CUMBERLAND PHARMACEUTICALS INC. 2007 LONG-TERM INCENTIVE COMPENSATION PLAN INCENTIVE STOCK OPTION AGREEMENT
EXHIBIT
4.6.1
CUMBERLAND PHARMACEUTICALS INC.
2007 LONG-TERM INCENTIVE COMPENSATION PLAN
INCENTIVE STOCK OPTION AGREEMENT
2007 LONG-TERM INCENTIVE COMPENSATION PLAN
INCENTIVE STOCK OPTION AGREEMENT
This Option Agreement is entered into and effective on ___, by and between
Cumberland Pharmaceuticals Inc., a Tennessee corporation (the “Company”), and
___, (the “Participant”).
WHEREAS, the Company has adopted the 2007 Long-Term Incentive Compensation Plan (the “Plan”),
which is administered by the Company’s Board of Directors (the “Board”); and
WHEREAS, as an increased incentive to contribute to the Company’s future success and
prosperity, the Company will, subject to the Participant continuing to provide services to the
Company (or any of its current or future subsidiaries), provide the Participant an opportunity to
acquire shares of the Company’s common stock, no par value (the “Stock”).
NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein and for
other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged,
the parties hereto agree as follows:
1. Grant of Option. Subject to the terms of the Plan and the terms of this Option
Agreement, the Company grants to the Participant an option (the “Option”) to purchase from the
Company up to ___shares of Stock (the “Shares”), subject to adjustment as provided
in the Plan. This Option is intended to qualify as an incentive stock option (an “ISO”) within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
2. Exercise Price. If the Option is exercised, the purchase price per Share shall be
___.
3. Method of Exercise. The Option granted under this Agreement shall be exercisable
from time to time, in whole or in part, by written notice in the manner set forth in Section 8
hereof, accompanied by payment of the purchase price for the Shares which the Participant elects to
purchase by cash, check, or such other instrument as the Company may accept. The Company shall make
prompt delivery of such Shares; provided that if any law or regulation which requires the Company
to take any action with respect to the Shares specified in such notice before issuance thereof,
then the date of delivery of such Shares shall be extended for the period necessary to take such
action.
4. Vesting.
(a) Participant shall become vested in the Option up to the amount of ___
shares on the 31st day of each December during the ___year period from
___to ___, subject to the achievement of certain Performance Criteria and amount of
time contributed, as determined in the sole and absolute discretion of the Board.
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(b) Upon the Participant’s Employment Termination, the Option, to the extent unvested, shall
lapse and be cancelled, and be of no further force and effect, as of midnight of such date, unless
the Board resolves (under Section 4(b) of the Plan) to cancel or cause the forfeiture of the
Incentive Option at an earlier time.
(c) Upon an Acquisition Event and/or a Change in Control Event, the Option will vest to the
extent provided in the Plan.
5. Termination of Option; Restrictions on Exercise. Except as otherwise stated in
this Agreement, this Option, to the extent not previously exercised, shall expire on the
___anniversary (the “Expiration Date”) of the date of this Agreement. The following
additional provisions shall apply to the exercise of this Option:
(a) Termination of Employment. Except as otherwise provided in this Agreement or in the Plan,
if Participant’s employment with the Company or any of its subsidiaries is terminated by the
Participant or the Company, this Option, to the extent that it is vested in accordance with the
applicable provisions of Section 4 hereof, may not be exercised after the earlier of (i) ninety
(90) days after such termination or (ii) the expiration date of this Option stated above. Except
as expressly set forth otherwise herein, this Option shall terminate in all other respects upon
such termination of employment.
(b) Death of Participant. If the Participant’s employment with the Company is terminated due
to his/her death during the term of this Option, the Participant’s legal representative, or the
person so entitled under the Participant’s last will and testament, or under applicable intestate
laws, shall have the right to exercise this Option for the number of shares to which the
Participant was entitled in accordance with applicable provisions of Section 4 hereof, and such
right shall expire and this Option shall terminate on the Expiration Date. Except as expressly set
forth otherwise herein, this Option shall terminate in all other respects upon such termination of
employment.
6. Provisions of Plan. This Option is subject to the Plan as defined herein. The
terms and provisions of the Plan as it may be amended from time to time are hereby incorporated
herein by reference. In the event of a conflict between the terms or provisions contained herein
and the terms or provisions of the Plan, the applicable terms and provisions of the Plan will
govern and prevail; however, in the event of a conflict regarding specific terms and provisions
addressing the duration of this Option after termination of employment, the terms and provisions
of this Option will govern.
7. Tax Treatment of Option. This Option is intended to qualify as an ISO within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended. This Option will
automatically be converted to a nonqualified option to the extent that the Option or exercise
thereof does not meet the conditions of the Internal Revenue Code, as amended, to maintain status
as an ISO. The Participant is responsible for any federal, state, local, or foreign tax, including
income tax, social security tax, payroll tax, payment on account, or other tax-related withholding
with respect to this Option (including the grant, vesting and exercise of the Option and the
receipt of Stock and sale of Stock). The Company does not guarantee any particular tax treatment
or results in connection with the grant, vesting or exercise of the Option.
8. Notices. Any notice, request, instruction or other document given under this
Option Agreement shall be in writing and shall be addressed and delivered in the case of the
Company, to the Secretary of the Company at the principal office of the Company and, in the
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case of the Participant, the Participant’s address as set forth herein or to such other
address as the Participant may provide in a written notice to the Company, a copy of which shall
be on file with the Secretary of the Company.
9. Governing Law. This Option Agreement shall be construed in accordance with and
governed by the law of the State of Tennessee, without giving effect to the conflict of law
provisions thereof.
10. Relation to Other Benefits. Unless otherwise provided, the benefits received by
the Participant under this Agreement will not be taken into account or treated as normal salary or
compensation in determining any benefits to which the Participant may be entitled under any profit
sharing, retirement, bonus, long service, or other benefit or compensation plan maintained by the
Company, including the amount of any life insurance coverage available to any beneficiary of the
Participant under any life insurance plan covering employees of the Company, or as part of the
calculation of any severance, resignation, termination, redundancy or end of service payments. The
grant of this Option does not create any contractual or other right to receive future grants of
Options, or benefits in lieu of Options, even if the Participant has a history of receiving Options
or other stock awards.
IN WITNESS WHEREOF, each of the parties hereto has caused this Option Agreement to be executed
by its duly authorized representative.
| CUMBERLAND PHARMACEUTICALS INC.: |
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| By: | ____________________ | |||
| Name: | ____________________ | |||
| Title: | ____________________ | |||
| PARTICIPANT: |
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| Signature: | ____________________ | |||
| Name: | ____________________ | |||
| Address: ____________________ | ||||
OPTION NO. _________________
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FOR FUTURE USE
NOTICE OF EXERCISE
The undersigned hereby elects to exercise the purchase rights granted thereto pursuant to the
attached Option Agreement # ___. In accordance with the terms thereof, the undersigned
elects to purchase ______ shares of Common Stock of Cumberland Pharmaceuticals Inc. and tenders herewith
payment of the purchase price for such shares in full.
In exercising such rights, the undersigned hereby confirms and acknowledges that the shares of
Common Stock are being acquired solely for investment, and that the undersigned will not offer,
sell, or otherwise dispose of any such shares of Common Stock, except under circumstances that will
not result in a violation of the Securities Act of 1933, as amended, or any state securities laws.
Please issue and deliver to the undersigned a certificate or certificates representing said
shares of Common Stock in the name of the undersigned. Please issue and deliver to the undersigned
a new Option for any unexercised portion of the attached Option in the name of the undersigned.
Date: _____________
| Signature: | ___________________________________ | |||
| Name: | ________________________________ | |||
| Title: | ________________________________ | |||
Delivery Information:
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Address: | |||
| City, State, Zip: | ||||
| Phone Number: | ||||
| (for express mailing purposes) |
$_________________________
Payment Attached
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