Document:

2004 Equity Incentive Plan

 Exhibit 4.2 
 SABRA HEALTH CARE REIT, INC. 
 2004 EQUITY INCENTIVE PLAN 

Amended and Restated 
 as of November 15, 20101 
 1. Purpose. The Sabra Health Care REIT, Inc. 2004
Equity Incentive Plan (the “Plan”) is intended to provide incentives which will attract, retain and motivate highly competent persons as officers, key employees and directors of, and consultants to, Sabra Health Care REIT, Inc. (the
“Company”) and its Subsidiaries, by providing them opportunities to acquire shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) or to receive monetary payments based on the value of such
shares pursuant to the Benefits (as defined in Section 4 below) described herein. “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company. 
 2. Administration. 

(a) Committee. The Plan will be administered by the Compensation Committee of the Board of Directors or such other
committee designated by the Board of Directors of the Company (the “Committee”) from among its members and shall be comprised, unless otherwise determined by the Company’s Board of Directors, solely of not less than two
(2) members who shall be (i) “Non-Employee Directors” within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and
(ii) “outside directors” within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). 

(b) Authority. The Committee is authorized, subject to the provisions of the Plan, to establish such rules and regulations
as it deems necessary for the proper administration of the Plan and to make such determinations and interpretations and to take such action in connection with the Plan and any Benefits granted hereunder as it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be binding and conclusive on all participants and their legal representatives. 

 

	1	The Plan was formerly named the Sun Healthcare Group, Inc. 2004 Equity Incentive Plan, and prior to that, the Sun Healthcare Group, Inc. 2002 Management Equity
Incentive Plan. On November 15, 2010, Sun Healthcare Group, Inc. merged with and into the Company, with the Company surviving the merger. In connection with this merger, the Plan was assumed by the Company and renamed the Sabra Health Care
REIT, Inc. 2004 Equity Incentive Plan, and certain other conforming changes were made to the terms of the Plan. The Plan is being assumed by the Company to evidence the terms of awards originally granted by Sun Healthcare Group, Inc. prior to its
merger with the Company. Award grant authority under the Plan terminated in June of 2009 upon the approval of the Sun Healthcare Group, Inc. 2009 Performance Incentive Plan (which is now named the Sabra Health Care REIT, Inc. 2009 Performance
Incentive Plan). Other than the options and stock units originally granted by Sun Healthcare Group, Inc. prior to its merger with the Company that have been substituted and assumed under the Plan, no other awards with respect to shares of the
Company’s Common Stock or other Benefits shall be made under the Plan. Certain references to the “Company” or other defined terms should be read and understood in light of the foregoing context. 

  
 1 

 (c) Indemnification. No member of the Committee and no employee of the Company
shall be liable for any act or failure to act hereunder, except in circumstances involving his or her bad faith, gross negligence or willful misconduct, or for any act or failure to act hereunder by any other member or employee or by any agent to
whom duties in connection with the administration of this Plan have been delegated. The Company shall indemnify members of the Committee and any agent of the Committee who is an employee of the Company, a subsidiary or an affiliate against any and
all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Plan, except in circumstances involving such person’s bad faith, gross negligence or willful
misconduct. 
 (d) Delegation and Advisers. The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the Committee, or any person to whom it has delegated duties as aforesaid, may employ one or more persons to render advice with respect to any responsibility the Committee or such
person may have under the Plan. The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such counsel,
consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company, or the subsidiary or affiliate whose employees have benefited from the Plan, as determined by the Committee.

 3. Participants. Participants will consist of such Eligible Persons as the Committee in its sole discretion
determines to be significantly responsible for the success and future growth and profitability of the Company and whom the Committee may designate from time to time to receive Benefits under the Plan. An “Eligible Person” is any person who
is any one of: (a) an officer (whether or not a director) or employee of the Company and its Subsidiaries; (b) a director of the Company or one of its Subsidiaries; or (c) an individual consultant or advisor who renders or has
rendered bona fide services (other than services in connection with the offering or sale of securities of the Company or one of its Subsidiaries in a capital-raising transaction or as a market maker or promoter of the Company’s or a
Subsidiary’s securities) to the Company or one of its Subsidiaries; provided, however, that a person who is otherwise an Eligible Person under clause (c) above may participate in this Plan only if such participation would not adversely
affect either the Company’s eligibility to use Form S-8 to register under the Securities Act of 1933, as amended (the “Securities Act”), the offering and sale of shares issuable under this Plan by the Company and its Subsidiaries or
the Company’s compliance with any other applicable laws. Designation of an Eligible Person to receive a Benefit (a “participant”) in any year shall not require the Committee to designate such person to receive a Benefit in any other
year or, once designated, to receive the same type or amount of Benefit as granted to the participant in any other year. The Committee shall consider such factors as it deems pertinent in selecting participants and in determining the type and amount
of their respective Benefits. 
 4. Type of Benefits. Benefits under the Plan may be granted in any one or a
combination of (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock Awards, (d) Stock Units, and (e) Performance-Based Awards, including cash awards granted consistent with Section 10 hereof (each as described
below, and collectively, the “Benefits”). Stock Awards and Stock Units may, as determined by the Committee in its discretion, constitute Performance-

 
Based Awards, as described in Section 10 hereof. Benefits shall be evidenced by agreements (which need not be identical) in such forms as the Committee may from time to time approve;
provided, however, that in the event of any conflict between the provisions of the Plan and any such agreements, the provisions of the Plan shall prevail. 
 5. Common Stock Available Under the Plan.2 
 (a) Basic Limitations. Subject to the provisions of
Section 12, the capital stock that may be delivered under this Plan subject to Benefits shall be shares of the Company’s authorized but unissued Common Stock and any of its shares held as treasury shares. The aggregate number of shares of
Common Stock that may be subject to Benefits granted under this Plan (the “Share Limit”) shall be shall be equal to the sum of (x) 5,600,000 shares of Common Stock, plus (y) the number of any shares subject to stock options
granted under the Company’s 2002 Non-Employee Director Equity Incentive Plan, as amended (the “2002 Director Plan”) and outstanding on March 31, 2004 which expire or have expired, or for any reason are, or have been, cancelled or
terminated, since March 31, 2004 without being exercised; provided that in no event shall the Share Limit exceed 5,680,000 shares (which is the sum of the 5,600,000 shares set forth above, plus the number of shares subject to options previously
granted and outstanding under the 2002 Director Plan as of March 31, 2004). The following limits also apply with respect to Benefits under this Plan: 
 (i) The maximum number of shares of Common Stock that may be delivered pursuant to Stock Options qualified as Incentive Stock Options granted under this Plan is 5,600,000 shares. 

(ii) The maximum number of shares of Common Stock subject to the Stock Options and Stock Appreciation Rights that are
granted during any calendar year to any individual under this Plan is 600,000 shares. 
 (iii) Additional limits
with respect to Performance-Based Awards are set forth in Section 10. 
 Each of the foregoing numerical limits is subject
to adjustment as contemplated by Section 5(b) and Section 12. 
 (b) Additional Shares. Any shares of
Common Stock subject to a Stock Option or Stock Appreciation Right which for any reason is cancelled or terminated without having been exercised, or any shares subject to Stock Awards or Stock Units which are forfeited, or any shares delivered to
the Company as part or full payment for the exercise of a Stock Option, Stock Appreciation Right or Stock Award or any shares that are delivered or withheld by the Company or a Subsidiary to satisfy the tax withholding obligations related to any
Benefit under this Plan shall again be available for award as Benefits under the Plan. To the extent that a Benefit is settled in cash or a form other than shares of Common Stock, the shares that would have been delivered had there been no such cash
or other settlement shall not be counted against the shares available for issuance under this Plan. In the event that shares are delivered in respect of a Dividend Equivalent Right (as defined in Section 9(f) below), Stock Appreciation Right,
or 
  

	2	 See Footnote 1. 

 
other Benefit, only the actual number of shares delivered with respect to the Benefit shall be counted against the share limits of this Plan. The provisions of this Section 5(b) shall apply
only for purposes of determining the aggregate number of shares of Common Stock subject to Benefits but shall not apply for purposes of determining the maximum number of shares of Common Stock with respect to which Benefits (including the maximum
number of shares of Common Stock subject to Stock Options and Stock Appreciation Rights) may be granted to any individual participant under the Plan. 
 (c) Acquisitions. In connection with the acquisition of any business by the Company or any of its subsidiaries or affiliates, any outstanding grants, awards or sales of options or other
similar rights pertaining to such business may be assumed or replaced by Benefits under the Plan upon such terms and conditions as the Committee determines. The date of any such grant or award shall relate back to the date of the initial grant or
award being assumed or replaced, and service with the acquired business shall constitute service with the Company or its subsidiaries or affiliates for purposes of such grant or award. Any shares of Common Stock underlying any grant or award or sale
pursuant to any such acquisition shall be disregarded for purposes of applying the limitations under and shall not reduce the number of shares of Common Stock available under Section 5(a) above. 

6. Stock Options. 
 (a) Generally. Stock Options will consist of awards from the Company that will enable the holder to purchase a number of shares of Common Stock, at set terms. Stock Options may be
“incentive stock options” (“Incentive Stock Options”), within the meaning of Section 422 of the Code, or Stock Options which do not constitute Incentive Stock Options (“Nonqualified Stock Options”). The Committee
will have the authority to grant to any participant one or more Incentive Stock Options, Nonqualified Stock Options, or both types of Stock Options (in each case with or without Stock Appreciation Rights). Each Stock Option shall be subject to such
terms and conditions consistent with the Plan as the Committee may impose from time to time, subject to the following limitations: 
 (b) Exercise Price. Each Stock Option granted hereunder shall have such per-share exercise price as the Committee may determine at the date of grant. The per share exercise price for each
Stock Option shall be not less than 100% of the Fair Market Value (as defined in Section 16 below) of a share of Common Stock on the date of grant of the Stock Option. 
 (c) Payment of Exercise Price. The option exercise price may be paid in cash or, in the discretion of the Committee, by the delivery of shares of Common Stock of the Company then owned by
the participant, by the withholding of shares of Common Stock for which a Stock Option is exercisable or by a combination of these methods. In the discretion of the Committee, payment may also be made by delivering a properly executed exercise
notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price. To facilitate the foregoing, the Company may enter into agreements
for coordinated procedures with one or more brokerage firms. The Committee may prescribe any other method of paying the exercise price that it determines to be consistent with applicable law and the purpose of the Plan, including,

 
without limitation, in lieu of the exercise of a Stock Option by delivery of shares of Common Stock of the Company then owned by a participant, providing the Company with a notarized statement
attesting to the number of shares owned, where upon verification by the Company, the Company would issue to the participant only the number of incremental shares to which the participant is entitled upon exercise of the Stock Option. 

(d) Exercise Period. Stock Options granted under the Plan shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee; provided, however, that no Stock Option shall be exercisable later than ten (10) years after the date it is granted except in the event of a participant’s death, in which case,
the exercise period of such participant’s Stock Options may be extended beyond such period but no later than one (1) year after the participant’s death. All Stock Options shall terminate at such earlier times and upon such conditions
or circumstances as the Committee shall in its discretion set forth in such option agreement at the date of grant. 
 (e)
Restoration of Stock Options. The Committee may, at the time of grant, provide for the grant of a subsequent Restoration Stock Option if the exercise price is paid for by delivering previously owned shares of Common Stock of the
Company. Restoration Stock Options (i) may be granted in respect of no more than the number of shares of Common Stock tendered in exercising the predecessor Stock Option, (ii) shall have an exercise price equal to the Fair Market Value (as
defined in Section 16 below) on the date the Restoration Stock Option is granted, and (iii) may have an exercise period that does not extend beyond the remaining term of the predecessor Stock Option. In determining which methods a
participant may utilize to pay the exercise price, the Committee may consider such factors as it determines are appropriate. 

(f) Limitations on Incentive Stock Options. Incentive Stock Options may be granted only to participants who are employees
of the Company or of a “Parent Corporation” or “Subsidiary Corporation” (as defined in Sections 424(e) and (f) of the Code, respectively) at the date of grant. The aggregate Fair Market Value (determined as of the time the
Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under all option plans of the Company and of any Parent Corporation or
Subsidiary Corporation) shall not exceed one hundred thousand dollars ($100,000). For purposes of the preceding sentence, Incentive Stock Options will be taken into account in the order in which they are granted. The per-share exercise price of an
Incentive Stock Option shall not be less than one hundred percent (100%) of the Fair Market Value of the Common Stock on the date of grant, and no Incentive Stock Option may be exercised later than ten (10) years after the date it is
granted. In addition, no Incentive Stock Option may be issued to a participant in tandem with a Nonqualified Stock Option. 

(g) Additional Limitations on Incentive Stock Options for Ten Percent Shareholders. Incentive Stock Options may not be
granted to any participant who, at the time of grant, owns stock possessing (after the application of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Parent Corporation or Subsidiary Corporation, unless the exercise price of the option is fixed at not less than one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date of grant and the
exercise of such option is prohibited by its terms after the expiration of five (5) years from the date of grant of such option. 

 (h) Modifications of Options/Repricing. Subject to Section 5 and
Section 22 and the specific limitations on Stock Options contained in this Plan, the Committee from time to time may authorize, generally or in specific cases only, for the benefit of any participant, adjustments in the terms and conditions of
a Stock Option granted under this Plan. Notwithstanding any provision in this Section 6(h) or the Plan to the contrary but subject to the adjustment provisions of Section 12, the per share exercise or base price of any Option or Stock
Appreciation Right granted under the Plan may not be reduced (by amendment, substitution, cancellation and regrant, exchange, or other means) to a per share price that is less than the exercise or base price of the award, as applicable, as of the
date the award was granted. 
 7. Stock Appreciation Rights. 

(a) Generally. The Committee may, in its discretion, grant Stock Appreciation Rights, including a concurrent grant of Stock
Appreciation Rights in tandem with any Stock Option grant. A Stock Appreciation Right means a right to receive a payment in cash, Common Stock or a combination thereof, in an amount equal to the excess of (i) the Fair Market Value, or other
specified valuation, of a specified number of shares of Common Stock on the date the right is exercised over (ii) the Fair Market Value, of such shares of Common Stock on the date the right is granted, or other specified amount, all as
determined by the Committee (the “Base Price”). Each Stock Appreciation Right shall be subject to such terms and conditions as the Committee shall impose from time to time. 

(b) Exercise Period. Stock Appreciation Rights granted under the Plan shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee; provided, however, that no Stock Appreciation Rights shall be exercisable later than ten (10) years after the date it is granted except in the event of a
participant’s death, in which case, the exercise period of such participant’s Stock Appreciation Rights may be extended beyond such period but no later than one (1) year after the participant’s death. All Stock Appreciation
Rights shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such right at the date of grant. 
 8. Stock Awards. 
 (a) Generally. The Committee may,
in its discretion, grant Stock Awards (which may include mandatory payment of any bonus in stock) consisting of Common Stock issued or transferred to participants with or without other payments therefor. A Stock Award shall be construed as an offer
by the Company to the participant to purchase the number of shares of Common Stock subject to the Stock Award at the purchase price, if any, established therefor. Any right to acquire the shares under the Stock Award that is not exercised by the
participant within thirty (30) days after the grant is communicated shall automatically expire. 
 (b) Payment of the
Purchase Price. If the Stock Award requires payment therefor, the purchase price of any shares of Common Stock subject to a Stock Award may be paid in any manner authorized by the Committee, which may include any manner authorized under the
Plan for the payment of the exercise price of a Stock Option. Stock Awards may also be made in consideration of services rendered to the Company or its Subsidiaries. 

 (c) Additional Terms. Stock Awards may be subject to such terms and conditions
as the Committee determines appropriate, including, without limitation, restrictions on the sale or other disposition of such shares, the right of the Company to reacquire such shares for no consideration upon termination of the participant’s
employment within specified periods, and may constitute Performance-Based Awards, as described in Section 10 hereof. The Committee may require the participant to deliver a duly signed stock power, endorsed in blank, relating to the Common Stock
covered by such an Award. The Committee may also require that the stock certificates evidencing such shares be held in custody or bear restrictive legends until the restrictions thereon shall have lapsed. 

(d) Rights as a Shareholder. The Stock Award shall specify whether the participant shall have, with respect to the shares
of Common Stock subject to a Stock Award, all of the rights of a holder of shares of Common Stock of the Company, including the right to receive dividends and to vote the shares. 

9. Stock Units. 
 (a) Generally. The Committee may, in its discretion, grant Stock Units (as defined in subsection (f) below) to participants hereunder. The Committee shall determine the criteria for the
vesting of Stock Units. Stock Units may constitute Performance-Based Awards, as described in Section 10 hereof. Stock Units granted by the Committee shall be payable in shares of Common Stock at such time as provided in this Section 9.
Shares of Common Stock issued pursuant to this Section 9 may be issued with or without other payments therefor as may be required by applicable law or such other consideration as may be determined by the Committee. The Committee shall determine
whether a participant granted a Stock Unit shall be entitled to a Dividend Equivalent Right (as defined in subsection (f) below). 
 (b) Settlement of Stock Units. Upon vesting of Stock Units, unless the Committee has determined to defer payment with respect to such unit in accordance with Section 409A of the Code or
except as otherwise provided under subsection (c) below, such Stock Units shall be paid in a lump sum to the participant in shares of Common Stock on or as soon as practicable after the vesting date, but in no event later than two and one-half
(2  1/2) months after the year in which such Stock
Units became vested; provided, however, that the Committee shall have discretion to provide for the payment of the Stock Units in cash equal to the value of the shares of Common Stock which would otherwise be paid to the participant or partly in
cash and partly in shares of Common Stock. 
 (c) Irrevocable Election to Defer Payment of Stock Units. At
the time an award of Stock Units is granted (or at such other time as may be provided by the Committee and in all cases at a time that complies with the initial deferral election requirements of Section 409A of the Code), the participant may
irrevocably elect, in accordance with rules prescribed by the Committee, not to receive a distribution upon the vesting of such Stock Units and instead have the Company continue to maintain such Stock Units on its books of account. Unless provided
otherwise by the Committee and set forth in the applicable deferral election form or award agreement, if a participant makes an election pursuant to this Section 9(c), the participant’s vested Stock Units will be paid (subject to earlier
payment pursuant to subsections (d) and (e) below) on the earlier to occur of (i) a date specified by the participant at the time the award is 

 
granted, or (ii) the date of the participant’s Separation from Service (as defined in subsection (f)) from the Company and its Subsidiaries; provided, however, that if the participant
is a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) on the date of the participant’s Separation from Service, the participant shall not be entitled to payment of any Stock Units that would
otherwise be paid in connection with his or her Separation from Service until the earlier of (A) the date which is six (6) months after his or her Separation from Service with the Company for any reason other than death, or (B) the
date of the participant’s death; provided, further, that this six-month delay shall apply only to the extent such delay in payment is required to comply with, and avoid the imputation of any tax, penalty or interest under, Section 409A of
the Code. Any Stock Units that have not vested as of the date specified by the participant shall be paid only if and when such Stock Units vest. If the participant does not make an election under this Section 9(c), the participant’s Stock
Units will be paid when and if such Stock Units vest. 
 (d) Unforeseeable Emergency. If a participant has elected
payment of his or her Stock Units after the vesting date of such units, the participant may request a distribution of his or her Stock Units for an Unforeseeable Emergency (as defined in subsection (f)). Such distribution for an Unforeseeable
Emergency shall be subject to approval by the Committee and may be made only from the participant’s then vested Stock Units and only to the extent necessary to satisfy such emergency (plus amounts necessary to pay taxes reasonably anticipated
as a result of the distribution) after taking into account the extent to which the hardship is or may be relieved (1) through reimbursement or compensation by insurance or otherwise or (2) by liquidation of the participant’s assets,
to the extent the liquidation of such assets would not itself cause severe financial hardship. 
 (e) Change in
Control. Notwithstanding anything in Section 9(b) or any participant’s distribution election to the contrary, a participant’s vested Stock Units shall be distributed immediately upon the occurrence of a Change in Control (as
such term is defined in subsection (f) below). 
 (f) Definitions. For purposes of this Section 9, the
definitions contained in this Section 9(f) shall apply. A “Stock Unit” means a notional account representing one (1) share of Common Stock. A “Dividend Equivalent Right” means the right to receive the amount of any
dividend paid on the share of Common Stock underlying a Stock Unit, which shall be payable in cash or in the form of additional Stock Units. A “Separation from Service” shall mean a “separation from service” within the meaning of
Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder. An “Unforeseeable Emergency” means a severe financial hardship to the participant resulting from (i) an
illness or accident of the participant, the participant’s spouse, or a dependent (as defined in Section 152(a) of the Code without regard to paragraphs (b)(1), (b)(2) and (d)(1)(b) thereof) of the participant, (ii) loss of the
participant’s property due to casualty, or (iii) other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the participant, all as determined by the Committee in its sole discretion.
“Change in Control” has the meaning ascribed to such term in Section 12(d) of this Plan; provided, however, that in all cases a Change in Control for purposes of Section 9(e) must qualify as a “change in the ownership,”
a “change in the effective control” or a “change in the ownership of a substantial 

 
portion of the assets” of the Company, in each case as determined in accordance with Treasury Regulation Section 1.409A-3(i)(5). 

10. Performance-Based Awards. 
 (a) Generally. Any Benefits granted under the Plan may be granted in a manner such that the Benefits qualify for the performance-based compensation exemption of Section 162(m) of the
Code (“Performance-Based Awards”). Grants or awards under this Section 10 may be paid in cash or shares of Common Stock or any combination thereof. As determined by the Committee in its sole discretion, either the granting or vesting
of such Performance-Based Awards shall be based on achievement of hurdle rates and/or growth rates in one or more business criteria that apply to the individual participant, one or more business units or the Company as a whole. The maximum number of
shares of Common Stock which may be delivered pursuant to Performance-Based Awards (other than Stock Options and Stock Appreciation Rights, and other than cash awards covered by the following sentence) that are granted to any one participant in any
one calendar year shall not exceed 600,000 shares, either individually or in the aggregate, subject to adjustment as provided in Section 12. In addition, the aggregate amount of compensation to be paid to any one participant in respect of all
Performance-Based Awards payable only in cash and not related to shares of Common Stock and granted to that participant in any one calendar year shall not exceed $1,000,000.00. Awards that are cancelled during the year shall be counted against these
limits to the extent permitted by Section 162(m) of the Code. 
 (b) Business Criteria. The business criteria
shall be as follows, individually or in combination: (i) net earnings; (ii) earnings per share; (iii) net sales growth; (iv) market share; (v) net operating profit; (vi) expense targets; (vii) working capital
targets relating to inventory and/or accounts receivable; (viii) operating margin; (ix) return on equity; (x) return on assets; (xi) planning accuracy (as measured by comparing planned results to actual results);
(xii) market price per share; (xiii) total return to stockholders, and (xiv) measurably improving quality of care outcomes at Company facilities. In addition, Performance-Based Awards may include comparisons to the performance of
other companies, such performance to be measured by one or more of the foregoing business criteria. 
 (c) Establishment
of Performance Goals. With respect to Performance-Based Awards, the Committee shall establish in writing no later than ninety (90) days after the commencement of the performance period (but in no event after twenty-five percent
(25%) of such period has elapsed) (i) the performance goals applicable to a given period, and such performance goals shall state, in terms of an objective formula or standard, the method for computing the amount of compensation payable to
the participant if such performance goals are obtained and (ii) the individual employees or class of employees to which such performance goals apply. The applicable performance measurement period may not be less than three months nor more than
10 years. 
 (d) Certification of Performance. No Performance-Based Awards shall be payable to or vest with
respect to, as the case may be, any participant for a given period until the Committee certifies in writing that the objective performance goals (and any other material terms) applicable to such period have been satisfied. 

 (e) Modification of Performance-Based Awards. With respect to any Benefits
intended to qualify as Performance-Based Awards, after establishment of a performance goal, the Committee shall not revise such performance goal or increase the amount of compensation payable thereunder (as determined in accordance with
Section 162(m) of the Code) upon the attainment of such performance goal. Notwithstanding the preceding sentence, the Committee may reduce or eliminate the number of shares of Common Stock or cash granted or the number of shares of Common Stock
vested upon the attainment of such performance goal if the Committee preserves such authority at the time of grant by language to this effect in its authorizing resolutions or otherwise. 

(f) Expiration of Grant Authority. As required pursuant to Section 162(m) of the Code and the regulations promulgated
thereunder, the Committee’s authority to grant new awards that are intended to qualify as performance-based compensation within the meaning of Section 162(m) of the Code (other than Stock Options and Stock Appreciation Rights) shall
terminate upon the first meeting of the Company’s shareholders that occurs in the fifth year following the Restatement Date. 
 11. Foreign Laws. The Committee may grant Benefits to individual participants who are subject to the tax laws of nations other than the United States, which Benefits may have terms and
conditions as determined by the Committee as necessary to comply with applicable foreign laws. The Committee may take any action which it deems advisable to obtain approval of such Benefits by the appropriate foreign governmental entity; provided,
however, that no such Benefits may be granted pursuant to this Section 11 and no action may be taken which would result in a violation of the Exchange Act, the Code or any other applicable law. 

12. Adjustment Provisions; Change in Control. 
 (a) Adjustment Generally. If there shall be any change in the Common Stock of the Company, through merger, consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse stock split, split up, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, an adjustment shall be
made to each outstanding Stock Option and Stock Appreciation Right such that each such Stock Option and Stock Appreciation Right shall thereafter be exercisable for such securities, cash and/or other property as would have been received in respect
of the Common Stock subject to such Stock Option or Stock Appreciation Right had such Stock Option or Stock Appreciation Right been exercised in full immediately prior to such change or distribution, and such an adjustment shall be made successively
each time any such change shall occur. 
 (b) Modification of Benefits. In the event of any change or distribution
described in subsection (a) above, in order to prevent dilution or enlargement of participants’ rights under the Plan, the Committee will have authority to adjust, in an equitable manner, the number and kind of shares that may be issued
under the Plan, the number and kind of shares subject to outstanding Benefits, the exercise price applicable to outstanding Benefits, and the Fair Market Value of the Common Stock and other value determinations applicable to outstanding Benefits;
provided, however, that any such arithmetic adjustment to a Performance-Based Award shall not cause the amount of compensation payable thereunder to be increased 

 
from what otherwise would have been due upon attainment of the unadjusted award. Appropriate adjustments may also be made by the Committee in the terms of any Benefits under the Plan to reflect
such changes or distributions and to modify any other terms of outstanding Benefits on an equitable basis, including modifications of performance targets and changes in the length of performance periods; provided, however, that any such arithmetic
adjustment to a Performance-Based Award shall not cause the amount of compensation payable thereunder to be increased from what otherwise would have been due upon attainment of the unadjusted award. In addition, other than with respect to Stock
Options, Stock Appreciation Rights, and other awards intended to constitute Performance-Based Awards, the Committee is authorized to make adjustments to the terms and conditions of, and the criteria included in, Benefits in recognition of unusual or
nonrecurring events affecting the Company or the financial statements of the Company, or in response to changes in applicable laws, regulations, or accounting principles. Notwithstanding the foregoing, (i) each such adjustment with respect to
an Incentive Stock Option shall comply with the rules of Section 424(a) of the Code, and (ii) in no event shall any adjustment be made which would render any Incentive Stock Option granted hereunder other than an incentive stock option for
purposes of Section 422 of the Code. 
 (c) Effect of a Change in Control. Notwithstanding any other
provision of this Plan, if there is a Change in Control (as defined in subsection (d) below) of the Company, all then outstanding Stock Options, Stock Appreciation Rights and Stock Units shall immediately vest and become exercisable and any
restrictions on Stock Awards or Stock Units shall immediately lapse. Thereafter, all Benefits shall be subject to the terms of any agreement effecting the Change in Control, which agreement, may provide, without limitation, that each Stock Option
and Stock Appreciation Right outstanding hereunder shall terminate within a specified number of days after notice to the holder, and that such holder shall receive, with respect to each share of Common Stock subject to such Stock Option or Stock
Appreciation Right, an amount equal to the excess of the Fair Market Value of such shares of Common Stock immediately prior to the occurrence of such Change in Control over the exercise price per share underlying such Stock Option or Stock
Appreciation Right with such amount payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine. A provision like
the one contained in the preceding sentence shall be inapplicable to a Stock Option or Stock Appreciation Right granted within six (6) months before the occurrence of a Change in Control if the holder of such Stock Option or Stock Appreciation
Right is subject to the reporting requirements of Section 16(a) of the Exchange Act and no exception from liability under Section 16(b) of the Exchange Act is otherwise available to such holder. 

(d) Definitions. For purposes of this Section 12, a “Change in Control” of the Company shall be deemed to
have occurred if any of the following events occurs: 
 (i) Any “person” or “group” (within
the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company (an “Acquiring Person”), is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 33 1/3% of the then outstanding voting stock of the Company; 

 (ii) A merger or consolidation of the Company with any other corporation,
other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 51% of the combined voting power of the voting securities of the Company or surviving entity outstanding immediately after such merger or consolidation; 

(iii) A sale or other disposition by the Company of all or substantially all of the Company’s assets; 

(iv) During any period of two (2) consecutive years (beginning on or after the Effective Date), individuals who at
the beginning of such period constitute the Board of Directors of the Company and any new director (other than a director who is a representative or nominee of an Acquiring Person) whose election by the Company’s Board of Directors or
nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination was previously so
approved, no longer constitute a majority of the Company’s Board of Directors; 
 provided, however, in no event shall any
acquisition of securities, a change in the composition of the Company’s Board of Directors or a merger or other consolidation pursuant to a plan of reorganization under chapter 11 of the Bankruptcy Code with respect to the Company
(“Chapter 11 Plan”), or a liquidation under the Bankruptcy Code constitute a Change in Control. In addition, notwithstanding Sections 12(d)(i), 12(d)(ii), 12(d)(iii) and 12(d)(iv) hereof, a Change in Control shall not be deemed to have
occurred in the event of a sale or conveyance in which the Company continues as a holding company of an entity or entities that conduct the business or businesses formerly conducted by the Company, or any transaction undertaken for the purpose of
reincorporating the Company under the laws of another jurisdiction, if such transaction does not materially affect the beneficial ownership of the Company’s capital stock. 

13. Nontransferability. Each Benefit granted under the Plan to a participant shall not be transferable otherwise than by
will or the laws of descent and distribution, and shall be exercisable, during the participant’s lifetime, only by the participant. In the event of the death of a participant, each Stock Option or Stock Appreciation Right theretofore granted to
him or her shall be exercisable during such period after his or her death as the Committee shall in its discretion set forth in such option or right at the date of grant and then only by the executor or administrator of the estate of the deceased
participant or the person or persons to whom the deceased participant’s rights under the Stock Option or Stock Appreciation Right shall pass by will or the laws of descent and distribution. Notwithstanding the foregoing, at the discretion of
the Committee, an award of a Benefit other than an Incentive Stock Option may permit the transferability of a Benefit by a participant solely to the participant’s spouse, siblings, parents, children and grandchildren or trusts for the benefit
of such persons or partnerships, corporations, limited liability companies or other entities owned solely by such persons, including trusts for such persons, subject to any restriction included in the award of the Benefit. Consistent with
Section 18, any permitted transfer shall be subject to the condition that the Committee receive 

 
evidence satisfactory to it that the transfer (a) is being made for essentially donative, estate and/or tax planning purposes on a gratuitous or donative basis and without consideration, and
(b) will not compromise the Company’s ability to register shares issuable under this Plan on Form S-8 under the Securities Act. Notwithstanding the foregoing, Incentive Stock Options and Stock Awards that are subject to “a substantial
risk of forfeiture” under Section 83 of the Code shall be subject to any and all additional transfer restrictions under the Code to the extent necessary to maintain the intended tax consequences of such awards. 

14. Other Provisions. The award of any Benefit under the Plan may also be subject to such other provisions (whether or not
applicable to the Benefit awarded to any other participant) as the Committee determines appropriate, including, without limitation, for the installment purchase of Common Stock under Stock Options, for the installment exercise of Stock Appreciation
Rights, to assist the participant in financing the acquisition of Common Stock, for the forfeiture of, or restrictions on resale or other disposition of, Common Stock acquired under any form of Benefit, for the acceleration of exercisability or
vesting of Benefits in the event of a change in control of the Company, for the payment of the value of Benefits to participants in the event of a change in control of the Company, or to comply with federal and state securities laws, or
understandings or conditions as to the participant’s employment in addition to those specifically provided for under the Plan. 
 15. Effect of a Termination of Service on Benefits. 
 (a)
General. The Committee shall establish the effect of a termination of employment or service on the rights and benefits under each award under this Plan and in so doing may make distinctions based upon, inter alia, the cause of
termination and type of Benefit (including without limitation, the participant’s death, Disability, a termination for Good Cause or termination by the participant for Good Reason). If the participant is not an employee or director of the
Company or a Subsidiary and provides other services to the Company or a Subsidiary, the Committee shall be the sole judge for purposes of this Plan (unless a contract or the award otherwise provides) of whether the participant continues to render
services to the Company or a Subsidiary and the date, if any, upon which such services shall be deemed to have terminated. 

(b) Events Not Deemed Terminations of Service. Unless Company policy or the Committee otherwise provides, the employment
relationship shall not be considered terminated in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence authorized by the Company or the Committee; provided that unless reemployment upon the expiration
of such leave is guaranteed by contract or law, such leave is for a period of not more than 90 days. In the case of any employee of the Company on an approved leave of absence, continued vesting of the Benefit while on leave from the employ of the
Company may be suspended until the employee returns to service, unless the Committee otherwise provides or applicable law otherwise requires. In no event shall a Benefit be exercised after the expiration of the term set forth in the award agreement.

 (c) Effect of Change of Subsidiary Status. For purposes of this Plan and any Benefit, if an entity ceases to be
a Subsidiary of the Company a termination of employment or service shall be deemed to have occurred with respect to each Eligible Person in respect of 

 
such Subsidiary who does not continue as an Eligible Person in respect of another entity within the Company after giving effect to the Subsidiary’s change in status. 

(d) Definitions. For purposes of this Section 15, the definitions contained in this Section 15(d) shall apply.

 (i) “Disability” with respect to a participant means that the participant has
experienced one of the following: (1) the participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months, or (2) the participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the participant’s employer. 

(ii) “Good Cause” with respect to a participant means (unless otherwise expressly provided in the
applicable agreement setting forth the terms and conditions of the award, or another applicable contract with the participant that defines such term for purposes of determining the effect that a “for cause” termination has on the
participant’s awards) any one of the following: (A) any criminal conviction of the participant under the laws of the United States or any state or other political subdivision thereof which, in the good faith determination of the Company
renders participant unsuitable as an employee or officer of the Company or any Subsidiary; (B) the participant’s continued failure to substantially perform the duties reasonably requested by the Company and commensurate with the
participant’s position and within the participant’s control in such position (other than any such failure resulting from participant’s incapacity due to the participant’s Disability) after a written demand for substantial
performance is delivered to the participant by the Company, which demand specifically identifies the manner in which the Company believes that the participant has not substantially performed the participant’s duties, and which performance is
not substantially corrected by the participant within ten (10) days of receipt of such demand; or (C) any material workplace misconduct or willful failure to comply with the Company’s general policies and procedures as they may exist
from time to time by the Company which, in the good faith determination of the Company, renders the participant unsuitable as an employee or officer of Company. 
 (iii) “Good Reason” with respect to a participant means (unless otherwise expressly provided in the applicable agreement setting forth the terms and conditions of the award, or
another applicable contract with the participant that defines such term for purposes of determining the effect that a “good reason” termination has on the participant’s awards) a resignation of the participant’s employment with
the Company as a result of and within 60 days after the occurrence of any of the following without the participant’s written consent: (A) a meaningful and detrimental reduction in the participant’s authority, duties or
responsibilities, or a meaningful and detrimental change in the participant’s reporting responsibilities, as in effect immediately prior to the participant’s termination of employment; (B) a material reduction in the
participant’s 

 
annual base salary as in effect immediately prior to the participant’s delivery of notice to the Company stating the basis of the participant’s allegation that “Good Reason”
exists (the “Good Reason Notice”), a material reduction in the participant’s target annual bonus (expressed as a percentage of base salary), if any, as in effect immediately prior to the circumstances described in the Good Reason
Notice, or a material failure to provide the participant with any other form of compensation or material employment benefit being provided to the participant immediately prior to the circumstances described in the Good Reason Notice (excluding
however, any reduction in the amount of any annual bonus or the granting or withholding of incentive compensation (including without limitation options or restricted stock units) but including a material reduction to the target amount of the bonus
as stated above); or (C) a relocation of the participant’s principal place of employment by more than fifty (50) miles (or the requirement that the participant be based at a different location), provided that such relocation results
in a longer commute (measured by actual mileage) for the participant from his or her primary residence to such new location. Notwithstanding the foregoing, for any of the foregoing circumstances to constitute “Good Reason” hereunder,
(x) the participant must deliver the Good Reason Notice to the Company within 30 days of the date on which the circumstances creating “Good Reason” have first occurred, (y) such circumstances are not corrected by the Company in a
manner that is reasonably satisfactory to the participant (including full retroactive correction with respect to any monetary matter) within 30 days of the Company’s receipt of the Good Reason Notice from the participant and, (z) the
participant thereafter resigns his or her employment within the 60 day time period described above. 
 16. Fair Market
Value. For purposes of this Plan and any Benefits awarded hereunder, Fair Market Value shall be the closing price of the Company’s Common Stock on the date of calculation (or on the last preceding trading date if Common Stock was not
traded on such date) if the Company’s Common Stock is readily tradable on a national securities exchange or other market system, and if the Company’s Common Stock is not readily tradable, Fair Market Value shall mean the amount determined
in good faith by the Committee as the fair market value of the Common Stock of the Company. 
 17. Withholding.
All payments or distributions of Benefits made pursuant to the Plan shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax withholding requirements. If the Company proposes or is required to
distribute Common Stock pursuant to the Plan, it may require the recipient to remit to it or to the corporation that employs such recipient an amount sufficient to satisfy such tax withholding requirements prior to the delivery of any certificates
for such Common Stock. In lieu thereof, the Company or the employing corporation shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the recipient as the Committee shall
prescribe. The Committee may, in its discretion and subject to such rules as it may adopt (including any as may be required to satisfy applicable tax and/or non-tax regulatory requirements), permit an optionee or award or right holder to pay all or
a portion of the federal, state and local withholding taxes arising in connection with any Benefit consisting of shares of Common Stock by electing to have the Company withhold shares of Common Stock having a Fair Market Value equal to the amount of
tax to be withheld, such tax calculated at rates required 

 
by statute or regulation. In no event shall the shares withheld exceed the minimum whole number of shares required for tax withholding under applicable law. 

18. Compliance with Laws. This Plan, the granting and vesting of Benefits under this Plan, the offer, issuance and delivery
of shares of Common Stock, the acceptance of promissory notes and/or the payment of money under this Plan or under Benefits are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to
state and federal securities law, and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. The
person acquiring any securities under this Plan will, if requested by the Company or one of its Subsidiaries, provide such assurances and representations to the Company or one of its Subsidiaries as the Committee may deem necessary or desirable to
assure compliance with all applicable legal and accounting requirements. 
 19. Employment Status; No Employment/Service
Contract. No person shall have any claim or rights to be granted a Benefit (or additional Benefits, as the case may be) under this Plan, subject to any express contractual rights (set forth in a document other than this Plan) to the
contrary. Nothing contained in this Plan (or in any other documents under this Plan or in any Benefit) shall confer upon any participant any right to continue in the employ or other service of the Company or one of its Subsidiaries, constitute any
contract or agreement of employment or other service or affect an employee’s status as an employee at will, nor shall interfere in any way with the right of the Company or one of its Subsidiaries to change a person’s compensation or other
benefits, or to terminate his or her employment or other service, with or without cause. Nothing in this Section 19, however, is intended to adversely affect any express independent right of such person under a separate employment or service
contract other than an award agreement. 
 20. Unfunded Plan. Participants shall have no right, title, or interest
whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any
kind, or a fiduciary relationship between the Company and any participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended. 

21. No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any
Benefit. The Committee shall determine whether cash, or Benefits, or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. 

 22. Duration, Amendment and Termination. 

(a) No Benefit shall be granted more than ten (10) years after the Effective Date. 

(b) The Committee may amend the Plan from time to time or suspend or terminate the Plan at any time. No Benefits may be granted during
any period that the Committee suspends this Plan. Without limiting any other express authority of the Committee under (but subject to) the express limits of this Plan, the Committee by agreement or resolution may waive conditions of or limitations
on Benefits to participants that the Committee in the prior exercise of its discretion has imposed, without the consent of a participant, and may make other changes to the terms and conditions of Benefits. Notwithstanding the foregoing, no
amendment, suspension or termination of this Plan or change of or affecting any outstanding Benefit shall, without written consent of the participant, affect in any manner materially adverse to the participant any rights or benefits of the
participant or obligations of the Company under any Benefit granted under this Plan prior to the effective date of such change. Changes, settlements and other actions contemplated by Section 12 shall not be deemed to constitute changes or
amendments for purposes of this Section 22(b). 
 (c) To the extent then required by applicable law or any applicable
listing agency or required under Sections 162, 422 or 424 of the Code to preserve the intended tax consequences of this Plan, or deemed necessary or advisable by the Committee, any amendment to this Plan shall be subject to stockholder approval.

 23. Governing Law. This Plan, Benefits granted hereunder and actions taken in connection herewith shall be
governed and construed in accordance with the laws of the State of Maryland (regardless of the law that might otherwise govern under applicable Maryland principles of conflict of laws). 

24. Effective Date.3 The Plan, originally entitled the 2002 Management Equity Incentive Plan, first became effective as of February 28,
2002 (the “Effective Date”) and was approved by the Company’s stockholders on February 6, 2002. The Plan was subsequently amended and restated effective March 31, 2004 (the “2004 Restatement Date”). The Plan was
subsequently amended and restated effective March 29, 2006 (the “2006 Restatement Date”), subject to the approval of the Company’s stockholders no later than twelve months after the 2006 Restatement Date (the date of stockholder
approval is referred to as the “Stockholder Approval Date”). The Plan was subsequently amended and restated effective December 18, 2008 (the “2008 Restatement Date”). 

25. Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to limit the authority of the Board or the
Committee to grant awards or authorize any other compensation, with or without reference to the Common Stock, under any other plan or authority. 
 26. No Corporate Action Restriction. The existence of this Plan, the award agreements and the Benefits granted hereunder shall not limit, affect or restrict in any way the 

 

	3	See Footnote 1. 

 
right or power of the Board or the shareholders of the Company to make or authorize: (a) any adjustment, recapitalization, reorganization or other change in the capital structure or business
of the Company or any subsidiary, (b) any merger, amalgamation, consolidation or change in the ownership of the Company or any subsidiary, (c) any issue of bonds, debentures, capital, preferred or prior preference stock ahead of or
affecting the capital stock (or the rights thereof) of the Company or any subsidiary, (d) any dissolution or liquidation of the Company or any subsidiary, (e) any sale or transfer of all or any part of the assets or business of the Company
or any subsidiary, or (f) any other corporate act or proceeding by the Company or any subsidiary. No participant, beneficiary or any other person shall have any claim under any Benefit or award agreement against any member of the Board or the
Committee, or the Company or any employees, officers or agents of the Company or any subsidiary, as a result of any such action. 
 27. Other Company Benefit and Compensation Programs. Payments and other benefits received by a participant under a Benefit made pursuant to this Plan shall not be deemed a part of a
participant’s compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Company or any subsidiary, except where the Committee expressly otherwise
provides or authorizes in writing. Benefits under this Plan may be made in addition to, in combination with, as alternatives to or in payment of grants, awards or commitments under any other plans or arrangements of the Company or its subsidiaries.Warrant dated December 22, 2010

 Exhibit 4.1 
 THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES (SUBJECT TO THE
PROVISIONS OF ARTICLE 5 BELOW), SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION. 
 WARRANT TO
PURCHASE STOCK 
 Company: Zalicus Inc., a Delaware corporation 

Number of Shares: As set forth below 
 Class of Stock:   Common Stock, $0.001 par value per share 
 Warrant Price:
  As set forth below 
 Issue Date:     December 22, 2010 

Expiration Date:   December 22, 2017 

	 Credit Facility:
	 This Warrant is issued in connection with that certain Loan and Security Agreement of even date herewith between Oxford Finance Corporation, the
Company and Zalicus Pharmaceuticals Ltd. (as amended and in effect from time to time, the “Loan Agreement”). 

 THIS WARRANT CERTIFIES THAT, for good and valuable consideration, OXFORD FINANCE CORPORATION (together with any successor or permitted assignee or transferee of this Warrant or of any Shares issued upon
exercise or conversion hereof, “Holder”) is entitled to purchase the number of fully paid and non-assessable shares of the above-stated Class of Stock (the “Class”) of the above-named company (the “Company”) as set
forth below, at the Warrant Price (as defined below), subject to the provisions and upon the terms and conditions set forth in this Warrant. 
  

	 	 A.
	 Number of Shares; Warrant Price. 

 (1)         Number of Shares.     Upon each date (if any) that Holder (or its affiliate) makes a Term Loan to Borrower (as each such term is
defined in the Loan Agreement) under the Loan Agreement, this Warrant automatically shall become exercisable for such number of shares of the Class as shall equal (a)(i) 0.03, multiplied by (ii) the principal amount of such Term Loan, divided
by (b) the Term Loan Shares Warrant Price (as defined below) applicable to such Term Loan Shares, and subject to adjustment thereafter from time to time in accordance with the provisions of this Warrant (“Term Loan Shares”). All Term
Loan Shares for which this Warrant becomes exercisable are referred to hereinafter collectively as the “Shares.” 
 (2)         Warrant Price.     For each accrual of Term Loan Shares pursuant to paragraph A(1) above, the purchase price per Term Loan Share
therefor (the “Term Loan Shares Warrant Price”) shall equal the volume-weighted average price of a share of the Class as reported on the principal securities exchange, inter-dealer quotation system or over-the-counter market over the ten
(10) consecutive trading days immediately 

 
preceding the date on which such Term Loan Shares accrue. The volume-weighted average price shall be determined as follows: 

         

 

 Where: 

PVWAP = volume-weighted average price 
 Pj =
price of trade j 
 Qj = quantity of trade j 

j = each individual trade that takes place over the
10-day period, 
      excluding cross trades and basket cross trades. 
 As used in this Warrant, “Warrant Price” means, with respect to particular Term Loan Shares, the Term Loan Shares Warrant Price therefor as calculated above, as may be adjusted from time to time in
accordance with the provisions of this Warrant. 
 (3)         Notice to
Holder.     Promptly following each date (if any) that Term Loan Shares accrue under this Warrant pursuant to the provisions of paragraph A(1) above, the Company shall at its sole expense deliver to Holder a certificate
executed by its Chief Financial Officer setting forth the number of such Term Loan Shares and the Term Loan Shares Warrant Price therefor. 
 ARTICLE 1. EXERCISE. 

1.1         Method of Exercise.     Holder may exercise
this Warrant by delivering the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion right set
forth in Article 1.2, Holder shall also deliver to the Company a check, wire transfer (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

 1.2         Conversion Right.     In lieu of
exercising this Warrant as specified in Article 1.1, Holder may from time to time convert this Warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities
otherwise issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share. The fair market value of the Shares shall be determined pursuant to Article 1.3. 

1.3         Fair Market Value.     If shares of the Class
are then publicly listed or quoted on one or more securities exchanges, inter-dealer quotation systems or over-the-counter markets, the fair market value of a Share shall be the closing price of a share of the Class reported on the principal such
exchange, system or market for the business day immediately before Holder delivers this Warrant together with its Notice of Exercise to the Company. If shares of the Class are not then publicly listed or quoted on one or more securities exchanges,
inter-dealer quotation systems or 

  
 2 

 
over-the-counter markets, then the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment. 

1.4         Delivery of Certificate and New Warrant.
    Promptly after Holder exercises or converts this Warrant and, if applicable, the Company receives payment of the aggregate Warrant Price, the Company shall deliver to Holder certificates for the Shares acquired and, if this
Warrant has not been fully exercised or converted and has not expired, a new warrant of like tenor representing the Shares not so acquired. 
 1.5         Replacement of Warrants.     On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant,
the Company shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor. 

1.6         Treatment of Warrant Upon Acquisition of Company. 

1.6.1         “Acquisition”.     For the
purpose of this Warrant, “Acquisition” means any sale or other disposition of all or substantially all of the assets of the Company, or any reorganization, consolidation, merger, or sale of outstanding equity securities of the Company by
the holders thereof, where the holders of the Company’s outstanding voting equity securities as of immediately before the transaction beneficially own less than a majority of the outstanding voting equity securities of the surviving or
successor entity as of immediately after the transaction. 
 1.6.2        
Treatment of Warrant at Acquisition. 
 A)         Holder agrees that, in the event
of an Acquisition in which the sole consideration payable to the Company and/or its stockholders consists of cash and/or Marketable Securities, this Warrant shall terminate on and as of the closing of such Acquisition to the extent not previously
exercised. The Company shall provide Holder with written notice of any proposed Acquisition at the same time and in the same manner as the Company notifies the holders of the outstanding shares of the Class thereof. 

B)         Upon the closing of any Acquisition other than as particularly described in subsection
(A) above, the surviving or successor entity shall assume this Warrant and the obligations of the Company hereunder, and this Warrant shall, from and after such closing, be exercisable for the same class, number and kind of securities, cash and
other property as would have been paid for or in respect of the Shares issuable (as of immediately prior to such closing) upon exercise in full hereof as if such Shares had been issued and outstanding on and as of such closing, at an aggregate
Warrant Price equal to the aggregate Warrant Price in effect as of immediately prior to such closing; and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. 

C)         As used in this Article 1.6, “Marketable Securities” means securities meeting
all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then
current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or 

  
 3 

 
other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise or convert this Warrant on or prior to the closing thereof is then
publicly listed or quoted on one or more securities exchanges, inter-dealer quotation systems or over-the-counter markets, and (iii) Holder would not be restricted by contract or by applicable federal and state securities laws from publicly
re-selling, within six (6) months and one day following the closing of such Acquisition, all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise or convert this
Warrant in full on or prior to the closing of such Acquisition. 
 ARTICLE 2. ADJUSTMENTS TO THE SHARES. 

2.1         Stock Dividends, Splits, Etc.     If the
Company declares or pays a dividend on the outstanding shares of the Class payable in additional shares of the Class or other securities, then upon exercise or conversion of this Warrant, for each Share acquired, Holder shall receive, without cost
to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend occurred. If the Company subdivides the outstanding shares of the Class by reclassification
or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares of the Class are combined or
consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased. 

2.2         Reclassification, Exchange, Substitution, Recapitalization or
Reorganization.     Upon any reclassification, exchange, substitution, recapitalization or reorganization affecting the outstanding shares of the Class, Holder shall be entitled to receive, upon exercise or conversion of this
Warrant, the number and kind of securities and property that Holder would have received for the Shares if this Warrant had been exercised in full immediately before such reclassification, exchange, substitution, recapitalization or reorganization,
at an aggregate Warrant Price not exceeding the aggregate Warrant Price in effect as of immediately prior thereto. The Company or its successor shall promptly issue to Holder a certificate pursuant to Article 2.6 hereof setting forth the number,
class and series or other designation of such new securities or other property issuable upon exercise or conversion of this Warrant as a result of such reclassification, exchange, substitution, recapitalization or reorganization. The provisions of
this Article 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, recapitalizations and reorganizations. 
 2.3         Adjustment to Warrant Price on Cash Dividend.     In the event that the Company at any time prior or from time to time prior to
exercise or conversion in full of this Warrant pays any cash dividend on the outstanding shares of the Class or makes any cash distribution on or in respect of the outstanding shares of the Class, then on and as of the date of such dividend payment
or the making of such distribution, the Warrant Price shall be reduced (but not below $0.001) by an amount equal to the amount paid or distributed upon or in respect of each outstanding share of the Class. 

2.4         No Impairment.     The Company shall not, by
amendment of its Certificate of Incorporation or through a reorganization, transfer of assets, consolidation, merger, dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or

  
 4 

 
performance of any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in carrying out of all the provisions of this Article 2
and in taking all such action as may be necessary or appropriate to protect Holder’s rights under this Article 2 against impairment. 
 2.5         Fractional Shares.     No fractional Shares shall be issuable upon exercise or conversion of the Warrant and the number of
Shares to be issued shall be rounded down to the nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the fair market value of a full Share. 

2.6         Certificate as to Adjustments.     Without
duplication of the notice required under paragraph A(3) above, upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company shall promptly notify Holder in writing, and, at the Company’s expense, promptly compute such
adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the
Warrant Price, Class and number of Shares in effect upon the date thereof and the series of adjustments leading to such Warrant Price, Class and number of Shares. 
 ARTICLE 3. REPRESENTATIONS AND COVENANTS OF THE COMPANY. 

3.1         Representations and Warranties.     The
Company represents and warrants to, and agrees with, the Holder as follows: 
 (a)
        The Company shall at all times during the term of this Warrant keep reserved out of its authorized and unissued capital stock a sufficient number of shares of the Class to permit exercise in full of
this Warrant and, if applicable, conversion of the Shares issuable and issued upon any exercise hereof. All Shares which may be issued upon the exercise or conversion of this Warrant shall, upon issuance, be duly authorized, validly issued, fully
paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. 

3.2         Notice of Certain Events.     If the Company
proposes at any time (a) to declare any dividend or distribution upon the outstanding shares of the Class, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) to offer for subscription or
sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s stock; (c) to effect any reclassification, reorganization or recapitalization of the shares of the Class; or
(d) to effect an Acquisition or to liquidate, dissolve or wind up; then in each such event the Company shall provide written notice thereof to Holder thereof at the same time and in the same manner as the Company gives notice thereof to the
holders of the outstanding shares of the Class. 
 3.3        
[Intentionally Omitted]. 

  
 5 

 3.4         No Shareholder
Rights.     Except as provided in this Warrant, Holder will not have any rights as a shareholder of the Company until the exercise of this Warrant. 
 ARTICLE 4. REPRESENTATIONS, WARRANTIES OF THE HOLDER.     The Holder represents and warrants to the Company as follows: 

4.1         Purchase for Own Account.     This Warrant
and the securities to be acquired upon exercise of this Warrant by Holder will be acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution in violation of applicable
securities laws. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares. 
 4.2         Disclosure of Information.     Holder has received or has had full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to Holder or to which Holder has access. 

4.3         Investment Experience.     Holder understands
that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such
Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its
underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business
acumen and financial circumstances of such persons. 
 4.4        
Accredited Investor Status.     Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act. 

4.5         The Act.     Holder understands that this
Warrant and the Shares issuable upon exercise or conversion hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s
investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise or conversion hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state
securities laws, or unless exemption from such registration and qualification are otherwise available. 
 ARTICLE 5.
MISCELLANEOUS. 
 5.1         Term:
    This Warrant is exercisable in whole or in part at any time and from time to time on or before the Expiration Date. 

  
 6 

 5.2         Legend.
    Each certificate representing Shares issued upon any exercise or conversion hereof shall be imprinted with a legend in substantially the following form: 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION OF LEGAL COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES (SUBJECT TO THE PROVISIONS OF ARTICLE 5 OF THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE COMPANY TO OXFORD FINANCE CORPORATION DATED AS OF DECEMBER __, 2010), SUCH OFFER,
SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM REGISTRATION. 

5.3         Compliance with Securities Laws on Transfer.
    This Warrant and/or the Shares issued upon exercise or conversion of this Warrant may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor
and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide
an opinion of counsel if the transfer is to any affiliate of Holder, provided that such affiliate is an “accredited investor” as defined in Regulation D promulgated under the Act. 

5.4         Transfer Procedure.     Subject to the
provisions of Article 5.3 and upon providing the Company with written notice, Holder may transfer all or part of this Warrant to any transferee, provided, however, in connection with any such transfer, Holder will give the Company notice of the
portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable). The foregoing
provisions of this Article 5.4 shall not apply to a sale or other transfer of any Shares issued on exercise or conversion of this Warrant pursuant to the provisions of Rule 144 promulgated under the Act. 

5.5         Notices.     All notices and other
communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail, postage prepaid (or on the first business day after transmission by
facsimile), at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company 

  
 7 

 
or such holder from time to time. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

 Oxford Finance Corporation 

Attn: Mr. John Henderson 
 133 North Fairfax Street 
 Alexandria, VA 22314 

Facsimile: 703-519-5225 
 Notice to the Company shall be addressed as follows until Holder receives notice of a change in address: 
 Zalicus Inc. 
 Attn: Chief Financial Officer 

245 First Street, 3rd Floor 
 Cambridge, MA 02142 
 Telephone: 617-301-7000 

Facsimile: 
 5.6         Waiver.     This Warrant and any term hereof may be amended, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of such change, waiver, discharge or termination is sought. 

5.7         Attorney’s Fees.     In the event of any
dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 5.8         Counterparts.     This Warrant
may be executed in counterparts, all of which together shall constitute one and the same agreement. 
 [Remainder of page left
blank intentionally; signature page follows] 

  
 8 

 5.9         Governing Law.
    This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law. 

 

			
	 “COMPANY”

	
	 ZALICUS INC.

		
	 By:
	 	 /s/ Mark H. N. Corrigan

			
		
	 Name:
	 	 Mark H. N. Corrigan

		 	 (Print)

	 Title:
	 	 President and Chief Executive Officer

	
	 “HOLDER”

	
	 OXFORD FINANCE CORPORATION

		
	 By:
	 	 /s/ John Henderson

			
		
	 Name:
	 	 John Henderson

		 	 (Print)

	 Title:
	 	 Senior Vice President and General Counsel

  
 9 

 APPENDIX 1 
 NOTICE OF EXERCISE 
 1.
        Holder elects to purchase                  shares of the Common Stock of Zalicus Inc. pursuant to the terms of the
attached Warrant, and tenders payment of the purchase price of the shares in full. 
 [or] 

1.         Holder elects to convert the attached Warrant into Shares in the manner
specified in the Warrant. This conversion is exercised for                              of the Shares
covered by the Warrant. 
 [Strike paragraph that does not apply.] 

2.         Please issue a certificate or certificates representing the Shares in the
name specified below: 
  

					
		  	 	  	
		  	 Holders Name
	  	
			
		  	 	  	
			
		  	 	  	
		  	 (Address)
	  	

 3.         By its execution below and for the
benefit of the Company, Holder hereby restates each of the representations and warranties in Article 4 of the Warrant as of the date hereof. 
  

			
	 HOLDER:

	
	 
		
	 By:
	 	 

			
		
	 Name:
	 	 

			
		
	 Title:
	 	 

			
		
	 (Date):
	 	 

  
 10

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