Document:

PYXIS
PHARMACEUTICALS, INC.

    

    2005 Stock Incentive
Plan

    

    1.           Purpose.  The
purpose of the 2005 Stock Incentive Plan (the “Plan”) of PYXIS PHARMACEUTICALS, INC.
(the “Company”) is to
increase shareholder value and to advance the interests of the Company by
furnishing a variety of economic incentives (“Incentives”) designed to
attract, retain and motivate employees, directors, officers and
consultants.  Incentives may consist of opportunities to purchase or
receive shares of Common Stock, $0.001 par value, of the Company (“Common Stock”), on terms
determined under this Plan.

    

    2.           Administration.

    

    2.1       The
Plan shall be administered by a committee of the Board of Directors of the
Company (the “Committee”).  The
Committee shall consist of not less than two directors of the Company who shall
be appointed from time to time by the board of directors of the
Company.  Each member of the Committee shall be a “non-employee
director” within the meaning of Rule 16b-3 of the Exchange Act of 1934, as
amended (together with the rules and regulations promulgated thereunder, the
“Exchange Act”), and an
“outside director” as defined in Section 162(m) of the Internal Revenue Code of
1986, as amended (the “Code”).  The
Committee shall have complete authority to determine all provisions of all
Incentives awarded under the Plan (as consistent with the terms of the Plan), to
interpret the Plan, and to make any other determination which it believes
necessary and advisable for the proper administration of the
Plan.  The Committee’s decisions on matters relating to the Plan shall
be final and conclusive on the Company and its participants.  No
member of the Committee will be liable for any action or determination made in
good faith with respect to the Plan or any Incentives granted under the
Plan.  The Committee will also have the authority under the Plan to
amend or modify the terms of any outstanding Incentives in any manner; provided,
however, that the amended or modified terms are permitted by the Plan as then in
effect and that any recipient of an Incentive adversely affected by such amended
or modified terms has consented to such amendment or modification.  No
amendment or modification to an Incentive, however, whether pursuant to this
Section 2 or any other provisions of the Plan, will be deemed to be a re-grant
of such Incentive for purposes of this Plan.  If at any time there is
no Committee, then for purposes of the Plan the term “Committee” shall mean the
Company’s Board of Directors.

    

    2.2       In
the event of (i) any reorganization, merger, consolidation,
recapitalization, liquidation, reclassification, stock dividend, stock split,
combination of shares, divestiture (including a spin-off) or any other similar
change in corporate structure or capitalization, (ii) any purchase,
acquisition, sale or disposition of all or substantially all of the assets or a
substantial business or (iii) any other similar occurrence, in each case with
respect to the Company or any other affiliate of the Company whose performance
is relevant to the grant or vesting of an Incentive, the Committee (or, if the
Company is not the surviving corporation in any such transaction, the board of
directors of the surviving corporation) may, without the consent of any affected
participant, amend or modify the vesting criteria of any outstanding Incentive
that is based in whole or in part on the financial performance of the Company
(or any subsidiary or division thereof) or such other entity so as equitably to
reflect such event, with the desired result that the criteria for evaluating
such financial performance of the Company or such other entity will be
substantially the same (in the sole discretion of the Committee or the board of
directors of the surviving corporation) following such event as prior to such
event; provided, however, that the amended or modified terms are permitted by
the Plan as then in effect.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    3.           Eligible
Participants.  Employees of the Company or its subsidiaries
(including officers and employees of the Company or its subsidiaries), directors
and consultants, advisors or other independent contractors who provide services
to the Company or its subsidiaries (including members of the Company’s
scientific advisory board) shall become eligible to receive Incentives under the
Plan when designated by the Committee.  Participants may be designated
individually or by groups or categories (for example, by pay grade) as the
Committee deems appropriate.  Participation by officers of the Company
or its subsidiaries and any performance objectives relating to such officers
must be approved by the Committee.  Participation by others and any
performance objectives relating to others may be approved by groups or
categories (for example, by pay grade) and authority to designate participants
who are not officers and to set or modify such targets may be
delegated.

    

    4.           Types of
Incentives.  Incentives under the Plan may be granted in any
one or a combination of the following forms:  (a) Incentive Stock
Options and Nonstatutory Stock Options (Section 6); (b) stock awards (Section
7); (c) restricted stock (Section 7); and (d) performance shares (Section
8).  Incentive Stock Options may only be granted to employees of the
Company.  Officers and directors who are not also employees of the
Company may not be granted Incentive Stock Options.

    

     5.           Shares Subject to the
Plan.

    

    5.1.      Number of
Shares.  Subject to adjustment as provided in Section 10.6, the
number of shares of Common Stock which may be issued under the Plan shall not
exceed 925,000 shares of Common Stock.  Of such aggregate number of
shares of Common Stock that may be issued under the Plan, the maximum number of
shares that may be issued as Incentive Stock Options under Section 422 of the
Code is 925,000.  Any shares of Common Stock available for issuance as
Incentive Stock Options may be alternatively issued as other types of Incentives
under the Plan.  Shares of Common Stock that are issued under the Plan
or that are subject to outstanding Incentives will be applied to reduce the
maximum number of shares of Common Stock remaining available for issuance under
the Plan.  No individual may be granted Incentives under the Plan with
respect to more than 300,000 shares of Common Stock in any
year.

    
      
         

      

      
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    5.2.      Cancellation.  In
the event that a stock option granted hereunder expires or is terminated or
canceled unexercised or unvested as to any shares of Common Stock, such shares
may again be issued under the Plan either pursuant to stock options or
otherwise.  In the event that shares of Common Stock are issued as
restricted stock or pursuant to a stock award and thereafter are forfeited or
reacquired by the Company pursuant to rights reserved upon issuance thereof,
such forfeited and reacquired shares may again be issued under the Plan, either
as restricted stock, pursuant to stock awards or otherwise.  The
Committee may also determine to cancel, and agree to the cancellation of, stock
options in order to make a participant eligible for the grant of a stock option
at a lower price than the option to be canceled.

    

    6.           Stock
Options.  A stock option is a right to purchase shares of
Common Stock from the Company.  The Committee may designate whether an
option is to be considered an Incentive Stock Option or a Nonstatutory Stock
Option.  To the extent that any Incentive Stock Option granted under
the Plan ceases for any reason to qualify as an “Incentive Stock Option” for
purposes of Section 422 of the Code, such Incentive Stock Option will continue
to be outstanding for purposes of the Plan but will thereafter be deemed to be a
Nonstatutory Stock Option.  Each stock option granted by the Committee
under this Plan shall be subject to the following terms and
conditions:

    

    6.1.      Price.  The
option price per share shall be determined by the Committee, subject to
adjustment under Section 10.6.

    

    6.2.      Number.  The
number of shares of Common Stock subject to the option shall be determined by
the Committee, subject to adjustment as provided in Section 10.6.

     

    6.3.      Duration and Time for
Exercise.  Subject to earlier termination as provided in
Section 10.4, the term of each stock option shall be determined by the Committee
but shall not exceed ten years from the date of grant.  Each stock
option shall become exercisable at such time or times during its term as shall
be determined by the Committee at the time of grant.  The Committee
may accelerate the exercisability of any stock option.

    

    6.4.      Manner of
Exercise.  Subject to the conditions contained in this Plan and
in the agreement with the recipient evidencing such option, a stock option may
be exercised, in whole or in part, by giving written notice to the Company,
specifying the number of shares of Common Stock to be purchased and accompanied
by the full purchase price for such shares.  The exercise price shall
be payable (a) in United States dollars upon exercise of the option and may be
paid by cash; uncertified or certified check; bank draft; (b) at the discretion
of the Committee, by delivery of shares of Common Stock that are already owned
by the participant in payment of all or any part of the exercise price, which
shares shall be valued for this purpose at the Fair Market Value on the date
such option is exercised; or (c) following the date that the Company’s stock
becomes publicly traded, in accordance with procedures previously approved by
the Committee, through the sale of the shares of Common Stock acquired on
exercise of a stock option through a bank or broker-dealer to whom the
participant has submitted an irrevocable notice of exercise and irrevocable
instructions to deliver promptly to the Company the amount of sale proceeds to
pay the exercise price for such shares together with, if requested by the
Company, the amount of any Federal, state, local or foreign withholding taxes
payable by the participant in connection with such exercise.  The
shares of Common Stock delivered by the participant pursuant to Section 6.4(b)
must have been held by the participant for a period of not less than six months
prior to the exercise of the option, unless otherwise determined by the
Committee.  Prior to the issuance of shares of Common Stock upon the
exercise of a stock option, a participant shall have no rights as a
shareholder.  Except as otherwise provided in the Plan, no adjustment
will be made for dividends or distributions with respect to such stock options
as to which there is a record date preceding the date the participant becomes
the holder of record of such shares, except as the Committee may determine in
its discretion.

    
      
         

      

      
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    6.5.      Incentive Stock
Options.  Notwithstanding anything in the Plan to the contrary,
the following additional provisions shall apply to the grant of stock options
which are intended to qualify as Incentive Stock Options (as such term is
defined in Section 422 of the Code):

    

    (a)        The
aggregate Fair Market Value (determined as of the time the option is granted) of
the shares of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any participant during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
subsidiary or parent corporation of the Company) shall not exceed
$100,000.  The determination will be made by taking incentive stock
options into account in the order in which they were granted.

    

    (b)        Any
Incentive Stock Option certificate authorized under the Plan shall contain such
other provisions as the Committee shall deem advisable, but shall in all events
be consistent with and contain all provisions required in order to qualify the
options as Incentive Stock Options.

    

    (c)        All
Incentive Stock Options must be granted within ten years from the earlier of the
date on which this Plan was adopted by board of directors or the date this Plan
was approved by the Company’s shareholders.

    

    (d)        Unless
sooner exercised, all Incentive Stock Options shall expire no later than 10
years after the date of grant.  No Incentive Stock Option may be
exercisable after ten (10) years from its date of grant (five (5) years from its
date of grant if, at the time the Incentive Stock Option is granted, the
Participant owns, directly or indirectly, more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation of the Company).

    

    (e)        The
exercise price for Incentive Stock Options shall be not less than 100% of the
Fair Market Value of one share of Common Stock on the date of grant; provided
that the exercise price shall be 110% of the Fair Market Value if, at the time
the Incentive Stock Option is granted, the participant owns, directly or
indirectly, more than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation of the
Company.

    
      
         

      

      
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    7.           Stock Awards and Restricted
Stock.  A stock award consists of the transfer by the Company
to a participant of shares of Common Stock, without other payment therefor, as
additional compensation for services to the Company.  The participant
receiving a stock award will have all voting, dividend, liquidation and other
rights with respect to the shares of Common Stock issued to a participant as a
stock award under this Section 7 upon the participant becoming the holder of
record of such shares.  A share of restricted stock consists of shares
of Common Stock which are sold or transferred by the Company to a participant at
a price determined by the Committee (which price shall be at least equal to the
minimum price required by applicable law for the issuance of a share of Common
Stock) and subject to restrictions on their sale or other transfer by the
participant, which restrictions and conditions may be determined by the
Committee as long as such restrictions and conditions are not inconsistent with
the terms of the Plan.  The transfer of Common Stock pursuant to stock
awards and the transfer and sale of restricted stock shall be subject to the
following terms and conditions:

    

    7.1.      Number of
Shares.  The number of shares to be transferred or sold by the
Company to a participant pursuant to a stock award or as restricted stock shall
be determined by the Committee.

    

    7.2.      Sale
Price.  The Committee shall determine the price, if any, at
which shares of restricted stock shall be sold or granted to a participant,
which may vary from time to time and among participants and which may be below
the Fair Market Value of such shares of Common Stock at the date of
sale.

    

    7.3.      Restrictions.  All
shares of restricted stock transferred or sold hereunder shall be subject to
such restrictions as the Committee may determine, including, without limitation
any or all of the following:

    

    (a)        a
prohibition against the sale, transfer, pledge or other encumbrance of the
shares of restricted stock, such prohibition to lapse at such time or times as
the Committee shall determine (whether in annual or more frequent installments,
at the time of the death, disability or retirement of the holder of such shares,
or otherwise);

    

    (b)        a
requirement that the holder of shares of restricted stock forfeit, or (in the
case of shares sold to a participant) resell back to the Company at his or her
cost (or, if lower, the then Fair Market Value of such shares), all or a part of
such shares in the event of termination of his or her employment or consulting
engagement during any period in which such shares are subject to restrictions;
or

    

    (c)        such
other conditions or restrictions as the Committee may deem
advisable.

    

    7.4.      Escrow.  In
order to enforce the restrictions imposed by the Committee pursuant to Section
7.3, the participant receiving restricted stock shall enter into an agreement
with the Company setting forth the conditions of the grant.  Shares of
restricted stock shall be registered in the name of the participant and
deposited, together with a stock power endorsed in blank, with the
Company.  Each such certificate shall bear a legend in substantially
the following form:

    
      
         

      

      
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    The
transferability of this certificate and the shares of Common Stock represented
by it are subject to the terms and conditions (including conditions of
forfeiture) contained in the 2005 Stock Incentive Plan of Pyxis Pharmaceuticals,
Inc. (the “Company”), and an agreement entered into between the registered owner
and the Company.  A copy of the 2005 Stock Incentive Plan and the
agreement is on file in the office of the secretary of the Company.

    

    7.5.      End of
Restrictions.  Subject to Section 10.5, at the end of any time
period during which the shares of restricted stock are subject to forfeiture and
restrictions on transfer, such shares will be delivered free of all restrictions
to the participant or to the participant’s legal representative, beneficiary or
heir.

    

    7.6.      Shareholder.  Subject
to the terms and conditions of the Plan, each participant receiving restricted
stock shall have all the rights of a shareholder with respect to shares of stock
during any period in which such shares are subject to forfeiture and
restrictions on transfer, including without limitation, the right to vote such
shares.  Dividends paid in cash or property other than Common Stock
with respect to shares of restricted stock shall be paid to the participant
currently.  Unless the Committee determines otherwise in its sole
discretion, any dividends or distributions (including regular quarterly cash
dividends) paid with respect to shares of Common Stock subject to the
restrictions set forth above will be subject to the same restrictions as the
shares to which such dividends or distributions relate.  In the event
the Committee determines not to pay dividends or distributions, the Committee
will determine in its sole discretion whether any interest will be paid on such
dividends or distributions.  In addition, the Committee in its sole
discretion may require such dividends and distributions to be reinvested (and in
such case the participant consents to such reinvestment) in shares of Common
Stock that will be subject to the same restrictions as the shares to which such
dividends or distributions relate.

    

    8.           Performance
Shares.  A performance share consists of an award which shall
be paid in shares of Common Stock, as described below.  The grant of a
performance share shall be subject to such terms and conditions as the Committee
deems appropriate, including the following:

    

    8.1.      Performance
Objectives.  Each performance share will be subject to
performance objectives for the Company or one of its operating units to be
achieved by the participant before the end of a specified period.  The
number of performance shares granted shall be determined by the Committee and
may be subject to such terms and conditions, as the Committee shall
determine.  If the performance objectives are achieved, each
participant will be paid in shares of Common Stock or cash as determined by the
Committee.  If such objectives are not met, each grant of performance
shares may provide for lesser payments in accordance with formulas established
in the award.

    
      
         

      

      
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    8.2.      Not
Shareholder.  The grant of performance shares to a participant
shall not create any rights in such participant as a shareholder of the Company,
until the payment of shares of Common Stock with respect to an
award.

    

    8.3.      No
Adjustments.  No adjustment shall be made in performance shares
granted on account of cash dividends which may be paid or other rights which may
be issued to the holders of Common Stock prior to the end of any period for
which performance objectives were established.

    

    8.4.      Expiration of Performance
Share.  If any participant’s employment or consulting
engagement with the Company is terminated for any reason other than normal
retirement, death or disability prior to the achievement of the participant’s
stated performance objectives, all the participant’s rights on the performance
shares shall expire and terminate unless otherwise determined by the
Committee.  In the event of termination of employment or consulting by
reason of death, disability, or normal retirement, the Committee, in its own
discretion may determine what portions, if any, of the performance shares should
be paid to the participant.

    

    9.           Change of
Control.

    

    9.1       Change in
Control.  For purposes of this Section 9, a “Change in Control” of the
Company will mean the following:

     

    (a)        the
sale, lease, exchange or other transfer, directly or indirectly, of
substantially all of the assets of the Company (in one transaction or in a
series of related transactions) to a person or entity that is not controlled by
the Company;

     

    (b)        the
approval by the shareholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company;

     

    (c)        if
any person becomes after the effective date of the Plan the “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
(i) 20% or more, but not 50% or more, of the combined voting power of the
Company’s outstanding securities ordinarily having the right to vote at
elections of directors, unless the transaction resulting in such ownership has
been approved in advance by the Continuing Directors (as defined below), or (ii)
50% or more of the combined voting power of the Company’s outstanding securities
ordinarily having the right to vote at elections of directors (regardless of any
approval by the Continuing Directors); provided that a traditional institutional
or venture capital financing transaction shall be excluded from this
definition;

     

    
      
         

      

      
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    (d)        a
merger or consolidation to which the Company is a party if the shareholders of
the Company immediately prior to effective date of such merger or consolidation
have “beneficial ownership” (as defined in Rule 13d-3 under the Exchange
Act), immediately following the effective date of such merger or consolidation,
of securities of the surviving corporation representing (i) 50% or more, but
less than 80%, of the combined voting power of the surviving corporation’s then
outstanding securities ordinarily having the right to vote at elections of
directors, unless such merger or consolidation has been approved in advance by
the Continuing Directors, or (ii) less than 50% of the combined voting
power of the surviving corporation’s then outstanding securities ordinarily
having the right to vote at elections of directors (regardless of any approval
by the Continuing Directors); or

     

    (e)        after
the date the Company’s securities are first sold in a registered public
offering, the Continuing Directors cease for any reason to constitute at least a
majority of the Board.

     

    9.2       Continuing
Directors.  For purposes of this Section 9, “Continuing Directors” of the
Company will mean any individuals who are members of the Board on the effective
date of the Plan and any individual who subsequently becomes a member of the
Board whose election, or nomination for election by the Company’s shareholders,
was approved by a vote of at least a majority of the Continuing Directors
(either by specific vote or by approval of the Company’s proxy statement in
which such individual is named as a nominee for director without objection to
such nomination).

     

    9.3       Acceleration of
Incentives.  Without limiting the authority of the Committee
under the Plan, if a Change in Control of the Company occurs whereby the
acquiring entity or successor to the Company does not assume the Incentives or
replace them with substantially equivalent incentive awards (as determined by
the Committee in its reasonable discretion), unless otherwise provided by the
Committee in its sole discretion in the agreement evidencing an Incentive at the
time of grant, then, as of the date of the Change of Control (a) all outstanding
options will vest and will become immediately exercisable in full and, subject
to Section 9.4, will remain exercisable for the remainder of their terms,
regardless of whether the participant to whom such options have been granted
remains in the employ or service of the Company or any subsidiary of the Company
or any acquiring entity or successor to the Company; (b) the restrictions on all
shares of restricted stock awards shall lapse immediately; and (c) all
performance shares shall be deemed to be met and payment made
immediately.

     

    9.4       Cash Payment for
Options.  If a Change in Control of the Company occurs, then
the Committee, if approved by the Committee in its sole discretion either in an
agreement evidencing an option at the time of grant or at any time after the
grant of an option, and without the consent of any participant affected thereby,
may determine that:

     

    
      (a)        some or
all participants holding outstanding options will receive, with respect to some
or all of the shares of Common Stock subject to such options, as of the
effective date of any such Change in Control of the Company, cash in an amount
equal to the excess of the Fair Market Value of such shares immediately prior to
the effective date of such Change in Control of the Company over the exercise
price per share of such options; and

    

    
      
         

      

      
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      (b)        any
options as to which, as of the effective date of any such Change in Control, the
Fair Market Value of the shares of Common Stock subject to such options is less
than or equal to the exercise price per share of such options, shall terminate
as of the effective date of any such Change in Control.

    

     

    
      If the
Committee makes a determination as set forth in subparagraph (a) of this Section
9.4, then as of the effective date of any such Change in Control of the Company
such options will terminate as to such shares and the participants formerly
holding such options will only have the right to receive such cash
payment(s).  If the Committee makes a determination as set forth in
subparagraph (b) of this Section 9.4, then as of the effective date of any such
Change in Control of the Company such options will terminate, become void and
expire as to all unexercised shares of Common Stock subject to such options on
such date, and the participants formerly holding such options will have no
further rights with respect to such options.

    

    

    10.          General.

    

    10.1.    Effective
Date.  The Plan will become effective upon approval by the
Company’s board of directors.

    

    10.2.    Duration.  The
Plan shall remain in effect until all Incentives granted under the Plan have
either been satisfied by the issuance of shares of Common Stock or the payment
of cash or been terminated under the terms of the Plan and all restrictions
imposed on shares of Common Stock in connection with their issuance under the
Plan have lapsed.  No Incentives may be granted under the Plan after
the tenth anniversary of the date the Plan is approved by the shareholders of
the Company.

    

    10.3.    Non-transferability of
Incentives.  Except, in the event of the holder’s death, by
will or the laws of descent and distribution to the limited extent provided in
the Plan or the Incentive, unless approved by the Committee, no stock option,
restricted stock or performance award may be transferred, pledged or assigned by
the holder thereof, either voluntarily or involuntarily, directly or indirectly,
by operation of law or otherwise, and the Company shall not be required to
recognize any attempted assignment of such rights by any
participant.  During a participant’s lifetime, an Incentive may be
exercised only by him or her or by his or her guardian or legal
representative.

    

    10.4.    Effect of Termination or
Death.  In the event that a participant ceases to be an
employee of or consultant to the Company, or the participant’s other service
with the Company is terminated, for any reason, including death, any Incentives
may be exercised or shall expire at such times as may be determined by the
Committee in its sole discretion in the agreement evidencing an
Incentive.  Notwithstanding the other provisions of this
Section 10.4, except as may be set forth in an agreement evidencing an
Incentive, upon a participant’s termination of employment or other service with
the Company and all subsidiaries, the Committee may, in its sole discretion
(which may be exercised at any time on or after the date of grant, including
following such termination), cause options (or any part thereof) then held by
such participant to become or continue to become exercisable and/or remain
exercisable following such termination of employment or service and Restricted
Stock Awards, Performance Shares and Stock Awards then held by such participant
to vest and/or continue to vest or become free of transfer restrictions, as the
case may be, following such termination of employment or service, in each case
in the manner determined by the Committee; provided, however, that no Incentive
may remain exercisable or continue to vest beyond its expiration
date.  Any Incentive Stock Option that remains unexercised more than
one (1) year following termination of employment by reason of death or
disability (as defined in Section 22(e)(3) of the Code) or more than three (3)
months following termination for any reason other than death or disability will
thereafter be deemed to be a Nonstatutory Stock Option.

    
      
         

      

      
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    10.5.    Additional
Conditions.  Notwithstanding anything in this Plan to the
contrary: (a) the Company may, if it shall determine it necessary or desirable
for any reason, at the time of award of any Incentive or the issuance of any
shares of Common Stock pursuant to any Incentive, require the recipient of the
Incentive, as a condition to the receipt thereof or to the receipt of shares of
Common Stock issued pursuant thereto, to deliver to the Company a written
representation of present intention to acquire the Incentive or the shares of
Common Stock issued pursuant thereto for his or her own account for investment
and not for distribution; and (b) if at any time the Company further determines,
in its sole discretion, that the listing, registration or qualification (or any
updating of any such document) of any Incentive or the shares of Common Stock
issuable pursuant thereto is necessary on any securities exchange or under any
federal or state securities or blue sky law, or that the consent or approval of
any governmental regulatory body is necessary or desirable as a condition of, or
in connection with the award of any Incentive, the issuance of shares of Common
Stock pursuant thereto, or the removal of any restrictions imposed on such
shares, such Incentive shall not be awarded or such shares of Common Stock shall
not be issued or such restrictions shall not be removed, as the case may be, in
whole or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company.  Notwithstanding any other provision of the
Plan or any agreements entered into pursuant to the Plan, the Company will not
be required to issue any shares of Common Stock under this Plan, and a
participant may not sell, assign, transfer or otherwise dispose of shares of
Common Stock issued pursuant to any Incentives granted under the Plan, unless
(a) there is in effect with respect to such shares a registration statement
under the Securities Act of 1933, as amended (the “Securities Act”), and any
applicable state or foreign securities laws or an exemption from such
registration under the Securities Act and applicable state or foreign securities
laws, and (b) there has been obtained any other consent, approval or permit
from any other regulatory body which the Committee, in its sole discretion,
deems necessary or advisable.  The Company may condition such
issuance, sale or transfer upon the receipt of any representations or agreements
from the parties involved, and the placement of any legends on certificates
representing shares of Common Stock, as may be deemed necessary or advisable by
the Company in order to comply with such securities law or other
restrictions.  The Committee may restrict the rights of participants
to the extent necessary to comply with Section 16(b) of the Exchange Act, the
Internal Revenue Code or any other applicable law or regulation. The grant of an
Incentive award pursuant to the Plan shall not limit in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure or to merge, exchange or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    

    10.6.    Adjustment.  In
the event of any merger, consolidation or reorganization of the Company with any
other corporation or corporations, there shall be substituted for each of the
shares of Common Stock then subject to the Plan, including shares subject to
restrictions, options, or achievement of performance share objectives, the
number and kind of shares of stock or other securities to which the holders of
the shares of Common Stock will be entitled pursuant to the
transaction.  In the event of any recapitalization, reclassification,
stock dividend, stock split, combination of shares or other similar change in
the corporate structure of the Company or capitalization of the Company, the
exercise price of an outstanding Incentive and the number of shares of Common
Stock then subject to the Plan, and the maximum number of shares with respect to
which Incentives may be granted in any year, including shares subject to
restrictions, options or achievements of performance shares, shall be adjusted
in proportion to the change in outstanding shares of Common Stock in order to
prevent dilution or enlargement of the rights of the participants.  In
the event of any such adjustments, the purchase price of any option, the
performance objectives of any Incentive, and the shares of Common Stock issuable
pursuant to any Incentive shall be adjusted as and to the extent appropriate, in
the discretion of the Committee, to provide participants with the same relative
rights before and after such adjustment.

    

    10.7.    Incentive Plans and
Agreements.  Except in the case of stock awards, the terms of
each Incentive shall be stated in a plan or agreement approved by the
Committee.  The Committee may also determine to enter into agreements
with holders of options to reclassify or convert certain outstanding options,
within the terms of the Plan, as Incentive Stock Options or as Nonstatutory
Stock Options.

    

    10.8.    Withholding.

    

     (a)           The
Company shall have the right to (i) withhold and deduct from any payments made
under the Plan or from future wages of the participant (or from other amounts
that may be due and owing to the participant from the Company or a subsidiary of
the Company), or make other arrangements for the collection of, all legally
required amounts necessary to satisfy any and all foreign, federal, state and
local withholding and employment-related tax requirements attributable to an
Incentive, or (ii) require the participant promptly to remit the amount of such
withholding to the Company before taking any action, including issuing any
shares of Common Stock, with respect to an Incentive.  At any time
when a participant is required to pay to the Company an amount required to be
withheld under applicable income tax laws in connection with a distribution of
Common Stock or upon exercise of an option, the participant may satisfy this
obligation in whole or in part by electing (the “Election”) to have the Company
withhold from the distribution shares of Common Stock having a value up to the
minimum amount required to be withheld.  The value of the shares to be
withheld shall be based on the Fair Market Value of the Common Stock on the date
that the amount of tax to be withheld shall be determined (“Tax Date”).

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    

     (b)           Each
Election must be made prior to the Tax Date.  The Committee may
disapprove of any Election, may suspend or terminate the right to make
Elections, or may provide with respect to any Incentive that the right to make
Elections shall not apply to such Incentive.  An Election is
irrevocable.

    

     (c)           If
a participant is an officer or director of the Company within the meaning of
Section 16 of the Exchange Act, then an Election is subject to the following
additional restrictions:

    

    (1)           No
Election shall be effective for a Tax Date which occurs within six months of the
grant or exercise of the award, except that this limitation shall not apply in
the event death or disability of the participant occurs prior to the expiration
of the six-month period.

    

    (2)           The
Election must be made either six months prior to the Tax Date or must be made
during a period beginning on the third business day following the date of
release for publication of the Company’s quarterly or annual summary statements
of sales and earnings and ending on the twelfth business day following such
date.

    

     (d)           If
the option granted to a participant hereunder is an Incentive Stock Option, and
if the participant sells or otherwise disposes of any of the shares of Common
Stock acquired pursuant to the Incentive Stock Option on or before the later of
(1) the date two years after the date of grant, or (2) the date one
year after the date of exercise, the participant shall immediately notify the
Company in writing of such disposition.  The participant agrees that
the participant may be subject to income tax withholding by the Company on the
compensation income recognized by the participant from the early disposition by
payment in cash or out of the current earnings paid to the
participant.

    

    10.9.    No Continued Employment,
Engagement or Right to Corporate Assets.  No participant under
the Plan shall have any right, because of his or her participation, to continue
in the employ of the Company for any period of time or to any right to continue
his or her present or any other rate of compensation.  Nothing
contained in the Plan shall be construed as giving an employee, a consultant,
such persons’ beneficiaries or any other person any equity or interests of any
kind in the assets of the Company or creating a trust of any kind or a fiduciary
relationship of any kind between the Company and any such person.

    

    10.10.  Deferral
Permitted.  Payment of cash or distribution of any shares of
Common Stock to which a participant is entitled under any Incentive shall be
made as provided in the Incentive.  Subject to the limitations
specified in Section 409A of the Code, payment may be deferred at the option of
the participant if provided in the Incentive.

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    

    10.11.  Amendment of the
Plan.  The Board may amend, suspend or discontinue the Plan at
any time; provided, however, that no amendments to the Plan will be effective
without approval of the shareholders of the Company if shareholder approval of
the amendment is then required pursuant to Section 422 of the Code, the
regulations promulgated thereunder or the rules of any stock exchange or Nasdaq
or similar regulatory body.  No termination, suspension or amendment
of the Plan may adversely affect any outstanding Incentive without the consent
of the affected participant; provided, however, that this sentence will not
impair the right of the Committee to take whatever action it deems appropriate
under the Plan.

     

    10.12.  Definition of Fair Market
Value. For purposes of this Plan, the “Fair Market Value” of a share
of Common Stock at a specified date shall, unless otherwise expressly provided
in this Plan, be the amount which the Committee or the board of directors of the
Company determines in good faith in the exercise of its reasonable discretion to
be 100% of the fair market value of such a share as of the date in question;
provided, however, that notwithstanding the foregoing, if such shares are listed
on a U.S. securities exchange or are quoted on the Nasdaq National Market System
or Nasdaq SmallCap Stock Market (“Nasdaq”), then Fair Market
Value shall be determined by reference to the last sale price of a share of
Common Stock on such U.S. securities exchange or Nasdaq on the applicable date.
If such U.S. securities exchange or Nasdaq is closed for trading on such date,
or if the Common Stock does not trade on such date, then the last sale price
used shall be the one on the date the Common Stock last traded on such U.S.
securities exchange or Nasdaq.

    

    10.13  
Breach of
Confidentiality, Assignment of Inventions, or Non-Compete Agreements.
 Notwithstanding anything in the Plan to the contrary, in the event that a
participant materially breaches the terms of any confidentiality, assignment of
inventions, or non-compete agreement entered into with the Company or any
subsidiary of the Company, whether such breach occurs before or after
termination of such participant’s employment or other service with the Company
or any subsidiary, the Committee in its sole discretion may immediately
terminate all rights of the participant under the Plan and any agreements
evidencing an Incentive then held by the participant without notice of any
kind.

    

    10.13   Governing
Law.  The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of New York, notwithstanding the conflicts of laws
principles of any jurisdictions.

    

    10.14   Successors and
Assigns.  The Plan will be binding upon and inure to the
benefit of the successors and permitted assigns of the Company and the
participants in the Plan.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    10.15   Lock-up
Agreement.  Each recipient of securities hereunder agrees, in
connection with the first registration with the United States Securities and
Exchange Commission under the Securities Act of 1933, as amended, of the public
sale of the Company's Common Stock, not to sell, make any short sale of, loan,
grant any option for the purchase of or otherwise dispose of any securities of
the Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed 180 days) from the effective date of such
registration as the Company or the underwriters, as the case may be, shall
specify.  Each such recipient agrees that the Company may instruct its
transfer agent to place stop-transfer notations in its records to enforce this
Section.  Each such recipient agrees to execute a form of agreement
reflecting the foregoing restrictions as requested by the underwriters managing
such offering.

    

    11.16   Nature of
Payments.  Incentives shall be special incentive payments to
the participants and shall not be taken into account in computing the amount of
salary or compensation of a participant for purposes of determining any pension,
retirement, death or other benefit under (a) any pension, retirement,
profit-sharing, bonus, insurance or other employee benefit plan of the Company
or any subsidiary or (b) any agreement between (i) the Company or any subsidiary
and (ii) a participant, except as such plan or agreement shall otherwise
expressly provide.

    

    11.17   Non-Uniform
Determinations.  The Committee’s determinations under the Plan
need not be uniform and may be made by the Committee selectively among persons
who receive, or are eligible to receive, Incentives, whether or not such persons
are similarly situated.  Without limiting the generality of the
foregoing, the Committee shall be entitled to enter into non-uniform and
selective Incentive agreements as to (a) the identity of the participants, (b)
the terms and provisions of Incentives and (c) the treatment of terminations of
employment or service.

    

    11.18   Reservation of
Shares.  The Company, during the term of this Plan, will at all
times reserve and keep available such number of shares of Common Stock as shall
be sufficient to satisfy the requirements of the Plan.

    
      
         

      

      
        14Amendment
No. 1

    to

    2005
Stock Incentive Plan

    

    Pursuant
to resolutions duly adopted by the Board of Directors and stockholders of
Cutanea Life Sciences, Inc., a Delaware corporation (f/k/a Pyxis
Pharmaceuticals, Inc., the “Company”), the 2005 Stock
Incentive Plan of the Company (as amended, the “Option Plan”), is hereby amended as
follows:

    

    Section 1
of the Plan is hereby deleted in its entirety and the following is hereby
substituted therefor:

    

    “1.           Purpose.  The
purpose of the 2005 Stock Incentive Plan (the “Plan”) of CUTANEA LIFE SCIENCES, INC.
(the “Company”) is to
increase shareholder value and to advance the interests of the Company by
furnishing a variety of economic incentives (“Incentives”) designed to
attract, retain and motivate employees, directors, officers and
consultants.  Incentives may consist of opportunities to purchase or
receive shares of Common Stock, $0.001 par value, of the Company (“Common Stock”), on terms
determined under this Plan.”

    

    Section
5.1 of the Plan is hereby deleted in its entirety and the following is hereby
substituted therefore:

    

    “5.1.        Number of
Shares.  Subject to adjustment as provided in Section 10.6, the
number of shares of Common Stock which may be issued under the Plan shall not
exceed 21,000,000 shares of Common Stock.  Of such aggregate number of
shares of Common Stock that may be issued under the Plan, the maximum number of
shares that may be issued as Incentive Stock Options under Section 422 of the
Code is 21,000,000.  Any shares of Common Stock available for issuance
as Incentive Stock Options may be alternatively issued as other types of
Incentives under the Plan.  Shares of Common Stock that are issued
under the Plan or that are subject to outstanding Incentives will be applied to
reduce the maximum number of shares of Common Stock remaining available for
issuance under the Plan.”

    

    [Signature
Page Follows]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Effective
as of ________________.

    

    
      
        
          	 
      	
                  Cutanea
      Life Sciences, Inc.

                
	 
      	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	 
      	
                  Name:  Robert
      J. Bitterman

                
	 
      	 
      	
                  Title:    President
      and Chief Executive
Officer

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