exv10w37






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



 









 




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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