CHELSEA THERAPEUTICS INTERNATIONAL LTD.

EXECUTIVE RETENTION BONUS PLAN
Effective April 16, 2013

 

1. Purpose.

 

The purpose of this Chelsea Therapeutics International Ltd. Executive Retention
Bonus Plan (the “Plan”) is to promote the interests of Chelsea Therapeutics
International Ltd. (the “Company”) by providing an incentive to selected key
executive level employees of the Company to remain employed until such time as a
sale of the Company occurs and/or the Company receives approval of its new drug
application from the U.S. Food and Drug Administration for Northera (droxidopa).
In this regard, the Plan is intended to provide cash bonus payments to such
executives if they remain employed by the Company on the effective date(s) of
such Sale Event (as defined herein) and/or new drug approval, or where their
employment terminates prior to such date(s) under certain specified
circumstances.

 

2. Definitions.

 

The following terms shall have the meanings set forth below for purposes of the
Plan:

 

“Board” means the Board of Directors of the Company or the Compensation
Committee or other committee of the Board delegated the duty to administer this
Plan.

 

“Cause” means a finding by the Board that any of the following has occurred: (A)
embezzlement, theft, misappropriation or conversion by the Eligible Executive of
any property of the Company or any of its subsidiaries or affiliates; (B) any
breach by the Eligible Executive of the Eligible Executive’s covenants under the
Plan or any agreement with the Company; (C) failure or refusal by the Eligible
Executive to perform the duties of his or her employment which continues for a
period of fourteen days following notice thereof by the Company to the Eligible
Executive; (D) any act by the Eligible Executive constituting a felony or
otherwise involving theft, fraud, dishonesty, misrepresentation or moral
turpitude; (E) conviction of, or plea of nolo contendere (or a similar plea),
to, or the failure of the Eligible Executive to contest his prosecution for, any
other criminal offense; (F) any violation of any law, rule or regulation
affecting business operations of the Company or its subsidiaries or affiliates,
regulatory disqualification or failure to comply with any legal or compliance
policies or code of ethics, code of business conduct, conflicts of interest
policy or similar policies of the Company or its subsidiaries or affiliates;
(G) gross negligence or willful misconduct on the part of the Eligible Executive
in the performance of his duties as an employee, officer or director of the
Company or any of its subsidiaries or affiliates; (H) any act or omission to act
of the Eligible Executive intended to harm or damage the business, property,
operations, financial condition or reputation of the Company or any of its
subsidiaries or affiliates; or (I) any chemical dependence of the Eligible
Executive which adversely affects the performance of his or her duties and
responsibilities to the Company or any of its subsidiaries or affiliates.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.

 

 

 

“Effective Date” means April 15, 2013.

 

“Eligible Executive” means an executive level employee of the Company designated
by the Board as eligible to participate in the Plan, as set forth on Exhibit A.
The individuals identified on Exhibit A, are sometimes hereinafter referred to
individually as a “Participant” and collectively as the Participants.

 

“Good Reason” means either of the following: (i) material reduction in the
Eligible Executive’s base pay or bonus opportunity; or (ii) a relocation of the
Participant’s principal work location to more than fifty (50) miles from its
current location; provided that the Participant notifies the Company that Good
Reason exists within thirty (30) days of first becoming aware that Good Reason
existed and gives the Company at least thirty (30) days prior written notice of
the date that the Participant intends to terminate employment with the Company
if the Good Reason is not cured prior to such date. For the avoidance of doubt,
if the Good Reason is cured by the Company prior to such date, Good Reason shall
cease to exist.

 

“NDA Approval Bonus” has the meaning set forth in Section 4.

 

“Sale Event” As used herein, a “Sale Event” shall be deemed to have occurred
means the occurrence of any of the following on or before December 31, 2014: (A)
the sale, lease, exchange or other transfer, directly or indirectly, of
substantially all of the assets of the Company (in one transaction or in a
series of related transactions) to a person or entity that is not controlled by
the Company; (B) any person not a shareholder of the Company on the date of the
Plan becomes after the effective date of the Plan the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, 50% or
more of the combined voting power of the Company’s outstanding securities
ordinarily having the right to vote at elections of directors (regardless of any
approval by the Continuing Directors); provided that a traditional institutional
or venture capital financing transaction shall be excluded from this definition;
or (C) a merger or consolidation to which the Company is a party if the
shareholders of the Company immediately prior to the effective date of such
merger or consolidation have “beneficial ownership” (as defined in Rule 13d-3
under the Exchange Act), immediately following the effective date of such merger
or consolidation, of securities of the surviving corporation representing less
than 50% of the combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at elections of
directors (regardless of any approval by the Continuing Directors). For these
purposes, “Continuing Directors” of the Company will mean any individuals who
are members of the Board on the effective date of the Plan and any individual
who subsequently becomes a member of the Board whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a
majority of the Continuing Directors (either by specific vote or by approval of
the Company’s proxy statement in which such individual is named as a nominee for
director without objection to such nomination).

 

Notwithstanding the foregoing, in no event shall a Sale Event be deemed to have
occurred for purposes of the Plan unless the transaction constituting the “Sale
Event” is also a “change in control event” for purposes of section 409A of the
Code.

 

“Sale Event Bonus” has the meaning set forth in Section 3.

 

 

 

3. Sale Event Bonus.

 

If a Sale Event occurs, subject to Sections 5 and 6 below, each Eligible
Executive employed by the Company on the date of the Sale Event shall be
entitled to receive a bonus in an amount equal to 50% of his or her base salary
(the “Sale Event Bonus”), subject in all respects to the terms of the Plan.

 

4. NDA Approval Bonus.

 

If the Company receives approval of its new drug application from the U.S. Food
and Drug Administration for Northera (droxidopa), subject to Sections 5 and 6
below, each Eligible Executive employed by the Company on the date of such
approval shall be entitled to receive a bonus in an amount equal to 50% of his
or her base salary (the “NDA Approval Bonus”), subject in all respects to the
terms of the Plan.

 

5. Payment of Awards.

 

(a) Notwithstanding an Eligible Executive’s designation as such, in order to
receive a Sale Event Bonus and/or a NDA Approval Bonus, as applicable, an
Eligible Executive must be employed by the Company on the date of the Sale Event
and/or the date the Company receives approval of its new drug application from
the U.S. Food and Drug Administration for Northera (droxidopa), except as
provided in Section 6 below.

 

(b) Upon consummation of a Sale Event, the Company shall pay to a Participant
his or her Sale Event Bonus in a lump sum payment on or within 30 days following
the date the Sale Event is consummated.

 

(c) The Company shall pay to a Participant his or her NDA Approval Bonus in a
lump sum payment on or within 30 days following the date the Company receives
approval of its new drug application from the U.S. Food and Drug Administration
for Northera (droxidopa).

 

6. Termination of Employment.

 

(a) If an Eligible Executive’s employment with the Company is terminated by the
Company (or, if applicable, the Company's successor) without Cause or
voluntarily by the Eligible Executive for Good Reason (i) within three months
prior to the occurrence of a Sale Event and the Sale Event is subsequently
consummated, or (ii) during the period between the Sale Event and the payment
date described in Section 5(b) of the Plan, the Eligible Executive shall be
entitled to receive his or her Sale Event Bonus hereunder. Payment shall be
made, if at all, as and when the Sale Event Bonuses are paid under Section 5(b)
of the Plan.

 

(b) If an Eligible Executive’s employment with the Company is terminated by the
Company without Cause or voluntarily by the Eligible Executive for Good Reason,
within three months prior to receipt of approval of its new drug application
from the U.S. Food and Drug Administration for Northera (droxidopa), the
Eligible Executive shall be entitled to receive his or her portion of the annual
NDA Approval Bonus, if any, paid following the Eligible Executive’s termination
of employment with the Company. Payment shall be made, if at all, as and when
the NDA Approval Bonuses are paid under Section 5(c) of the Plan.

 

 

 

(c) If an Eligible Executive’s employment with the Company terminates on account
of (i) the Eligible Executive’s death or disability, (ii) termination by the
Company for Cause or (iii) the Eligible Executive’s voluntary resignation
without Good Reason, in each case prior to the occurrence of a Sale Event or the
receipt of approval of its new drug application from the U.S. Food and Drug
Administration for Northera (droxidopa), as applicable, the Eligible Executive’s
entitlement to a Sale Event Bonus or any NDA Approval Bonuses shall be
forfeited, and no payment shall be made therefor.

 

7. Administration.

 

The Plan shall be administered by the Board. The interpretation and construction
by the Board of any provisions of the Plan or of any awards granted under it
shall be final and conclusive. No member of the Board shall be liable for any
action taken or determination made with respect to the Plan or any awards
granted under it. No equity holder of the Company nor any employee or former
employee of the Company, or any beneficiary, shall have any claim or cause of
action against the Company, an officer of the Company, or the Board on account
of, by reason of, or arising out of the exercise of the discretionary power
granted hereunder.

 

8. Non-Transferability.

 

No rights granted under this Plan may be transferred, assigned, pledged,
encumbered or disposed of in any way by an Eligible Executive, except by will or
by the laws of descent and distribution.

 

9. No Rights as Equity Holders or Employee; No Right to Future Awards.

 

Except as otherwise provided herein, no Eligible Executive or Participant shall
have any privileges of a stockholder of the Company with respect to a Sale Event
Bonus and/or an NDA Approval Bonus, nor shall the Company have any obligation to
issue any equity, pay any distributions or otherwise afford any rights to which
holders of equity are entitled with respect to any such award. The granting of
an award under the Plan shall not confer upon an Eligible Executive or
Participant any right to continue as an employee, to receive future awards under
the Plan, or to interfere in any way with the Company’s right to terminate such
Eligible Executive’s or Participant’s employment. For purposes of clarification,
eligibility to participate in the Plan under this Plan shall not guarantee
employment through the date of a Sale Event or the date the Company receives
approval of its new drug application from the U.S. Food and Drug Administration
for Northera (droxidopa).

 

10. Withholding; Taxes.

 

Payments of all bonuses under the Plan shall be subject to applicable federal
(including FICA), state and local tax withholding requirements. The Company may
require that the Participant or other person receiving the bonus pay to the
Company the amount of any federal, state or local taxes that the Company is
required to withhold with respect to such bonus, or the Company may deduct from
other wages paid by the Company the amount of any withholding taxes due with
respect to the bonus.

 

 

 

Neither the Company nor its officers or agents make or has made any
representations about the tax consequences of the bonus payments paid or payable
under this Plan by the Company to any Participant.

 

11. Amendment or Discontinuance of the Plan.

 

The Board may amend or terminate this Plan at any time and from time to time
without the consent of any Eligible Executive hereunder; provided, however, that
no such amendment or termination may diminish the rights of a Participant
without such Participant’s written consent; provided, further, that the Company
may make any changes to this Plan it determines in its sole discretion are
necessary to comply with the provisions of section 409A of the Code and any
final, proposed or temporary regulations or other guidance issued thereunder
without the consent of any Participant.

 

12. Section 409A.

 

The benefits provided under this Plan are intended to be exempt from or comply
with the requirements of section 409A of the Code, and, to the extent
applicable, shall in all respects be administered in accordance with section
409A of the Code. Notwithstanding anything in the Agreement to the contrary,
payments may only be made under the Plan upon an event and in a manner permitted
by section 409A of the Code. If a payment is not made by the designated payment
date under the Plan, the payment shall be made by December 31 of the calendar
year in which the designated date occurs. To the extent that any provision of
the Plan would cause a conflict with the requirements of section 409A of the
Code, or would cause the administration of the Plan to fail to satisfy the
requirements of section 409A, such provision shall be deemed null and void to
the extent permitted by applicable law. In no event shall a Participant,
directly or indirectly, designate the calendar year of payment.

 

13. Governing Law.

 

The Plan shall be governed by the laws of the State of North Carolina without
regard to the conflicts of law principles thereof.

 

 

 

 

Exhibit A

 

Eligible Executives

 

 

Art Hewitt

 

Joe Oliveto

 

Nick Riehle

 

Michael Roberts

 

Bill Schwieterman