EXHIBIT 10.4
STACK PHARMACEUTICALS CONSULTING AGREEMENT
This Consulting Agreement (hereinafter "Agreement") made and entered into this
23rd day of December, 2000 by and between ENDEAVOR Pharmaceuticals, Inc., a
Delaware corporation, having its principal place of business at 127 Racine
Drive, Wilmington, North Carolina 28403 (hereinafter "ENDEAVOR") and Stack
Pharmaceuticals, Inc., a Delaware corporation, having its principal place of
business at 5 Sylvan Way, Parsippany, New Jersey 07054 (hereinafter "STACK
PHARMACEUTICALS").
BACKGROUND
STACK PHARMACEUTICALS has significant expertise in pharmaceutical marketing,
sales, and strategic planning. STACK PHARMACEUTICALS has agreed to assist
ENDEAVOR by providing consulting services in these areas. The parties will
define projects during the course of this consulting relationship, and STACK
PHARMACEUTICALS will assign appropriate personnel to perform the assigned
services. STACK PHARMACEUTICALS will also provide ENDEAVOR with advice from time
to time with respect to STACK PHARMACEUTICALS' areas of expertise.
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
hereinafter and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties do hereby agree as
follows:
1. SCOPE OF SERVICES
STACK PHARMACEUTICALS will provide consulting services to ENDEAVOR
based on a daily rate for such services as more fully described below.
Consulting services will be provided by mutual agreement of the parties
with regard to scope and estimated time/personnel requirements, and may
include, but not be limited to, (i) strategic business planning, (ii)
marketing and sales strategic development, (iii) performing ENDEAVOR's
marketing and sales functions on an outsourced basis, and (iv)
assisting with ENDEAVOR's hiring of personnel, (collectively
"Services").
2. CONSIDERATION FOR SERVICES
STACK PHARMACEUTICALS will provide Services to ENDEAVOR on an hourly
basis in exchange for the following consideration:
A. CASH COMPENSATION. STACK PHARMACEUTICALS will be paid cash
compensation based on the daily rates (or appropriate fraction
thereof) applicable to each category of STACK PHARMACEUTICALS'
personnel as set forth on Schedule #1, attached hereto.
B. WARRANTS. STACK PHARMACEUTICALS shall be granted warrants
exercisable for ENDEAVOR common stock ("Warrants") in the
quantities and under the terms and conditions set forth in
Schedule #2, attached hereto. The grant of Warrants set forth
in this Agreement shall be conditioned upon and subject to
STACK PHARMACEUTICALS executing an agreement to be bound by
ENDEAVOR's Securityholders Agreement in the form of Exhibit C,
attached hereto.
C. EXPENSES. ENDEAVOR shall reimburse STACK PHARMACEUTICALS for
reasonable out-of-pocket expenses incurred within the scope of
providing Services to ENDEAVOR, including, but not limited to,
travel expenses and express delivery services. STACK
PHARMACEUTICALS shall obtain receipts for all expenses to be
reimbursed by ENDEAVOR and shall submit said receipts with the
claims for reimbursement.
D. PAYMENT. STACK PHARMACEUTICALS shall deliver to ENDEAVOR
monthly invoices for Services provided hereunder and
reimbursable expenses, and such invoices shall reflect the
total consulting hours worked for each project, allocated by
individual, and itemized reimbursable expenses. ENDEAVOR shall
pay the accumulated consulting cash fees and expense
reimbursements to STACK PHARMACEUTICALS within thirty (30)
days of receipt of invoice. Warrants shall be issued, as
earned in accordance with the terms hereof, within sixty (60)
days of the close of the relevant calendar quarter.
3. RELATIONSHIP BETWEEN THE PARTIES
The relationship of the parties shall be that of an independent
contractor, and neither party shall have the ability to act as agent
for, or bind the other party. As an independent contractor, STACK
PHARMACEUTICALS, its principals, stockholders, employees and agents
shall not be entitled to any pension, stock, bonus, profit sharing,
health, or similar benefits which are available to ENDEAVOR employees.
4. TERM AND TERMINATION OF AGREEMENT
This Agreement shall continue for a period of one (1) year. The parties
may renew the Agreement by mutual written consent; however, the parties
recognize that any such renewal will be subject to a renegotiation of
compensation rates and warrant terms and conditions, including warrant
exercise prices and vesting schedules. This Agreement is for consulting
on an independent contractor basis and as such can be terminated by
either party at any time without prior notice. Subsequent to
termination, ENDEAVOR shall be obligated to pay STACK PHARMACEUTICALS
the consideration specified above, including Warrants earned (with an
accounting of Vested Warrants and Milestone Warrants), for all hours of
work performed and reimbursable expenses incurred prior to receipt of
notice of termination pursuant to the terms of this Agreement.
5. CONFIDENTIALITY, WORK FOR HIRE, AND ASSIGNMENT OF INVENTION
The parties have entered into a separate agreement dated September 25,
2000, that is attached hereto and incorporated herein as Exhibit E. The
Confidentiality Agreement is hereby made part of, and is to be
construed with, this Agreement.
6. AMENDMENT, ASSIGNMENT, AND CHOICE OF LAWS.
This Agreement may be amended only by written instrument executed by
both parties. This Agreement shall be interpreted in accordance with
the laws of the State of North Carolina.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
their respective corporate names by duly authorized officers, as of the day and
year first above written.
STACK PHARMACEUTICALS, INC.
By: /s/ David Stack
-------------------------------
David Stack, President
ENDEAVOR PHARMACEUTICALS, INC.
By: /s/ R. Forrest Waldon
-------------------------------
R. Forrest Waldon, President
SCHEDULE #1
The following daily cash compensation (or appropriate fractional portion
thereof) shall paid to STACK PHARMACEUTICALS for Services provided to ENDEAVOR
based on the category of personnel providing such Services:
CATEGORY OF PERSONNEL DAILY CHARGE
- --------------------- ------------
Senior Partner $1,500.00
Partner $1,500.00
Associate $200.00
SCHEDULE #2
ENDEAVOR shall grant Warrants to STACK PHARMACEUTICALS based upon the level of
Services provided each calendar quarter (or fraction thereof). The number of
shares of ENDEAVOR Common Stock covered by Warrants shall be based upon the
cumulative cash compensation earned by STACK PHARMACEUTICALS pursuant to this
Agreement during each such calendar quarter (or fraction thereof) for Services
rendered. Warrants granted shall fall into two different vesting schedules: (1)
the first type of Warrant shall be immediately vested upon issuance to STACK
PHARMACEUTICALS (the "Vested Warrant"); and the second type of Warrant shall
vest based upon ENDEAVOR achieving certain milestones (the "Milestone Warrant").
The terms and conditions of each of the above-described Warrants shall be in the
substantial form of Exhibits A and B attached hereto for the Vested Warrant and
the Milestone Warrant, respectively. The rate at which Warrants shall be granted
to STACK PHARMACEUTICALS for Services shall be based on the following schedule:
CASH COMPENSATION FOR SERVICES GRANTED WARRANTS
For each $1500 of cash compensation - 75 Vested Warrants
Pursuant to Section 2.A. of the Agreement -150 Milestone Warrants
Actual grants will be rounded to the nearest whole number to avoid fractional
shares.
The Warrants shall be subject to the 2000 Warrant Plan (the "Warrant Plan")
attached hereto as Exhibit D. The above Warrants shall be awarded within thirty
(30) days of the end of each calendar quarter, subject to STACK PHARMACEUTICALS'
compliance with the terms of this Agreement.
EXHIBIT A: FORM OF VESTED WARRANT
1. Term: 5 yrs
2. Vesting Schedule: Immediate
3. Exercise Price: $20
4. Acceleration on a Change of Control
EXHIBIT B: FORM OF MILESTONE WARRANT
1. Term: 5yrs
2. Vesting Schedule:
A. 33% upon hiring of a Vice President of Marketing and
Sales recommended by STACK PHARMACEUTICALS
B. 33% upon completion of an IPO
C. 34% upon ENDEAVOR's CE Product achieving annualized
sales (i.e. a run rate) of $50 million.
3. Exercise Price of $10
4. Acceleration on a Change of Control
EXHIBIT C: AGREEMENT TO BE BOUND BY SECURITYHOLDERS AGREEMENT
EXHIBIT D: WARRANT PLAN
EXHIBIT E: CONFIDENTIALITY AGREEMENT
Exhibit A
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE. NEITHER SUCH WARRANTS NOR SUCH
SHARES MAY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE
WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION
(EACH A "TRANSFER") OF ANY OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
RESTRICTED BY THE TERMS OF THE SECURITYHOLDERS AGREEMENT AMONG THE COMPANY AND
THE SECURITYHOLDERS NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT THE
COMPANY'S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH
SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN
MADE IN COMPLIANCE WITH THE TERMS OF THE SECURITYHOLDERS AGREEMENT.
DATED:
-----------------------------
VESTED WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF ENDEAVOR PHARMACEUTICALS, INC.
Warrant No. Shares
-------------------- ---------------------
This certifies that, for and in consideration of value received, ______
___________________________ (the "Undersigned"), or his/her assigns
(collectively, the "Warrantholder"), is entitled to purchase from Endeavor
Pharmaceuticals, Inc., a corporation incorporated under the laws of the State of
Delaware (the "Company"), subject to the terms and conditions hereof, at any
time on or after the Initial Issuance Date (as defined herein), and before 5:00
P.M. Eastern Standard Time (EST) on the Expiration Date (as defined herein), up
to ________________________________ (__________________________) fully paid and
non-assessable shares of Common Stock, par value $.01 per share ("Common Stock")
of the Company at the Exercise Price (as defined herein), subject to the
provisions and upon the terms and conditions hereinafter set forth. The Exercise
Price and the number of shares purchasable upon exercise of this Warrant are
subject to adjustment from time to time upon the occurrence of certain events as
set forth herein.
ARTICLE I
Section 1.01 Definition of Terms. As used in this Warrant, the
following capitalized terms shall have the following respective meanings:
(a) Business Day: A day other than a Saturday, Sunday or other day
on which banks in the State of North Carolina are authorized by law to remain
closed.
(b) Common Stock: The Company's Common Stock, par value $.01 per
share.
(c) Exercise Price: $20.00 per Warrant Share.
(d) Expiration Date: The fifth anniversary of the Initial Issuance
Date, provided that if such day is not a Business Day, the next succeeding day
which is a Business Day.
(e) Initial Issuance Date: The date of this Warrant as reflected
on the cover page hereof.
(f) Person: An individual, partnership, joint venture,
corporation, trust, unincorporated organization or government of any department
or agency thereof.
(g) Plan: The Endeavor Pharmaceuticals, Inc. 2000 Warrant Plan for
Consultants.
(h) Services: The consulting services provided by the Undersigned
to the Company pursuant to the consulting arrangement between the Company and
the Undersigned.
(i) Warrant: This warrant instrument between the Company and the
Warrantholder.
(j) Warrant Shares: Shares of Common Stock purchased or
purchasable upon exercise of this Warrant.
ARTICLE II
DURATION AND EXERCISE OF WARRANT
Section 2.01 Duration of Warrant. The Warrantholder may exercise
this Warrant at any time and from time to time after 9:00 A.M., EST, on the
Initial Issuance Date and before 5:00 P.M., EST, on the Expiration Date. This
Warrant shall not expire prior to the Expiration Date pursuant to the second
paragraph of Section 6 of the Plan except to the extent the Warrant is
exercised.
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Section 2.02 Exercise of Warrant; Exercise Required by Company.
(a) The Warrantholder may exercise this Warrant, in whole or in
part, by presentation and surrender of this Warrant to the Company at its
principal corporate office or at the office of its stock transfer agent, if any,
with the subscription form attached hereto as Exhibit A (the "Subscription
Form") duly executed and, except as otherwise provided herein, accompanied by
payment of the full Exercise Price for each Warrant Share to be purchased. The
Exercise Price may be paid to the Company by cash, check or bank draft, or a
combination of cash, check, and bank draft. Upon the date of receipt of this
Warrant with the Subscription Form fully executed and accompanied by payment of
the aggregate Exercise Price for the Warrant Shares for which this Warrant is
then being exercised (the "Exercise Date"), the Company shall cause to be issued
certificates for the total number of whole shares of Warrant Shares for which
this Warrant is being exercised in such denominations as are requested for
delivery to the Warrantholder, registered in the name of the Warrantholder or
his/her nominee, and the Company shall thereupon deliver such certificates to
the Warrantholder. The Warrantholder shall be deemed to be the holder of record
of the shares of Warrant Shares issuable upon such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Warrant Shares shall not then be
actually delivered to the Warrantholder.
(b) In case the Warrantholder shall exercise this Warrant with
respect to less than all of the Warrant Shares that may be purchased under this
Warrant, the Company shall execute a new warrant in the form of this Warrant for
the balance of such Warrant Shares and deliver such new warrant to the
Warrantholder.
Section 2.03 Reservation of Shares. The Company hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise of
this Warrant such number of shares of Common Stock from time to time issuable
upon exercise of this Warrant. All such shares shall be duly authorized, and
when issued upon such exercise in accordance with the terms hereof, shall be
validly issued, fully paid and non-assessable, free and clear of all liens,
security interests, charges or other encumbrances (other than as a result of any
actions taken by the Warrantholder); provided, however, that such shares shall
be subject to the terms of the Securityholders Agreement among the Company and
the securityholders named therein (the "Securityholders Agreement").
Section 2.04 Fractional Shares. The Company shall not be required
to issue any fraction of a share of its capital stock in connection with the
exercise of this Warrant, and in any case where the Warrantholder would, except
for the provisions of this Section 2.04, be entitled under the terms of this
Warrant to receive a fraction of a share upon the exercise of this Warrant, the
Company shall, upon the exercise of this Warrant and receipt of the Exercise
Price, issue the largest number of whole shares purchasable upon such exercise
of this Warrant. The Company shall, in lieu of issuing
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any fractional share pay the Warrantholder a sum in cash equal to the fair
market value of any such fractional interest as determined in good faith by the
Company.
ARTICLE III
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
Section 3.01 No Rights as Shareholders; Notice to Warrantholders.
Nothing contained in this Warrant shall be construed as conferring upon the
Warrantholder the right to vote or to receive dividends or to consent or to
receive notice as a shareholder in respect of any meeting of shareholders for
the election of directors of the Company or of any other matter, or any rights
whatsoever as shareholders of the Company. The Company shall give notice to the
Warrantholder by certified mail if at any time prior to the expiration or
exercise in full of the Warrant, any of the following events shall occur:
(a) the Company shall declare any dividend or distribution with
respect to its capital stock;
(b) a dissolution, liquidation or winding up of the Company shall
be proposed; or
(c) any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets) in
which the Common Stock shall be changed into or exchanged for common stock or
other securities of another corporation or interests in a noncorporate entity or
other property (including cash) or any combination of any of the foregoing.
Such giving of notice shall be initiated as soon as practicable, but in
no event later than ten (10) Business Days prior to the date fixed as a record
date or effective date or the date of closing of the Company's stock transfer
books for the determination of the shareholders entitled to such dividend or
distribution, or for the determination of the shareholders entitled to vote on
such proposed merger, consolidation, sale, conveyance, dissolution, liquidation
or winding up. Such notice shall specify (i) the date on which a record is to be
taken for the purpose of such dividend or distribution or, if a record is not to
be taken, the date as of which the holders of shares of capital stock of record
to be entitled to such dividend or distribution are to be determined, or (ii)
the date on which such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up is expected to become
effective.
Section 3.02 Lost, Stolen, Mutilated or Destroyed Warrants. If
this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such
reasonable terms as to indemnity or otherwise as it may in its reasonable
discretion impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as, and
in substitution for, this Warrant.
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ARTICLE IV
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article IV.
Section 4.01 Mechanical Adjustments.
(a) In case the Company shall at any time or from time to time
while this Warrant remains outstanding and unexpired (i) pay any dividend, or
make any distribution, on the outstanding shares of Common Stock (or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase shares of Common Stock) in shares of its capital
stock, including Common Stock, (ii) subdivide the outstanding shares of Common
Stock, (iii) combine the outstanding shares of Common Stock into a smaller
number of shares or (iv) issue by reclassification of the shares of Common Stock
any shares of capital stock of the Company, then and in each such case, the
Exercise Price in effect immediately prior to such event or the record date
therefor, whichever is earlier, shall be adjusted so that the Warrantholder
shall be entitled to receive the number and type of shares of Common Stock or
other capital stock which such Warrantholder would have owned or have been
entitled to receive after the happening of any of the events described above had
such Warrant been converted into Common Stock immediately prior to the happening
of such event or the record date therefor, whichever is earlier. An adjustment
made pursuant to this Section 4.01(a) shall become effective (x) in the case of
any such dividend or distribution, immediately after the close of business on
the record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or (y) in the case of such
subdivision, reclassification or combination, at the close of business on the
day upon which such corporate action becomes effective.
(b) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution and shall thereafter, and before such dividend or distribution is
paid or delivered to stockholders entitled thereto, legally abandon its plan to
pay or deliver such dividend or distribution, then no adjustment in the Exercise
Price then in effect shall be made by reason of the taking of such record, and
any such adjustment previously made as a result of the taking of such record
shall be reversed.
(c) As used in this Section 4.01 the term "Common Stock" shall
mean and include the Company's authorized Common Stock, par value $.0l per
share, as constituted on the date hereof, and shall also include any capital
stock of any class of the Company thereafter authorized which shall neither be
limited to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends nor be
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entitled to a preference in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Company.
(d) Upon each adjustment of the Exercise Price as a result of the
calculations made in this Article IV, this Warrant shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of Warrant Shares
(calculated to be the nearest hundredth) obtained by (A) multiplying the number
of Warrant Shares purchasable upon exercise of this Warrant prior to the
adjustment of the number of Warrant Shares by the Exercise Price in effect prior
to adjustment of the Exercise Price and (B) dividing the product so obtained by
the Exercise Price in effect after such adjustment of the Exercise Price.
(e) In the event that at any time, as a result of any adjustment
made pursuant to Section 4.01(a), the Warrantholder thereafter shall become
entitled to receive any shares of capital stock of the Company other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 4.01(a).
(f) If any event occurs as to which, in the opinion of the Board
of Directors of the Company, the provisions of this Section 4.01 are not
strictly applicable or if strictly applicable would not fairly protect the
rights of the holders of the Warrants, in accordance with the essential intent
and principles of such provisions, the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such rights as aforesaid;
provided, that no such adjustment shall reduce the rights of the holders of
Warrants as provided herein.
Section 4.02 Notices of Adjustment. Whenever the number of Warrant
Shares or the Exercise Price is adjusted as herein provided, the Company shall
prepare and deliver forthwith to the Warrantholder a certificate signed by its
President or a Vice President, or by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, setting forth the adjusted number of
shares purchasable upon the exercise of this Warrant and the Exercise Price of
such shares after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which adjustment
was made.
Section 4.03 Form of Warrant After Adjustments. The form of this
Warrant need not be changed because of any adjustments in the Exercise Price or
the number or kind of the Warrant Shares, and Warrants theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in this Warrant, as initially issued.
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Section 4.04 Treatment of Warrantholder. Prior to due presentment
for registration of transfer of this Warrant, the Company may deem and treat the
Warrantholder as the absolute owner of this Warrant (notwithstanding any
notation of ownership or other writing hereon) for all purposes and shall not be
affected by any notice to the contrary.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WARRANTHOLDER
Section 5.01 Rule 701 Eligibility. The Warrantholder hereby
represents and warrants to the Company, and acknowledges that the Company is
relying upon such representations and warranties for the purposes of treating
the issuance of this Warrant and the Warrant Shares issuable upon the exercise
hereof as being qualified for the exemption under Rule 701 of the Securities Act
("Rule 701"), that:
(a) The Warrantholder is a natural person under Rule 701; and
(b) This Warrant is issued in connection with the Undersigned
providing bona fide Services to the Company pursuant to the
consulting arrangement between the Undersigned and the
Company, which Services are not in connection with the offer
or sale of securities in a capital-raising transaction and do
not directly or indirectly promote or maintain a market for
the Company's securities.
ARTICLE VI
SPLIT-UP, COMBINATION,
EXCHANGE AND TRANSFER OF WARRANTS
Section 6.01 Split-Up. Combination, Exchange and Transfer of
Warrants. Subject to the provisions of Section 6.02 hereof, this Warrant may be
split up, combined or exchanged for another Warrant or Warrants containing the
same terms to purchase a like aggregate number of Warrant Shares. If the
Warrantholder desires to split up, combine or exchange this Warrant, the
Warrantholder shall make such request in writing delivered to the Company and
shall surrender to the Company this Warrant and any other Warrants to be so
split-up, combined or exchanged. Upon any such surrender for a split-up,
combination or exchange, the Company shall execute and deliver to the person
entitled thereto a Warrant or Warrants, as the case may be, as so requested. The
Company shall not be required to effect any split-up, combination or exchange
which will result in the issuance of a Warrant entitling the Warrantholder to
purchase upon exercise a fraction of a share of Common Stock or a fractional
Warrant. The Company may require such Warrantholder to pay a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
split-up, combination or exchange of Warrants.
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Section 6.02 Transferability. This Warrant and all rights
hereunder may be sold, transferred or otherwise disposed of, in whole or in
part, to any person in accordance with and subject to the provisions of the
Securities Act, and the rules and regulations promulgated thereunder, subject to
the transfer restrictions and other terms of the Securityholders Agreement. The
Company may request a customary legal opinion, at the expense of the
Warrantholder or from counsel to the Warrantholder, that such sale, transfer or
disposition does not violate the registration requirements of the Securities Act
and the related rules and regulations. Upon the delivery to the Company at its
principal corporate office of this Warrant along with a duly completed
Assignment Form substantially in the form of Exhibit B hereto and after the
transferor-Warrantholder has complied with all terms of the Securityholders
Agreement, the Company shall execute and deliver a new Warrant in the form of
this Warrant, but registered in the name of the transferee, to purchase the
number of Warrant Shares assigned to the transferee. In case the Warrantholder
shall assign this Warrant with respect to less than all of the Warrant Shares
that may be purchased under this Warrant, the Company shall execute a new
Warrant in the form of this Warrant for the balance of such Warrant Shares and
deliver such new Warrant to the Warrantholder.
Section 6.03 Warrant Share Legends. Each Warrant Share issued upon
exercise of this Warrant shall bear legends containing the following words:
"THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR
OTHER DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED
BY THE TERMS OF THE SECURITYHOLDERS AGREEMENT AMONG THE
COMPANY AND THE SECURITYHOLDERS NAMED THEREIN, A COPY OF
WHICH MAY BE INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE. THE
COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON
THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS
BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE SECURITYHOLDERS
AGREEMENT."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
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The requirement that the above legend be placed upon certificates evidencing any
such securities shall cease and terminate upon the earliest of the following
events: (i) when such shares are transferred in an underwritten public offering,
(ii) when such shares are transferred pursuant to Rule 144 under the Securities
Act or (iii) when such shares are transferred in any other transaction if the
seller delivers to the Company an opinion of its counsel, which counsel and
opinion shall be reasonably satisfactory to the Company, or a "no-action" letter
from the Staff of the Securities and Exchange Commission, in either case to the
effect that such legend is no longer necessary in order to protect the Company
against a violation by it of the Securities Act upon any sale or other
disposition of such shares without registration thereunder. Upon the occurrence
of such event, the Company, upon the surrender of certificates containing such
legend, shall, at its own expense, deliver to the holder of any such securities
as to which the requirement for such legend shall have terminated, one or more
new certificates evidencing such securities not bearing such legend.
ARTICLE VII
OTHER MATTERS
Section 7.01 Successors and Assigns. The terms and provisions of
this Warrant shall bind and inure to the benefit of the Warrantholder and
his/her successors and assigns.
Section 7.02 No Inconsistent Agreements. To the extent the terms
of this Warrant may conflict with any of the provisions of the Securityholders
Agreement, the relevant provisions of the Securityholders Agreement shall apply.
The Company will not on or after the date of this Warrant enter into any
agreement (other than the Securityholders Agreement) with respect to its
securities which is inconsistent with the rights granted to the Warrantholder or
otherwise conflicts with the provisions hereof. The rights granted to the
Warrantholder hereunder do not in any way conflict with and are not inconsistent
with the rights granted to holders of the Company's securities under any other
agreements (other than the Securityholders Agreement.)
Section 7.03 Entire Agreement. This Warrant and the Exhibits
hereto contain the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous arrangements
or understandings with respect thereto.
Section 7.04 Amendments and Waivers. The terms and provisions of
this Warrant, including the provisions of this sentence, may be modified or
amended, or any of the provisions hereof waived, temporarily or permanently,
pursuant to the written consent of the Company and the Warrantholder.
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Section 7.05 Counterparts. This Warrant may be executed in any
number of counterparts and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
Section 7.06 Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of North Carolina and of the United States of
America, in each case located in the County of New Hanover, for any action,
proceeding or investigation in any court or before any governmental authority
("Litigation") arising out of or relating to this Warrant and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in this Warrant shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Warrant or the transactions contemplated hereby in the
courts of the State of North Carolina or the United States of America, in each
case located in the County of New Hanover, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum.
Section 7.07 Severability. Whenever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid,
but if any provision of this Warrant is held to be invalid or unenforceable in
any respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Warrant.
Section 7.08 Notice. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
(i) if to the Company, to:
Endeavor Pharmaceuticals, Inc.
127 Racine Drive
Wilmington, North Carolina 28401
Attention: R. Forrest Waldon
10
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
345 California Street
29th Floor
San Francisco, California 94104
Attention: Thomas R. Pollock, Esq.
(ii) if to the Warrantholder, to:
Stack Pharmaceuticals, Inc.
5 Sylvan Way
Parsippany, New Jersey 07054
Attention: David Stack
All such notices, requests, consents and other communications shall be deemed to
have been given when received.
[Remainder of page intentionally left blank - signature pages to follow]
11
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
as of the day of , 2000.
-------- ---------------
ENDEAVOR PHARMACEUTICALS, INC.
By:
--------------------------------------
Name: R. Forrest Waldon
Title: President and Chief Executive
Officer
Attest:
---------------------------
Name:
Title:
AGREED AND ACCEPTED:
- ----------------------------------
Name:
Title:
12
Exhibit A to Warrant
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
ENDEAVOR PHARMACEUTICALS, INC.
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, _____________________ (1)
shares of Common Stock covered by the within Warrant and requests that the
certificates for such shares be issued in the name of, and delivered to,
________________ whose address is _________________. The undersigned herewith
makes payment (by cash, check, surrender of Warrants, or any combination
thereof) in full therefor of the Exercise Price therefor (or $__________________
in the aggregate).
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
- ------------
(1) Insert here the number of shares called for on the face of this Warrant (or,
in the case of a partial exercise, the portion thereof as to which this Warrant
is being exercised). In the case of a partial exercise, a new Warrant or
Warrants will be issued and delivered, representing the unexercised portion of
the Warrant, to the holder surrendering the Warrant.
Exhibit B to Warrant
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto ________________ the right represented
by such Warrant to purchase __________________ (1) shares of Common Stock of
Endeavor Pharmaceuticals, Inc. to which such Warrant relates and appoints
_________________ Attorney to make such transfer on the books of Endeavor
Pharmaceuticals, Inc. maintained for such purpose, with full power of
substitution in the premises.
Dated:
--------------------------------------------
Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
- ---------------------------------
- ---------------------------------
- ------------
(1) Insert here the number of shares called for on the face of this Warrant (or,
in the case of a partial assignment, the portion thereof as to which this
Warrant is being assigned). In the case of a partial assignment, a new Warrant
or Warrants will be issued and delivered, representing the unassigned portion of
the Warrant, to the holder surrendering the Warrant.
EXHIBIT B
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE. NEITHER SUCH WARRANTS NOR SUCH
SHARES MAY BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE
WITH SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.
THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR OTHER DISPOSITION
(EACH A "TRANSFER") OF ANY OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
RESTRICTED BY THE TERMS OF THE SECURITYHOLDERS AGREEMENT AMONG THE COMPANY AND
THE SECURITYHOLDERS NAMED THEREIN, A COPY OF WHICH MAY BE INSPECTED AT THE
COMPANY'S PRINCIPAL OFFICE. THE COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH
SECURITIES ON THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS BEEN
MADE IN COMPLIANCE WITH THE TERMS OF THE SECURITYHOLDERS AGREEMENT.
DATED:
-----------------------------
MILESTONE WARRANT
TO PURCHASE SHARES OF COMMON STOCK
OF ENDEAVOR PHARMACEUTICALS, INC.
Warrant No. Shares
-------------------- ---------------------
This certifies that, for and in consideration of value received,
__________________________ (the "Undersigned"), or his/her assigns
(collectively, the "Warrantholder"), is entitled to purchase from Endeavor
Pharmaceuticals, Inc., a corporation incorporated under the laws of the State of
Delaware (the "Company"), subject to the terms and conditions hereof, at any
time on or after the Initial Issuance Date (as defined herein), and before 5:00
P.M. Eastern Standard Time (EST) on the Expiration Date (as defined herein), up
to________________ (_______________ ) fully paid and non-assessable shares of
Common Stock, par value $.01 per share ("Common Stock") of the Company at the
Exercise Price (as defined herein), subject to the provisions and upon the terms
and conditions hereinafter set forth, including, without limitation, the vesting
terms set forth in Article III hereof. The Exercise Price and the number of
shares purchasable upon exercise of this Warrant are subject to adjustment from
time to time upon the occurrence of certain events as set forth herein.
ARTICLE I
Section 1.01 Definition of Terms. As used in this Warrant, the
following capitalized terms shall have the following respective meanings:
(a) Business Day: A day other than a Saturday, Sunday or other day
on which banks in the State of North Carolina are authorized by law to remain
closed.
(b) Change of Control:
(i) The consummation of a tender offer or exchange offer
for the ownership of securities of the Company representing 51% or more of the
combined voting powers of the Company's then outstanding voting securities;
(ii) The adoption by the Company's stockholders of a plan
of merger or consolidation providing for the merger or consolidation of the
Company with another corporation (other than an affiliate of the Company within
the meaning of the Securities Exchange Act of 1934) and as a result of such
merger or consolidation less than 75% of the outstanding voting securities of
the surviving or resulting corporation would then be owned in the aggregate by
the former stockholders of the Company; or
(iii) The transfer by the Company of substantially all of
its assets to another corporation or entity which is not a wholly owned
subsidiary of the Company.
(c) Common Stock: The Company's Common Stock, par value $.01 per
share.
(d) Exercise Price: $10.00 per Warrant Share.
(e) Expiration Date: The fifth anniversary of the Initial Issuance
Date, provided that if such day is not a Business Day, the next succeeding day
which is a Business Day.
(f) Initial Issuance Date: The date of this Warrant as reflected
on the cover page hereof.
(g) Person: An individual, partnership, joint venture,
corporation, trust, unincorporated organization or government of any department
or agency thereof.
(h) Plan: The Endeavor Pharmaceuticals, Inc. 2000 Warrant Plan for
Consultants.
(i) Services: The consulting services provided by the Undersigned
to the Company pursuant to the consulting arrangement between the Company and
the Undersigned.
2
(j) Warrant: This warrant instrument between the Company and the
Warrantholder.
(k) Warrant Shares: Shares of Common Stock purchased or
purchasable upon exercise of this Warrant.
ARTICLE II
DURATION AND EXERCISE OF WARRANT
Section 2.01 Duration of Warrant. To the extent this Warrant has
vested pursuant to Article III hereof, the Warrantholder may exercise the
Warrant at any time and from time to time after 9:00 A.M., EST, on the Initial
Issuance Date and before 5:00 P.M., EST, on the Expiration Date. This Warrant
shall not expire prior to the Expiration Date pursuant to the second paragraph
of Section 6 of the Plan except to the extent the Warrant is exercised.
Section 2.02 Exercise of Warrant; Exercise Required by Company.
(a) To the extent this Warrant has vested pursuant to Article III
hereof, the Warrantholder may exercise the Warrant, in whole or in part, by
presentation and surrender of this Warrant to the Company at its principal
corporate office or at the office of its stock transfer agent, if any, with the
subscription form attached hereto as Exhibit A (the "Subscription Form") duly
executed and, except as otherwise provided herein, accompanied by payment of the
full Exercise Price for each Warrant Share to be purchased. The Exercise Price
may be paid to the Company by cash, check or bank draft, or a combination of
cash, check, and bank draft. Upon the date of receipt of this Warrant with the
Subscription Form fully executed and accompanied by payment of the aggregate
Exercise Price for the Warrant Shares for which this Warrant is then being
exercised (the "Exercise Date"), the Company shall cause to be issued
certificates for the total number of whole shares of Warrant Shares for which
this Warrant is being exercised in such denominations as are requested for
delivery to the Warrantholder, registered in the name of the Warrantholder or
his/her nominee, and the Company shall thereupon deliver such certificates to
the Warrantholder. The Warrantholder shall be deemed to be the holder of record
of the shares of Warrant Shares issuable upon such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such shares of Warrant Shares shall not then be
actually delivered to the Warrantholder.
(b) In case the Warrantholder shall exercise this Warrant with
respect to less than all of the Warrant Shares that may be purchased under this
Warrant, the Company shall execute a new warrant in the form of this Warrant for
the balance of such Warrant Shares and deliver such new warrant to the
Warrantholder.
3
Section 2.03 Reservation of Shares. The Company hereby agrees that
at all times there shall be reserved for issuance and delivery upon exercise of
this Warrant such number of shares of Common Stock from time to time issuable
upon exercise of this Warrant. All such shares shall be duly authorized, and
when issued upon such exercise in accordance with the terms hereof, shall be
validly issued, fully paid and non-assessable, free and clear of all liens,
security interests, charges or other encumbrances (other than as a result of any
actions taken by the Warrantholder); provided, however, that such shares shall
be subject to the terms of the Securityholders Agreement among the Company and
the securityholders named therein (the "Securityholders Agreement").
Section 2.04 Fractional Shares. The Company shall not be required
to issue any fraction of a share of its capital stock in connection with the
exercise of this Warrant, and in any case where the Warrantholder would, except
for the provisions of this Section 2.04, be entitled under the terms of this
Warrant to receive a fraction of a share upon the exercise of this Warrant, the
Company shall, upon the exercise of this Warrant and receipt of the Exercise
Price, issue the largest number of whole shares purchasable upon such exercise
of this Warrant. The Company shall, in lieu of issuing any fractional share pay
the Warrantholder a sum in cash equal to the fair market value of any such
fractional interest as determined in good faith by the Company.
ARTICLE III
VESTING OF WARRANT SHARES
Section 3.01 Vesting Schedule. The Warrant Shares represented by
this Warrant shall become vested as follows:
(a) Thirty-three and one-third percent (33 1/3%) of the Warrant
Shares shall become vested upon the hiring by the Company of a Vice President of
Marketing and Sales as recommended by the Warrantholder;
(b) Thirty-three and one-third percent (33 1/3%) of the Warrant
Shares shall become vested upon completion of the first sale by the Company of
Common Stock in a firm commitment underwritten public offering pursuant to a
registration statement under the Securities Act; and
(c) Thirty-three and one-third percent (33 1/3%) of the Warrant
Shares shall become vested upon the Company's conjugated estrogens product
achieving aggregate annualized sales equal to $50,000,000, as determined by the
Company in accordance with generally accepted accounting principles consistently
applied.
Section 3.02 Acceleration upon Change of Control. Notwithstanding
the vesting schedule set forth in Section 3.01 hereof, all Warrant Shares shall,
to the extent not vested, be deemed fully vested immediately prior to a Change
of Control.
4
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDER
Section 4.01 No Rights as Shareholders; Notice to Warrantholders.
Nothing contained in this Warrant shall be construed as conferring upon the
Warrantholder the right to vote or to receive dividends or to consent or to
receive notice as a shareholder in respect of any meeting of shareholders for
the election of directors of the Company or of any other matter, or any rights
whatsoever as shareholders of the Company. The Company shall give notice to the
Warrantholder by certified mail if at any time prior to the expiration or
exercise in full of the Warrant, any of the following events shall occur:
(a) the Company shall declare any dividend or distribution with
respect to its capital stock;
(b) a dissolution, liquidation or winding up of the Company shall
be proposed; or
(c) any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets) in
which the Common Stock shall be changed into or exchanged for common stock or
other securities of another corporation or interests in a noncorporate entity or
other property (including cash) or any combination of any of the foregoing.
Such giving of notice shall be initiated as soon as practicable, but in
no event later than ten (10) Business Days prior to the date fixed as a record
date or effective date or the date of closing of the Company's stock transfer
books for the determination of the shareholders entitled to such dividend or
distribution, or for the determination of the shareholders entitled to vote on
such proposed merger, consolidation, sale, conveyance, dissolution, liquidation
or winding up. Such notice shall specify (i) the date on which a record is to be
taken for the purpose of such dividend or distribution or, if a record is not to
be taken, the date as of which the holders of shares of capital stock of record
to be entitled to such dividend or distribution are to be determined, or (ii)
the date on which such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up is expected to become
effective.
Section 4.02 Lost, Stolen, Mutilated or Destroyed Warrants. If
this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such
reasonable terms as to indemnity or otherwise as it may in its reasonable
discretion impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as, and
in substitution for, this Warrant.
5
ARTICLE V
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF EXERCISE PRICE
The Exercise Price and the number and kind of Warrant Shares shall be
subject to adjustment from time to time upon the happening of certain events as
provided in this Article IV.
Section 5.01 Mechanical Adjustments.
(a) In case the Company shall at any time or from time to time
while this Warrant remains outstanding and unexpired (i) pay any dividend, or
make any distribution, on the outstanding shares of Common Stock (or rights,
options, warrants or convertible or exchangeable securities containing the right
to subscribe for or purchase shares of Common Stock) in shares of its capital
stock, including Common Stock, (ii) subdivide the outstanding shares of Common
Stock, (iii) combine the outstanding shares of Common Stock into a smaller
number of shares or (iv) issue by reclassification of the shares of Common Stock
any shares of capital stock of the Company, then and in each such case, the
Exercise Price in effect immediately prior to such event or the record date
therefor, whichever is earlier, shall be adjusted so that the Warrantholder
shall be entitled to receive the number and type of shares of Common Stock or
other capital stock which such Warrantholder would have owned or have been
entitled to receive after the happening of any of the events described above had
such Warrant been converted into Common Stock immediately prior to the happening
of such event or the record date therefor, whichever is earlier. An adjustment
made pursuant to this Section 5.01(a) shall become effective (x) in the case of
any such dividend or distribution, immediately after the close of business on
the record date for the determination of holders of shares of Common Stock
entitled to receive such dividend or distribution, or (y) in the case of such
subdivision, reclassification or combination, at the close of business on the
day upon which such corporate action becomes effective.
(b) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution and shall thereafter, and before such dividend or distribution is
paid or delivered to stockholders entitled thereto, legally abandon its plan to
pay or deliver such dividend or distribution, then no adjustment in the Exercise
Price then in effect shall be made by reason of the taking of such record, and
any such adjustment previously made as a result of the taking of such record
shall be reversed.
(c) As used in this Section 5.01 the term "Common Stock" shall
mean and include the Company's authorized Common Stock, par value $.0l per
share, as constituted on the date hereof, and shall also include any capital
stock of any class of the Company thereafter authorized which shall neither be
limited to a fixed sum or percentage in respect of the rights of the holders
thereof to participate in dividends nor be entitled to a preference in the
distribution of assets upon the voluntary or involuntary liquidation,
dissolution or winding up of the Company.
6
(d) Upon each adjustment of the Exercise Price as a result of the
calculations made in this Article IV, this Warrant shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of Warrant Shares
(calculated to be the nearest hundredth) obtained by (A) multiplying the number
of Warrant Shares purchasable upon exercise of this Warrant prior to the
adjustment of the number of Warrant Shares by the Exercise Price in effect prior
to adjustment of the Exercise Price and (B) dividing the product so obtained by
the Exercise Price in effect after such adjustment of the Exercise Price.
(e) In the event that at any time, as a result of any adjustment
made pursuant to Section 5.01(a), the Warrantholder thereafter shall become
entitled to receive any shares of capital stock of the Company other than Common
Stock, thereafter the number of such other shares so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in Section 5.01(a).
(f) If any event occurs as to which, in the opinion of the Board
of Directors of the Company, the provisions of this Section 5.01 are not
strictly applicable or if strictly applicable would not fairly protect the
rights of the holders of the Warrants, in accordance with the essential intent
and principles of such provisions, the Board of Directors shall make an
adjustment in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such rights as aforesaid;
provided, that no such adjustment shall reduce the rights of the holders of
Warrants as provided herein.
Section 5.02 Notices of Adjustment. Whenever the number of Warrant
Shares or the Exercise Price is adjusted as herein provided, the Company shall
prepare and deliver forthwith to the Warrantholder a certificate signed by its
President or a Vice President, or by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant Secretary, setting forth the adjusted number of
shares purchasable upon the exercise of this Warrant and the Exercise Price of
such shares after such adjustment, setting forth a brief statement of the facts
requiring such adjustment and setting forth the computation by which adjustment
was made.
Section 5.03 Form of Warrant After Adjustments. The form of this
Warrant need not be changed because of any adjustments in the Exercise Price or
the number or kind of the Warrant Shares, and Warrants theretofore or thereafter
issued may continue to express the same price and number and kind of shares as
are stated in this Warrant, as initially issued.
Section 5.04 Treatment of Warrantholder. Prior to due presentment
for registration of transfer of this Warrant, the Company may deem and treat the
Warrantholder as the absolute owner of this Warrant (notwithstanding any
notation of
7
ownership or other writing hereon) for all purposes and shall not be affected by
any notice to the contrary.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF WARRANTHOLDER
Section 6.01 Rule 701 Eligibility. The Warrantholder hereby
represents and warrants to the Company, and acknowledges that the Company is
relying upon such representations and warranties for the purposes of treating
the issuance of this Warrant and the Warrant Shares issuable upon the exercise
hereof as being qualified for the exemption under Rule 701 of the Securities Act
("Rule 701"), that:
(a) The Warrantholder is a natural person under Rule 701; and
(b) This Warrant is issued in connection with the Undersigned
providing bona fide Services to the Company pursuant to the consulting
arrangement between the Undersigned and the Company, which Services are not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the Company's
securities.
ARTICLE VII
SPLIT-UP, COMBINATION
EXCHANGE AND TRANSFER OF WARRANTS
Section 7.01 Split-Up. Combination, Exchange and Transfer of
Warrants. Subject to the provisions of Section 7.02 hereof, this Warrant may be
split up, combined or exchanged for another Warrant or Warrants containing the
same terms to purchase a like aggregate number of Warrant Shares. If the
Warrantholder desires to split up, combine or exchange this Warrant, the
Warrantholder shall make such request in writing delivered to the Company and
shall surrender to the Company this Warrant and any other Warrants to be so
split-up, combined or exchanged. Upon any such surrender for a split-up,
combination or exchange, the Company shall execute and deliver to the person
entitled thereto a Warrant or Warrants, as the case may be, as so requested. The
Company shall not be required to effect any split-up, combination or exchange
which will result in the issuance of a Warrant entitling the Warrantholder to
purchase upon exercise a fraction of a share of Common Stock or a fractional
Warrant. The Company may require such Warrantholder to pay a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
split-up, combination or exchange of Warrants.
Section 7.02 Transferability. This Warrant and all rights
hereunder may be sold, transferred or otherwise disposed of, in whole or in
part, to any person in accordance with and subject to the provisions of the
Securities Act, and the rules and
8
regulations promulgated thereunder, subject to the transfer restrictions and
other terms of the Securityholders Agreement. The Company may request a
customary legal opinion, at the expense of the Warrantholder or from counsel to
the Warrantholder, that such sale, transfer or disposition does not violate the
registration requirements of the Securities Act and the related rules and
regulations. Upon the delivery to the Company at its principal corporate office
of this Warrant along with a duly completed Assignment Form substantially in the
form of Exhibit B hereto and after the transferor-Warrantholder has complied
with all terms of the Securityholders Agreement, the Company shall execute and
deliver a new Warrant in the form of this Warrant, but registered in the name of
the transferee, to purchase the number of Warrant Shares assigned to the
transferee. In case the Warrantholder shall assign this Warrant with respect to
less than all of the Warrant Shares that may be purchased under this Warrant,
the Company shall execute a new Warrant in the form of this Warrant for the
balance of such Warrant Shares and deliver such new Warrant to the
Warrantholder.
Section 7.03 Warrant Share Legends. Each Warrant Share issued upon
exercise of this Warrant shall bear legends containing the following words:
"THE SALE, ASSIGNMENT, HYPOTHECATION, PLEDGE, ENCUMBRANCE OR
OTHER DISPOSITION (EACH A "TRANSFER") AND VOTING OF ANY OF
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED
BY THE TERMS OF THE SECURITYHOLDERS AGREEMENT AMONG THE
COMPANY AND THE SECURITYHOLDERS NAMED THEREIN, A COPY OF
WHICH MAY BE INSPECTED AT THE COMPANY'S PRINCIPAL OFFICE. THE
COMPANY WILL NOT REGISTER THE TRANSFER OF SUCH SECURITIES ON
THE BOOKS OF THE COMPANY UNLESS AND UNTIL THE TRANSFER HAS
BEEN MADE IN COMPLIANCE WITH THE TERMS OF THE SECURITYHOLDERS
AGREEMENT."
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
The requirement that the above legend be placed upon certificates evidencing any
such securities shall cease and terminate upon the earliest of the following
events: (i) when such shares are transferred in an underwritten public offering,
(ii) when such shares are
9
transferred pursuant to Rule 144 under the Securities Act or (iii) when such
shares are transferred in any other transaction if the seller delivers to the
Company an opinion of its counsel, which counsel and opinion shall be reasonably
satisfactory to the Company, or a "no-action" letter from the Staff of the
Securities and Exchange Commission, in either case to the effect that such
legend is no longer necessary in order to protect the Company against a
violation by it of the Securities Act upon any sale or other disposition of such
shares without registration thereunder. Upon the occurrence of such event, the
Company, upon the surrender of certificates containing such legend, shall, at
its own expense, deliver to the holder of any such securities as to which the
requirement for such legend shall have terminated, one or more new certificates
evidencing such securities not bearing such legend.
ARTICLE VIII
OTHER MATTERS
Section 8.01 Successors and Assigns. The terms and provisions of
this Warrant shall bind and inure to the benefit of the Warrantholder and
his/her successors and assigns.
Section 8.02 No Inconsistent Agreements. To the extent the terms
of this Warrant may conflict with any of the provisions of the Securityholders
Agreement, the relevant provisions of the Securityholders Agreement shall apply.
The Company will not on or after the date of this Warrant enter into any
agreement (other than the Securityholders Agreement) with respect to its
securities which is inconsistent with the rights granted to the Warrantholder or
otherwise conflicts with the provisions hereof. The rights granted to the
Warrantholder hereunder do not in any way conflict with and are not inconsistent
with the rights granted to holders of the Company's securities under any other
agreements (other than the Securityholders Agreement.)
Section 8.03 Entire Agreement. This Warrant and the Exhibits
hereto contain the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous arrangements
or understandings with respect thereto.
Section 8.04 Amendments and Waivers. The terms and provisions of
this Warrant, including the provisions of this sentence, may be modified or
amended, or any of the provisions hereof waived, temporarily or permanently,
pursuant to the written consent of the Company and the Warrantholder.
Section 8.05 Counterparts. This Warrant may be executed in any
number of counterparts and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
10
Section 8.06 Governing Law. This Warrant shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of North Carolina and of the United States of
America, in each case located in the County of New Hanover, for any action,
proceeding or investigation in any court or before any governmental authority
("Litigation") arising out of or relating to this Warrant and the transactions
contemplated hereby (and agrees not to commence any Litigation relating thereto
except in such courts), and further agrees that service of any process, summons,
notice or document by U.S. registered mail to its respective address set forth
in this Warrant shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Warrant or the transactions contemplated hereby in the
courts of the State of North Carolina or the United States of America, in each
case located in the County of New Hanover, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such Litigation brought in any such court has been brought in an
inconvenient forum.
Section 8.07 Severability. Whenever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid,
but if any provision of this Warrant is held to be invalid or unenforceable in
any respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Warrant.
Section 8.08 Notice. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:
(i) if to the Company, to :
Endeavor Pharmaceuticals, Inc.
127 Racine Drive
Wilmington, North Carolina 28401
Attention: R. Forrest Waldon
with a copy to:
Paul, Hastings, Janofsky & Walker LLP
345 California Street
29th Floor
San Francisco, California 94104
Attention: Thomas R. Pollock, Esq.
11
(ii) if to the Warrantholder, to:
Stack Pharmaceuticals, Inc.
5 Sylvan Way
Parsippany, New Jersey 07054
Attention: David Stock
All such notices, requests, consents and other communications shall be deemed to
have been given when received.
[Remainder of page intentionally left blank - signature pages to follow]
12
IN WITNESS WHEREOF, this Warrant has been duly executed by the Company
as of the______ day of____________, 2000.
ENDEAVOR PHARMACEUTICALS, INC.
By:
--------------------------------------
Name: R. Forrest Waldon
Title: President and Chief Executive
Officer
Attest:
-------------------------
Name:
Title:
AGREED AND ACCEPTED:
------------------------------------
Name:
Title:
13
Exhibit A to Warrant
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
ENDEAVOR PHARMACEUTICALS, INC.
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder,____________________
(1) shares of Common Stock covered by the within Warrant and requests that the
certificates for such shares be issued in the name of, and delivered
to,________________ whose address is _________________. The undersigned herewith
makes payment (by cash, check, surrender of Warrants, or any combination
thereof) in full therefor of the Exercise Price therefor (or
$___________________ in the aggregate).
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
- -------------------
(1) Insert here the number of shares called for on the face of this Warrant (or,
in the case of a partial exercise, the portion thereof as to which this Warrant
is being exercised). In the case of a partial exercise, a new Warrant or
Warrants will be issued and delivered, representing the unexercised portion of
the Warrant, to the holder surrendering the Warrant.
Exhibit B to Warrant
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto _______________ the right represented
by such Warrant to purchase __________________ (1) shares of Common Stock of
Endeavor Pharmaceuticals, Inc. to which such Warrant relates and appoints
________________ Attorney to make such transfer on the books of Endeavor
Pharmaceuticals, Inc. maintained for such purpose, with full power of
substitution in the premises.
Dated:
Signature must conform in all respects to
name of holder as specified on the face of
Warrant)
--------------------------------------------
(Street Address)
--------------------------------------------
(City) (State) (Zip Code)
Signed in the presence of:
- --------------------------
- --------------------------
- -------------------
(1) Insert here the number of shares called for on the face of this Warrant (or,
in the case of a partial assignment, the portion thereof as to which this
Warrant is being assigned). In the case of a partial assignment, a new Warrant
or Warrants will be issued and delivered, representing the unassigned portion of
the Warrant, to the holder surrendering the Warrant.
EXHIBIT C
AGREEMENT TO BE BOUND BY
SECURITYHOLDERS AGREEMENT OF
ENDEAVOR PHARMACEUTICALS, INC.
, 2000
-------------
Endeavor Pharmaceuticals, Inc.
5051 New Centre Drive
Wilmington, North Carolina 28403
Re: Securityholders Agreement dated as of August 8, 2000 among
Endeavor Pharmaceuticals, Inc. (the "Company") and the securityholders of the
Company named therein, and all amendments and modifications thereto (the
"Securityholders Agreement")
Ladies and Gentlemen:
In consideration of, and in satisfaction of a condition to, my receipt
of warrant(s) ("Warrant" or "Warrants") to purchase shares of the Company's
common stock, par value $.01 per share, pursuant to the Endeavor
Pharmaceuticals, Inc. 2000 Warrant Plan, I hereby acknowledge and agree as
follows:
1. I am hereby made a party to the Securityholders Agreement and
bound by all of the terms and conditions contained in the
Securityholders Agreement; and
2. Each Warrant issued to me by the Corporation shall be
considered a security of the Corporation pursuant to the
Securityholders Agreement and shall be subject to all of the
terms and conditions contained in the Securityholders
Agreement.
-------------------------------------------
Name:
--------------------------------------
Address:
-----------------------------------
Accepted:
Endeavor Pharmaceuticals, Inc.
By:
-------------------------------
R. Forrest Waldon, President
EXHIBIT D
ENDEAVOR PHARMACEUTICALS, INC.
2000 WARRANT PLAN FOR CONSULTANTS
1. PURPOSE
The purpose of the Endeavor Pharmaceuticals, Inc. 2000 Warrant Plan
(the "Plan") is to promote the growth and profitability of Endeavor
Pharmaceuticals, Inc. (the "Company") and its subsidiaries ("Subsidiaries") from
time to time by increasing the incentive for participants to contribute to the
success of the Company and to reward them for their contribution to that
success. It is intended that warrants under this Plan be awarded to certain
consultants of the Company who work on projects for and on behalf of the Company
and directly consult with officers and other employees of the Company with
respect to important Company business ("Consultants"). Accordingly, this Plan is
intended to qualify for the exemption available under Rule 701 under the
Securities Act of 1933, as amended (the "Securities Act"), as a plan for
consultants.
2. STOCK SUBJECT TO PLAN
The warrants granted under this Plan shall be warrants ("Warrant" or
"Warrants") to purchase shares of the Company's common stock, $.01 par value
("Common Stock"), subject to restrictions on transfer or such other restrictions
as the administrators of the Plan may determine and as set forth in the
Securityholders Agreement between the Company and the securityholders named
therein. The stock to be offered under the Plan shall be authorized but unissued
shares of the Company's Common Stock. An aggregate of 75,000 shares of Common
Stock is reserved for issuance upon exercise of Warrants. The number of shares
reserved under the Plan may be adjusted to reflect any change in the
capitalization of the Company as contemplated by SECTION 10 hereof and occurring
after the adoption of the Plan.
3. ADMINISTRATION
The Plan may be administered by one or more committees (each a
"Committee") of the Company's Board of Directors (the "Board"). Each Committee
shall consist of two or more members of the Board who have been appointed by the
Board. Each Committee shall have such authority and be responsible for such
functions as the Board has assigned to it. If no Committee has been appointed,
the entire Board shall administer the Plan.
Subject to the provisions of the Plan, the Board shall have full
authority and discretion to take any actions it deems necessary or advisable for
the administration of the Plan. All decisions, interpretations, and other
actions of the Board shall be final and binding.
The Board or the Committee shall have complete authority to: (i)
interpret all terms and provisions of the Plan consistent with law; (ii) select
the Consultants to whom Warrants shall be granted from the group of Consultants
eligible to participate in the Plan; (iii) within the limits
established herein, determine the number of shares to be subject to and the
exercise price of each Warrant; (iv) prescribe the form of instrument(s)
evidencing Warrants granted under the Plan; (v) determine the time or times at
which Warrants shall be granted to Consultants; (vi) provide, if appropriate,
for the exercisability of Warrants in installments or subject to specified
conditions; (vii) determine the method of exercise of Warrants; (viii) adopt,
amend and rescind general and special rules and regulations for the Plan's
administration; and (ix) make all other determinations necessary or advisable
for the administration of the Plan.
Any action which the Board or the Committee is authorized to take may
be taken without a meeting if all the members of the Board or the Committee sign
a written document authorizing such action to be taken, unless different
provision is made by the By-Laws of the Company or by resolution of the Board or
the Committee.
The Board or the Committee may designate selected Board or Committee
members or certain employees of the Company to assist the Board or the Committee
in the administration of the Plan and may grant authority to such persons to
execute documents, including Warrants, on behalf of the Board or the Committee.
No member of the Board or the Committee or employee of the Company
assisting the Board or the Committee pursuant to the preceding paragraph shall
be liable for any action taken or determination made in good faith.
The Board or the Committee shall maintain records showing the
cumulative total of all shares subject to Warrants outstanding under the Plan.
4. WARRANT AWARDS
(a) Eligibility for Warrants
The grant of Warrants under this SECTION 4 shall be limited to those
Consultants of the Company or any of its Subsidiaries who are selected by the
Board or the Committee ("Qualified Participants"). In making any determination
as to the Qualified Participants to whom Warrants shall be granted under this
SECTION 4 and as to the number of shares to be subject thereto, the Board or the
Committee shall take into account, in each case, the value of the consulting
services provided to the Company by the Qualified Participant based upon the
level and responsibility of the person's position, the level of the person's
performance, the person's level of compensation, and such additional factors as
the Board or the Committee shall deem relevant to the accomplishment of the
purposes of the Plan.
-2-
(b) Allotment of Shares
The Board or the Committee, in its sole discretion and subject to the
provisions of the Plan, may grant Warrants to Qualified Participants eligible
under this SECTION 4, on or after the date of adoption of the Plan (hereinafter
"Warrant Recipient"). Warrants granted under this SECTION 4 may be allotted to a
Qualified Participant in such amounts, subject to the limitations specified in
the Plan, as the Board or the Committee, in its sole discretion, may from time
to time determine.
(c) Time of Granting Warrants
The date of grant of a Warrant under this SECTION 4 shall be, for all
purposes, the date on which the Board or the Committee makes the determination
of granting such Warrant (each such date, a "Grant Date"). Notice of the
determination shall be given to each Warrant Recipient to whom a Warrant is so
granted under this SECTION 4 within a reasonable time after the Grant Date.
(d) Warrant Instrument
Each grant of a Warrant under this SECTION 4 shall be evidenced by a
Warrant Instrument between the Warrant Recipient and the Company (a "Warrant
Instrument"). Each Warrant Instrument shall contain such terms and conditions as
the Board or the Committee, in its sole discretion, deems appropriate, which
shall be consistent with the terms and conditions of the Plan.
(e) Exercise Price for Warrants
The price per share at which each Warrant granted under this SECTION 4
may be exercised shall be such price as shall be determined by the Board or the
Committee at the time of grant and set forth in the Warrant Instrument.
(f) Term of Warrants
The term of each Warrant granted under this SECTION 4 shall be
established by the Board or the Committee, but shall not exceed 5 years from the
Grant Date for such Warrant.
(g) Cancellation and Replacement of Warrants
The Board or the Committee may at any time or from time to time permit
the voluntary surrender by the holder of any outstanding Warrant granted under
this SECTION 4 where such surrender is conditioned upon the granting under this
SECTION 4 to such holder of new Warrant(s) for such number of shares as the
Board or the Committee shall determine, or may require such a voluntary
surrender as a condition precedent to the grant under this SECTION 4 of new
Warrant(s) to such holder.
The Board or the Committee shall determine the terms and conditions of
any such new Warrant(s), including their exercise price and the periods during
which they may be exercised, subject to and in accordance with the provisions of
the Plan, all or any of which may differ from the
-3-
terms and conditions of the Warrant(s) surrendered. Any such new Warrant(s)
shall be subject to all the relevant provisions of the Plan.
The shares subject to any Warrant so surrendered or terminated shall no
longer be charged against the limitation or limitations provided in SECTION 2 of
the Plan and may thereafter become the subject of new Warrant grants under the
Plan.
The granting of new Warrant(s) in connection with the surrender of
outstanding Warrant(s) under the Plan shall be considered for the purposes of
the Plan as the grant of new Warrant(s) and not an alteration, amendment or
modification of the Plan or of the Warrant(s) being surrendered.
(h) Vesting
The vesting schedule for each Warrant granted under this SECTION 4
shall be determined by the Board or the Committee at the time of grant and set
forth in the Warrant Instrument.
Notwithstanding the foregoing, any Warrant granted pursuant to this
Plan shall, to the extent not vested, be deemed fully vested immediately prior
to a Change of Control. For the purposes of the Plan, a "Change of Control"
shall mean and include the following:
(i) The consummation of a tender offer or exchange offer
for the ownership of securities of the Company representing
51% or more of the combined voting powers of the Company's
then outstanding voting securities;
(ii) The adoption by the Company's stockholders of a plan
of merger or consolidation providing for the merger or
consolidation of the Company with another corporation (other
than an affiliate of the Company within the meaning of the
Securities Exchange Act of 1934) and as a result of such
merger or consolidation less than 75% of the outstanding
voting securities of the surviving or resulting corporation
would then be owned in the aggregate by the former
stockholders of the Company; or
(iii) The transfer by the Company of substantially all of
its assets to another corporation or entity which is not a
wholly owned subsidiary of the Company.
5. TRANSFERABILITY
A Warrant granted to a Warrant Recipient under the Plan shall be
transferable by him or her to the extent set forth in the Warrant Instrument or
as otherwise determined by the Board or the Committee.
6. EXERCISABILITY OF WARRANTS
Subject to the provisions of the Plan, Warrants granted under SECTION 4
hereof shall be exercisable at such time or times after the Grant Date to the
extent such Warrants are vested.
-4-
Except as otherwise determined by the Board or the Committee and as set
forth in the Warrant Instrument, any Warrant shall terminate in full (whether or
not previously exercisable) prior to the expiration of its term on the date
thirty (30) days after the date the Warrant Recipient ceases to be a Consultant
of the Company or a Company Subsidiary.
In no event may a Warrant be exercised after the expiration of its
fixed term.
7. METHOD OF EXERCISE
Each Warrant granted under the Plan shall be deemed exercised when (a)
the holder shall indicate the decision to do so in writing delivered to the
Company, (b) payment in full of the exercise price for the shares for which the
Warrant is exercised has been received by the Company, and (c) the holder shall
comply with such other reasonable requirements as the Board or the Committee may
establish.
No person, estate or other entity shall have any of the rights of a
shareholder with reference to shares subject to a Warrant until a certificate
for such shares has been issued by the Company.
A Warrant granted under the Plan may be exercised for any lesser number
of shares than the full amount for which it could be exercised. Such a partial
exercise of a Warrant shall not affect the right to exercise the Warrant from
time to time in accordance with the Plan for the remaining shares subject to the
Warrant.
8. CONSIDERATION
The consideration to be paid for the shares to be issued upon exercise
of a Warrant, including the method of payment, shall be determined by the Board
or the Committee and set forth in the Warrant Instrument and shall be made by
cash or check; provided that to enable a Warrant Recipient to exercise Warrants
granted under the Plan, the Board or Committee may determine, in the exercise of
its discretion, to (i) cause the Company to lend money or other property to such
holder upon such terms and conditions and in such amounts as the Board or the
Committee may determine, (ii) grant such holder permission to pay the exercise
price in installments, or to accept such holder's note as whole or partial
payment, (iii) permit such holder to repay loans made by the Company to such
holder for the exercise of Warrants with issued and outstanding shares of Common
Stock, or (iv) provide such financial assistance to such holder as the Board or
the Committee determines to be desirable.
The exercise of any Warrant granted under the Plan may be made subject
to the condition that, if at any time the Board or the Committee shall
determine, in its discretion, that the satisfaction of withholding tax or other
withholding liabilities under any state or federal law is necessary or desirable
as a condition of, or in connection with, such exercise or the delivery or
purchase of shares pursuant thereto, then in such event, the exercise of the
Warrant shall not be effective unless such withholding tax or other withholding
liabilities shall have been satisfied in a manner acceptable to the Company,
which may include the withholding by the Company of shares of Common Stock to be
-5-
issued upon exercise of a Warrant having a fair market value equal to the
required withholding amount.
9. TERMINATION OF WARRANTS
A Warrant granted under the Plan shall be considered terminated in
whole or in part, to the extent that, in accordance with the provisions of the
Plan and such Warrant, it can no longer be exercised for any shares originally
subject to the Warrant.
-6-
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding Common Stock or shares of
Common Stock issuable upon conversion of any preferred stock of the Company by
reason of a stock dividend, stock split, stock consolidation, recapitalization,
reorganization, merger, split up or the like, the shares available for purposes
of the Plan or under Warrant in outstanding Warrant Instruments pursuant to the
Plan (and the Warrant price under such Warrant Instruments) shall be
appropriately adjusted so as to preserve, but not increase, the benefits of the
Plan to the Company and the benefits to the holders of such Warrants.
Adjustments under this Section shall be made by the Board or the
Committee.
11. COMPLIANCE WITH SECURITIES LAWS AND OTHER REQUIREMENTS
No certificate(s) for shares shall be issued upon exercise of a Warrant
until the Company shall have taken such action, if any, as is then required to
comply with the provisions of the Securities Act, the securities laws of the
State of North Carolina, any other applicable state securities law(s) and the
requirements of any exchange (including the NASDAQ National Market) on which the
Common Stock may, at the time, be listed.
In the case of the exercise of a Warrant by a person or estate
acquiring the right to exercise the Warrant by bequest or inheritance, the Board
or the Committee may require reasonable evidence as to the ownership of the
Warrant and may require such consents and releases of taxing authorities as it
may deem advisable.
12. NO RIGHT TO CONSULT
Neither the adoption of the Plan, nor its operation, nor any document
describing or referring to the Plan, or any part thereof, shall confer upon any
participant under the Plan any right to continue his/her consulting relationship
with the Company, or shall in any way affect the right and power of the Company
to terminate the consulting relationship with the Company of any participant
under the Plan at any time with or without assigning a reason therefor, to the
same extent as the Company might have done if the Plan had not been adopted.
13. EFFECTIVE DATE OF THE PLAN
The Plan was adopted by the Board on October____, 2000 and shall be
effective for five (5) years from the earlier of the adoption of the Plan by the
Board or approval of the Plan by the Company's stockholders, after which time no
Warrant shall be granted, but such termination shall not affect any Warrant
previously granted under the Plan.
-7-
14. WARRANT SHARE LEGENDS
Section 1.01 Each stock certificate issued upon exercise of a
Warrant granted under the Plan shall bear such legends as set forth in the
Warrant Instrument, including, without limitation, a legend containing the
following words:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE. THE SECURITIES MAY NOT BE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
The requirement that the above legend be placed upon certificates evidencing any
such securities shall cease and terminate upon the earliest of the following
events: (i) when such shares are transferred in an underwritten public offering,
(ii) when such shares are transferred pursuant to Rule 144 under the Securities
Act or (iii) when such shares are transferred in any other transaction if the
seller delivers to the Company an opinion of its counsel, which counsel and
opinion shall be reasonably satisfactory to the Company, or a "no-action" letter
from the Staff of the Securities and Exchange Commission, in either case to the
effect that such legend is no longer necessary in order to protect the Company
against a violation by it of the Securities Act upon any sale or other
disposition of such shares without registration thereunder. Upon the occurrence
of such event, the Company, upon the surrender of certificates containing such
legend, shall, at its own expense, deliver to the holder of any such securities
as to which the requirement for such legend shall have terminated, one or more
new certificates evidencing such securities not bearing such legend.
-8-
Exhibit E
CONFIDENTIAL DISCLOSURE AGREEMENT
This Confidential Disclosure Agreement ("Agreement") is made this _____
day of ____________, ____ by and between Endeavor Pharmaceuticals, Inc., a
Delaware corporation, located at 127 Racine Drive, Wilmington, North Carolina
28403, ("Endeavor") and David Stack, an individual whose address is Stack
Pharmaceuticals, 5 Sylvan Way, Parsippany, NJ 07054 ("Consultant").
W I T N E S S E T H
WHEREAS, Endeavor proposes to disclose certain proprietary and
confidential information more fully defined below ("CONFIDENTIAL INFORMATION");
WHEREAS, said CONFIDENTIAL INFORMATION is being disclosed for the
purpose of Consultant performing certain consulting services for and on behalf
of Endeavor;
WHEREAS, Consultant has agreed to keep said CONFIDENTIAL INFORMATION
secret and confidential during the term of this Agreement and to make no use of
it whatsoever except as expressly authorized by Endeavor in writing.
NOW THEREFORE, in consideration of the disclosure of CONFIDENTIAL
INFORMATION to be provided pursuant to this Agreement and in consideration of
the covenants set forth hereinafter, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto do agree as follows:
1. CONFIDENTIAL INFORMATION shall mean information relating to,
without limitation, trade secrets, know-how, new chemical entities, processes,
methodologies, analytical procedures, clinical procedures, clinical protocols,
clinical and experimental results, formulations, patent applications, raw
materials, business plans, financial information and models, and/or marketing
strategies whether written, electronic, graphic, or oral, as well as physical
samples and specimens, furnished or disclosed by Endeavor directly or indirectly
to Consultant with the exception only of the following:
a) information that is now in the public domain or subsequently
enters the public domain without fault on the part of
Consultant;
b) information that is presently known to Consultant from his own
sources and which was not subject to Endeavor confidentiality
obligations by the disclosing party at the time of the
disclosure,
which Consultant can demonstrate by written records; or
c) information Consultant lawfully receives from any third party
not under any obligation to keep such information
confidential.
2. Consultant agrees not to use CONFIDENTIAL INFORMATION for any
purpose other than for Consultant performing certain agreed upon consulting
services for and on behalf of Endeavor.
3. Consultant agrees that he will maintain in confidence all
CONFIDENTIAL INFORMATION. In this regard, Consultant agrees to disclose
CONFIDENTIAL INFORMATION only to those persons who are directly concerned with
the use and evaluation of the CONFIDENTIAL INFORMATION for the purpose specified
above and shall take all necessary and reasonable precautions to prevent such
CONFIDENTIAL INFORMATION from being disclosed to an unauthorized person, firm,
or company. Prior to disclosing CONFIDENTIAL INFORMATION to any other party,
Consultant shall obtain Endeavor's permission to do so and shall require said
party to enter into a Confidential Disclosure Agreement with Endeavor with such
restrictions as Endeavor deems appropriate. Consultant shall take all necessary
and reasonable precautions to prevent the unauthorized disclosure of the
CONFIDENTIAL INFORMATION by any such third parties.
4. Consultant understands and agrees that Consultant is
performing work for hire for Endeavor and that any Inventions (as more fully
defined below) or work product developed or conceived by Consultant during
Consultant's performance of services for Endeavor that are related to the
services provided are the sole property of Endeavor. Inventions shall include
any (i) inventions, discoveries, programs, techniques, designs and/or concepts,
(ii) machinery, products, processes, information systems, software (including
without limitation source code, object code, documentation, diagrams and flow
charts), as well as any other discoveries, concepts and ideas, whether
patentable or not, relating to any present or prospective activities or business
of Endeavor. Consultant agrees to promptly disclose to Endeavor all Inventions
Consultant makes while performing services to Endeavor. Consultant agrees to
assign, and does hereby assign, to Endeavor or its nominees, all right, title
and interest in and to Inventions made by Consultant. Consultant will, with
reasonable reimbursement for expenses plus Consultant's standard consulting fee,
but at no other expense to Endeavor, at any time during or after the
Consultant's provision of services to Endeavor, sign and deliver all lawful
papers and cooperate in such other lawful acts which may be reasonably necessary
or desirable to protect or vest title in Inventions in Endeavor or its nominees,
including applying for, obtaining, maintaining, and enforcing copyrights and/or
patents on Inventions in all countries of the world. Provided, however, that
nothing herein shall require Endeavor to accept or perfect any such assignment
or other conveyance of any interest in any patent or Inventions or require
Endeavor to prosecute such patent
or other application. This provision does not apply to any Inventions for which
Consultant affirmatively proves that no equipment, supplies, facility, or trade
secret information of Endeavor was used and which was developed entirely on the
Consultant's own time unless the Inventions result, either directly or
indirectly, from any services performed by Consultant for Endeavor.
5. Consultant further acknowledges that any violation of the
provisions hereof will result in irreparable injury to Endeavor for which there
is no adequate remedy at law, and Consultant agrees that, in the event of any
breach of the provisions hereof, Endeavor shall be entitled to injunctive relief
in addition to any other remedy at law or in equity which may be available to
Endeavor. The parties hereto also agree that any court proceeding arising out of
a breach of the provisions hereof shall be brought in New Hanover County, North
Carolina, and that the General Court of Justice, New Hanover County, North
Carolina, shall have jurisdiction over any proceedings arising out of a breach
of this Agreement.
6. The obligations of Consultant set forth in this Agreement
shall continue for a period of ten (10) years from the date of the execution of
this Agreement.
7. This Agreement may only be changed by another written
Agreement signed by both of the parties hereto.
8. This Agreement shall inure to the benefit of and be binding
upon the undersigned parties, their respective legal successors and assigns.
9. This Agreement shall be governed and construed in accordance
with the laws of the State of North Carolina, U.S.A.
10. This Agreement shall be executed in duplicate originals with
each party retaining one original for its records.
IN WITNESS WHEREOF, Endeavor and Consultant have each caused this
instrument to be executed as of the date and year first above written.
- ----------------------------------------
CONSULTANT NAME
ENDEAVOR PHARMACEUTICALS, INC.
By:
-------------------------------------
R. Forrest Waldon
President and Chief Executive Officer