Document:

exv10w34

Exhibit 10.34

CORNERSTONE BIOPHARMA HOLDINGS, INC.

Amended and Restated Restricted Stock Agreement

Granted Under 2005 Stock Incentive Plan

     This AMENDED AND RESTATED RESTRICTED STOCK AGREEMENT (this “Agreement”) is dated as of August
20, 2008, and amended and restated as of October 31, 2008 (the “Amendment Date”), between
Cornerstone BioPharma Holdings, Inc., a Delaware corporation (the “Company”), and David Price (the
“Participant”).

BACKGROUND

     WHEREAS, the Company has entered into an agreement and plan of merger, as amended with
Critical Therapeutics, Inc. (“Critical Therapeutics”) and Neptune Acquisition Corp., which is a
wholly owned subsidiary of Critical Therapeutics (“Transitory Subsidiary”), pursuant to which
Transitory Subsidiary will merge with and into the Company, with the Company as the surviving
entity and a wholly owned subsidiary of Critical Therapeutics. Critical Therapeutics will
thereafter change its name to Cornerstone Therapeutics Inc (“Cornerstone Therapeutics”).

     WHEREAS, the Company wishes to employ the Participant, and the Participant desires to accept
employment with the Company.

     WHEREAS, in connection with the employment by the Company of the Participant, the parties
intended that the Participant would receive, immediately prior to the merger, a restricted stock
grant of 2.2% of the fully diluted capitalization of Cornerstone Therapeutics immediately following
the merger (the “Objective”).

     WHEREAS, in order to accomplish the Objective, the Company and the Participant previously
entered into the Restricted Stock Agreement dated as of August 20, 2008 (the “Original Agreement”),
pursuant to which the Company agreed to grant the Participant 1,301,776 shares of the Company’s
common stock, $0.0001 par value per share, subject to certain restrictions, based upon the
projected fully diluted post-merger capitalization of Cornerstone Therapeutics as of that date.

     WHEREAS, since entering into the Original Agreement, the number of shares of the Company’s
common stock that would represent 2.2% of the projected fully diluted post-merger capitalization of
Cornerstone Therapeutics has changed due to, among other things, changes in the number of
outstanding stock options for each of Critical Therapeutics and the Company, and accordingly the
number of restricted shares under the Original Agreement are insufficient to accomplish the
Objective.

     WHEREAS, the parties acknowledge the need to increase the number of restricted shares granted
to Participant based on the projected fully diluted capitalization of Cornerstone Therapeutics as
of the Amendment Date to more fully achieve the Objective.

 

 

     NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein, and of other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending legally to be bound, hereby agree as follows:

1. Grant of Restricted Stock.

     In connection with the employment by the Company, of the Participant, the Company has agreed
to grant the Participant 1,365,629 shares (the “Shares”) of the Company’s common stock, $0.0001 par
value per share (the “Common Stock”), subject to certain restrictions (the “Restricted Stock”),
upon the terms and conditions set forth in this Agreement. The Restricted Stock will be granted
pursuant to and shall in all respects be subject to the terms and conditions of the Company’s 2005
Stock Incentive Plan (the “Plan”), a copy of which has been furnished to the Participant.

2. Vesting Commencement Date; Grant Date. This agreement is effective as of August 20,
2008 and vesting of the Shares to be granted hereunder shall commence as of September 8, 2008 (the
“Vesting Commencement Date”). The Company shall grant the Shares to the Participant
immediately prior to the effective time of the proposed merger between the Company and Neptune
Acquisition Corp. (“Neptune”), a Delaware corporation and wholly owned subsidiary of Critical
Therapeutics, Inc., a Delaware corporation (“Critical Therapeutics”), pursuant to an Agreement and
Plan of Merger dated as of May 1, 2008, as amended (the “Merger Agreement”), among the Company,
Neptune, Critical Therapeutics and, for purposes of Section 8.3 and 9.13 of the Merger Agreement,
Cornerstone BioPharma, Inc., a Nevada corporation (the “Critical Therapeutics Merger”). If either
or both of the Company and/or Critical Therapeutics terminate the Merger Agreement, the Company
shall grant the Shares to the Participant within five (5) business days following the completion of
the Company’s annual valuation, but in no event later than February 15, 2009. The date on which
the Shares shall be granted to the Participant is referred to herein as the “Grant Date,” and the
Participant shall be promptly notified of the Grant Date by the Company in writing once determined.

3. Vesting.

     (a) Vesting Schedule. Subject to the Participant’s continuing to provide services to
the Company (whether as an employee, officer, director, consultant or advisor) on such dates, 25%
of the Shares shall vest on each of the first four anniversaries of the Vesting Commencement Date,
so that all of the Shares shall be vested four years after such date.

     (b) Forfeiture of Unvested Shares. If the Participant ceases to provide services to
the Company for any reason prior to the date that all of the Shares are vested, the Participant
shall automatically forfeit to the Company all Shares that are unvested at such time, except as
provided in Section 3(c) below. Shares that are not vested are referred to herein as “Unvested
Shares.”

     (c) Acceleration of Vesting. Notwithstanding Sections 3(a) and 3(b) above,
immediately prior to, and contingent upon, the consummation of a Change in Control Event (as
defined in the Plan), all of the Shares, to the extent that they are then unvested, shall vest in
full and the forfeiture restrictions applicable to such Shares shall lapse. Notwithstanding
anything to

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the contrary contained herein or in the Plan, the Company and the Executive acknowledge and
agree that, for all purposes under this Agreement, a Change in Control Event as defined in the Plan
does not and shall not include any merger, business combination or similar transaction with
Critical Therapeutics, Inc. or any subsidiary or affiliate thereof.

4. Deposit and Release of Stock Certificates.

     (a) Deposit. To ensure the availability for delivery to the Company of the Unvested
Shares upon the Participant’s ceasing to provide services to the Company, the Participant shall,
upon execution of this Agreement and at any time thereafter, deliver and deposit with the Secretary
of the Company any stock certificates representing any of the Unvested Shares, together with the
stock assignment duly endorsed in blank attached hereto as Exhibit A. The Secretary shall
hold the Unvested Shares and stock assignment until the Unvested Shares become vested or are
forfeited to the Company. The Participant hereby appoints the Secretary as the Participant’s
attorney-in-fact to assign and transfer to the Company any Unvested Shares that are forfeited to
the Company.

     (b) Release. As the Shares vest or are forfeited to the Company, upon request by the
Participant, the Secretary of the Company shall promptly cause a new stock certificate to be issued
for the vested Shares and shall deliver any stock certificate for vested Shares to the Participant
and any stock certificate for Unvested Shares to the Secretary of the Company. As a condition to
the delivery of any stock certificate for vested Shares to the Participant, all applicable
requirements for income and employment tax withholding with respect to such Shares shall have been
satisfied by the Participant.

     (c) No Liability. Neither the Company nor the Secretary shall be liable for any act
it may do or omit to do in good faith while holding the Unvested Shares.

5. Rights as a Stockholder. Participant shall have all rights of a stockholder (including,
without limitation, dividend and voting rights) with respect to the Restricted Stock, for record
dates occurring on or after the Grant Date and prior to the date any such Shares of Restricted
Stock are forfeited in accordance with this Agreement, except that any dividends or distributions
paid in Shares or other securities (including, without limitation, any change in the shares of
Restricted Stock pursuant to Section 8.(a) of the Plan) with respect to Unvested Shares shall,
until such shares vest, be deposited with the Company or any holder appointed pursuant to Section 4
hereof, together with a stock power endorsed in blank or other appropriate instrument of transfer,
and shall be subject to the same restrictions as such Restricted Stock and otherwise considered to
be such Restricted Stock for all purposes hereunder.

6. No Right to Continued Employment. The Participant understands and acknowledges that,
except as may otherwise be provided in a separate, written employment agreement between the Company
and the Participant, the Participant’s employment is “at will” and is for no specified term.
Nothing in this Agreement shall confer upon the Participant any right to continue in the service of
the Company or interfere in any way with any right of the Company to terminate the Participant’s
service as an employee or consultant, as the case may be, at any time.

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7. Company Right of First Refusal.

     (a) Notice of Proposed Transfer. If the Participant proposes to sell, assign,
transfer, pledge, hypothecate or otherwise dispose of, by operation of law or otherwise
(collectively, “transfer”) any Shares acquired pursuant to this Agreement, then the Participant
shall first give written notice of the proposed transfer (the “Transfer Notice”) to the Company.
The Transfer Notice shall name the proposed transferee and state the number of such Shares the
Participant proposes to transfer (the “Offered Shares”), the price per share and all other material
terms and conditions of the transfer.

     (b) Company Right to Purchase. For 60 days following its receipt of such Transfer
Notice, the Company shall have the option to purchase all or part of the Offered Shares at the
price and upon the terms set forth in the Transfer Notice. In the event the Company elects to
purchase all or part of the Offered Shares, it shall give written notice of such election to the
Participant within such 60-day period. Within 10 days after his or her receipt of such notice, the
Participant shall tender to the Company at its principal offices the certificate or certificates
representing the Offered Shares to be purchased by the Company, duly endorsed in blank by the
Participant or with duly endorsed stock powers attached thereto, all in a form suitable for
transfer of the Offered Shares to the Company. Promptly following receipt of such certificate or
certificates, the Company shall deliver or mail to the Participant a check in payment of the
purchase price for such Offered Shares; provided that if the terms of payment set
forth in the Transfer Notice were other than cash against delivery, the Company may pay for the
Offered Shares on the same terms and conditions as were set forth in the Transfer Notice; and
provided further that any delay in making such payment shall not invalidate the
Company’s exercise of its option to purchase the Offered Shares.

     (c) Shares Not Purchased By Company. If the Company does not elect to acquire all of
the Offered Shares, the Participant may, within the 30-day period following the expiration of the
option granted to the Company under subsection (b) above, transfer the Offered Shares which the
Company has not elected to acquire to the proposed transferee, provided that such
transfer shall not be on terms and conditions more favorable to the transferee than those contained
in the Transfer Notice. Notwithstanding any of the above, all Offered Shares transferred pursuant
to this Section 7 shall remain subject to the right of first refusal set forth in this Section 7
and such transferee shall, as a condition to such transfer, deliver to the Company a written
instrument confirming that such transferee shall be bound by all of the terms and conditions of
this Section 7.

     (d) Consequences of Non-Delivery. After the time at which the Offered Shares are
required to be delivered to the Company for transfer to the Company pursuant to subsection (b)
above, the Company shall not pay any dividend to the Participant on account of such Offered Shares
or permit the Participant to exercise any of the privileges or rights of a stockholder with respect
to such Offered Shares, but shall, insofar as permitted by law, treat the Company as the owner of
such Offered Shares.

     (e) Exempt Transactions. The following transactions shall be exempt from the
provisions of this Section 7:

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          (1) any transfer of Shares to or for the benefit of any spouse, child or grandchild of the
Participant, or to a trust for their benefit;

          (2) any transfer pursuant to an effective registration statement under the Securities Act of
1933, as amended (the “Securities Act”); and

          (3) the sale of all or substantially all of the shares of capital stock of the Company
(including pursuant to a merger or consolidation);

provided, however, that in the case of a transfer pursuant to clause (1) above,
such Shares shall remain subject to the right of first refusal set forth in this Section 7 and such
transferee shall, as a condition to such transfer, deliver to the Company a written instrument, in
a form reasonably satisfactory to the Company, confirming that such transferee shall be bound by
all of the terms and conditions of this Section 7.

     (f) Termination. The provisions of this Section 7 shall terminate upon the earlier of
the following events:

          (1) the closing of the sale of shares of Common Stock in an underwritten public offering
pursuant to an effective registration statement filed by the Company under the Securities Act;

          (2) the closing of a Change in Control Event; or

          (3) the consummation of the Critical Therapeutics Merger.

     (g) No Obligation to Recognize Invalid Transfer. The Company shall not be required
(1) to transfer on its books any of the Shares which shall have been sold or transferred in
violation of any of the provisions set forth in this Section 7, or (2) to treat as owner of such
Shares or to pay dividends to any transferee to whom any such Shares shall have been so sold or
transferred.

     (h) Legends. The certificate representing Shares shall bear a legend substantially in
the following form (in addition to, or in combination with, any legend required by applicable
federal and state securities laws and agreements relating to the transfer of the Company
securities):

“The securities represented hereby have not been registered under the Securities Act
of 1933, as amended (the “Act”), or any state securities laws, and have been
acquired for investment and not with a view to distribution or resale. Such
securities may not be offered, sold or otherwise transferred, pledged or
hypothecated except (i) pursuant to an effective registration statement under the
Securities Act of 1933, as amended, and in compliance with applicable state
securities laws or (ii) in the opinion of counsel satisfactory to the issuer of
these securities, such offer, sale, transfer, pledge or hypothecation is in
compliance with the Act and any applicable state securities laws.

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The securities represented by this Certificate are subject to certain restrictions
on vesting and transfer, and a right of first refusal held by the issuer or its
assignee(s), as set forth in an Amended and Restated Restricted Stock Agreement,
dated as of August 20, 2008, and amended and restated as of October 31, 2008, as
such Agreement may be further amended, restated or modified from time to time, and
may not be transferred, sold, assigned, pledged, hypothecated or otherwise disposed
of except in accordance with the provisions thereof and any transferee of these
securities shall be subject to the terms of such Agreement. Copies of the foregoing
Agreement are maintained with the corporate records of the issuer and are available
for inspection at the principal offices of the issuer.”

8. Successors and Assigns of the Company. The rights of the Company under this Agreement
shall be transferable to any one or more persons or entities, and all covenants and agreements
hereunder shall inure to the benefit of, and be enforceable by, such transferees.

9. Tax Withholding. The Participant acknowledges and agrees that the Company may require
the Participant to pay, or may withhold from wages or other amounts paid by the Company to the
Participant, any amount that the Company, in its sole discretion, deems necessary to comply with
any federal, state or local withholding requirements for income and employment tax purposes.

10. Section 83(b) Election. The Participant hereby acknowledges that he may file a Section
83(b) election with the Internal Revenue Service within 30 days of the Grant Date, electing
thereby to be taxed on the fair market value of the Shares as of the Grant Date. Absent such an
election, ordinary income will be measured and recognized by the Participant as the shares vest
(that is, each year on the anniversary of the Vesting Commencement Date). If the Participant makes
a Section 83(b) election and later forfeits any Unvested Shares upon termination of service to the
Company, the Participant could suffer adverse tax consequences. The Participant is strongly
encouraged to seek the advice of his or her own tax consultants in connection with the grant of the
Shares and the advisability of filing of an election under Section 83(b) of the Internal Revenue
Code.

THE PARTICIPANT ACKNOWLEDGES THAT IT IS HIS OR HER SOLE RESPONSIBILITY AND NOT THE COMPANY’S
RESPONSIBILITY TO FILE THE ELECTION UNDER SECTION 83(b), EVEN IF THE PARTICIPANT REQUESTS
THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON THE PARTICIPANT’S BEHALF.

11. Agreement in Connection with Public Offering.

     The Participant agrees, in connection with either the Critical Therapeutics Merger or the
initial and any other underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act, (i) not to sell, make short sale of, loan, grant
any options for the purchase of, or otherwise dispose of any shares of Common Stock held by the
Participant (other than, if applicable, those shares included in the offering) without the prior
written consent of the Company or, if applicable, the underwriters managing such initial

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underwritten public offering of the Company’s securities for such number of days (not to
exceed 180 days) from the closing date of the Critical Therapeutics Merger or the effective date of
such registration statement, as applicable, as the Company or the managing underwriters, as
applicable, may require, and (ii) to execute any agreement reflecting clause (i) above as may be
requested by the Company or the managing underwriters, as applicable, at the time of the Critical
Therapeutics Merger or any such offering.

12. Notices. All notices by the Participant or the Participant’s assignees shall be
addressed to Cornerstone BioPharma Holdings, Inc., 2000 Regency Parkway Suite 255, Cary, NC 27518,
Attention: Human Resources, or such other address as the Company may from time to time specify.
All notices to the Participant shall be addressed to Participant at Participant’s address in the
Company’s records.

13. Governing Law. This Agreement shall be construed under and governed by the laws of the
State of North Carolina, without regard to the conflict of law provisions thereof.

14. Counterparts and Signature. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which together shall be
considered one and the same agreement. The exchange of copies of this Agreement or amendments
thereto and of signature pages by facsimile transmission or by e-mail transmission in portable
document format, or similar format, shall constitute effective execution and delivery of such
instrument(s) as to the parties and may be used in lieu of the original Agreement for all purposes.
Signatures of the parties transmitted by facsimile or by e-mail transmission in portable document
format, or similar format, shall be deemed to be their original signatures for all purposes.

15. Headings. The headings contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or interpretation of this Agreement.

16. Entire Agreement. The Plan and the terms and conditions thereof are incorporated
herein by this reference. In the event of any conflict between the Plan and this Agreement, the
Plan shall control. Any defined terms used herein shall have the meanings set forth in the Plan,
except as otherwise defined herein. This Agreement and the Plan constitute the entire agreement of
the parties with respect to the subject matter hereof and may not be modified except by means of a
writing signed by the Participant and the Company.

[signature page follows]

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[Signature Page to Amended and Restated Restricted Stock Agreement]

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed under its corporate
seal by its duly authorized officer. This Agreement shall take effect as a sealed instrument.

	 	 	 	 	 
	 	CORNERSTONE BIOPHARMA HOLDINGS, INC.

 	 
	 	By:  	/s/ Craig A. Collard
 	 
	 	 	Name:  	Craig A. Collard 	 
	 	 	Title:  	President & Chief Executive Officer 	 

 

 

	 	 	 	 	 

PARTICIPANT’S ACCEPTANCE

     The undersigned hereby accepts the foregoing restricted stock grant and agrees to the terms
and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company’s
2005 Stock Incentive Plan.

	 	 	 	 	 
	 	PARTICIPANT:

 	 
	 	/s/ David Price
 	 
	 	Name:  	David Price 	 
	 
	 	Address:  	286 Masters Court

Kiawah Island, SC 29455 	 
	 

 

 

Exhibit A

ASSIGNMENT SEPARATE FROM STOCK CERTIFICATE

     FOR VALUE RECEIVED I, David Price, hereby assign and transfer unto Cornerstone BioPharma
Holdings, Inc. (the “Company”) shares of the Common Stock of the Company standing in my name on its
books and represented by Certificate No. ___. I do hereby irrevocably constitute and appoint
                                         to transfer such shares, with full power of
substitution in the premises.

     This Assignment may be used only in conjunction with the Amended and Restated Restricted Stock
Agreement between the Company and the undersigned entered into on August 20, 2008, and amended and
restated as of October 31, 2008.

Dated:                     , 2008

	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 	 

	 	 

INSTRUCTIONS: Do not complete any blanks other than the signature line. The sole purpose of this
assignment is to enable Unvested Shares to be transferred to the Company upon the termination of
the Participant’s service to the Company, as described in the Restricted Stock Agreement, without
requiring additional signatures on the part of the Participant.exv10w35

Exhibit 10.35

CORNERSTONE BIOPHARMA, INC.

PROPRIETARY INFORMATION, INVENTIONS,

NON-COMPETITION AND NON-SOLICITATION AGREEMENT

     This Proprietary Information, Inventions, Non-competition, and Non-solicitation Agreement
(“Agreement’) is made [in consideration for my employment/engagement — for new
employees/consultants/directors] [in consideration of an option grant attached as Schedule 1
hereto or for the payment of $ 100.00 — for existing employees/consultants/directors] by
Cornerstone BioPharma, Inc., a Delaware corporation, or its subsidiaries or affiliates (the
“Company”), and the compensation now and hereafter paid to me. I hereby agree as follows:

     1. NONDISCLOSURE.

1.1 Recognition of Company’s Rights; Nondisclosure. At all times during my employment and
thereafter, I will hold in strictest confidence and will not disclose or use any Proprietary
Information (as defined below), except as such disclosure or use may be required in connection
with my work for the Company or unless the Company expressly authorizes such in writing. I will
obtain the Company’s written approval before publishing or submitting for publication any material
(written, verbal, or otherwise) that relates to my work at the Company and/or incorporates any
Proprietary Information. I agree that upon termination of my employment I will acknowledge my
possession of Proprietary Information by signing an appropriate list of all Proprietary
Information of which I have knowledge or about which I have acquired information. I hereby assign
to the Company any rights I may have or acquire in such Proprietary Information and recognize that
all Proprietary Information shall be the sole property of the Company.

1.2 Proprietary Information. The term “Proprietary Information” shall mean any and all confidential
and/or proprietary knowledge, data or information of the Company. By way of illustration but not
limitation, “Proprietary Information” includes: (a) trade secrets, inventions, ideas, processes,
formulas, source and object codes, data, programs, other works of authorship, know-how,
improvements, discoveries, developments, designs and techniques, (b) information regarding plans
for research, development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and customers, and (c)
information regarding the skills and compensation of other employees of the Company.

1.3 Third Party Information. I understand, in addition, that the Company has received and in the
future will receive from third parties confidential or
proprietary information (“Third Party Information”)
subject to a duty on the Company’s part to maintain the confidentiality of such information and to
use it only for certain limited purposes. During the term of my employment and thereafter, I will
hold Third Party Information in the strictest confidence and will not disclose to anyone or use the
Third Party Information, except in connection with my work for the Company.

1.4 No Improper Use of Information of Prior Employers and Others. During my employment by the
Company, I will not improperly use or disclose any confidential information or trade secrets, if
any, of any former employer or any other person to whom I have an obligation of confidentiality. I
will not bring onto the premises of the Company any unpublished documents or any property belonging
to any former employer or any other person to whom I have an obligation of confidentiality unless
consented to in writing by that former employer or person. I will use in the performance of my
duties only information which is generally known and used by persons with training and experience
comparable to my own, which is common knowledge in the industry or otherwise legally in the public
domain, or which is otherwise provided or developed by the Company or me. I represent that my
performance of all the terms of this Agreement and as an employee of the Company does not and will
not breach any agreement to keep in confidence information acquired by me in confidence or in trust
prior to my employment by the Company. I have not entered into, and I agree 1 will not enter into,
any agreement either written or oral in conflict herewith.

     2. Assignment of Inventions.

2.1 Proprietary Rights. The term “Proprietary
Rights” shall mean all trade secret, patent, copyright, mask work and other intellectual property
rights throughout the world.

1

 

2.2 Prior Inventions. Inventions, if any, patented or unpatented, which I made prior to the
commencement of my employment with the Company are excluded from the scope of this Agreement. To
preclude any possible uncertainty, I have set forth on Exhibit A (Previous Inventions) attached
hereto, and incorporated herein by reference, a complete list of all inventions that I have, alone
or jointly with others, conceived, developed or reduced to practice or caused to be conceived,
developed or reduced to practice prior to the commencement of my employment with the Company, that
I consider to be my property or the property of third parties and that I wish to have excluded
from the scope of this Agreement (collectively, “Prior Inventions”). If disclosure of any such
Prior Invention would cause me to violate any prior confidentiality agreement, I understand that I
am not to list such Prior Inventions in Exhibit A but am only to disclose a cursory name for each
such invention, a listing of the party to whom it belongs and the fact that full disclosure as to
such inventions has not been made for that reason. If no such disclosure is attached, I represent
that there are no Prior Inventions. If, in the course of my employment with the Company, I
incorporate a Prior Invention into a Company product, process or machine, the Company is hereby
granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license
(with rights to sublicense through multiple tiers of sublicensees) to make, have made, modify, use
and sell such Prior Invention. Notwithstanding the foregoing, I agree that I will not incorporate,
or permit to be incorporated, Prior Inventions in any Company Inventions (as defined below)
without the Company’s prior written consent.

2.3 Assignment of Inventions. I hereby assign and agree to assign in the future all my right, title
and interest in and to any and all inventions (and all Proprietary Rights with respect thereto),
trade secrets, confidential and proprietary information, software programs, discoveries,
conceptions, preparations and developments, whether or not eligible for or covered by patent,
copyright or trade secret protection (collectively, “Inventions”), and whether or not such
Inventions constitute works for hire or would otherwise belong to the Company by operation of law
which (i) are related to the Company’s business or actual or demonstrably anticipated research or
development or (ii) were developed during Company time or using Company resources (collectively,
“Assigned Inventions”) that become known to, or are made, conceived, reduced to practice or learned
by me, either alone or jointly with others, during the
period of my employment with the Company. Inventions assigned to the Company, or to a third party
as directed by the Company pursuant to this Section 2, are hereinafter referred to as “Company
Inventions.”

2.4 Obligation to Keep Company Informed. I
will promptly disclose to the Company fully and in writing all Inventions authored, conceived or
reduced to practice by me, either alone or jointly with others, during the period of my
employment. At the time of each such disclosure, I will advise the Company in writing of any
Inventions that I believe are as nonassignable inventions under the provisions of N.C. GEN. STAT.
§66-57.1 (inventions that I developed entirely on my own time without using the Company’s
equipment, supplies, facility or trade secret information, unless such invention (a) relates to
the Company’s business or actual or demonstrably anticipated research or development, or (b)
results from any work performed by Employee for the Company) and I will at that time provide to
the Company in writing all evidence necessary to substantiate that belief.

2.5 Works for Hire. I acknowledge that all original works of authorship which are made by me
(solely or jointly with others) within the scope of my employment and which are protectable by
copyright are “works made for hire,” pursuant to United States Copyright Act (17 U.S.C., Section
101).

2.6 Enforcement of Proprietary Rights. I will assist the Company in every proper way to obtain, and
from time to time enforce, United States and foreign Proprietary Rights relating to Company
Inventions in any and all countries. To that end I will execute, verify and deliver such documents
and perform such other acts (including appearances as a witness) as the Company may reasonably
request for use in applying for, obtaining, perfecting, evidencing, sustaining and enforcing such
Proprietary Rights and the assignment thereof. In addition, I will execute, verify and deliver
assignments of such Proprietary Rights to the Company or its designee. My obligation to assist the
Company with respect to Proprietary Rights relating to such Company Inventions in any and all
countries shall continue beyond the termination of my employment, but the Company shall compensate
me at a reasonable rate after my termination for the time actually spent by me and for any
reasonable expenses actually incurred by me at the Company’s request on such assistance.

2

 

In the event the Company is unable for any reason, after reasonable effort, to secure my signature
on any document needed in connection with the actions specified in the preceding paragraph, I
hereby irrevocably designate and appoint the Company and its duly authorized officers and agents
as my agent and attorney in fact, which appointment is coupled with an interest, to act for and in
my behalf to execute, verify and file any such documents and to do all other lawfully permitted
acts to further the purposes of the preceding paragraph with the same legal force and effect as if
executed by me. 1 hereby waive and quitclaim to the Company any and all claims, of any nature
whatsoever, which I now or may hereafter have for infringement of any Proprietary Rights assigned
hereunder to the Company.

     3. No Conflicts or Solicitation.
To protect the Company’s Proprietary Information, I agree that during the period of my employment
by the Company I will not, without the Company’s express written consent, enter into any other
employment or business activity with any other person or entity engaged in a Restricted Business
(as defined below). I also agree that for the period of my employment by the Company and for one
(1) year after the date of termination of my employment by the Company I will not, either directly
or through others, solicit or attempt to solicit or hire or attempt to hire any employee,
independent contractor or consultant of the Company to terminate his or her relationship with the
Company in order to become an employee, consultant or independent contractor to or for any other
person or entity engaged in a Restricted Business (as defined below) in a Restricted Territory (as
defined below). I agree further that for the period of my employment by the Company and for one (1)
year after the date of termination of my employment by the Company I will not, either directly or
through others: (a) solicit or attempt to solicit any customer or partner of the Company with whom
I had contact during my employment with the Company to purchase a product or service competitive
with a product or service of the Company; or (b) provide products or services competitive with a
product or service of the Company to any customer or partner of the Company with whom I had contact
during my employment with the Company. If any restriction set forth in this Section 3 is found by
any court of competent jurisdiction to be unenforceable because it extends for too long a period of
time or over too great a range of activities or in too broad a geographic area, it shall be
interpreted to extend only over the maximum period of time, range of activities or geographic area
as to which such court shall determine it to be enforceable.

     4. Covenant Not to Compete.
To protect Proprietary Information, I agree that during my employment with the Company and for a
period of one (1) year after my last day of employment with the Company, I will not directly or
indirectly engage in (whether as an employee, consultant, proprietor, partner, director or
otherwise), or have any ownership interest in, or participate in the financing, operation,
management or control of, any person, firm, corporation or business that engages in a Restricted
Business in a Restricted Territory. It is agreed that ownership of no more than one percent (1%)
of the outstanding voting stock of a publicly traded corporation shall not constitute a violation
of this provision.

4.1 Reasonable. I agree and acknowledge that the time limitation on the restrictions in Section 4,
combined with the geographic scope, is reasonable. I also acknowledge and agree that Section 4 is
reasonably necessary for the protection of Proprietary Information that through my employment I
shall receive adequate consideration for any loss of opportunity associated with the provisions
herein, and that these provisions provide a reasonable way of protecting Company’s business value
which will be imparted to me.

4.2 As used herein, the terms:

(i) “Restricted Business” shall mean an entity
that develops, commercializes or promotes proprietary formulations of already approved or existing
prescription drugs in the central nervous systems or respiratory markets, or conducts research or
development with regard to such, that are competitive with the products or services then offered
or reasonably anticipated to be offered by the Company.

(ii) “Restricted Territory” shall mean (a) the entire world; (b) North America; (c) the United
States of America; (d) each state in which the Company does business or did business at any time
within two (2) years prior to the termination of my employment with the Company; (e) the States of
Maryland, Virginia, North Carolina, South Carolina and Georgia; and (f) the State of North
Carolina. If a court of competent jurisdiction determines that the Restricted Territory described
above in subparagraph (a) is too restrictive, then the parties agree that the Restricted Territory
shall be the area specified in subparagraph (b). If a court of competent jurisdiction determines
that the Restricted Territory as set forth in subparagraphs (a) and (b) above are too
restrictive,

3

 

then the parties agree the Restricted Territory shall be reduced to the area specified in
each of the following subsections and in the following order until the court determines an
acceptable geographic area: subparagraphs (c), (d), (e) or (f). If the court determines that all
of the areas mentioned above are too restrictive, then the parties agree that the court may reduce
or limit the area to enable the intent of this Section to be enforced in the largest acceptable
area.

     5. Non-Disparagement. I agree not to make any disclosures, issue any statements or
otherwise cause to be disclosed any information which is designed, intended or might reasonably be
anticipated to disparage the Company, its officers or directors, its business, services, products
and/or personnel.

     6. Records. I agree to keep and maintain adequate and current records of all
Proprietary Information developed by me and all Inventions made by me during the period of my
employment at the Company, which records shall be available to and remain the sole property of the
Company at all times.

     7. No Conflicting Obligation. I represent that my performance of all the terms of this
Agreement and as an employee of the Company does not and will not breach any agreement to keep in
confidence information acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and I agree I will not enter into, any agreement either written
or oral in conflict herewith.

     8. Return Of Company Materials.
When I leave the employ of the Company, I will deliver to the Company any and all drawings, notes,
memoranda, specifications, devices, formulas, and documents, together with all copies thereof, and
any other material containing or disclosing any Company Inventions, Third Party Information or
Proprietary Information in whatever form such information is contained. I further agree that any
property situated on the Company’s premises and owned by the Company, including disks and other
storage media, filing cabinets or other work areas, is subject to inspection by Company personnel
at any time with or without notice.

     9. Legal And Equitable Remedies.
Because my services are personal and unique and because I may have access to and become acquainted
with the Proprietary Information, the Company shall have the right to enforce this Agreement and
any of its provisions by injunction, specific performance or other equitable relief, without bond
and without prejudice to any other rights and remedies that the Company may have for a breach of
this Agreement.

     10. NOTICES. Any notices required or permitted hereunder shall be given to the appropriate
party at the address specified below or at such other address as the party shall specify in
writing. Such notice shall be deemed given upon personal delivery to the appropriate address or if
sent by certified mail, three days after the date of mailing.

     11. Notification Of New Employer.

     In the event that I leave the employ of the Company, I hereby consent to the notification of my
new employer of my rights and obligations under this Agreement.

     12. General Provisions.

12.1 Governing Law; Consent to Personal Jurisdiction and Exclusive Forum. This Agreement will be
governed by and construed according to the laws of the State of North Carolina as such laws are
applied to agreements entered into and to be performed entirely within North Carolina between North
Carolina residents. I hereby expressly understand and consent that my employment is a transaction
of business in the State of North Carolina and constitutes the minimum contacts necessary to make
me subject to the personal jurisdiction of the federal courts located in the State of North
Carolina, and the state courts located in Durham County, North Carolina, for any lawsuit filed
against me by Company arising from or related to this Agreement. I agree and acknowledge that any
controversy arising out of or relating to this Agreement or the breach thereof, or any claim or
action to enforce this Agreement or portion thereof, or any controversy or claim requiring
interpretation of this Agreement must be brought in a forum located within the State of North
Carolina. Any action brought in contravention of this paragraph by one party is subject to
dismissal at any time and at any stage of the proceedings by the other, and no action taken by the
other in defending, counterclaiming or appealing shall be construed as a waiver of this right to
immediate dismissal. A party bringing an action in contravention of this paragraph shall be liable
to the other party for the costs, expenses and attorneys’ fees incurred in successfully dismissing
the action or successfully transferring the action to the federal courts located in the
State of

4

 

North Carolina, or the state courts located in Wake County, North Carolina.

12.2 Severability. In case any one or more of the provisions contained in this Agreement shall,
for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect the other provisions of this Agreement, and this
Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been
contained herein. If moreover, any one or more of the provisions contained in this Agreement shall
for any reason be held to be excessively broad as to duration, geographical scope, activity or
subject, it shall be construed by limiting and reducing it, so as to be enforceable to the extent
compatible with the applicable law as it shall then appear.

12.3 “Employee”/Employment” Terms. For
purposes of this Agreement, the term “employee” shall be deemed to include “consultant,”
“independent contractor” and “director,” and the term “employment,” or any variation thereof,
shall be deemed to include “engagement.”

12.4 Successors and Assigns. This Agreement will be binding upon my heirs, executors,
administrators and other legal representatives and will be for the benefit of the Company, its
successors, and its assigns.

12.5 Survival. The provisions of this Agreement shall survive the termination of my employment and
the assignment of this Agreement by the Company to any successor in interest or other assignee.

12.6 No Employment Rights. I agree and understand that my employment is at-will which means I or
the Company each have the right to terminate my employment at will, with or without advance notice
and with or without cause. I further agree and understand that nothing in this Agreement shall
confer any right with respect to continuation of employment by the Company, nor shall it interfere
in any way with my right or the Company’s right to terminate my employment at any time, with or
without cause or notice.

12.7 Waiver. No waiver by the Company of any breach of this Agreement shall be a waiver of any
preceding or succeeding breach. No waiver by the Company of any right under this Agreement shall
be construed as a waiver of any other right. The Company shall not be required to give notice to
enforce strict adherence to all terms of this Agreement.

12.8 Tolling of Limitation Period. I agree that a breach of any provision(s) of this Agreement
will toll the running of the limitation period with respect to such provision(s) for as long as
such breach occurs.

12.9 Entire Agreement. The obligations pursuant to Sections 1 through 4 and Sections 6 and 7
(including all subparts) of this Agreement shall apply to any time during which I was previously
employed, or am in the future employed, by the Company as an employee if no other agreement governs
nondisclosure and assignment of inventions during such period. This Agreement is the final,
complete and exclusive agreement of the parties with respect to the subject matter hereof and
supersedes and merges all prior discussions between us with respect to the subject matter hereof.
No modification of or amendment to this Agreement, nor any waiver of any rights under this
Agreement, will be effective unless in writing and signed by the party to be charged. Any
subsequent change or changes in my duties, salary or compensation will not affect the validity or
scope of this Agreement.

     This Agreement shall be effective as of
*                      , the first day of my employment
with the Company.

I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETED EXHIBIT A TO THIS
AGREEMENT.

Dated:                    

	 	 	 
	 
	 	 
	 

Signature

	 	 
	 
	 
	 	 
	 

Printed Name

	 	 
	 
	 	 
	accepted and agreed to:
	 	 
	 
	 	 
	Cornerstone BioPharma, Inc.
	 	 

	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 

5

 

EXHIBIT A

	 	 	 	 	 
	TO:

	 	Cornerstone BioPharma, Inc.	 	 
	 
	 	 	 	 
	FROM:
	 	 	 	 
	 

	 	 

	 	 
	DATE:
	 	 	 	 
	 

	 	 

	 	 
	SUBJECT:

	 	Previous Inventions	 	 

     1. Except as listed in Section 2 below, the following is a complete list of all
inventions or improvements relevant to the subject matter of my employment by Cornerstone
BioPharma, Inc. that have been made or conceived or first reduced to practice by me alone or
jointly with others prior to my employment by the Company:

	 	o	 	No inventions or improvements.
	 
	 	o	 	See below:
	 
	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	o	 	Additional sheets attached.

     2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1
above with respect to inventions or improvements generally listed below, the proprietary rights
and duty of confidentiality with respect to which I owe to the following party(ies):

	 	 	 	 	 	 	 
	 	 	Invention or Improvement	 	Party(ies)	 	Relationship
	1.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	2.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 
	3.
	 	 	 	 	 	 
	 

	 	 
	 	 
	 	 

	 	o	 	Additional sheets attached.

6

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