted in accordance with the laws of the State of
Delaware, excluding choice-of-law principles of the law of such state that would
require the application of the laws of a jurisdiction other than such state.

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CORNERSTONE BIOPHARMA HOLDINGS, INC.
2005 STOCK INCENTIVE PLAN
(as Amended and Restated Effective October 31, 2008)
CALIFORNIA SUPPLEMENT
     Pursuant to Section 10(e) of the Plan, the Board has adopted this
supplement for purposes of satisfying the requirements of Section 25102(o) of
the California Law:
     Any Awards granted under the Plan to a Participant who is a resident of the
State of California on the date of grant (a “California Participant”) shall be
subject to the following additional limitations, terms and conditions:
1. Additional Limitations on Options.
     (a) Minimum Vesting Rate. Except in the case of Options granted to
California Participants who are officers, directors, managers, consultants or
advisors of the Company or its affiliates (which Options may become exercisable
at whatever rate is determined by the Board), Options granted to California
Participants shall become exercisable at a rate of no less than 20% per year
over five years from the date of grant; provided, that, such Options may be
subject to such reasonable forfeiture conditions as the Board may choose to
impose and which are not inconsistent with Section 260.140.41 of the California
Regulations.
     (b) Minimum Exercise Price. The exercise price of Options granted to
California Participants may not be less than 85% of the Fair Market Value of the
Common Stock on the date of grant in the case of a Nonstatutory Stock Option or
less than 100% of the Fair Market Value of the Common Stock on the date of grant
in the case of an Incentive Stock Option; provided, however, that if the
California Participant is a person who owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or its
parent or subsidiary corporations, the exercise price shall be not less than
110% of the Fair Market Value of the Common Stock on the date of grant.
     (c) Maximum Duration of Options. No Options granted to California
Participants will be granted for a term in excess of 10 years.
     (d) Minimum Exercise Period Following Termination. Unless a California
Participant’s employment is terminated for cause (as defined in any contract of
employment between the Company and such Participant, or if none, in the
instrument evidencing the grant of such Participant’s Option), in the event of
termination of employment of such Participant, he or she shall have the right to
exercise an Option, to the extent that he or she was otherwise entitled to
exercise such Option on the date employment terminated, as follows: (i) at least
six months from the date of termination, if termination was caused by such
Participant’s death or “permanent and total disability” (within the meaning of
Section 22(e)(3) of the Code) and (ii) at least 30 days from the date of
termination, if termination was caused other than by such Participant’s death or
“permanent and total disability” (within the meaning of Section 22(e)(3) of the
Code).

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     (e) Limitation on Repurchase Rights. If an Option granted to a California
Participant gives the Company the right to repurchase shares of Common Stock
issued pursuant to the Plan upon termination of employment of such Participant,
the terms of such repurchase right must comply with Section 260.140.4 l(k) of
the California Regulations.
2. Additional Limitations for Restricted Stock Awards.
     (a) Minimum Purchase Price. The purchase price for a Restricted Stock Award
granted to a California Participant shall be not less than 85% of the Fair
Market Value of the Common Stock at the time such Participant is granted the
right to purchase shares under the Plan or at the time the purchase is
consummated; provided, however, that if such Participant is a person who owns
stock possessing more than 10% of the total combined voting power or value of
all classes of stock of the Company or its parent or subsidiary corporations,
the purchase price shall be not less than 100% of the Fair Market Value of the
Common Stock at the time such Participant is granted the right to purchase
shares under the Plan or at the time the purchase is consummated.
     (b) Limitation of Repurchase Rights. If a Restricted Stock Award granted to
a California Participant gives the Company the right to repurchase shares of
Common Stock issued pursuant to the Plan upon termination of employment of such
Participant, the terms of such repurchase right must comply with
Section 260.140.42(h) of the California Regulations.
3. Additional Limitations for Other Stock-Based Awards. The terms of all Awards
granted to a California Participant under Section 7 of the Plan shall comply, to
the extent applicable, with Section 260.140.41 or Section 260.140.42 of the
California Regulations.
4. Additional Requirement to Provide Information to California Participants. The
Company shall provide to each California Participant and to each California
Participant who acquires Common Stock pursuant to the Plan, not less frequently
than annually, copies of annual financial statements (which need not be
audited). The Company shall not be required to provide such statements to key
employees whose duties in connection with the Company assure their access to
equivalent information.
5. Additional Limitations on Timing of Awards. No Award granted to a California
Participant shall become exercisable, vested or realizable, as applicable to
such Award, unless the Plan has been approved by a majority of the Company’s
stockholders within 12 months before or after the date the Plan was adopted by
the Board.
6. Additional Limitations Relating to Definition of Fair Market Value. For
purposes of Section 1(b) and 2(a) of this supplement, “Fair Market Value” shall
be determined in a manner not inconsistent with Section 260.140.50 of the
California Regulations.
7. Additional Restriction Regarding Recapitalizations, Stock Splits, Etc. For
purposes of Section 8 of the Plan, in the event of a stock split, reverse stock
split, stock dividend, recapitalization, combination, reclassification or other
distribution of the Company’s securities, the number of securities allocated to
each California Participant must be adjusted proportionately and without the
receipt by the Company of any consideration from any California Participant.

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