Document:

exv10w38

Exhibit 10.38

CORNERSTONE BIOPHARMA HOLDINGS, INC.

2005 STOCK OPTION PLAN

(as Amended and Restated Effective October 31, 2008)

     1. Purposes of this Plan. The purposes of this 2005 Stock Option Plan (as Amended and
Restated Effective October 31, 2008) are to attract and retain the best available personnel, to
provide additional incentive to the Employees of Cornerstone BioPharma Holdings, Inc. (the
“Company”) and any of its Subsidiaries, to promote the success of the Company’s business and to
enable the Employees to share in the growth and prosperity of the Company by providing them with an
opportunity to purchase stock in the Company.

     Options granted hereunder may be either Incentive Stock Options or Nonstatutory Stock Options,
at the discretion of the Board and as reflected in the terms of the written stock option agreement.

     2. Definitions. As used herein, the following definitions shall apply:

          (a) “Board” shall mean the Board of Directors of the Company.

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

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

          (d) “Company” shall mean Cornerstone BioPharma Holdings, Inc., a corporation duly organized
under the laws of the State of Delaware.

          (e) “Committee” shall mean the Committee appointed by the Board in accordance with Section 4
of this Plan, if one is appointed.

          (f) “Continuous Employment” or “Continuous Status as an Employee” shall mean the absence of
any interruption or termination of employment or service as an Employee, Director or Consultant by
or to the Company or any Parent or Subsidiary of the Company which now exists or is hereafter
organized or acquired by or acquires the Company. Continuous Employment shall not be considered
interrupted in the case of sick leave, military leave or any other leave of absence approved by the
Board or in the event of transfers between locations of the Company or between the Company, its
Parent, any of its Subsidiaries or its successors.

          (g) “Corporate Change” shall mean one of the following events: (i) the merger, consolidation
or other reorganization of the Company in which the outstanding Common Stock is converted into or
exchanged for a different class of securities of the Company, a class of securities of any other
issuer (except a Parent or Subsidiary of the Company), cash or other property (ii) the sale, lease
or exchange of all or substantially all of the assets of the Company to any other corporation or
entity (except a Parent or Subsidiary of the Company); or (iii) the adoption by shareholders of the
Company of a plan of liquidation or dissolution. The following events are not defined as a
“Corporate Change”: (i) a merger, consolidation or reorganization of the Company which would result
in the voting stock 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), in combination with the ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, at least sixty percent (60%) of the combined voting
power of the voting stock of the Company or such surviving entity outstanding immediately after
such merger, consolidation or reorganization of the Company, or (ii) merger, consolidation or
reorganization of the Company effected to implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than forty-nine percent (49%) of the combined voting
power of the Company’s then outstanding stock;

          (h) “Employee” shall mean any person, including officers and directors, employed by the
Company, its Parent, any of its Subsidiaries or its successors; or, for purposes of eligibility for
Nonstatutory Stock Options, any person employed by the Company, including officers and directors,
or any consultant to, or director of, the Company, or any Parent or Subsidiary of the Company,
whether or not such consultant or director is an employee of such entities.

          (i) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any
successor legislation.

          (j) “Incentive Stock Option” shall mean an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.

          (k) “Non-Employee Director” shall mean a director who is a “Non-Employee Director,” as such
term is defined under Rule 16b-3(b)(3)(i) promulgated pursuant to the Exchange Act and any
applicable releases and opinions or the Securities and Exchange Commission.

          (1) “Nonstatutory Stock Option” shall mean an Option which is not an Incentive Stock Option.

          (m) “Option” shall mean a stock option granted pursuant to this Plan.

          (n) “Option Agreement” shall mean a written agreement in such form or forms as the Board
(subject to the terms and conditions of this Plan) may from time to time approve, evidencing an
Option.

          (o) “Optioned Stock” shall mean the Common Stock subject to an Option.

          (p) “Optionee” shall mean an Employee who is granted an Option.

          (q) “Parent” shall mean a “parent corporation,” whether now or hereafter existing, as defined
in Sections 424(e) and (g) of the Code.

          (r) “Plan” shall mean this 2005 Stock Option Plan (as Amended and Restated Effective October
31, 2008).

          (s) “Registration Date” shall mean the effective date of the first registration statement
which is filed by the Company and declared effective pursuant to Section 12(g) of the Exchange Act,
with respect to any class of the Company’s securities.

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          (t) “Securities Act” shall mean the Securities Act of 1933, as amended, or any successor
legislation.

          (u) “Share” or “Shares” shall mean the Common Stock, as adjusted in accordance with Section 11
of this Plan.

          (v) “Stock Purchase Agreement” shall mean an agreement in such form or forms as the Board
(subject to the terms and conditions of this Plan) may from time to time approve, which is to be
executed as a condition of purchasing Optioned Stock upon exercise of an Option.

          (w) “Subsidiary” or “Subsidiaries” shall mean one or more subsidiary corporations, whether now
or hereafter existing, as defined in Sections 424(f) and (g) of the Code.

     3. Stock Subject to this Plan. Subject to the provisions of Section 11 of this Plan,
the maximum number of Shares which may be optioned and sold under this Plan is 373,650 Shares. The
Shares may be authorized, but unissued Shares or reacquired Shares other than reacquired Shares
delivered pursuant to Section 7(c)(iv) hereof as payment of consideration or associated taxes in
connection with the exercise of an option. If an Option should expire or become unexercisable or
otherwise terminate for any reason without having been exercised in full after October 31, 2008,
the unpurchased Shares which were subject thereto shall not return to this Plan and shall not
become available for other Options under this Plan and shall instead be immediately canceled.

     The Company intends that as long as it is not subject to the reporting requirements of Section
13 or 15(d) of the Exchange Act, and is not an investment company registered or required to be
registered under the Investment Company Act of 1940, as amended, all offers and sales of Options
and Common Stock issuable upon exercise of any Option shall be exempt from registration under the
provisions of Section 5 of the Securities Act, and this Plan shall be administered in such a manner
so as to preserve such exemption.

     The Company intends for this Plan to constitute a written compensatory benefit plan within the
meaning of Rule 701(b) of 17 CFR Section 230.701 (“Rule 701”) promulgated by the Securities and
Exchange Commission pursuant to the Securities Act. Unless otherwise designated by the Committee at
the time an Option is granted, all options granted under this Plan by the Company, and the issuance
of any Shares upon exercise thereof, are intended to be granted in reliance on Rule 701.

     4. Administration of this Plan.

          (a) Procedure. This Plan shall be administered by the Board. The Board may appoint a
Committee consisting of two (2) or more members of the Board (or such greater number as is required
to qualify for the exemption from the provisions of Section 16(b) of the Exchange Act provided by
Rule 16b-3 promulgated pursuant to the Exchange Act) to administer this Plan on behalf of the
Board, subject to such terms and conditions as the Board may prescribe. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board. From time to time, the
Board may increase the size of the Committee and appoint additional members of the Board thereto,
remove members (with or without cause) and appoint new members of the Board in

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substitution
therefor, fill vacancies, however caused, and remove all members of the Committee and, thereafter,
directly administer this Plan. Members of the Board or Committee who are either eligible for
Options or have been granted Options may vote on any matters affecting the administration of this
Plan or the grant of Options pursuant to this Plan, except that no such member shall act upon the
granting of an Option to such person nor shall any such member’s presence at a meeting of the Board
of Directors establish the existence of a quorum at any meeting of the Board or the Committee
during which action is taken with respect to the granting of an Option to him.

          (b) Procedure After Registration Date. Notwithstanding the provisions of Section 4(a)
above, after the Registration Date this Plan shall be administered either by: (i) the full Board,
provided that at all times each member of the Board is a Non-Employee Director; or (ii) a Committee
which at all times consists solely of Board members who are Non-Employee Directors. After the
Registration Date, the Board shall take all action necessary to administer this Plan in accordance
with the then-effective provisions of Rule 16b-3 promulgated under the Exchange Act, provided that
any amendment to this Plan required for compliance with such provisions shall be made in accordance
with Section 13 of this Plan.

          (c) Powers of the Board and/or Committee. Subject to the provisions of this Plan, the
Committee or the Board, as appropriate, shall have the authority, in its discretion: (i) to grant
Incentive Stock Options and Nonstatutory Stock Options; (ii) to determine, upon review of relevant
information and in accordance with Section 7 of this Plan, the fair market value per Share; (iii)
to determine the exercise price of the Options, which exercise price and type of consideration
shall be determined in accordance with Section 7 of this Plan; (iv) to determine the Employees to
whom, and the time or times at which, Options shall be granted, and the number of Shares to be
subject to each Option; (v) to prescribe, amend and rescind rules and regulations relating to this
Plan; (vi) to determine the terms and provisions of each Option Agreement and each Stock Purchase
Agreement (each of which need not be identical with the terms of other Option Agreements and Stock
Purchase Agreements) and, with the consent of the holder thereof, to modify or amend each Option
Agreement and Stock Purchase Agreement; (vii) to determine whether a stock repurchase agreement or
other agreement will be required to be executed by any Employee as a condition to the exercise of
an Option, and to determine the terms and provisions of any such agreement (which need not be
identical with the terms of any other such agreement) and, with the consent of the Optionee, to
amend any such agreement; (viii) to interpret this Plan, the Option Agreements, the Stock Purchase
Agreements or any agreement entered into with respect to the grant or exercise of Options; (ix) to
authorize any person to execute on behalf of the Company any instrument required to effectuate the
grant of an Option previously granted by the Board or to take such other actions as may be
necessary or appropriate with respect to the Company’s rights pursuant to Options or agreements
relating to the grant or exercise thereof; and (x) to make such
other determinations and establish such other procedures as it deems necessary or advisable
for the administration of this Plan.

          (d) Effect of the Board’s or Committee’s Decision. All decisions, determinations and
interpretations of the Board or the Committee shall be final and binding on all Optionees and any
other holders of Options.

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     5. Eligibility. Options may be granted only to Employees, which, as defined herein,
includes consultants. An Employee who has been granted an Option may, if such Employee is otherwise
eligible, be granted additional Options.

     6. Term of Plan. This Plan originally became effective upon the earlier to occur of
its adoption by the Board or its approval by vote of a majority of the outstanding shares of the
Company’s capital stock entitled to vote on the adoption of this Plan. The Plan was amended and
restated as set forth herein effective October 31, 2008. This Plan shall continue in effect for a
term of (10) years from its original effective date unless sooner terminated in accordance with the
terms and provisions of this Plan.

     7. Option Price and Consideration.

          (a) Exercise Price. The exercise price per Share for the Shares to be issued pursuant
to the exercise of an Option shall be such price as is determined by the Board; provided,
however, that such price shall in no event be less than eighty-five percent (85%) with
respect to Nonstatutory Stock Options, and one hundred percent (100%) with respect to Incentive
Stock Options, of the fair market value per Share on the date of grant. In the case of an Option
granted to an Employee who, at the time the Option is granted, owns stock (as determined under
Section 424(d) of the Code) constituting more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its Parent or Subsidiaries, the exercise price per
Share shall be no less than one hundred ten percent (110%) of the fair market value per Share on
the date of grant.

          (b) Fair Market Value. The fair market value per Share on the date of grant shall be
determined by the Board in its sole discretion, exercised in good faith and consistent with the
laws of The State of Delaware; provided, however, that where there is a public
market for the Common Stock, the fair market value per Share shall be the average of the closing
bid and asked prices of the Common Stock on the date of grant, as reported in The Wall Street
Journal (or, if not so reported, as otherwise reported by the National Association of Securities
Dealers Automated Quotations (“NASDAQ”) System), or, in the event the Common Stock is listed on a
stock exchange or on the NASDAQ System, the fair market value per Share shall be the closing price
on the exchange or on the NASDAQ System as of the date of grant of the Option, as reported in The
Wall Street Journal.

          (c) Payment of Consideration. The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined by the Board and
may consist entirely of cash, check, promissory notes, Shares held by the Optionee for the
requisite period necessary to avoid a charge to the Company’s earnings for financial reporting
purposes which have a fair market value on the date of surrender equal to the aggregate exercise
price of the Shares as to which said Option shall be exercised, or any combination of such
methods of payment. Subject to subparagraphs (i) through (iv) hereto, utilization of Shares as the
method of payment may be completed by either (a) the tender of Shares then held by the Optionee, or
(b) the withholding of Shares which would otherwise be issued pursuant to an Option pursuant to a
broker-dealer sale and remittance procedure described in subparagraph (iii) hereto. In making its
determination as to the type of consideration to accept, the Board shall consider if acceptance of
such consideration is deemed to be such as may be reasonably expected to benefit the Company.

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               (i) If the consideration for the exercise of an Option is a promissory note, it shall be a
full recourse promissory note executed by the Optionee, bearing interest at a rate which shall be
sufficient to preclude the imputation of interest under the applicable provisions of the Code.
Until such time as the promissory note has been paid in full, the Company may retain the Shares
purchased upon exercise of the Option in escrow as security for payment of the promissory note.

               (ii) If the consideration for the exercise of an Option is the surrender of previously
acquired and owned Shares, the Optionee will be required to make representations and warranties
satisfactory to the Company regarding his or her title to the Shares used to effect the purchase,
including, without limitation, representations and warranties that the Optionee has good and
marketable title to such Shares free and clear of any and all liens, encumbrances, charges,
equities, claims, security interests, options or restrictions and has full power to deliver such
Shares without obtaining the consent or approval of any person or governmental authority other than
those which have already given consent or approval in a form satisfactory to the Company. The value
of the Shares used to effect the purchase shall be the fair market value of those Shares as
determined by the Board in its sole discretion, exercised in good faith.

               (iii) If the consideration for the exercise of an Option is to be paid through a broker-dealer
sale and remittance procedure, the Optionee shall provide (1) irrevocable written instructions to a
designated brokerage firm to effect the immediate sale of the purchased shares and to remit to the
Company, out of the sale proceeds available on the settlement date, sufficient funds to cover the
aggregate option price payable for the purchased Shares plus all applicable Federal and State
income and employment taxes required to be withheld by the Company in connection with such purchase
and (2) written instructions to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction.

               (iv) If an Optionee is permitted to exercise an Option by delivering shares of the Company’s
Common Stock, the option agreement covering such Option may include provisions authorizing the
Optionee to exercise the Option, in whole or in part, by: (1) delivering whole shares of the
Company’s Common Stock previously owned by such Optionee (whether or not acquired through the prior
exercise of a stock option) having a fair market value equal to the option price; and/or (2)
directing the Company to withhold from the Shares that would otherwise be issued upon exercise of
the Option that number of whole Shares having a fair market value equal to the option price. Shares
of the Company’s Common Stock so delivered or withheld shall be valued at their fair market value
on the date of exercise of the Option, as determined by the Committee and/or the Board, as
appropriate. Any balance of the exercise price shall be paid in cash or by check or a promissory
note, each in accordance with the terms of this Section 7. Any Shares
delivered or withheld in accordance with this provision shall again become available for
purposes of this Plan and for Options subsequently granted thereunder to the extent permissible
pursuant to Section 3 of this Plan.

     8. Options.

          (a) Terms and Provisions of Options. As provided in Section 4 of this Plan and subject
to any limitations specified herein, the Board and/or Committee shall have the authority to

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determine the terms and provisions of any Option granted under this Plan or any agreement required
to be executed in connection with the grant or exercise of an Option. Each Option granted pursuant
to this Plan shall be evidenced by an Option Agreement. Options granted pursuant to this Plan are
conditioned upon the Company obtaining any required permit or order from appropriate governmental
agencies authorizing the Company to issue such Options and Shares issuable upon exercise thereof.

          (b) Term of Option. The term of each Option may be up to ten (10) years from the date
of grant thereof as determined by the Board upon the grant of the Option and specified in the
Option Agreement, except that the term of an Option granted to an Employee who, at the time the
Option is granted, owns stock comprising more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or its Parent or Subsidiaries, shall be five (5) years
from the date of grant thereof or such shorter term as may be provided in the Option Agreement.

          (c) Exercise of Option.

               (i) Procedure for Exercise; Rights as a Shareholder. Any Option shall be exercisable
at such times, in such installments and under such conditions as may be determined by the Board and
specified in the Option Agreement, including performance criteria with respect to the Company
and/or the Optionee, and as shall be permissible under the terms of this Plan.

          An Option may be exercised in accordance with the provisions of this Plan as to all or any
portion of the Shares then exercisable under an Option, from time to time during the term of the
Option. An Option may not be exercised for a fraction of a Share.

          An Option shall be deemed to be exercised when written notice of such exercise has been given
to the Company at its principal business office in accordance with the terms of the Option
Agreement by the person entitled to exercise the Option and, except when the broker-dealer sale and
remittance procedure described in Section 7(c)(iii) hereto is used, full payment for the Shares
with respect to which the Option is exercised has been received by the Company, accompanied by an
executed Stock Purchase Agreement and any other agreements required by the terms of this Plan
and/or the Option Agreement. Full payment may consist of such consideration and method of payment
allowable under Section 7 of this Plan. Until the Option is properly exercised in accordance with
the terms of this paragraph, no right to vote or receive dividends or any other rights as a
stockholder exist with respect to the Optioned Stock. No adjustment shall be made for a dividend or
other right for which the record date is prior to the date the Option is exercised, except as
provided in Section 11 of this Plan.

          As soon as practicable after any proper exercise of an Option in accordance with the
provisions of this Plan, the Company shall, without transfer or issue tax to the Optionee, deliver
to the Optionee at the principal executive office of the Company or such other place as shall be
mutually agreed upon between the Company and the Optionee, a certificate or certificates
representing the Shares for which the Option shall have been exercised. The time of issuance and
delivery of the certificate(s) representing the Shares for which the Option shall have been
exercised may be postponed by the Company for such period as may be required by the Company, with
reasonable diligence, to comply with any applicable listing requirements of any national or
regional securities exchange or any law or regulation applicable to the issuance or delivery of
such Shares. No

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Option may be exercised unless this Plan has been duly approved by the shareholders
of the Company in accordance with applicable law. Notwithstanding anything to the contrary herein,
the terms of a Stock Purchase Agreement required to be executed and delivered in connection with
the exercise of an Option may require the certificate or certificates representing the Shares
purchased upon exercise of an Option to be delivered and deposited with the Company as security for
the Optionee’s faithful performance of the terms of his Stock Purchase Agreement.

          Exercise of an Option in any manner shall result in a decrease in the number of Shares which
thereafter may be available, both for purposes of this Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.

               (ii) Termination of Status as an Employee. If an Optionee ceases to serve as an
Employee for any reason other than death or disability and thereby terminates his or her Continuous
Status as an Employee, such Optionee shall have the right to exercise the Option at any time within
thirty (30) days (or such other period of time not exceeding three (3) months as is determined by
the Board at the time of granting the Option), following the date such Optionee ceases his or her
Continuous Status as an Employee of the Company to the extent that such Optionee was entitled to
exercise the Option at the date of such termination; provided, however, that no
Option shall be exercisable after the expiration of the term set forth in the Option Agreement. To
the extent that such Optionee was not entitled to exercise the Option at the date of such
termination, or if such Optionee does not exercise such Option (which such Optionee was entitled to
exercise) within the time specified herein, the Option shall terminate.

               (iii) Death or Disability of Optionee. If an Optionee ceases to serve as an Employee
due to death or disability and thereby terminates his or her Continuous Status as an Employee, the
Option may be exercised at any time within six (6) months following the date of death or
termination of employment due to disability, in the case of death, by the Optionee’s estate or by a
person who acquired the right to exercise the Option by bequest or inheritance, or, in the case of
disability, by the Optionee, but in any case only to the extent the Optionee was entitled to
exercise the Option at the date of his or her termination of employment by death or disability;
provided, however, that no Option shall be exercisable after the expiration of the
Option term set forth in the Option Agreement. To the extent that such Optionee was not entitled to
exercise such Option at the date of his or her termination of employment by death or disability or
if such Option is not exercised (to the extent it could be exercised) within the time specified
herein, the Option shall terminate.

               (iv) Extension of Time to Exercise. Notwithstanding anything to the contrary in this
Section 8, the Board may at any time and from time to time prior to the termination
of a Nonstatutory Stock Option, with the consent of the Optionee, extend the period of time
during which the Optionee may exercise his or her Nonstatutory Stock Option following the date the
Optionee ceases such Optionee’s Continuous Status as an Employee; provided,
however, that (1) the maximum period of time during which a Nonstatutory Stock Option shall
be exercisable following such termination date shall not exceed an aggregate of six (6) months, (2)
the Nonstatutory Stock Option shall not become exercisable after the expiration of the term of such
Option as set form in the Option Agreement as a result of such extension, and (3) notwithstanding
any extension of time during which the Nonstatutory Stock Option may be exercised, such Option,
unless otherwise amended by the Board, shall only be exercisable to the extent to which the
Optionee was entitled to

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exercise it on the date Optionee ceased Continuous Status as an Employee.
To the extent that such Optionee was not entitled to exercise the Option at the date of such
termination, or if such Optionee does not exercise an Option which Optionee was entitled to
exercise within the time specified herein, the Option shall terminate.

     9. Limit on Incentive Stock Options. The aggregate fair market value (determined at
the time an Incentive Stock Option is granted) of the Shares which may be acquired upon exercise of
Incentive Stock Options for the first time by an Optionee during any calendar year under all
incentive stock option plans of the Company, its Parents or its Subsidiaries, if any, cannot exceed
One Hundred Thousand Dollars ($100,000). Incentive Stock Options which exceed this limit must be
treated as Nonstatutory Stock Options. The Board shall determine, in accordance with the Code,
which of an Optionee’s Incentive Stock Options will not be treated as Incentive Stock Options as a
result of such limitation and will so notify the Optionee as soon as practicable following such
determination.

     10. Nontransferability of Options. Options granted under this Plan may not be sold,
pledged, assigned, hypothecated, gifted, transferred or disposed of in any manner, either
voluntarily or involuntarily by operation of law, other than by will or by the laws of descent or
distribution, and may be exercised during the lifetime of the Optionee only by such Optionee.

     11. Adjustments Upon Changes in Capitalization or Corporate Change.

          (a) Subject to any required action by the shareholders of the Company, the number of Shares
covered by each outstanding Option, and the number of Shares which have been authorized for
issuance under this Plan but as to which no Options have yet been granted or which have been
returned to this Plan upon cancellation or expiration of an Option or repurchase of shares from an
Optionee upon termination of employment or service, as well as the exercise or purchase price per
Share covered by each such outstanding Option, shall be proportionately adjusted for any increase
or decrease in the number of issued Shares resulting from a stock split, reverse stock split,
combination or reclassification of the Common Stock, or the payment of a stock dividend (but only
on the Common Stock) or any other increase or decrease in the number of issued shares of Common
Stock effected without receipt of consideration by the Company (other than stock bonuses to
Employees, including, without limitation, officers and directors); provided,
however, that the conversion of any convertible securities of the Company shall not be
deemed to have been effected without the receipt of consideration. Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of stock of any class, or securities
convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to this Plan or an Option.

          (b) In the event of a Corporate Change effected by a transaction in which the consideration
therefor consists only of stock of another issuer, then the Plan, all Options and Option Agreements
in force at the date of the Corporate Change shall continue to be in full force and effect and
shall be assumed by the merging or acquiring entity.

          (c) In the event of a Corporate Change effected by a transaction in which the consideration
therefor does not consist solely of the stock of another issuer (e.g., an all cash or part

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cash and
part stock transaction), then all Options which are not vested and exercisable at that date shall
terminate immediately.

          (d) No fractional shares of Common Stock shall be issuable on account of any action described
in this Section, and the aggregate number of shares into which Shares then covered by the Option,
when changed as the result of such action, shall be reduced to the largest number of whole shares
resulting from such action, unless the Board, in its sole discretion, shall determine to issue
scrip certificates in respect to any fractional shares, which scrip certificates, in such event,
shall be in a form and have such terms and conditions as the Board in its discretion shall
prescribe.

     12. Time of Granting Options. The date of grant of an Option shall be the date on
which the Board makes the determination granting such Option; provided, however,
that if the Board determines that such grant shall be as of some future date, the date of grant
shall be such future date. Notice of the determination shall be given to each Employee to whom an
Option is so granted within a reasonable time after the date of such grant.

     13. Amendment and Termination of this Plan.

          (a) Amendment and Termination. The Board may amend or terminate this Plan from time to
time in such respects as the Board may deem advisable and shall make any amendments which may be
required so that Options intended to be Incentive Stock Options shall at all times continue to be
Incentive Stock Options for the purpose of the Code, except that, without approval of the holders
of a majority of the outstanding shares of the Company’s capital stock, no such revision or
amendment shall:

               (i) Increase the number of Shares subject to this Plan, other than in connection with an
adjustment under Section 11 of this Plan;

               (ii) Materially change the designation of the class of Employees eligible to be granted
Options;

               (iii) Remove the administration of this Plan from the Board (other than to the Committee);

               (iv) Materially increase the benefits accruing to participants under this Plan; or

               (v) Extend the term of this Plan.

          (b) Effect of Amendment or Termination. Except as otherwise provided in Section 11,
any amendment or termination of this Plan shall not affect Options already granted and such Options
shall remain in full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Company, which agreement must be in writing
and signed by the Optionee and the Company.

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     14. Conditions Upon Issuance of Shares.

          (a) Shares shall not be issued pursuant to the exercise of an Option unless the exercise of
such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act,
applicable state securities laws, the rules and regulations promulgated thereunder, and the
requirement of any stock exchange upon which the Shares may then be listed, and shall be further
subject to the approval of counsel for the Company with respect to such compliance.

          (b) As a condition to the exercise of an Option, the Board may require the person exercising
such Option to execute an agreement with, and/or may require the person exercising such Option to
make any representation and warranty to, the Company as may in the judgment of counsel to the
Company be required under applicable law or regulation, including but not limited to a
representation and warranty that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is appropriate under any of the aforementioned relevant provisions of law.

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

     The Company, during the term of this Plan, shall use diligent efforts to seek to obtain from
appropriate regulatory agencies any requisite authorization in order to issue and sell such number
of Shares as shall be sufficient to satisfy the requirements of this Plan. The inability of the
Company to obtain the requisite authorization(s) deemed by the Company’s counsel to be necessary
for the lawful issuance and sale of any Shares hereunder, or the inability of the Company to
confirm to its satisfaction that any issuance and sale of any Shares hereunder will meet applicable
legal requirements, shall relieve the Company of any liability in respect to the failure to issue
or sell such Shares as to which such requisite authority shall not have been obtained.

     16. Stock Option and Stock Purchase Agreements. Options shall be evidenced by written
stock option agreements in such form or forms as the Board shall approve from time to time. Upon
the exercise of an Option, the Optionee shall sign and deliver to the Company a Stock Purchase
Agreement (if required to be executed and delivered to the Company by an Optionee as a condition to
the exercise of an Option) in such form or forms as the Board shall approve from time to time.

     17. Shareholder Approval. Continuance of this Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months before or after the date this Plan is adopted
by the Board. If such shareholder approval is obtained at a duly held shareholders’ meeting, it may
be obtained by the affirmative vote of the holders of a majority of the outstanding shares of the
Company entitled to vote thereon. All Options granted prior to shareholder approval of this Plan
are subject to such approval, and if such approval is not obtained within twelve (12) months before
or after the date this Plan is adopted by the Board all such Options shall expire and shall be of
no further force or effect.

11

 

     18. Taxes. Fees, Expenses and Withholding of Taxes.

          (a) The Company shall pay all original issue and transfer taxes (but not income taxes, if any)
with respect to the grant of Options and/or the issue and transfer of Shares pursuant to the
exercise thereof, and all other fees and expenses necessarily incurred by the Company in connection
therewith, and will from time to time use diligent efforts to comply with all laws and regulations
which, in the opinion of counsel for the Company, shall be applicable thereto.

          (b) The grant of Options hereunder and the issuance of Shares pursuant to the exercise thereof
is conditioned upon the Company’s reservation of the right to withhold, in accordance with any
applicable law, from any compensation payable to the Optionee any taxes required to be withheld by
federal, state or local law as a result of the grant or exercise of such Option or the sale of the
Shares issued upon exercise thereof. To the extent that compensation or other amounts, if any,
payable to the Optionee are insufficient to pay any taxes required to be so withheld, the Company
may, in its sole discretion, require the Optionee, as a condition of the exercise of an Option, to
pay in cash to the Company an amount sufficient to cover such tax liability or otherwise to make
adequate provision for the Company’s satisfaction of its withholding obligations under federal and
state law.

          (c) The Board or the Committee may, in its discretion and upon such terms and conditions as
it may deem appropriate (including the applicable safe-harbor provisions of SEC Rule 16b-3 and
interpretations thereof by the staff of the Securities and Exchange Commission) provide any or all
holders of outstanding option grants under this Plan with the election to have the Company
withhold, from the shares of Common Stock otherwise issuable upon the exercise of such options,
one or more of such shares with an aggregate fair market value equal to the designated percentage
(any multiple of 5% specified by the optionee) of the Federal and State income taxes (“Taxes”)
incurred in connection with the acquisition of such Shares. In lieu of such direct withholding,
one or more optionees may also be granted the right to deliver shares of Common Stock to the
Company in satisfaction of such Taxes. The withheld or delivered shares shall be valued at the
Fair Market Value on the applicable determination date for such Taxes or such other date required
by the applicable safe-harbor provisions of SEC Rule 16b-3.

     19. Liability of Company. The Company, its Parent or any Subsidiary which is in
existence or hereafter comes into existence shall not be liable to an Optionee or other person if
it is determined for any reason by the Internal Revenue Service or any court having jurisdiction
that any
Options intended to be Incentive Stock Options granted hereunder do not qualify as incentive
stock options within the meaning of Section 422 of the Code.

     20. Information to Optionee. The Company shall provide without charge at least
annually to each Optionee during the period his or her Option is outstanding a balance sheet and
income statement of the Company. In the event that the Company provides annual reports or periodic
reports to its shareholders during the period in which an Optionee’s Option is outstanding, the
Company shall provide to each Optionee a copy of each such report.

     21. Notices. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the United States mail,

12

 

as first class, registered or certified mail, with postage and fees prepaid and addressed (i) if to
the Company, at its principal place of business, attention: Secretary, or (ii) if to the Optionee
at his or her address as set forth on the signature page of his or her Option Agreement, or at such
other address as either party may from time to time designate in writing to other. It shall be the
obligation of each Optionee and each transferee holding Shares purchased upon exercise of an Option
to provide the Secretary of the Company, by letter mailed as provided hereinabove, with written
notice of his or her direct mailing address.

     22. No Enlargement of Employee Rights. This Plan is purely voluntary on the part of
the Company, and the continuance of this Plan shall not be deemed to constitute a contract between
the Company and any Employee, or to be consideration for or a condition of the employment or
service of any Employee. Nothing contained in this Plan shall be deemed to give any Employee the
right to be retained in the employ or service of the Company, its Parent, Subsidiary or a successor
corporation, or to interfere with the right of the Company or any such corporations to discharge or
retire any Employee at any time with or without cause and with or without notice. No Employee shall
have any right to or interest in Options authorized hereunder prior to the grant thereof to such
Employee, and upon such grant such Employee shall have only such rights and interests as are
expressly provided herein, subject, however, to all applicable provisions of the Company’s Articles
of Incorporation, as the same may be amended from time to time.

     23. Legends on Certificates.

          (a) Federal Law. Unless an appropriate registration statement is filed pursuant to the
Securities Act of 1933 with respect to the Options and Shares issuable under this Plan, each
document or certificate representing such Options or Shares shall be endorsed thereon with a legend
substantially as follows:

“THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE
OF THIS SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT
WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN OPINION
OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.”

          (b) California Legend. If required by the California Commissioner of Corporations,
each document or certificate representing the Options or Shares issuable under this Plan shall be
endorsed thereon with a legend substantially as follows:

“IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS OPTION AND
THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE OF THIS OPTION,
OR ANY INTEREST THEREIN, OR TO RECEIVE ANY

13

 

CONSIDERATION THEREFOR,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE
COMMISSIONER’S RULES.”

          (c) Additional Legends. Each document or certificate representing the Options or
Shares issuable under this Plan, where applicable, shall also contain the legends as may be
required under California law or other applicable state or federal securities laws or by any Stock
Purchase Agreement or other agreement the execution of which is a condition to the exercise of an
Option under this Plan including a legend substantially as follows:

“THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE
OF THIS OPTION, OR ANY INTEREST THEREIN, ARE SUBJECT TO CERTAIN
RESTRICTIONS, INCLUDING A RIGHT OF FIRST REFUSAL OF THE COMPANY, AND
MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE
WITH THE SECRETARY OF THE COMPANY.”

     24. Availability of Plan. A copy of this Plan shall be delivered to the Secretary of
the Company and shall be shown by him to any eligible person making reasonable inquiry concerning
it.

     25. Compliance with Exchange Act Rule 16b-3. With respect to persons subject to
Section 16 of the Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3, promulgated pursuant to the Exchange Act, or its successors.
To the extent any provision of this Plan or action by the Board or any Committee fails so to
comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the
Board or any Committee.

     26. Invalid Provisions. In the event that any provision of this Plan is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability
shall not be construed as rendering any other provisions contained herein as invalid or
unenforceable, and all
such other provisions shall be given full force and effect to the same extent as though the
invalid or unenforceable provision was not contained herein.

     27. Applicable Law. This Plan shall be governed by and construed in accordance with
the laws of The State of Delaware.

     As amended and restated by the Board of Directors effective October 31, 2008.

14exv10w39

Exhibit 10.39

CORNERSTONE BIOPHARMA HOLDINGS, INC.

Nonstatutory Stock Option Agreement

Granted Under 2005 Stock Incentive Plan

1. Grant of Option.

     This agreement evidences the grant by Cornerstone BioPharma Holdings, Inc., a Delaware
corporation (the “Company”), on [Grant Date] (the “Grant Date”) to [Participant] (the
“Participant”), of an option to purchase, in whole or in part, on the terms provided herein and in
the Company’s 2005 Stock Incentive Plan (the “Plan”), a total of [Number] shares (the “Shares”) of
common stock, $0.0001 par value per share, of the Company (“Common Stock”) at $[Option Price] per
Share. Unless earlier terminated, this option shall expire at 5:00 p.m., Eastern time, on [Final
Exercise Date] (the “Final Exercise Date”).

     It is intended that the option evidenced by this agreement shall not be an incentive stock
option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the
term “Participant”, as used in this option, shall be deemed to include any person who acquires the
right to exercise this option validly under its terms.

2. Vesting Schedule.1

3. Exercise of Option.

     (a) Form of Exercise. Each election to exercise this option shall be in writing,
signed by the Participant, and received by the Company at its principal office, accompanied by this
agreement, and payment in full in the manner provided in the Plan. The Participant may purchase
less than the number of shares covered hereby, provided that no partial exercise of this option may
be for any fractional share.

     (b) Continuous Relationship with the Company Required. Except as otherwise provided
in this Section 3, this option may not be exercised unless the Participant, at the time he or she
exercises this option, is, and has been at all times since the Grant Date, an employee, or officer
or director of, or consultant or advisor to, the Company or any other entity the employees,
officers, directors, consultants or advisors of which are eligible to receive option grants under
the Plan (an “Eligible Participant”).

     (c) Termination of Relationship with the Company. If the Participant ceases to be an
Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the
right to exercise this option shall terminate three months after such cessation (but in no event
after the Final Exercise Date), provided that this option shall be exercisable only
to the extent that the Participant was entitled to exercise this option on the date of such
cessation. Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date,
violates the

 

			
	1	 	Insert appropriate time-based vesting schedule.

 

 

non-competition or confidentiality provisions of any employment contract, confidentiality and
nondisclosure agreement or other agreement between the Participant and the Company, the right to
exercise this option shall terminate immediately upon such violation.

     (d) Exercise Period Upon Death or Disability. If the Participant dies or becomes
disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date
while he or she is an Eligible Participant and the Company has not terminated such relationship for
“cause” as specified in paragraph (e) below, this option shall be exercisable, within the period of
one year following the date of death or disability of the Participant, by the Participant (or in
the case of death by an authorized transferee), provided that this option shall be
exercisable only to the extent that this option was exercisable by the Participant on the date of
his or her death or disability, and further provided that this option shall not be exercisable
after the Final Exercise Date.

     (e) Discharge for Cause. If the Participant, prior to the Final Exercise Date, is
discharged by the Company for “cause” (as defined below), the right to exercise this option shall
terminate immediately upon the effective date of such discharge. “Cause” shall mean willful
misconduct by the Participant or willful failure by the Participant to perform his or her
responsibilities to the Company (including, without limitation, breach by the Participant of any
provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar
agreement between the Participant and the Company), as determined by the Company, which
determination shall be conclusive. The Participant shall be considered to have been discharged for
“Cause” if the Company determines, within 30 days after the Participant’s resignation, that
discharge for cause was warranted.

4. Agreement in Connection with Public Offering.

     The Participant agrees, in connection with the initial and any other underwritten public
offering of the Company’s securities pursuant to a registration statement under the Securities Act,
(i) not to sell, make short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock held by the Participant (other than those shares included in
the offering) without the prior written consent of the Company or the underwriters managing such
initial underwritten public offering of the Company’s securities for such number of days (not to
exceed 180 days) from the effective date of such registration statement as the managing
underwriters or the Company may require, and (ii) to execute any agreement reflecting clause (i)
above as may be requested by the Company or the managing underwriters at the time of such offering.

-2-

 

5. Withholding.

     No Shares will be issued pursuant to the exercise of this option unless and until the
Participant pays to the Company, or makes provision satisfactory to the Company for payment of, any
federal, state or local withholding taxes required by law to be withheld in respect of this option.
At such time as the Common Stock shall be registered under the Exchange Act, Participant may
satisfy such tax obligations in whole or in part by delivery of shares of Common Stock owned by
Participant valued at their Fair Market Value; provided, however, that the total tax withholding
where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum
statutory withholding obligations (based on minimum statutory withholding rates for federal and
state tax purposes, including payroll taxes, that are applicable to such supplemental taxable
income). The Company may, to the extent permitted by law, deduct any such tax obligations from any
payment of any kind otherwise due to Participant.

6. Nontransferability of Option.

     This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the
Participant, either voluntarily or by operation of law, except by will or the laws of descent and
distribution, and, during the lifetime of the Participant, this option shall be exercisable only by
the Participant.

7. Provisions of the Plan.

     This option is subject to all of the provisions of the Plan, including any sub-plans
authorized thereunder pursuant to the provisions of the Plan. A copy of the Plan is furnished to
the Participant with this option.

[signature page follows]

-3-

 

 

[Signature Page to Nonstatutory Stock Option Agreement]

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

	 	 	 	 	 	 	 
	 	 	CORNERSTONE BIOPHARMA HOLDINGS, INC.
	 
	 	 	 	 	 	 
	Dated: [Date]

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

 

 

 

PARTICIPANT’S ACCEPTANCE

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

	 	 	 	 	 	 	 
	 	 	PARTICIPANT:	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Printed

Name:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:

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