Document:

exv10w11

Exhibit 10.11

 

 

STOCK PURCHASE AGREEMENT

by and among

CHIESI FARMACEUTICI SPA,

CORNERSTONE BIOPHARMA HOLDINGS, LTD.,

LUTZ FAMILY LIMITED PARTNERSHIP

and

THE STOCKHOLDERS NAMED HEREIN AND

CORNERSTONE THERAPEUTICS, INC. (solely with respect to Section 4.1)

Dated as of December 16, 2010

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 
	 	 	 	 
	ARTICLE I PURCHASE AND SALE OF SHARES	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	 	Section 1.1.	 	Purchase and Sale
	 	 	1	 
	 	Section 1.2.	 	Consideration
	 	 	1	 
	 	Section 1.3.	 	Closing
	 	 	1	 
	 	Section 1.4.	 	Closing Deliveries by the Sellers
	 	 	2	 
	 	Section 1.5.	 	Closing Deliveries by Purchaser
	 	 	2	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS	 	 	2	 
	 	 	 	 	 
	 	 	 	 
	 	Section 2.1.	 	Ownership of Shares
	 	 	2	 
	 	Section 2.2.	 	Authority
	 	 	2	 
	 	Section 2.3.	 	Consents and Approvals; No Violations
	 	 	2	 
	 	Section 2.4.	 	Disclosure of Information and Investment Experience
	 	 	3	 
	 	Section 2.5.	 	No Additional Representations
	 	 	3	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER	 	 	3	 
	 	 	 	 	 
	 	 	 	 
	 	Section 3.1.	 	Organization
	 	 	4	 
	 	Section 3.2.	 	Authority
	 	 	4	 
	 	Section 3.3.	 	Consents and Approvals; No Violations
	 	 	4	 
	 	Section 3.4.	 	Financing
	 	 	4	 
	 	Section 3.5.	 	Brokers and Other Advisors
	 	 	4	 
	 	Section 3.6.	 	Investment Intent
	 	 	5	 
	 	Section 3.7.	 	Disclosure of Information and Investment Experience
	 	 	5	 
	 	Section 3.8.	 	No Additional Representations
	 	 	5	 
	 	 	 	 	 
	 	 	 	 
	ARTICLE IV MISCELLANEOUS	 	 	5	 
	 	 	 	 	 
	 	 	 	 
	 	Section 4.1.	 	Stockholders Agreement Waiver
	 	 	5	 
	 	Section 4.2.	 	Transfer Taxes
	 	 	6	 
	 	Section 4.3.	 	Fees and Expenses
	 	 	6	 
	 	Section 4.4.	 	Notices
	 	 	6	 
	 	Section 4.5.	 	Entire Agreement
	 	 	7	 
	 	Section 4.6.	 	Waivers
	 	 	7	 
	 	Section 4.7.	 	No Third-Party Beneficiaries
	 	 	7	 
	 	Section 4.8.	 	Assignment; Binding Effect
	 	 	7	 
	 	Section 4.9.	 	GOVERNING LAW
	 	 	7	 
	 	Section 4.10.	 	CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL
	 	 	8	 
	 	Section 4.11.	 	Remedies
	 	 	8	 
	 	Section 4.12.	 	Invalid Provisions
	 	 	8	 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	 	 	 	 
	 	 	 	 
	 	Section 4.13.	 	Counterparts
	 	 	9	 
	 	Section 4.14.	 	Interpretation
	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	Exhibit A: Sellers’ Holdings	 	 	 	 

ii

 

INDEX OF DEFINED TERMS

	 	 	 	 	 
	 	 	Page
	 
	 	 	 	 
	affiliate
	 	 	10	 
	Agreement
	 	 	1	 
	business day
	 	 	10	 
	Closing
	 	 	2	 
	Closing Date
	 	 	2	 
	Common Stock
	 	 	1	 
	Company
	 	 	1	 
	Consideration
	 	 	1	 
	contract
	 	 	3	 
	control
	 	 	10	 
	Encumbrances
	 	 	2	 
	expenses
	 	 	6	 
	Governance Agreement
	 	 	1	 
	Governmental Authority
	 	 	2	 
	person
	 	 	10	 
	Purchaser
	 	 	1	 
	Shares
	 	 	1	 
	Stockholders Agreement
	 	 	1	 

iii

 

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT, dated as of December 16, 2010 (this “Agreement”), is by
and among CHIESI FARMACEUTICI SPA, a corporation organized under the laws of Italy
(“Purchaser”), CORNERSTONE BIOPHARMA HOLDINGS, LTD., a limited liability company organized
under the laws of Anguilla, and LUTZ FAMILY LIMITED PARTNERSHIP, a Nevada limited partnership
(collectively, the “Sellers”) and solely with respect to Section 4.1, Cornerstone
Therapeutics Inc., a Delaware corporation (the “Company”) and CAROLINA PHARMACEUTICALS,
LTD., a limited liability company organized under the laws of Bermuda, Craig A. Collard and Steven
M. Lutz (collectively, the “Stockholders”).

RECITALS

     WHEREAS, each Seller is the record and beneficial owner of the number of shares of common
stock, par value $0.001 per share (the “Common Stock”), of the Company, set forth opposite
such Seller’s name on Exhibit A hereto (collectively, the “Shares”);

     WHEREAS, the Shares of each Seller are not “Covered Shares” as defined in that certain
Stockholders Agreement, dated as of May 6, 2009 (the “Stockholders Agreement”), by and
among the Company, the Purchaser, the Sellers and the Stockholders;

     WHEREAS, each Seller desires to sell the amount of Shares set forth opposite such Seller’s
name on Exhibit A hereto to the Purchaser, and the Purchaser desires to purchase such Shares from
the Sellers;

     WHEREAS, pursuant to Section 2.1(a) of that certain Governance Agreement, dated as of May 6,
2009 (the “Governance Agreement”), by and among the Company, the Purchaser, the Sellers and
the other stockholders named therein, the Purchaser may acquire additional Common Stock to the
extent necessary to maintain Beneficial Ownership (as defined in the Governance Agreement) at an
amount equal to 51% of Common Stock on a Fully Diluted Basis (as defined in the Governance
Agreement); and

     WHEREAS, pursuant to Section 5.4 of the Stockholders Agreement, the Company, the Purchaser,
each of the Sellers (with respect to the Shares being sold by the other Seller), and each of the
Stockholders are hereby waiving the provisions of Section 3.2(b) thereof with respect to transfer
of the Shares.

     NOW, THEREFORE, the parties hereby agree as follows:

ARTICLE I

PURCHASE AND SALE OF SHARES

     Section 1.1. Purchase and Sale. At the Closing, upon the terms and subject to the
conditions set forth in this Agreement, each Seller will sell, assign, transfer and deliver the
amount of Shares set forth opposite such Seller’s name on Exhibit A hereto to the Purchaser, and
the Purchaser will purchase and accept such Shares from the Sellers.

     Section 1.2. Consideration. The consideration (the “Consideration”) to be
paid to the Sellers for the Shares at the Closing shall be U.S. $6.02 per share in cash.

 

 

     Section 1.3. Closing. The consummation of the transactions contemplated hereby shall
take place at a closing (the “Closing”) to be held at the offices of Morgan, Lewis &
Bockius LLP, 101 Park Avenue, New York, New York 10178, or by electronic transmission on terms
agreed upon by the Purchaser and the Sellers, simultaneously with the execution and delivery of
this Agreement. The date of the Closing is referred to herein as the “Closing Date”.
The Closing shall be deemed to occur as of 12:01 a.m. Eastern Standard Time on the Closing Date.

     Section 1.4. Post Closing Deliveries by the Sellers. As soon as reasonably
practicable after the Closing, but no later than five (5) business days, each Seller shall deliver
or cause to be delivered to Purchaser a certificate or certificates representing the number of
Shares to be sold by it (as set forth on Exhibit A), in each case endorsed in blank or with
an executed blank stock power attached and with all transfer tax stamps attached or provided for
sufficient to vest good and valid title to the Shares in Purchaser.

     Section 1.5. Closing Deliveries by Purchaser. At the Closing, Purchaser shall deliver
the Consideration to the Sellers by wire transfer of immediately available funds in United States
dollars to such account or accounts as the Sellers may direct by written notice to Purchaser.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

     Each Seller represents and warrants, severally but not jointly and solely with respect to such
Seller and not with respect to the other Seller, to Purchaser as follows:

     Section 2.1. Ownership of Shares. Such Seller is the lawful record and beneficial
owner of the number of Shares set forth next to such Seller’s name on Exhibit A free and
clear of all liens, charges, security interests, mortgages, pledges, options, preemptive rights,
rights of first refusal or first offer, proxies, levies, voting trusts or agreements, or other
adverse claims or restrictions on title or transfer of any nature whatsoever (collectively,
“Encumbrances”), other than restrictions on transfer imposed under applicable securities
laws. Upon the conveyance by such Seller of such Shares and receipt of payment in the manner
contemplated by Article I, such Seller will transfer, assign, convey and deliver beneficial
and legal title to Purchaser free and clear of all Encumbrances, other than Encumbrances imposed
under applicable securities laws or resulting from acts or omissions of Purchaser. The Shares are
not “Covered Shares”, as defined in the Stockholders Agreement.

     Section 2.2. Authority. Such Seller is an entity with the requisite partnership or
limited liability company power and authority to execute and deliver this Agreement and to perform
the transactions contemplated by this Agreement. This Agreement has been duly and validly executed
and delivered by such Seller and, assuming the due authorization, execution and delivery of this
Agreement by each other party hereto, constitutes legal, valid and binding obligations of such
Seller, enforceable against such Seller in accordance with its terms.

     Section 2.3. Consents and Approvals; No Violations.

     (a) The execution, delivery and performance by such Seller of this Agreement and the
consummation by such Seller of the transactions contemplated hereby do not and will not require any
filing or registration with, notification to, or authorization, permit, consent or approval of, or
other action by or in respect of, any U.S. or non-U.S. government, regulatory or administrative
authority, agency, instrumentality or commission or any court, tribunal, judicial or arbitral body
or other similar authority (a

2

 

“Governmental Authority”) other than (i) compliance with any applicable requirements
of the Securities Exchange Act of 1934, as amended, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or notifications, would not
reasonably be expected to prevent or materially delay the consummation of the transactions
contemplated hereby.

     (b) The execution, delivery and performance by such Seller of this Agreement and the
consummation by such Seller of the transactions contemplated hereby do not and will not (i) result
in a violation or breach of, or constitute (with or without notice or lapse of time or both) a
default under, or give rise to any right of termination, amendment, cancellation, acceleration or
loss of benefits or the creation or acceleration of any right or obligation under or result in the
creation of any Encumbrance upon any of the properties or assets of such Seller under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, loan, credit
agreement, lease, license, permit, concession, franchise, purchase order, sales order, contract,
agreement or other instrument, understanding or obligation, whether written or oral (a
“contract”), to which such Seller is a party or by which any of its properties or assets
may be bound or (ii) violate any law applicable to such Seller or any of its properties or assets,
except, in each case, for violations, breaches or defaults that would not reasonably be expected to
prevent or delay the consummation of the transactions contemplated hereby.

     Section 2.4. Disclosure of Information and Investment Experience.

     (a) Each Seller understands that the transactions contemplated by this Agreement involve
substantial risk. Such Seller (i) is a sophisticated investor with respect to the transactions
contemplated by this Agreement, (ii) has adequate information concerning the business and financial
affairs of the Company to make an informed decision regarding the sale of the Shares pursuant to
the terms and conditions of this Agreement, (iii) has independently and without reliance upon the
Purchaser, and based on such information as such Seller has deemed appropriate, made its own
analysis and decision to sell the Shares to the Purchaser and (iv) has a preexisting business
relationship with the Company of a nature and duration that enables such Seller to assess the
merits and risks of the transactions contemplated by this Agreement.

     (b) The Purchaser has not given such Seller any investment advice, credit information or
opinion on whether the sale of the Shares is prudent.

     (c) Notwithstanding anything to the contrary contained herein, such Seller acknowledges that
(i) the Purchaser currently may or may not have, and later may or may not come into possession of,
information about the Shares or the Company that is not known to such Seller and that may or may
not be material to a decision to sell the Shares; (ii) it has determined to sell the Shares to the
Purchaser notwithstanding its lack of such knowledge and (iii) the Purchaser shall not have any
liability to any Seller with respect to material information that the Purchaser possesses and/or
such Seller’s lack of such information. Each Seller hereby waives and releases any claims relating
to the transactions contemplated by this Agreement that it might have against the Purchaser, its
subsidiaries or other affiliates, and all of its and their respective officers, directors,
employees, shareholders and agents, whether under applicable securities laws or otherwise.

     Section 2.5. No Additional Representations. Except as otherwise expressly set forth
in this Article II, such Seller does not make any representation or warranty of any kind,
express or implied, in connection with the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, except as expressly set forth in this Article II,
no representation or warranty is made by such Seller as to any information provided in any
management presentation, through any virtual or physical

3

 

data room or otherwise, including in respect of any financial projections, estimates,
forecasts or other data.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser represents and warrants to the Sellers as follows:

     Section 3.1. Organization. Purchaser is a corporation duly organized, validly
existing and in good standing (to the extent such concept exists in the relevant jurisdiction)
under the laws of the jurisdiction of its organization and has all requisite corporate power and
authority to own, license, use, lease and operate its assets and properties and to carry on its
business as now being conducted, except where the failure to be so organized, existing and in good
standing or to have such power and authority would not reasonably be expected to prevent or delay
the consummation of the transactions contemplated hereby.

     Section 3.2. Authority. Purchaser has all requisite corporate power and authority to
execute and deliver this Agreement and to perform and consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary organization action on
the part of Purchaser and no other organizational proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate such transactions. No vote of the
stockholders of Purchaser is required to approve this Agreement or the transactions contemplated
hereby. This Agreement has been duly executed and delivered by Purchaser and, assuming the due
authorization, execution and delivery of this Agreement by each other party hereto, constitutes a
valid and binding obligation of Purchaser enforceable against it in accordance with its terms.

     Section 3.3. Consents and Approvals; No Violations.

     (a) The execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby do not and will not require any
filing or registration with, notification to, or authorization, permit, consent or approval of, or
other action by or in respect of, any Governmental Authority other than (i) compliance with any
applicable requirements of the Securities Exchange Act of 1934, as amended, and (ii) where the
failure to obtain such consents, approvals, authorizations or permits, or to make such filings or
notifications, would not reasonably be expected to prevent or materially delay the consummation of
the transactions contemplated hereby.

     (b) The execution, delivery and performance by Purchaser of this Agreement and the
consummation by Purchaser of the transactions contemplated hereby do not and will not (i) conflict
with or result in any breach of any provision of the organizational documents of Purchaser, (ii)
result in a violation or breach of, or constitute (with or without notice or lapse of time or both)
a default under, or give rise to any right of termination, amendment, cancellation, acceleration or
loss of benefits under, or result in the creation of any Encumbrance upon any of the properties or
assets of Purchaser or any of its subsidiaries under, any of the terms, conditions or provisions of
contract to which Purchaser is a party or any of its subsidiaries is a party or by which any of its
properties or assets may be bound or (iii) violate any judgment, order, writ, preliminary or
permanent injunction or decree or any statute, law, ordinance, rule or regulation of any
Governmental Authority applicable to Purchaser, any of its subsidiaries or any of their properties
or assets, except in the case of clauses (ii) or (iii) for violations, breaches or defaults that

4

 

would not reasonably be expected to prevent or materially delay the consummation of the
transactions contemplated hereby.

     Section 3.4. Financing. Purchaser has funds sufficient to pay the Consideration at
the Closing.

     Section 3.5. Brokers and Other Advisors. No broker, investment banker, financial
advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar
fee or commission in connection with the transactions contemplated by this Agreement as a result of
any action taken by or on behalf of Purchaser.

     Section 3.6. Investment Intent. Purchaser is acquiring the Shares for its own
account, for the purpose of investment only and not with a view to, or for sale in connection with,
any distribution thereof in violation of applicable securities laws.

     Section 3.7. Disclosure of Information and Investment Experience.

     (a) The Purchaser understands that the transactions contemplated by this Agreement involve
substantial risk. The Purchaser (i) is a sophisticated investor with respect to the transactions
contemplated by this Agreement, (ii) has adequate information concerning the business and financial
affairs of the Company to make an informed decision regarding the purchase of the Shares pursuant
to the terms and conditions of this Agreement, (iii) has independently and without reliance upon
either Seller, and based on such information as the Purchaser has deemed appropriate, made its own
analysis and decision to purchase the Shares from the Sellers and (iv) has a preexisting business
relationship with the Company of a nature and duration that enables the Purchaser to assess the
merits and risks of the transactions contemplated by this Agreement.

     (b) Neither Seller has given the Purchaser any investment advice, credit information or
opinion on whether the purchase of the Shares is prudent.

     (c) Notwithstanding anything to the contrary contained herein, the Purchaser acknowledges that
(i) either Seller currently may or may not have, and later may or may not come into possession of,
information about the Shares or the Company that is not known to the Purchaser and that may or may
not be material to a decision to purchase the Shares; (ii) it has determined to purchase the Shares
from the Sellers notwithstanding its lack of such knowledge and (iii) neither Seller shall have any
liability to the Purchaser with respect to material information that such Seller possesses and/or
the Purchaser’s lack of such information. The Purchaser hereby waives and releases any claims
relating to the transactions contemplated by this Agreement that it might have against either
Seller or any of their respective subsidiaries or other affiliates, and all of its and their
respective officers, directors, employees, shareholders and agents, whether under applicable
securities laws or otherwise.

     Section 3.8. No Additional Representations. Except as otherwise expressly set forth
in this Article III, Purchaser does not make any representation or warranty of any kind,
express or implied, in connection with the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, except as expressly set forth in this Article
III, no representation or warranty is made by Purchaser as to any information provided in any
management presentation, through any virtual or physical data room or otherwise, including in
respect of any financial projections, estimates, forecasts or other data.

5

 

ARTICLE IV

MISCELLANEOUS

     Section 4.1. Stockholders Agreement Waiver. Pursuant to Section 5.4 of the
Stockholders Agreement, the Company, the Purchaser, each of the Sellers (with respect to the Shares
being sold by the other Seller), and the Stockholders hereby waive the application of Section
3.2(b) of the Stockholders Agreement to the transactions contemplated hereby.

     Section 4.2. Transfer Taxes. The responsibility for, and the payment obligation in
connection therewith, all transfer, registration, stamp, documentary, sales, use and similar taxes
(excluding all applicable gains taxes), and any penalties, interest and additions to such taxes
incurred, levied or payable in connection with the transactions contemplated by this Agreement
shall be borne and paid by Purchaser and Purchaser will at it own expense file or otherwise submit
all necessary returns and other documentation with respect to all such taxes and fees.

     Section 4.3. Fees and Expenses. Except as otherwise provided in this Agreement, each
party shall bear its own expenses in connection with the transactions contemplated by this
Agreement. For purposes of this Section, “expenses” means the out-of-pocket fees and
expenses of any advisors, counsel and accountants, incurred by the party or on its behalf in
connection with this Agreement and the transactions contemplated hereby.

     Section 4.4. Notices.

     (a) All notices and other communications under this Agreement must be in writing and delivered
to the applicable party or parties in person or by delivery to the address or facsimile number
specified below (or to such other address or facsimile number as the recipient previously shall
have specified by notice to the other parties hereunder):

If to Sellers:

c/o Cornerstone Therapeutics Inc.

1255 Crescent Green Drive, Suite 250

Cary, NC 27518

Attention: Chief Financial Officer

                 General Counsel

Facsimile: (888) 443-3092

With a copy (which shall not constitute notice) to:

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.

150 Fayetteville Street, Suite 2500

Raleigh, NC 27601

Attention: David B. Clement

Facsimile: (919) 821-6800

6

 

If to Purchaser:

Chiesi Farmaceutici SpA

Via Palermo 26/A

43122 Parma, Italy

Attention: President and CEO

                 Corporate Development Director and Legal and Corporate Affairs
Director

Facsimile: +39-0521-774468

With copies (which shall not constitute notice) to:

Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue, NW

Washington, DC 20004

Attention: Stephen Paul Mahinka

Facsimile: (202) 739-3001

and

Morgan, Lewis & Bockius LLP

101 Park Avenue

New York, New York 10178

Attention: Emilio Ragosa and Steven A. Navarro

Facsimile: (212) 309-6001

     (b) All notices and other communications sent to the applicable address or facsimile number
specified above shall be deemed to have been delivered at the earlier of (i) the time of actual
receipt by the addressee; (ii) if the notice is sent by facsimile transmission, the time indicated
on the transmitting party’s receipt of confirmation of transmission that time is during the
addressee’s regular business hours on a business day, and otherwise at 9:00 a.m. on the next
business day after such time; and (iii) if the notice is sent by a nationally recognized, reputable
overnight courier service, the time shown on the confirmation of delivery provided by that service
if that time is during the recipient’s regular business hours on a business day, and otherwise at
9:00 a.m. on the next business day after such time.

     Section 4.5. Entire Agreement. This Agreement and the exhibits, annexes and schedules
hereto, constitute the sole and entire agreement among the parties to this Agreement with respect
to the subject matter of this Agreement, and supersede all prior and contemporaneous
representations, agreements and understandings, written or oral, with respect to the subject matter
hereof.

     Section 4.6. Waivers. Subject to applicable law and except as otherwise provided in
this Agreement, any party to this Agreement may, at any time prior to the Closing, extend the time
for performance of any obligation under this Agreement of any other party or waive compliance with
any term or condition of this Agreement by any other party. No such extension or waiver shall be
effective unless set forth in a written instrument duly executed by the party granting such
extension or waiver. No delay in asserting or exercising a right under this Agreement shall be
deemed a waiver of that right.

     Section 4.7. No Third-Party Beneficiaries. The terms and provisions of this Agreement
are intended solely for the benefit of each party hereto and their respective successors or
permitted assigns, and it is not the intention of the parties to confer third-party beneficiary
rights upon any other person.

7

 

     Section 4.8. Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation under this Agreement may be assigned by any party to this Agreement, by
operation of law or otherwise, without the prior written consent of the other parties to this
Agreement and any attempt to do so will be void. Subject to the foregoing, this Agreement is
binding upon, inures to the benefit of and is enforceable by the parties to this Agreement and
their respective successors and assigns.

     Section 4.9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD FOR ANY OF THE CONFLICTS OF LAWS
PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.

     Section 4.10. CONSENT TO JURISDICTION AND SERVICE OF PROCESS; WAIVER OF JURY TRIAL.
EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE
DELAWARE CHANCERY COURT SITTING IN THE COUNTY OF NEW CASTLE, OR IF SUCH COURT SHALL NOT HAVE PROPER
JURISDICTION, OF THE UNITED STATES FEDERAL DISTRICT COURT SITTING IN DELAWARE, AND ANY APPELLATE
COURT THEREOF, IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND AGREES THAT ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE BROUGHT ONLY IN SUCH COURTS (AND WAIVES AND AGREES NOT TO ASSERT ANY OBJECTION
BASED ON FORUM NON CONVENIENS OR ANY OTHER OBJECTION TO VENUE THEREIN OR JURISDICTION THEREOF);
PROVIDED, HOWEVER, THAT SUCH CONSENT TO JURISDICTION IS SOLELY FOR THE PURPOSE
REFERRED TO IN THIS SECTION 4.10 AND SHALL NOT BE DEEMED TO BE A GENERAL SUBMISSION TO THE
JURISDICTION OF SAID COURTS OR IN THE STATE OF DELAWARE OTHER THAN FOR SUCH PURPOSE. Any and all
process may be served in any action, suit or proceeding arising in connection with this Agreement
by complying with the provisions of Section 4.4. Such service of process shall have the
same effect as if the party being served were a resident in the State of Delaware and had been
lawfully served with such process in such jurisdiction. The parties hereby waive all claims of
error by reason of such service. Nothing herein shall affect the right of any party to serve
process in any other manner permitted by law or to commence legal proceedings or otherwise proceed
against the other in any other jurisdiction to enforce judgments or rulings of the aforementioned
courts. EACH PARTY TO THIS AGREEMENT HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY, AS APPLICABLE,
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 4.10.

     Section 4.11. Remedies. The parties hereto agree that if any of the provisions of
this Agreement were not performed in accordance with their specific terms or were otherwise
breached, irreparable damage would occur, no adequate remedy at law would exist and damages would
be difficult to determine, and that the parties shall be entitled to injunctive relief to prevent
breaches of this Agreement and to specific performance of the terms hereof, in addition to any
other remedy at law or equity to which the parties may be entitled. Except as otherwise provided
herein, all remedies available

8

 

under this Agreement, at law or otherwise, shall be deemed cumulative and not alternative or
exclusive of other remedies. The exercise by any party of a particular remedy shall not preclude
the exercise of any other remedy.

     Section 4.12. Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this
Agreement will remain in full force and effect and will not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this Agreement a legal,
valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible and the parties hereto shall cooperate in good faith to formulate and
implement such provision.

     Section 4.13. Counterparts. This Agreement may be executed in any number of
counterparts, all of which will constitute one and the same instrument, and will become effective
when a counterpart shall have been executed and delivered by each party to the other parties
(except that parties that are affiliates need not deliver counterparts to each other in order for
this Agreement to be effective). The exchange of copies of this Agreement or amendments thereto
and of signature pages by facsimile transmission or by email 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 or amendment for all purposes.
Signatures of the parties transmitted by facsimile or by email transmission in portable document
format, or similar format, shall be deemed to be original signatures for all purposes.

     Section 4.14. Interpretation.

     (a) When a reference is made in this Agreement to an Article or a Section hereof, such
reference shall be to an Article or a Section of this Agreement unless otherwise indicated.

     (b) The table of contents and headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement.

     (c) The parties have participated jointly in negotiating and drafting this Agreement. If an
ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provisions of this Agreement.

     (d) The words “include,” “includes” or “including” shall be deemed to be followed by the words
“without limitation.”

     (e) The words “hereof,” “herein” and “hereunder” and words of similar import, when used in
this Agreement, refer to this Agreement as a whole and not to any particular provision of this
Agreement.

     (f) All terms defined in this Agreement have their defined meanings when used in any
certificate or other document made or delivered pursuant hereto, unless otherwise defined therein.

     (g) The definitions contained in this Agreement are applicable to the singular as well as the
plural forms of such terms.

9

 

     (h) If any action is to be taken by any party hereto pursuant to this Agreement on a day that
is not a business day, such action shall be taken on the next business day following such day.

     (i) References to a person are also to its permitted successors and assigns.

     (j) The use of “or” is not intended to be exclusive unless expressly indicated otherwise.

     (k) The term “person” means any natural person, corporation, general partnership,
limited partnership, limited or unlimited liability company, proprietorship, joint venture, other
business organization, trust, union, association or Governmental Authority.

     (l) Except as otherwise may be provided herein, the term “business day” means any day
other than a Saturday, Sunday or day when commercial banks in New York City are permitted or
required by law to be closed for the conduct of regular banking business.

     (m) The term “affiliate” means, with respect to any person, any other person that
directly, or indirectly through one or more intermediaries, controls, is controlled by or is under
common control with the person specified. The term “control” (including the terms
“controlling,” “controlled by” and “under common control with”) means possession, direct or
indirect, of the power to direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise.

[signature page follows]

10

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written
above.

	 	 	 	 	 
	 	CHIESI FARMACEUTICI SPA

 	 
	 	By:  	/s/ Alberto Chiesi
 	 
	 	 	Name:  	Alberto Chiesi 	 
	 	 	Title:  	President and CEO 	 
	 
	 	CORNERSTONE BIOPHARMA HOLDINGS, LTD.

 	 
	 	By:  	/s/ Craig A. Collard
 	 
	 	 	Name:  	Craig A. Collard 	 
	 	 	Title:  	Director 	 
	 
	 	LUTZ FAMILY LIMITED PARTNERSHIP

By: STEVEN M. LUTZ, its general partner

 	 
	 	/s/ Steven M. Lutz
 	 
	 	Steven M. Lutz 	 
	 	 	 
	 	CORNERSTONE THERAPEUTICS, INC.

 	 
	 	By:  	/s/ Andrew K. W. Powell
 	 
	 	 	Name:  	Andrew K. W. Powell 	 
	 	 	Title:  	Executive Vice President, General Counsel and Secretary 	 
	 
	 	CAROLINA PHARMACEUTICALS, LTD.

 	 
	 	By:  	/s/ Craig A. Collard
 	 
	 	 	Name:  	Craig A. Collard 	 
	 	 	Title:  	Director 	 
	 	 	 
	 	                                               /s/ Craig A. Collard
 	 
	 	Craig A. Collard 	 
	 	 	 
	 	                                              /s/ Steven M. Lutz
 	 
	 	Steven M. Lutz 	 
	 	 	 
	 

Signature Page to Stock Purchase Agreement

 

 

EXHIBIT A

SELLERS’ HOLDINGS

	 	 	 	 	 
	Stockholder	 	No. of Shares to be Sold	 
	 
	 	 	 	 
	CORNERSTONE BIOPHARMA HOLDINGS, LTD.
	 	385,000 shares
	 
	 	 	 	 
	LUTZ FAMILY LIMITED PARTNERSHIP
	 	65,000 shares
	 
	 	 	 	 
	 
	 
	 	 	 	 
	TOTAL
	 	450,000 sharesexv10w1

Exhibit 10.1

Altor Networks, Inc.

2007 Stock Plan

Adopted on June 8, 2007

As Amended on September 26, 2007, April 4, 2008, August 19, 2009 

and December 5, 2010 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	SECTION 1. Establishment And Purpose
	 	 	1	 
	 
	 	 	 	 
	SECTION 2. Administration
	 	 	1	 
	(a) Committees of the Board of Directors
	 	 	1	 
	(b) Authority of the Board of Directors
	 	 	1	 
	 
	 	 	 	 
	SECTION 3. Eligibility
	 	 	1	 
	(a) General Rule
	 	 	1	 
	(b) Ten-Percent Stockholders
	 	 	1	 
	 
	 	 	 	 
	SECTION 4. Stock Subject To Plan
	 	 	2	 
	(a) Basic Limitation
	 	 	2	 
	(b) Additional Shares
	 	 	2	 
	 
	 	 	 	 
	SECTION 5. Terms And Conditions Of Awards Or Sales
	 	 	2	 
	(a) Stock Purchase Agreement
	 	 	2	 
	(b) Duration of Offers and Nontransferability of Rights
	 	 	2	 
	(c) Purchase Price
	 	 	2	 
	(d) Withholding Taxes
	 	 	2	 
	(e) Restrictions on Transfer of Shares and Minimum Vesting
	 	 	2	 
	 
	 	 	 	 
	SECTION 6. Terms And Conditions Of Options
	 	 	3	 
	(a) Stock Option Agreement
	 	 	3	 
	(b) Number of Shares
	 	 	3	 
	(c) Exercise Price
	 	 	3	 
	(d) Exercisability
	 	 	3	 
	(e) Basic Term
	 	 	3	 
	(f) Termination of Service (Except by Death)
	 	 	4	 
	(g) Leaves of Absence
	 	 	4	 
	(h) Death of Optionee
	 	 	4	 
	(i) Restrictions on Transfer of Shares and Minimum Vesting
	 	 	5	 
	(j) Transferability of Options
	 	 	5	 
	(k) Withholding Taxes
	 	 	5	 
	(l) No Rights as a Stockholder
	 	 	5	 
	(m) Modification, Extension and Assumption of Options
	 	 	5	 
	 
	 	 	 	 
	SECTION 7. Payment For Shares
	 	 	6	 
	(a) General Rule
	 	 	6	 
	(b) Services Rendered
	 	 	6	 
	(c) Promissory Note
	 	 	6	 
	(d) Surrender of Stock
	 	 	6	 
	(e) Exercise/Sale
	 	 	6	 
	(f) Other Forms of Payment
	 	 	6	 

i

 

	 	 	 	 	 
	 	 	Page	 
	SECTION 8. Adjustment Of Shares
	 	 	6	 
	(a) General
	 	 	6	 
	(b) Mergers and Consolidations
	 	 	7	 
	(c) Reservation of Rights
	 	 	8	 
	 
	 	 	 	 
	SECTION 9. Securities Law Requirements
	 	 	8	 
	(a) General
	 	 	8	 
	(b) Financial Reports
	 	 	8	 
	 
	 	 	 	 
	SECTION 10. No Retention Rights
	 	 	8	 
	 
	 	 	 	 
	SECTION 11. Duration and Amendments
	 	 	8	 
	(a) Term of the Plan
	 	 	8	 
	(b) Right to Amend or Terminate the Plan
	 	 	9	 
	(c) Effect of Amendment or Termination
	 	 	9	 
	 
	 	 	 	 
	SECTION 12. Definitions
	 	 	9	 

ii

 

Altor Networks, Inc. 2007 Stock Plan

SECTION 1. ESTABLISHMENT AND PURPOSE.

          The purpose of the Plan is to offer selected persons an opportunity to acquire a proprietary
interest in the success of the Company, or to increase such interest, by purchasing Shares of the
Company’s Stock. The Plan provides for the direct award or sale of Shares, the grant of Restricted
Stock Units and for the grant of Options to purchase Shares. Options granted under the Plan may
include Nonstatutory Options as well as ISOs intended to qualify under Section 422 of the Code..

          Capitalized terms are defined in Section 12.

SECTION 2. ADMINISTRATION.

(a) Committees of the Board of Directors. The Plan may be administered by one or more Committees.
Each Committee shall consist of one or more members of the Board of Directors who have been
appointed by the Board of Directors. Each Committee shall have such authority and be responsible
for such functions as the Board of Directors has assigned to it. If no Committee has been
appointed, the entire Board of Directors shall administer the Plan. Any reference to the Board of
Directors in the Plan shall be construed as a reference to the Committee (if any) to whom the Board
of Directors has assigned a particular function.

(b) Authority of the Board of Directors. Subject to the provisions of the Plan, the Board of
Directors shall have full authority and discretion to take any actions it deems necessary or
advisable for the administration of the Plan. All decisions, interpretations and other actions of
the Board of Directors shall be final and binding on all Purchasers, all Optionees and all persons
deriving their rights from a Purchaser or Optionee.

SECTION 3. ELIGIBILITY.

(a) General Rule. Only Employee, Outside Directors and Consultants shall be eligible for the
grant of Nonstatutory Options, the grant of Restricted Stock Units or the direct award or sale of
Shares. Only Employees shall be eligible for the grant of ISOs.

(b) Ten-Percent Stockholders. A person who owns more than 10% of the total combined voting power
of all classes of outstanding stock of the Company, its Parent or any of its Subsidiaries shall not
be eligible for designation as an Optionee or Purchaser unless (i) the Exercise Price is at least
110% of the Fair Market Value of a Share on the date of grant, (ii) the Purchase Price (if any) is
at least 100% of the Fair Market Value of a Share and (iii) in the case of an ISO, such ISO by its
terms is not exercisable after the expiration of five years from the date of grant. For purposes
of this Subsection (b), in determining stock ownership, the attribution rules of Section 424(d) of
the Code shall be applied.

 

 

SECTION 4. STOCK SUBJECT TO PLAN.

(a) Basic Limitation. Not more than 9,214,5601 Shares may be issued under the Plan
(subject to Subsection (b) below and Section 8(a)). All of these Shares may be issued upon the
exercise of ISOs. The number of Shares that are subject to Options or other rights outstanding at
any time under the Plan shall not exceed the number of Shares that then remain available for
issuance under the Plan. The Company, during the term of the Plan, shall at all times reserve and
keep available sufficient Shares to satisfy the requirements of the Plan. Shares offered under the
Plan may be authorized but unissued Shares or treasury Shares.

(b) Additional Shares. In the event that Shares previously issued under the Plan are reacquired
by the Company, such Shares shall be added to the number of Shares then available for issuance
under the Plan. In the event that an outstanding Option or other right for any reason expires or
is canceled, the Shares allocable to the unexercised portion of such Option or other right shall be
added to the number of Shares then available for issuance under the Plan.

SECTION 5. TERMS AND CONDITIONS OF AWARDS OR SALES.

(a) Stock Purchase Agreement. Each award or sale of Shares under the Plan (other than upon
exercise of an Option) shall be evidenced by a Stock Purchase Agreement between the Purchaser and
the Company. Such award or sale shall be subject to all applicable terms and conditions of the
Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan
and which the Board of Directors deems appropriate for inclusion in a Stock Purchase Agreement.
The provisions of the various Stock Purchase Agreements entered into under the Plan need not be
identical.

(b) Duration of Offers and Nontransferability of Rights. Any right to acquire Shares under the
Plan (other than an Option) shall automatically expire if not exercised by the Purchaser within 30
days after the grant of such right was communicated to the Purchaser by the Company. Such right
shall not be transferable and shall be exercisable only by the Purchaser to whom such right was
granted.

(c) Purchase Price. The Purchase Price of Shares to be offered under the Plan shall not be less
than 85% of the Fair Market Value of such Shares, and a higher percentage may be required by
Section 3(b). Subject to the preceding sentence, the Board of Directors shall determine the
Purchase Price at its sole discretion. The Purchase Price shall be payable in a form described in
Section 7.

(d) Withholding Taxes. As a condition to the purchase of Shares, the Purchaser shall make such
arrangements as the Board of Directors may require for the satisfaction of any federal, state,
local or foreign withholding tax obligations that may arise in connection with such purchase.

(e) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares awarded or sold under the
Plan shall be subject to such special forfeiture conditions, rights of repurchase,

 

			
	1	 	Reflects the 2-to-1 forward stock split
approved by the Board of Directors on September 26, 2007, the 1,167,332-share
increase approved by the Board of Directors on April 4, 2008 and the
1,800,000-share increase approved by the Board of Directors on December 5,
2010.

2

 

rights of first refusal and other transfer restrictions as the Board of Directors may
determine. Such restrictions shall be set forth in the applicable Stock Purchase Agreement and
shall apply in addition to any restrictions that may apply to holders of Shares generally. In the
case of a Purchaser who is not an officer of the Company, an Outside Director or a Consultant:

          (i) Any right to repurchase the Purchaser’s Shares at the original Purchase
Price (if any) upon termination of the Purchaser’s Service shall lapse at least as
rapidly as 20% per year over the five-year period commencing on the date of the
award or sale of the Shares;

          (ii) Any such right may be exercised only for cash or for cancellation of
indebtedness incurred in purchasing the Shares; and

          (iii) Any such right may be exercised only within 90 days after the termination
of the Purchaser’s Service.

SECTION 6. TERMS AND CONDITIONS OF OPTIONS.

(a) Stock Option Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock
Option Agreement between the Optionee and the Company. The Option shall be subject to all
applicable terms and conditions of the Plan and may be subject to any other terms and conditions
which are not inconsistent with the Plan and which the Board of Directors deems appropriate for
inclusion in a Stock Option Agreement. The provisions of the various Stock Option Agreements
entered into under the Plan need not be identical.

(b) Number of Shares. Each Stock Option Agreement shall specify the number of Shares that are
subject to the Option and shall provide for the adjustment of such number in accordance with
Section 8. The Stock Option Agreement shall also specify whether the Option is an ISO or a
Nonstatutory Option.

(c) Exercise Price. Each Stock Option Agreement shall specify the Exercise Price. The Exercise
Price of any Option shall not be less than 100% of the Fair Market Value of a Share on the date of
grant, and a higher percentage may be required by Section 3(b). Subject to the preceding sentence,
the Exercise Price shall be determined by the Board of Directors at its sole discretion. The
Exercise Price shall be payable in a form described in Section 7.

(d) Exercisability. Each Stock Option Agreement shall specify the date when all or any
installment of the Option is to become exercisable. No Option shall be exercisable unless the
Optionee (i) has delivered an executed copy of the Stock Option Agreement to the Company or (ii)
otherwise agrees to be bound by the terms of the Stock Option Agreement. In the case of an
Optionee who is not an officer of the Company, an Outside Director or a Consultant, an Option shall
become exercisable at least as rapidly as 20% per year over the five-year period commencing on the
date of grant. Subject to the preceding sentence, the Board of Directors shall determine the
exercisability provisions of the Stock Option Agreement at its sole discretion. All of an
Optionee’s Options shall become exercisable in full if Section 8(b)(iv) applies.

(e) Basic Term. The Stock Option Agreement shall specify the term of the Option. The term shall
not exceed 10 years from the date of grant, and a shorter term may be required by

3

 

Section 3(b). Subject to the preceding sentence, the Board of Directors at its sole
discretion shall determine when an Option is to expire.

(f) Termination of Service (Except by Death). If an Optionee’s Service terminates for any reason
other than the Optionee’s death, then the Optionee’s Options shall expire on the earliest of the
following occasions:

          (i) The expiration date determined pursuant to Subsection (e) above;

          (ii) The date three months after the termination of the Optionee’s Service for
any reason other than Disability, or such later date as the Board of Directors may
determine; or

          (iii) The date six months after the termination of the Optionee’s Service by
reason of Disability, or such later date as the Board of Directors may determine.

The Optionee may exercise all or part of the Optionee’s Options at any time before the expiration
of such Options under the preceding sentence, but only to the extent that such Options had become
exercisable before the Optionee’s Service terminated (or became exercisable as a result of the
termination) and the underlying Shares had vested before the Optionee’s Service terminated (or
vested as a result of the termination). The balance of such Options shall lapse when the
Optionee’s Service terminates. In the event that the Optionee dies after the termination of the
Optionee’s Service but before the expiration of the Optionee’s Options, all or part of such Options
may be exercised (prior to expiration) by the executors or administrators of the Optionee’s estate
or by any person who has acquired such Options directly from the Optionee by beneficiary
designation, bequest or inheritance, but only to the extent that such Options had become
exercisable before the Optionee’s Service terminated (or became exercisable as a result of the
termination) and the underlying Shares had vested before the Optionee’s Service terminated (or
vested as a result of the termination).

(g) Leaves of Absence.  For purposes of Subsection (f) above, Service shall be deemed to continue
while the Optionee is on a bona fide leave of absence, if such leave was approved by the Company in
writing and if continued crediting of Service for this purpose is expressly required by the terms
of such leave or by applicable law (as determined by the Company).

(h) Death of Optionee. If an Optionee dies while the Optionee is in Service, then the Optionee’s
Options shall expire on the earlier of the following dates:

          (i) The expiration date determined pursuant to Subsection (e) above; or

          (ii) The date 12 months after the Optionee’s death, or such later date as the
Board of Directors may determine.

All or part of the Optionee’s Options may be exercised at any time before the expiration of such
Options under the preceding sentence by the executors or administrators of the Optionee’s estate

4

 

or by any person who has acquired such Options directly from the Optionee by beneficiary
designation, bequest or inheritance, but only to the extent that such Options had become
exercisable before the Optionee’s death (or became exercisable as a result of the death) and the
underlying Shares had vested before the Optionee’s death (or vested as a result of the Optionee’s
death). The balance of such Options shall lapse when the Optionee dies.

(i) Restrictions on Transfer of Shares and Minimum Vesting. Any Shares issued upon exercise of an
Option 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 Stock Option Agreement and shall apply in
addition to any restrictions that may apply to holders of Shares generally. In the case of an
Optionee who is not an officer of the Company, an Outside Director or a Consultant:

          (i) Any right to repurchase the Optionee’s Shares at the original Exercise
Price upon termination of the Optionee’s Service shall lapse at least as rapidly as
20% per year over the five-year period commencing on the date of the option grant;

          (ii) Any such right may be exercised only for cash or for cancellation of
indebtedness incurred in purchasing the Shares; and

          (iii) Any such right may be exercised only within 90 days after the later of
(A) the termination of the Optionee’s Service or (B) the date of the option
exercise.

(j) Transferability of Options. An Option shall be transferable by the Optionee only by (i) a
beneficiary designation, (ii) a will or (iii) the laws of descent and distribution, except as
provided in the next sentence. If the applicable Stock Option Agreement so provides, a
Nonstatutory Option shall also be transferable by gift or domestic relations order to a Family
Member of the Optionee. An ISO may be exercised during the lifetime of the Optionee only by the
Optionee or by the Optionee’s guardian or legal representative.

(k) Withholding Taxes. As a condition to the exercise of an Option, the Optionee shall make such
arrangements as the Board of Directors may require for the satisfaction of any federal, state,
local or foreign withholding tax obligations that may arise in connection with such exercise. The
Optionee shall also make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.

(l) No Rights as a Stockholder. An Optionee, or a transferee of an Optionee, shall have no rights
as a stockholder with respect to any Shares covered by the Optionee’s Option until such person
becomes entitled to receive such Shares by filing a notice of exercise and paying the Exercise
Price pursuant to the terms of such Option.

(m) Modification, Extension and Assumption of Options. Within the limitations of the Plan, the
Board of Directors may modify, extend or assume outstanding Options or may accept the cancellation
of outstanding Options (whether granted by the Company or another issuer) in return for the grant
of new Options for the same or a different number of Shares and at the same

5

 

or a different Exercise Price. The foregoing notwithstanding, no modification of an Option
shall, without the consent of the Optionee, impair the Optionee’s rights or increase the Optionee’s
obligations under such Option.

SECTION 7. PAYMENT FOR SHARES.

(a) General Rule. The entire Purchase Price or Exercise Price of Shares issued under the Plan
shall be payable in cash or cash equivalents at the time when such Shares are purchased, except as
otherwise provided in this Section 7.

(b) Services Rendered. At the discretion of the Board of Directors, Shares may be awarded under
the Plan in consideration of services rendered to the Company, a Parent or a Subsidiary prior to
the award.

(c) Promissory Note. At the discretion of the Board of Directors, all or a portion of the
Purchase Price or Exercise Price (as the case may be) of Shares issued under the Plan may be paid
with a full-recourse promissory note. The Shares shall be pledged as security for payment of the
principal amount of the promissory note and interest thereon. The interest rate payable under the
terms of the promissory note shall not be less than the minimum rate (if any) required to avoid the
imputation of additional interest under the Code. Subject to the foregoing, the Board of Directors
(at its sole discretion) shall specify the term, interest rate, amortization requirements (if any)
and other provisions of such note.

(d) Surrender of Stock. At the discretion of the Board of Directors, all or any part of the
Exercise Price may be paid by surrendering, or attesting to the ownership of, Shares that are
already owned by the Optionee. Such Shares shall be surrendered to the Company in good form for
transfer and shall be valued at their Fair Market Value as of the date when the Option is
exercised.

(e) Exercise/Sale. To the extent that a Stock Option Agreement so provides, and if Stock is
publicly traded, all or part of the Exercise Price and any withholding taxes may be paid by the
delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the
Company.

(f) Other Forms of Payment. To the extent that a Stock Purchase Agreement or Stock Option
Agreement so provides, the Purchase Price or Exercise Price of Shares issued under the Plan may be
paid in any other form permitted by the Delaware General Corporation Law, as amended.

SECTION 8. ADJUSTMENT OF SHARES.

(a) General. In the event of a subdivision of the outstanding Stock, a declaration of a dividend
payable in Shares, a combination or consolidation of the outstanding Stock into a lesser number of
Shares, a reclassification, or any other increase or decrease in the number of issued shares of
Stock effected without receipt of consideration by the Company, proportionate adjustments shall
automatically be made in each of (i) the number of Shares available for future grants under Section
4, (ii) the number of Shares covered by each outstanding Option and

6

 

(iii) the Exercise Price under each outstanding Option. In the event of a declaration of an
extraordinary dividend payable in a form other than Shares in an amount that has a material effect
on the Fair Market Value of the Stock, a recapitalization, a spin-off, or a similar occurrence, the
Board of Directors at its sole discretion may make appropriate adjustments in one or more of (i)
the number of Shares available for future grants under Section 4, (ii) the number of Shares covered
by each outstanding Option or (iii) the Exercise Price under each outstanding Option.

(b) Mergers and Consolidations. In the event that the Company is a party to a merger or
consolidation, all outstanding Options shall be subject to the agreement of merger or
consolidation. Such agreement shall provide for one or more of the following:

          (i) The continuation of such outstanding Options by the Company (if the Company
is the surviving corporation).

          (ii) The assumption of such outstanding Options by the surviving corporation or
its parent in a manner that complies with Section 424(a) of the Code (whether or not
such Options are ISOs).

          (iii) The substitution by the surviving corporation or its parent of new
options for such outstanding Options in a manner that complies with Section 424(a)
of the Code (whether or not such Options are ISOs).

          (iv) Full exercisability of such outstanding Options and full vesting of the
Shares subject to such Options, followed by the cancellation of such Options. The
full exercisability of such Options and full vesting of the Shares subject to such
Options may be contingent on the closing of such merger or consolidation. The
Optionees shall be able to exercise such Options during a period of not less than
five full business days preceding the closing date of such merger or consolidation,
unless (A) a shorter period is required to permit a timely closing of such merger or
consolidation and (B) such shorter period still offers the Optionees a reasonable
opportunity to exercise such Options. Any exercise of such Options during such
period may be contingent on the closing of such merger or consolidation.

          (v) The cancellation of such outstanding Options and a payment to the Optionees
equal to the excess of (A) the Fair Market Value of the Shares subject to such
Options (whether or not such Options are then exercisable or such Shares are then
vested) as of the closing date of such merger or consolidation over (B) their
Exercise Price. Such payment shall be made in the form of cash, cash equivalents,
or securities of the surviving corporation or its parent with a Fair Market Value
equal to the required amount. Such payment may be made in installments and may be
deferred until the date or dates when such Options would have become exercisable or
such Shares would have vested. Such payment may be subject to vesting based on the
Optionee’s continuing Service, provided that the vesting schedule shall not be less
favorable to the Optionee than the schedule under which such Options would have
become

7

 

exercisable or such Shares would have vested. If the Exercise Price of the
Shares subject to such Options exceeds the Fair Market Value of such Shares, then
such Options may be cancelled without making a payment to the Optionees. For
purposes of this Paragraph (v), the Fair Market Value of any security shall be
determined without regard to any vesting conditions that may apply to such security.

(c) Reservation of Rights. Except as provided in this Section 8, an Optionee or Purchaser shall
have no rights by reason of (i) any subdivision or consolidation of shares of stock of any class,
(ii) the payment of any dividend or (iii) any other increase or decrease in the number of shares of
stock of any class. Any issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Option.
The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of its capital or
business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any
part of its business or assets.

SECTION 9. SECURITIES LAW REQUIREMENTS.

(a) General. Shares shall not be issued under the Plan unless the issuance and delivery of such
Shares comply with (or are exempt from) all applicable requirements of law, including (without
limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder, state securities laws and regulations, and the regulations of any stock exchange or
other securities market on which the Company’s securities may then be traded.

(b) Financial Reports. The Company each year shall furnish to Optionees, Purchasers and
stockholders who have received Stock under the Plan its balance sheet and income statement, unless
such Optionees, Purchasers or stockholders are key Employees whose duties with the Company assure
them access to equivalent information. Such balance sheet and income statement need not be
audited.

SECTION 10. NO RETENTION RIGHTS.

          Nothing in the Plan or in any right or Option granted under the Plan shall confer upon the
Purchaser or Optionee any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company (or any Parent or
Subsidiary employing or retaining the Purchaser or Optionee) or of the Purchaser or Optionee, which
rights are hereby expressly reserved by each, to terminate his or her Service at any time and for
any reason, with or without cause.

SECTION 11. DURATION AND AMENDMENTS.

(a) Term of the Plan. The Plan, as set forth herein, shall become effective on the date of its
adoption by the Board of Directors, subject to the approval of the Company’s stockholders. If the
stockholders fail to approve the Plan within 12 months after its adoption by the Board of
Directors, then any grants, exercises or sales that have already occurred under the Plan shall be
rescinded and no additional grants, exercises or sales shall thereafter be made under the Plan.

8

 

The Plan shall terminate automatically 10 years after the later of (i) the date when the Board
of Directors adopted the Plan or (ii) the date when the Board of Directors approved the most recent
increase in the number of Shares reserved under Section 4 that was also approved by the Company’s
stockholders. The Plan may be terminated on any earlier date pursuant to Subsection (b) below.

(b) Right to Amend or Terminate the Plan. The Board of Directors may amend, suspend or terminate
the Plan at any time and for any reason; provided, however, that any amendment of the Plan shall be
subject to the approval of the Company’s stockholders if it (i) increases the number of Shares
available for issuance under the Plan (except as provided in Section 8) or (ii) materially changes
the class of persons who are eligible for the grant of ISOs. Stockholder approval shall not be
required for any other amendment of the Plan. If the stockholders fail to approve an increase in
the number of Shares reserved under Section 4 within 12 months after its adoption by the Board of
Directors, then any grants, exercises or sales that have already occurred in reliance on such
increase shall be rescinded and no additional grants, exercises or sales shall thereafter be made
in reliance on such increase.

(c) Effect of Amendment or Termination. No Shares shall be issued or sold under the Plan after
the termination thereof, except upon exercise of an Option granted prior to such termination. The
termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or
any Option previously granted under the Plan.

(d) Grant to Israeli Employee or to an Israeli Non-Employee. Any grant of a Stock Award to an
Israeli Employee or to an Israeli Non-Employee (as each of such terms is defined in the Israeli Sub
Plan) shall be made in accordance with and pursuant to the provisions of the Plan and the Israeli
Sub Plan.

SECTION 12. DEFINITIONS.

          (a) “Board of Directors” shall mean the Board of Directors of the Company, as constituted from
time to time.

          (b) “Code” shall mean the Internal Revenue Code of 1986, as amended.

          (c) “Committee” shall mean a committee of the Board of Directors, as described in Section
2(a).

          (d) “Company” shall mean Altor Networks, Inc., a Delaware corporation.

          (e) “Consultant” shall mean a person who performs bona fide services for the Company, a Parent
or a Subsidiary as a consultant or advisor, excluding Employees and Outside Directors.

          (f) “Disability” shall mean that the Optionee is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.

9

 

          (g) “Employee” shall mean any individual who is a common-law employee of the Company, a Parent
or a Subsidiary.

          (h) “Exercise Price” shall mean the amount for which one Share may be purchased upon exercise
of an Option, as specified by the Board of Directors in the applicable Stock Option Agreement.

          (i) “Fair Market Value” shall mean the fair market value of a Share, as determined by the
Board of Directors in accordance with applicable law. Such determination shall be conclusive and
binding on all persons.

          (j) “Family Member” shall mean (i) any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships,
(ii) any person sharing the Optionee’s household (other than a tenant or employee), (iii) a trust
in which persons described in Clause (i) or (ii) have more than 50% of the beneficial interest,
(iv) a foundation in which persons described in Clause (i) or (ii) or the Optionee control the
management of assets and (v) any other entity in which persons described in Clause (i) or (ii) or
the Optionee own more than 50% of the voting interests.

          (k) “Holder” shall mean a person who holds a Restricted Stock Unit award.

          (l) “ISO” shall mean an employee incentive stock option described in Section 422(b) of the
Code.

          (m) “Israeli Sub Plan” shall mean the 2009 Israeli Equity Incentive Sub Plan attached as
Appendix A to the Plan.

          (n) “Nonstatutory Option” shall mean a stock option not described in Sections 422(b) or 423(b)
of the Code.

          (o) “Option” shall mean an ISO or Nonstatutory Option granted under the Plan and entitling the
holder to purchase Shares.

          (p) “Optionee” shall mean a person who holds an Option.

          (q) “Outside Director” shall mean a member of the Board of Directors who is not an Employee.

          (r) “Parent” shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than the Company owns stock
possessing 50% or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain. A corporation that attains the status of a Parent on a date
after the adoption of the Plan shall be considered a Parent commencing as of such date.

          (s) “Plan” shall mean this Altor Networks, Inc. 2007 Stock Plan.

10

 

          (t) “Purchase Price” shall mean the consideration for which one Share may be acquired under
the Plan (other than upon exercise of an Option), as specified by the Board of Directors.

          (u) “Purchaser” shall mean a person to whom the Board of Directors has offered the right to
acquire Shares under the Plan (other than upon exercise of an Option).

          (v) “Restricted Stock Unit” shall mean a bookkeeping entry granted pursuant to Section 13
representing an amount equivalent to one Share of Stock of the Company for purposes of determining
the number of Shares subject to the award. Each Restricted Stock Unit represents an unfunded and
unsecured obligation of the Company.

          (w) “Restricted Stock Unit Award Agreement” shall mean the written or electronic agreement
setting forth the terms and provisions applicable to the Restricted Stock Unit award granted under
the Plan. The Restricted Stock Unit Award Agreement is subject to the terms and conditions of the
Plan.

          (x) “Service” shall mean service as an Employee, Outside Director or Consultant.

          (y) “Share” shall mean one share of Stock, as adjusted in accordance with Section 8 (if
applicable).

          (z) “Stock” shall mean the Common Stock of the Company.

          (aa) “Stock Award(s)” shall mean an Option or award or sale of Shares under the Plan.

          (bb) “Stock Option Agreement” shall mean the agreement between the Company and an Optionee
that contains the terms, conditions and restrictions pertaining to the Optionee’s Option.

          (cc) “Stock Purchase Agreement” shall mean the agreement between the Company and a Purchaser
who acquires Shares under the Plan that contains the terms, conditions and restrictions pertaining
to the acquisition of such Shares.

          (dd) “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain. A corporation that
attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a
Subsidiary commencing as of such date.

SECTION 13. RESTRICTED STOCK UNITS.

(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by
the Board of Directors. After the Board of Directors determines that it will grant Restricted Stock
Units under the Plan, it shall advise the Holder in writing or electronically of

11

 

the terms, conditions, and restrictions related to the grant, including the number of Restricted
Stock Units and the form of payout, which may be left to the discretion of the Board of Directors.

(b) Vesting Criteria and Other Terms. The Board of Directors shall set vesting criteria in its
discretion, which, depending on the extent to which the criteria are met, will determine the number
of Restricted Stock Units that will be paid out to the Holder. The Board of Directors may set
vesting criteria based upon the achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment), or any other basis determined by the Board
of Directors in its discretion.

(c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Holder shall
be entitled to receive a payout as specified in the Restricted Stock Unit Award Agreement.
Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Board of
Directors, in its sole discretion, may reduce or waive any vesting criteria that must be met to
receive a payout.

(d) Form and Timing of Payment. Payment of earned Restricted Stock Units shall be made as soon as
practicable after the date(s) set forth in the Restricted Stock Unit Award Agreement. The Board of
Directors, in its sole discretion, but only as specified in the Restricted Stock Unit Award
Agreement, may pay earned Restricted Stock Units in cash, Shares, or a combination thereof. If the
Restricted Stock Unit Award Agreement is silent as to the form of payment, payment of the
Restricted Stock Units may only be in Shares.

(e) Cancellation. On the date set forth in the Restricted Stock Unit Award Agreement, all unearned
Restricted Stock Units shall be forfeited to the Company.

(f) General Terms and Conditions. Notwithstanding anything to the contrary in the Plan, the
following terms and conditions shall apply to the grant of Restricted Stock Units:

               (i) Leaves of Absence. If as a condition to be granted an unpaid leave of absence by
the Company, a Holder agrees that vesting shall be suspended during all or a portion of such leave
of absence, (except as otherwise required by applicable laws) vesting of Restricted Stock Units
granted hereunder shall cease during such agreed upon portion of the unpaid leave of absence and
shall only recommence upon return to active service.

               (ii) Part-Time Service. Unless otherwise required by applicable laws, if as a
condition to being permitted to work on a less than full-time basis, the Holder agrees that any
service-based vesting of Restricted Stock Units granted hereunder shall be extended on a
proportionate basis in connection with such transition to a less than a full-time basis, vesting
shall be adjusted in accordance with such agreement. Such vesting shall be proportionately
re-adjusted prospectively in the event that the Holder subsequently becomes regularly scheduled to
work additional hours of service.

               (iii) Tax Withholding. When a Holder incurs tax liability in connection with the
vesting or payout, as applicable, of an Award, which tax liability is subject to tax withholding
under applicable tax laws, and the Holder is obligated to pay the Company an

12

 

amount required to be withheld under applicable tax laws, the Holder may satisfy the
withholding tax obligation by electing to have the Company withhold from the Shares to be issued
upon payout or vesting of the Restricted Stock Unit, if any, that number of Shares having a Fair
Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld is to be determined
(the “Tax Date”).

               All elections by a Holder to have Shares withheld for this purpose shall be made in writing in
a form acceptable to the Board of Directors and shall be subject to the following restrictions: (x)
the election must be made on or prior to the applicable Tax Date; and (y) all elections shall be
subject to the consent or disapproval of the Board of Directors.

               (iv) Adjustments. Subject to any required action by the shareholders of the Company,
the number of shares of Stock covered by each outstanding award of Restricted Stock Units shall be
proportionately adjusted for any increase or decrease in the number of issued shares of Stock
resulting from a stock split, reverse stock split, stock dividend, combination or reclassification
of the Stock, or any other increase or decrease in the number of issued shares of Stock effected
without receipt of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board of Directors, whose determination in
that respect shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities convertible into shares of
stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Stock subject to an award of Restricted Stock Units.

               (v) Treatment of Restricted Stock Units in a Merger or Asset Sale. Notwithstanding
anything to the contrary in the Plan, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each outstanding
Restricted Stock Unit shall be assumed or an equivalent Restricted Stock Unit substituted by the
successor corporation or a Parent or Subsidiary of the successor corporation. In the event that
the successor corporation refuses to assume or substitute for the Restricted Stock Unit, the Holder
shall fully vest in the Restricted Stock Unit which would not otherwise be vested. For the
purposes of this paragraph, a Restricted Stock Unit shall be considered assumed if, following the
merger or asset sale, the award confers the right to purchase or receive, for each Share subject to
the award immediately prior to the merger or asset sale, the consideration (whether stock, cash, or
other securities or property) received in the merger or asset sale by holders of the Company’s
common stock for each Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received in the merger or
asset sale is not solely common stock of the successor corporation or its Parent, the Board of
Directors may, with the consent of the successor corporation, provide for the consideration to be
received, for each Share and each unit/right to acquire a Share subject to the award to be solely
common stock of the successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of the Company’s common stock in the merger or asset sale.

13

 

APPENDIX A

Altor Networks, Inc.

2007 EQUITY INCENTIVE PLAN

Adopted on June 8, 2007

As Amended on September 26, 2007, April 4, 2008, August 19, 2009 and December 5, 2010

2009 ISRAELI EQUITY INCENTIVE SUB PLAN

I. GENERAL

     This 2009 Israeli Equity Incentive Sub Plan (the “Sub-Plan”) sets forth the terms of Altor
Networks, Inc. (the “Company”), 2007 Stock Plan (the “Plan”) for the grant of any Stock Award to
Israeli Employee or Israeli Non-Employee (as defined below).

II. DEFINITIONS

     1. Any capitalized term not specifically defined in this Sub-Plan shall have the meaning
assigned to it in the Plan.

     2. As used in this Sub-Plan, the following definitions shall apply:

          “Affiliate” means any Parent or Subsidiary, whether now or hereafter existing.

          “Board” means the Board of Directors of the Company.

          “Capital Gain Option” means a Trustee 102 Option intended to qualify under the capital
gain tax treatment in accordance with the provisions of Section 102(b)(2) of the Ordinance.

          “Capital Gain Share” means a Trustee 102 Share intended to qualify under the capital
gain tax treatment in accordance with the provisions of Section 102(b)(2) of the Ordinance.

          “Capital Gain Award” means Options granted under this Sub-Plan as Capital Gain Option
and/or Shares granted under this Sub-Plan as Capital Gain Shares.

          “Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of
the Ordinance as amended from time to time.

          “Israeli Employee” means any employee of the Company or its Affiliate, and any
individual who is serving as Nosei Misra - Officer Holder (as such

 

 

term is defined in the Israeli
Companies’ Law, 5759-1999, including directors) of the Company or its Affiliate, but excluding any
Controlling Shareholder.

          “Israeli Non-Employee” means any individual or an entity in Service to the Company or
its Affiliate who is not an Israeli Employee.

          “ITA” means the Israeli Tax Authority.

          “Non Trustee 102 Option” means an Option granted to an Israeli Employee pursuant to
Section 102(c) of the Ordinance and not held in trust by a Trustee.

          “Non Trustee 102 Share” means Shares and/or Restricted Stock Units granted to an
Israeli Employee pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.

          “Non Trustee Award” means Options granted under this Sub-Plan as Non Trustee 102
Options and Shares granted under this Sub-Plan as Non Trustee 102 Shares.

          “3(i) Option” means an Option granted pursuant to Section 3(i) of the Ordinance.

          “Ordinance” means the Income Tax Ordinance [New Version], 5721, 1961 as now in effect
or as hereafter amended.

          “Ordinary Income Option” means a Trustee 102 Option intended to qualify under the
ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) of the
Ordinance.

          “Ordinary Income Share” means a Trustee 102 Share intended to qualify under the
ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) of the
Ordinance.

          “Ordinary Income Award” means Options granted under this Sub-Plan as Ordinary Income
Option and shares granted under this Sub-Plan as Ordinary Income Shares.

          “Section 102” means Section 102 of the Ordinance and any regulations, rules, orders or
procedures promulgated thereunder as now in effect or as hereafter amended.

          “Stock Award Agreement” means a written agreement between the Company and a holder of
a Stock Award evidencing the terms and conditions of an individual Stock Award grant, including,
Stock Option Agreement and/or Stock Purchase Agreement and/or Restricted Stock Unit Award
agreement. Each Stock Award Agreement shall be subject to the terms and conditions of the Plan and
this Sub-Plan.

 

 

          “Trustee” means any individual or entity appointed by the Company to serve as a
trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the
Ordinance and the regulations thereof.

          “Trustee 102 Option” means an Option granted pursuant to Section 102(b) of the
Ordinance and held in trust by a Trustee for the benefit of an Israeli Employee.

          “Trustee 102 Share” means Shares and/or Restricted Stock Units granted pursuant to
Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of an Israeli
Employee.

          “Trustee 102 Award” means Options granted under this Sub-Plan as Trustee 102 Option
and/or shares and/or Restricted Stock Units granted under this Sub-Plan as Trustee 102 Shares.

III. OPTION GRANTS AND SHARE GRANTS

     1. Eligibility. The persons eligible to receive Stock Awards under this Sub-Plan are
Israeli Employees and/or Israeli Non-Employees.

     2. Types of Options. The Board shall have the authority to grant an Option under this
Sub-Plan classified as (i) a Trustee 102 Option, (ii) a Non Trustee 102 Option or (iii) a 3(i)
Option; provided, however, that a Trustee 102 Option and a Non Trustee 102 Option
may only be granted to an Israeli Employee, and a 3(i) Option shall be granted only to an Israeli
Non Employee.

     3. Types of Shares. The Board shall have the authority to grant shares and/or
Restricted Stock Units under this Sub-Plan classified as (i) a Trustee 102 Share, or (ii) a Non
Trustee 102 Share; provided, however, that a Trustee 102 Share and a Non Trustee
102 Share shall only be granted to an Israeli Employee.

     4. Trustee 102 Award.

     (a) The grant of Trustee 102 Award under this Sub-Plan shall be conditioned upon the approval
of this Sub-Plan and the Trustee by the ITA, and the filing of the Company’s Election (as defined
below) with the ITA at least thirty (30) days before the first date of grant of Stock Awards under
this Sub-Plan and/or any tax ruling that shall be obtained from the Israeli Tax Authority with that
respect. The grant of 102 Trustee Award shall be in accordance with the terms and conditions of
Section 102.

     (b) The Company may grant at any single time only one type of Trustee 102 Award, either
Capital Gain Award or Ordinary Income Award (the “Election”). The Company shall file its Election
with the ITA. The Election shall apply to any Employee who has been granted Trustee 102 Award. The
first Election shall become effective as of the date of grant of the first Trustee 102 Award
granted under this Sub-Plan and shall remain in effect at least until the end of the year following
the year during which the Company first granted Trustee 102 Award. The Company may not

 

 

be entitled
to change its election at least until the lapse of a year from the end of the year in which the
first Trustee 102 Award were granted pursuant to the prior Election.

     (c) Such Election shall not prevent the Company from granting Non Trustee 102 Award to Israeli
Employees or 3(i) Options to Israeli Non-Employees simultaneously.

     (d) All Trustee 102 Award will be held in trust by a Trustee, as described in Section IV
below.

     5. Non Trustee 102 Award. The granting of a Non Trustee 102 Award to an Israeli
Employee shall be made in accordance with the provisions of Section 102(c) of the Ordinance. With
respect to Non Trustee 102 Award or other Stock Awards which are deemed as Non Trustee 102 Award,
in the event of termination of Israeli Employee’s engagement with the Company or any of its
Affiliate, then the Israeli Employee shall extend to the Company and/or its Affiliate a security or
guarantee for the payment of tax and/or social charges due at the time of sale of Non Trustee 102
Award, all in accordance with the provisions of Section 102.

     6. 3(i) Option. The Company may grant 3(i) Option to any person who is an Israeli Non
Employee.

IV. TRUSTEE

     1. Appointment of Trustee. A Trustee shall be appointed by the Board to administer
each Trustee 102 Award in accordance with the provisions of Section 102 and pursuant to a written
agreement to be entered into between the Trustee and the Company (the “Trust Agreement”).

     2. Grants of Trustee 102 Award. All Trustee 102 Award granted under this Sub-Plan as
well as shares allocated or issued upon exercise of such Trustee 102 Award and/or bonus shares
and/or any rights granted with respect to such Trustee 102 Award, shall be held by the Trustee for
the benefit of the Israeli Employee for the requisite period of time as required by Section 102 or
any regulations, rules or orders or procedures promulgated thereunder (the “Holding Period”). The
Trustee shall be exempt from any liability in respect of any action or decision duly taken in its
capacity as a Trustee, provided, however, that the Trustee acted at all times in
good faith.

     3. Grants of 3(i) Option. The Board may choose to deposit the 3(i) Option with the
Trustee. In such event, the Trustee shall hold such 3(i) Option in trust, until exercised by the
Optionholder, pursuant to the Company’s instructions from time to time.

     4. Release of Awards. The Trustee shall not release any Trustee 102 Award granted
under this Sub-Plan as well as shares allocated or issued upon exercise of such Trustee 102 Award
and/or bonus shares and/or any rights granted with respect to such Trustee 102 Award, until all
required payments have been fully made: (i) the receipt by the Trustee of an acknowledgment from
the ITA that the Israeli Employee has paid any applicable tax due pursuant to the Ordinance, or
(ii) the Company has made other arrangements for the deduction of tax at source acceptable to the
Trustee.

 

 

V. THE HOLDING PERIOD REQUIREMENT

     1. Holding Period Requirements.

     (a) Trustee 102 Award may not be sold, transferred, assigned, pledged, given as collateral, or
mortgaged (other than through a transfer by will or by operation of law), nor may they be subject
of an attachment, seizure power of attorney or transfer deed (other than a power of attorney for
the purpose of participation in stockholders meetings or voting such shares) unless Section 102
and/or the regulations, rules, orders or procedures promulgated thereunder allow otherwise.

     (b) With respect to any Stock Awards granted as Trustee 102 Award, and subject to the
provisions of Section 102, an Israeli Employee shall not be entitled to sell or release from trust
any Trustee 102 Award, Share received upon the exercise of any such Trustee 102 Option and/or bonus
shares granted with respect to such Trustee 102 Award, until the lapse of the Holding Period and in
accordance with Section 102. Notwithstanding the above, if any such sale or release occurs during
the Holding Period, the sanctions under Section 102 of the Ordinance and under any rules or
regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such
Israeli Employee

     2. Trustee 102 Award Requirements. In the event that the requirements of Section 102
with respect to Trustee 102 Award are not met, then it shall be treated in accordance with the
provisions of Section 102 and any regulations promulgated thereunder.

     3. Stock Award Agreement. Upon receipt of Trustee 102 Award, Israeli Employee shall
sign a Stock Award Agreement under which the Israeli Employee shall, among others, (i) agree to be
subject to the trust agreement between the Company and the Trustee, stating, among others, that the
Trustee will be released from any liability in respect of any action or decision duly taken and
bona fide executed in relation with the Plan, or any Stock Awards granted to him or her thereunder;
(ii) declare that he/she understands the provisions of Section 102 and the applicable tax track and
approve the tax arrangement; and (iii) confirm that he/she shall not sell nor transfer the Stock
Awards from the Trustee until the lapse of the Holding Period.

VI. DIVIDEND

     Any dividends payable with respect to shares acquired upon exercise of an Option or shares
issued under the Sub-Plan shall also be subject to the provisions of Section 102 and the rules,
regulations or orders promulgated thereunder.

VII. TAX CONSEQUENCES

     1. Israeli Employee.

 

 

     (a) Any tax consequences arising from the grant or exercise of any Option or grant of shares,
or from sale or release or transfer of such Option or shares (including, without limitation, the
Israeli Employee’s social security taxes and health insurance if applicable) or from any other
event or act (of the Company and/or its Affiliate, the Trustee or the Israeli Employee) pursuant to
this Sub-Plan, shall be borne solely by the Israeli Employee. Notwithstanding the forgoing, the
Company and/or its Affiliate and/or the Trustee shall withhold taxes according to the requirements
under the laws, rules, and regulations, including withholding taxes at source under Section 102.

     (b) Furthermore, the Israeli Employee shall indemnify the Company and/or Affiliate that
employs the Israeli Employee and/or the Trustee, and/or the Company’s stockholders and/or directors
and/or officers if applicable, and hold them harmless against and from any and all liability for
any such tax or interest or penalty thereon, including without limitation, liabilities relating to
the necessity to withhold, or to have withheld, any such tax from any payment made to the Israeli
Employee.

     (c) The Company shall not be obligated to honor the exercise of any Option by or on behalf of
an Israeli Employee until all tax consequences (if any) arising from the exercise of such Options
or sale of shares are resolved to the full satisfaction of the Company. Without derogating from the
above, the Company and/or the Trustee when applicable shall not be required to release any share
certificate to an Israeli Employee until all required payments (including tax payments) have been
fully made in accordance with Section 102.

     (d) If at the date of grant the Company’s shares (or options) are listed on any established
stock exchange or a national market system or if the Company’s shares (or option) will be
registered for trading within ninety (90) days following the date of grant, the fair market value
and classification of income as either capital gain or ordinary income shall be determined pursuant
to Section 102(b)(3) of the Ordinance. Without derogating from the definition of “Fair Market
Value” in the Plan and solely for the purpose of determining the tax liability pursuant to Section
102(b)(3) of the Ordinance, if at the date of grant the Company’s Common Stock are listed on any
established stock exchange or a national market system or if the Company’s Common Stock will be
registered for trading within ninety (90) days following the date of grant of the Capital Gain
Options, the fair market value of the Common Stock at the date of grant shall be determined in
accordance with the average value of the Company’s Common Stock on the thirty (30) trading days
preceding the date of grant or on the thirty (30) trading days following the date of
registration for trading, as the case may be and all in accordance with Section 102(b)(3) of the
Ordinance or any tax ruling obtained from the Israeli tax authority.

     2. Israeli Non Employee. Any tax consequences arising from the grant or exercise of
any Option or grant of shares, or from sale or transfer of such Stock Awards or from any other
event or act (of the Company and/or its Affiliate or the Israeli Non Employee) pursuant to this
Sub-Plan, hereunder shall be borne solely by the Israeli Non Employee.

 

 

VIII. COORDINATION WITH THE PLAN

     Section 102 and any regulations, rules, orders or procedures promulgated thereunder as now in
effect or as hereafter amended shall apply to grant of Stock Awards under the provisions of the
Sub-Plan to an Israeli Employee.

     The Plan is hereby incorporated by reference and shall be deemed as integral part of this
Sub-Plan. Without derogating from the provisions of Section 102 of the Ordinance, all the terms and
conditions of the Plan shall apply to grant of Stock Awards to Israeli Employee or Israeli
Non-Employee. In the event of conflict between the Sub-Plan and the Plan the Sub-Plan would take
precedence as for the provisions with respect to Section 102 of the Ordinance.

*********************************************************************

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