EXHIBIT
10.5


 


IMPRIMIS
PHARMACEUTICALS, INC.

AMENDED AND RESTATED 2007 INCENTIVE STOCK AND AWARDS PLAN


 


PERFORMANCE
STOCK UNITS AGREEMENT


 


Effective
as of April 25, 2016 (the “Grant Date”), Imprimis Pharmaceuticals, Inc., a Delaware corporation (the “Company”),
has awarded to Andrew R. Boll (“Grantee”) a targeted number of 157,500 Performance Stock Units (the “Performance
Stock Units” or “Award”) to be calculated and determined as discussed below. Each Performance Stock Unit will
represent an unfunded and unsecured promise of the Company to deliver shares of common stock, par value $0.01 per share, of the
Company (the “Shares”) to Grantee as set forth herein. Each Performance Stock Unit will be subject to forfeiture until
the date such Performance Stock Unit vests pursuant to Section 1 of this Performance Stock Units Agreement (this “Agreement”).
The Performance Stock Units have been granted pursuant to the Imprimis Pharmaceuticals, Inc. Amended and Restated 2007 Incentive
Stock and Awards Plan (the “Plan”), and shall be subject to all provisions of the Plan, which are incorporated herein
by reference, and of this Agreement and the Employment Agreement between the Grantee and the Company dated April 25, 2016 as it
may be amended from time to time (the “Employment Agreement”). Capitalized terms used in this Agreement that are not
specifically defined or referenced to the Employment Agreement will have the meanings ascribed to such terms in the Plan.


 


1. Vesting.
The Performance Stock Units will vest upon the five (5) year anniversary of the Effective Date of the Employment Agreement (the
“5 Year Anniversary”), provided that Grantee is in continuous service with the Company or its Affiliates through such
date. Notwithstanding the foregoing, the Performance Stock Units will accelerate vesting sooner upon the earlier of (x) upon the
achievement of the performance vesting conditions specified in Section 1(a) below, in which case the Performance Stock Units shall
accelerate to the extent described in Section 1(a) below; (y) a Change in Control in which the Performance Stock Units are not
assumed, continued or substituted for by the acquiring or surviving company or entity, in which case the Performance Stock Units
shall accelerate and vest in full or (z) upon certain types of Grantee’s termination as described in Section 1(b) below.
The date on which any portion of the Performance Stock Units vest under the terms of this Section 1 is referred to as the “Vesting
Date” for such Performance Stock Units. Except as provided in Section 1(b), any Performance Stock Units that are unvested
as of Grantee’s termination of continuous service with the Company and its Affiliates shall be immediately forfeited and
any Performance Stock Units that have not vested on or before the 5 Year Anniversary shall immediately expire.


 


(a) Performance
Vesting. The following five tranches (each, a “Tranche”) of Performance Stock Units shall accelerate and vest
upon the attainment of the target share price (the “Target Share Price”) as specified below on or prior to the 5 Year
Anniversary (such five-year period, the “Performance Period”):


 


	Tranche	 	No.
    of Shares	 	Target
    Share Price
	Tranche
    1	 	30,000
    Performance Stock Units	 	$9.00
    or greater
	Tranche
    2	 	30,000
    Performance Stock Units	 	$10.00
    or greater
	Tranche
    3	 	30,000
    Performance Stock Units	 	$12.00
    or greater
	Tranche
    4	 	30,000
    Performance Stock Units	 	$14.00
    or greater
	Tranche
    5	 	37,500
    Performance Stock Units	 	$15.00
    or greater


 




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Each
Tranche may only vest once. Except as otherwise specified below, for each respective Tranche to accelerate and vest under this
Section 1(a), all three of the following conditions must be met:


 


(i) a
Trigger Date may occur any time after the Grant Date and during the Performance Period. A “Trigger Date” means any
trading day on which the official closing price per Share (the “Closing Price”) is at or above the Target Share Price
for the respective Tranche. Notwithstanding the foregoing, the Committee will, in such manner as the Committee determines is appropriate
in its discretion, include the value of stock dividends distributed to the stockholders of the Company in connection with spin-offs
or similar transactions for purposes of determining whether the Target Share Price has been achieved;


 


(ii) during
the period that includes the Trigger Date and the immediately following 19 trading days (each, a “Measurement Period”),
the arithmetic mean of the 20 Closing Prices during the Measurement Period must be at or above the Target Share Price for such
Tranche (the “20 Closing Price Condition”); and


 


(iii) the
Grantee must be in continuous service with the Company and its Affiliates through the Performance Period (the “Service Condition”).


 


To
the extent all three of the above conditions are met, the applicable number of Performance Stock Units shall accelerate and vest
in full on the first trading day immediately following the Measurement Period for the Trigger Date. Notwithstanding the foregoing,
in the event of a Change in Control, the per-Share transaction consideration received by stockholders of the Company upon the
Change in Control (as determined in accordance with the terms and conditions of the applicable definitive agreement that results
in the Change in Control) shall be used as the Closing Price for purposes of determining if a Trigger Date has occurred and the
20 Closing Price Condition shall be inapplicable for determining whether any Tranche shall vest as a result of the Change in Control.


 


 (b) Involuntary Termination.




 


(i) If
the Grantee’s continuous service is terminated as a result of an Involuntary Termination (as defined in the Employment Agreement)
at any time after the Grant Date and on or prior to the thirty (30) day period prior to the 5 Year Anniversary, then, Grantee’s
unvested Performance Stock Units shall remain outstanding and eligible to accelerate vesting pursuant to their terms for the Continuation
Period (defined below) as if Grantee’s continuous service had continued for such Continuation Period, provided that,
in order to receive any vesting during the Continuation Period, Grantee satisfies the conditions set forth in Section 11.4 of
the Employment Agreement, which include the execution and delivery of an effective release of claims. The “Continuation
Period” means the period of time beginning on the date of Involuntary Termination and continuing until the earlier of (i)
twelve (12) months thereafter and (ii) one day before the 5 Year Anniversary.


 




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(ii) If
Grantee’s Involuntary Termination (as described in the Employment Agreement) occurs within the one (1) month period prior
to, or twelve (12) months following, a Change in Control, and in any case before the 5 Year Anniversary, then the Performance
Stock Units shall accelerate and vest in full; provided that, in order to receive any such vesting acceleration, Grantee
satisfies the conditions set forth in Section 11.4 of the Employment Agreement, which include the execution and delivery of an
effective release of claims.


 


2. Transferability.
Prior to the time that Shares are delivered to Grantee, the Performance Stock Units shall not be transferable other than by will
or by the laws of descent and distribution. During the lifetime of the Grantee, the Performance Stock Units shall be exercisable
only by the Grantee or, in the event of his or her disability, by his or her guardian or legal representative, except that, with
the prior written consent of the Committee (or its authorized designee), the Performance Stock Units may be transferred under
the following circumstances, to the extent permissible under applicable securities laws: (i) to a trust for the benefit of the
Grantee; (ii) to a member of the Grantee’s immediate family (or a trust for his or her benefit) or (iii) pursuant to a domestic
relations order or official marital settlement agreement that contains the information required by the Company to effectuate the
transfer. Upon any of the foregoing permitted transfers, the Grantee and the transferee must enter into any transfer or other
agreement as required by the Company. In no event may this Award be transferred for consideration.


 


3. Forfeiture/Termination
of Employment. Except as set forth in Section 1, if a termination of employment of Grantee occurs prior to the vesting in
full of the Performance Stock Units, any unvested portion of such Performance Stock Units shall be forfeited by Grantee. For the
avoidance of doubt, any Performance Stock Units not vested as of the 5 Year Anniversary shall be forfeited by Grantee, unless
otherwise agreed by the Company and the Grantee.


 


4. Triggering
Conduct. As used in this Agreement, “Triggering Conduct” shall mean Grantee’s material breach of any provision
of Section 14.3 and 14.4 of the Employment Agreement or Grantee’s breach of any provision of Grantee’s Proprietary
Agreement (as defined in the Employment Agreement).


 


5. Special
Forfeiture/Repayment Rules. For so long as Grantee continues as an employee with the Company or any of its affiliates and
for one (1) year following termination of employment regardless of the reason, Grantee agrees not to engage in Triggering Conduct.
If Grantee engages in Triggering Conduct during the time period set forth in the preceding sentence, then Grantee shall, within
sixty (60) days following written notice from the Company (subject to the opportunity to cure described below), pay to the Company
an amount equal to (x) the aggregate gross gain realized or obtained by Grantee resulting from the settlement of all Performance
Stock Units pursuant to Section 6 hereof (measured as of the settlement date (i.e., the market value of the Performance Stock
Units on such settlement date)) that have already been settled and that had vested at any time within three years prior to the
Triggering Conduct (the “Look-Back Period”), minus (y) $1.00. Before the Company seeks recovery from Grantee pursuant
to the foregoing sentence, Grantee shall be provided an opportunity to be heard by the full Committee and an opportunity to cure
the material breach, if curable, within thirty (30) days from the written notice of such material breach is received by Grantee.
Grantee may be released from Grantee’s obligations under this Section 5 if and only if the Committee (or its duly appointed
designee) authorizes, in writing and in its sole discretion, such release. This Section 5 prohibits certain conduct while Grantee
is associated with the Company or any of its affiliates and thereafter and does provide for the forfeiture or repayment of the
benefits granted by this Agreement under certain circumstances. No provisions of this Agreement shall diminish, negate or otherwise
impact any separate agreement to which Grantee may be a party, including, without limitation, any certificate of compliance or
similar attestation/certification signed by Grantee; provided, however, that to the extent that any provisions contained in any
other agreement are inconsistent in any manner with the restrictions and covenants of Grantee contained in this Agreement, the
provisions of this Agreement shall take precedence and such other inconsistent provisions shall be null and void as to this Agreement.
Grantee acknowledges and agrees that the restrictions contained in this Agreement are being made for the benefit of the Company
in consideration of Grantee’s receipt of the Performance Stock Units, in consideration of employment, in consideration of
exposing Grantee to the Company’s business operations and confidential information, and for other good and valuable consideration,
the adequacy of which consideration is hereby expressly confirmed. Grantee further acknowledges that the receipt of the Performance
Stock Units and execution of this Agreement are voluntary actions on the part of Grantee and that the Company is unwilling to
provide the Performance Stock Units to Grantee without including the restrictions and covenants of Grantee contained in this Agreement.
Further, the parties agree and acknowledge that the provisions contained in Sections 4 and 5 are ancillary to, or part of, an
otherwise enforceable agreement at the time the agreement is made.


 




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6. Payment.
Subject to the provisions of Sections 4 and 5 of this Agreement, and unless Grantee makes an effective election to defer receipt
of the Shares represented by the Performance Stock Units, on the Vesting Date, Grantee shall be entitled to receive from the Company
(without any payment on behalf of Grantee other than as described in Section 10) the Shares represented by such Performance Stock
Units; provided, however, that where the vesting of any Performance Stock Unit occurs in connection with Grantee’s Involuntary
Termination or termination due to Disability, if the distribution in connection with such acceleration is subject to Section 409A
of the Code and Grantee is a “specified employee” (determined in accordance with Section 409A of the Code), Grantee
shall be entitled to receive the corresponding Shares from the Company on the date that is the first day of the seventh (7th)
month after Grantee’s “separation from service” with the Company (determined in accordance with Section 409A
of the Code). Elections to defer receipt of the Shares beyond the date of settlement provided herein may be permitted in the discretion
of the Committee pursuant to procedures established by the Committee in compliance with the requirements of Section 409A of the
Code.


 


7. Dividend
Equivalents. Grantee shall not be entitled to receive any cash dividends on the Performance Stock Units. However, to the extent
the Company determines to pay a cash dividend to holders of the Shares, Grantee shall, with respect to each Performance Stock
Unit, be entitled to receive a cash payment from the Company on each cash dividend payment date with respect to the Shares with
a record date between the Grant Date and the settlement of such Performance Stock Unit pursuant to Section 6 hereof, such cash
payment to be in an amount equal to the dividend that would have been paid on the Shares represented by such Performance Stock
Unit. Cash payments on each cash dividend payment date with respect to the Shares with a record date prior to a Vesting Date shall
be accrued until the Vesting Date and paid thereon (subject to the same vesting requirements as the underlying Performance Stock
Units). Elections to defer receipt of the cash payments in lieu of cash dividends beyond the date of settlement provided herein
may be permitted in the discretion of the Committee pursuant to procedures established by the Company in compliance with the requirements
of Section 409A of the Code.


 




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8. Right
of Set-Off. By accepting these Performance Stock Units, Grantee consents to a deduction from, and set-off against, any amounts
owed to Grantee that are not treated as “non-qualified deferred compensation” under Section 409A of the Code by the
Company or any of its affiliates from time to time (including, but not limited to, amounts owed to Grantee as wages, severance
payments or other fringe benefits) to the extent of the amounts owed by Grantee to the Company or any of its affiliates under
this Agreement.


 


9. No
Stockholder Rights. Grantee shall have no rights of a stockholder with respect to the Performance Stock Units, including,
without limitation, any right to vote the Shares represented by the Performance Stock Units unless and until such Shares are delivered
to Grantee.


 


10. Withholding
Tax.


 


(a) Generally.
Grantee is liable and responsible for all withholding taxes owed in connection with the Performance Stock Units (including taxes
owed with respect to any cash payments described in Section 7 hereof), regardless of any action the Company takes with respect
to any tax withholding obligations that arise in connection with the Performance Stock Units. The Company does not make any representation
or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant or vesting of
the Performance Stock Units or the subsequent sale of Shares issuable upon settlement of the Performance Stock Units. The Company
does not commit and is under no obligation to structure the Performance Stock Units to reduce or eliminate Grantee’s tax
liability.


 


(b) Payment
of Withholding Taxes. Prior to any event in connection with the Performance Stock Units (e.g., vesting or settlement) that
the Company determines may result in any domestic or foreign tax withholding obligation, whether national, federal, state or local,
including any employment tax obligation (the “Tax Withholding Obligation”), Grantee is required to arrange for the
satisfaction of the minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company.


 


(i) By
Share Withholding. Unless Grantee elects to satisfy the Tax Withholding Obligation pursuant to Sections 10(b)(ii) or 10(b)(iii),
Grantee’s acceptance of this Agreement constitutes Grantee’s instruction and authorization to the Company to retain
on Grantee’s behalf the number of Shares from those Shares issuable to Grantee under the Award as the Company determines
to be sufficient to satisfy the Tax Withholding Obligation as owed when any such obligation becomes due. The value of any Shares
retained for such purposes shall be based on the Fair Market Value, as the term is defined in the Plan, of the Shares on the date
of vesting of the Performance Stock Units. To the extent that the Company retains any Shares to cover the Tax Withholding Obligation,
it will do so at the minimum statutory rate, but in no event shall such amount exceed the minimum required by applicable law and
regulations.


 




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(ii) By
Sale of Shares. No later than five (5) business days prior to a Vesting Date, Grantee may instruct and authorize the Company
and any brokerage firm determined acceptable to the Company for such purpose to sell on Grantee’s behalf a whole number
of Shares from those Shares issuable to Grantee as the Company determines to be appropriate to generate cash proceeds sufficient
to satisfy the minimum applicable Tax Withholding Obligation. Such Shares will be sold on the day such Tax Withholding Obligation
arises (e.g., a vesting date) or as soon thereafter as practicable. Grantee will be responsible for all broker’s fees and
other costs of sale, and Grantee agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses
relating to any such sale. To the extent the proceeds of such sale exceed Grantee’s minimum Tax Withholding Obligation,
the Company agrees to pay such excess in cash to Grantee. Grantee acknowledges that the Company or its designee is under no obligation
to arrange for such sale at any particular price, and that the proceeds of any such sale may not be sufficient to satisfy Grantee’s
minimum Tax Withholding Obligation. Accordingly, Grantee agrees to pay to the Company or any Subsidiary as soon as practicable,
including through additional payroll withholding, any amount of the Tax Withholding Obligation that is not satisfied by the sale
of Shares described herein.


 


(iii) By
Check, Wire Transfer or Other Means. No later than five (5) business days prior to a Vesting Date, Grantee may elect to satisfy
Grantee’s Tax Withholding Obligation by delivering to the Company an amount that the Company determines is sufficient to
satisfy the Tax Withholding Obligation by (x) wire transfer to such account as the Company may direct, (y) delivery of a certified
check payable to the Company, or (z) such other means as specified from time to time by the Administrator.


 


(iv) Notwithstanding
anything to the contrary set forth above, the Company shall have the right to deduct from all cash payments paid pursuant to Section
7 hereof the amount of any taxes which the Company is required to withhold with respect to such payments.


 


11. Governing
Law/Venue for Dispute Resolution. This Agreement shall be governed by the laws of the State of Delaware, without regard to
principles of conflicts of law, except to the extent superseded by the laws of the United States of America. The parties agree
and acknowledge that the laws of the State of Delaware bear a substantial relationship to the parties and/or this Agreement and
that the Performance Stock Units and benefits granted herein would not be granted without the governance of this Agreement by
the laws of the State of Delaware. In addition, all disputes relating to this Agreement shall be resolved exclusively pursuant
to the terms of Section 16 of the Employment Agreement.


 


12. Action
by the Committee. The parties agree that the interpretation of this Agreement shall rest exclusively and completely within
the sole discretion of the Committee. The parties agree to be bound by the decisions of the Committee with regard to the interpretation
of this Agreement and with regard to any and all matters set forth in this Agreement. The Committee may delegate its functions
under this Agreement to an officer of the Company designated by the Committee (hereinafter the “designee”). In fulfilling
its responsibilities hereunder, the Committee or its designee may rely upon documents, written statements of the parties or such
other material as the Committee or its designee deems appropriate. The parties agree that, except as described in Section 5, there
is no right to be heard or to appear before the Committee or its designee and that any decision of the Committee or its designee
relating to this Agreement shall be final and binding unless such decision is arbitrary and capricious.


 




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13. Prompt
Acceptance of Agreement. The Performance Stock Unit award evidenced by this Agreement shall, at the discretion of the Committee,
be forfeited if this Agreement is not manually executed and returned to the Company, or electronically executed by Grantee by
indicating Grantee’s acceptance of this Agreement in accordance with the Company’s applicable acceptance procedures,
within ninety (90) days after the Grant Date.


 


14. Electronic
Delivery and Consent to Electronic Participation. The Company may, in its sole discretion, decide to deliver any documents
related to the Performance Stock Unit grant under and participation in the Plan or future Performance Stock Units that may be
granted under the Plan by electronic means. Grantee hereby consents to receive such documents by electronic delivery and to participate
in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated
by the Company, including the acceptance of this Performance Stock Unit award and the execution of this Agreement through electronic
signature.


 


15. Notices.
All notices, requests, consents and other communications required or provided under this Agreement to be delivered by Grantee
to the Company will be in writing and will be deemed sufficient if delivered by hand, facsimile, nationally recognized overnight
courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the
Company at the address set forth below:


 


Imprimis
Pharmaceuticals, Inc.


12264
El Camino Real, Suite 350


San
Diego, CA 92130


Attention:
Chief Executive Officer


Facsimile:
858-345-1745


 


All
notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Company
to Grantee may be delivered by e-mail or in writing and will be deemed sufficient if delivered by e-mail, hand, facsimile, nationally
recognized overnight courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective
upon delivery to the Grantee at the address set forth on the Grantee’s acceptance of this Agreement or such other address
provided by the Grantee to the Company pursuant to this Section 15.


 


*
* * * *


 




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IN
WITNESS WHEREOF, the Company and the Grantee have executed this Notice and agree that the Award is to be governed by the terms
and conditions of this Notice, the Plan, the Agreement and the Employment Agreement. This Agreement may not be amended or modified
in any manner that would impair the rights of Grantee without his prior written consent.


 


	IMPRIMIS
    PHARMACEUTICALS, INC.	 
	a
    Delaware corporation	 
	 	 	 
	By:	/s/
    Mark L. Baum	 
	 	 	 
	Its:	Chief
    Executive Officer	 
	 	 	 
	Date:	April
    25, 2016	 


 




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ACCEPTANCE
OF AGREEMENT


 


Grantee,
Andrew R. Boll, hereby: (a) acknowledges receiving a copy of the Plan, which has either been previously delivered or is provided
with this Agreement, and represents that he or she is familiar with and understands all provisions of the Plan and this Agreement;
and (b) voluntarily and knowingly accepts this Agreement and the Performance Stock Units granted to him under this Agreement subject
to all provisions of the Plan and this Agreement, including, without limitation, the provisions in the Agreement regarding “Triggering
Conduct” and “Special Forfeiture/Repayment Rules” set forth in Sections 4 and 5 of this Agreement. Grantee further
acknowledges receiving a copy of the Company’s most recent annual report to stockholders and other communications routinely
distributed to the Company’s stockholders and a copy of the Prospectus pertaining to the Plan.


 


	/s/
    Andrew R. Boll 	 
	Grantee’s
    Signature	 
	 	 
	April
    25, 2016 	 
	Date	 
	 	 
	 	 
	Address	 
	 	 
	 	 
	City,
    Sate & Zip	 
	 	 
	 	 
	Email
    Address	 
	 	 
	 	 
	Facsimile
    Number	 


 




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