UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
MAY 23, 2007
Date of Report (Date of earliest event reported)
DELAWARE 000-51290 52-1841431
------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
777 OLD SAW MILL RIVER ROAD
TARRYTOWN, NEW YORK 10591
------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
|
(914) 606-3500
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[_] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[_] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[_] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
ITEM 5.03 AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS, CHANGE IN FISCAL YEAR.
ITEM 8.01 OTHER EVENTS.
On Wednesday, May 23, 2007, EpiCept Corporation (the "Company") held an Annual Meeting of the Stockholders. Represented at the meeting, either in person or by proxy, were 16,981,117 shares of Common Stock of the Company, out of a total of 32,401,252 shares of Common Stock entitled to vote at the meeting, or greater than 50%, constituting a quorum.
The Stockholders approved a resolution to amend the Company's 2005 Equity Incentive Plan to increase the number of shares of Common Stock available for award under the plan from 4,000,000 to 7,000,000 and allow the issuance of restricted stock units. This amendment will be effective as of May 23, 2007.
The Stockholders also adopted a resolution to ratify the Audit Committee's selection of Deloitte & Touche LLP as the Corporation's Independent Registered Public Accounting Firm for the year ending December 31, 2007.
The Stockholders reelected, by a plurality of the votes cast, Gerhard Waldheim and John F. Bedard to the Board of Directors of the Company. They will serve until the Annual Meeting of Stockholders in 2010 and until their successors are elected and qualify.
Stockholders also authorized an amendment to the Company's Certificate of Incorporation, effective May 23, 2007, to increase the number of authorized shares of capital stock of the Company from 55,000,000 to 80,000,000.
A copy of the 2005 Equity Incentive Plan, as amended, is attached hereto as Exhibit 10.1 and is incorporated in this Item 1.01 by reference.
A copy of the Second Amended and Restated Certificate of Incorporation relating to the foregoing is attached hereto as Exhibit 3.1 and is incorporated in these Items 5.03 and 8.01 by reference.
A copy of statements at the 2007 Annual Stockholders Meeting by the Chairman of the Board and President and Chief Executive Officer of EpiCept Corporation are attached hereto as Exhibit 99.1 and 99.2, respectively, and are incorporated in this Item 8.01 by reference.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
3.1 Second Amended and Restated Certificate of Incorporation
10.1 2005 Equity Incentive Plan
99.1 Statement by the Chairman of the Board of EpiCept Corporation
at the 2007 Annual Meeting of the Stockholders
99.2 Statement by the President and Chief Executive Officer of
EpiCept Corporation at the 2007 Annual Meeting of the
Stockholders
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
EPICEPT CORPORATION
/s/ Robert W. Cook
--------------------------------
Name: Robert W. Cook
Title: Chief Financial Officer
Date: May 23, 2007
|
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
3.1 Second Amended and Restated Certificate of Incorporation
10.1 2005 Equity Incentive Plan
99.1 Statement by the Chairman of the Board of EpiCept Corporation at the
2007 Annual Meeting of the Stockholders
99.2 Statement by the President and Chief Executive Officer of EpiCept
Corporation at the 2007 Annual Meeting of the Stockholders
|
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EPICEPT CORPORATION
EpiCept Corporation, a Delaware corporation (the "CORPORATION"), does hereby certify that:
FIRST: The name of the Corporation is "EpiCept Corporation." The Corporation was originally incorporated under the name "American Pharma-Liedtke, Inc." by the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware on March 9, 1993 as amended on March 19, 1993, September 8, 1993, May 27, 1994, February 8, 1996, April 18, 1997, November 18, 1999, January 26, 2000, December 21, 2000, August 18, 2004, September 13, 2004, November 12, 2004, March 4, 2005, September 6, 2005, November 15, 2005, and January 3, 2006, and as restated on January 4, 2006. The name of the Corporation was changed to "EpiCept Corporation" pursuant to an amendment to the Certificate of Incorporation of the Corporation filed with the Secretary of State of the State of Delaware on November 18, 1999.
SECOND: This Second Amended and Restated Certificate of Incorporation of the Corporation (the "CERTIFICATE") amends and restates in its entirety the present Amended and Restated Certificate of Incorporation of the Corporation, and has been approved in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.
THIRD: The Certificate shall become effective immediately upon its filing with the Secretary of State of the State of Delaware.
FOURTH: Upon the filing of the Certificate with the Secretary of State of the State of Delaware, the Amended and Restated Certificate of Incorporation of the Corporation shall be amended and restated in its entirety to read as set forth on Exhibit A attached hereto.
IN WITNESS WHEREOF, the undersigned, being the Chief Executive Officer of the Corporation, DOES HEREBY CERTIFY, under penalties of perjury, that the facts hereinabove stated are truly set forth and, accordingly, such officer has hereunto set his hand as of May 30, 2007.
EPICEPT CORPORATION
By: /s/ John V. Talley
----------------------------
Name: John V. Talley
Title: Chief Executive Officer
|
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
EPICEPT CORPORATION
ARTICLE FIRST
The name of the corporation is EpiCept Corporation ( the "CORPORATION").
ARTICLE SECOND
The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware. The name of the registered agent of the Corporation at such address is The Corporation Trust Company.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware, as from time to time amended (the "DGCL").
ARTICLE FOURTH
A. AUTHORIZED SHARES
The total number of shares of capital stock which the Corporation has
authority to issue is 80,000,000, consisting of (i) 75,000,000 shares of common
stock of the Corporation, par value $0.0001 per share (the "COMMON STOCK") and
(ii) 5,000,000 shares of preferred stock of the Corporation, $0.0001 par value
per share (the "PREFERRED STOCK").
The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect of each class of capital stock of the Corporation.
B. COMMON STOCK
1. General. The voting, dividend and liquidation rights of the holders of the Common Stock are subject to and qualified by the rights of the holders of the Preferred Stock of any series as may be designated by the Board of Directors of the Corporation (the "BOARD OF DIRECTORS") upon any issuance of the Preferred Stock of any series.
2. Voting. The holders of the Common Stock shall have voting rights at all meetings of stockholders of the Corporation, each such holder being entitled to one vote for each share thereof held by such holder; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate. There shall be no cumulative voting.
The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote (including shares entitled to vote on an as-converted basis), irrespective of the provisions of Section 242(b)(2) of the DGCL.
3. Dividends. Dividends may be declared and paid on the Common Stock from funds lawfully available therefor as and when determined by the Board of Directors and subject to any preferential dividend or other rights of any then outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the Corporation, whether voluntary or involuntary, holders of Common Stock will be entitled to receive all assets of the Corporation available for distribution to its stockholders, subject to any preferential or other rights of any then outstanding Preferred Stock.
C. PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more series, each of such series to have such terms as stated or expressed herein and in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors as hereinafter provided. Any shares of Preferred Stock which may be redeemed, purchased or acquired by the Corporation may be reissued except as otherwise provided by law. Discrete series of Preferred Stock shall not be construed to constitute discrete classes of shares for the purposes of voting by classes unless expressly provided.
1. Authority is hereby expressly granted to the Board of Directors from time to time to issue the Preferred Stock in one or more series, and in connection with the creation of any such series, by resolution or resolutions providing for the issuance of the shares thereof, to determine and fix the number of shares of such series and such voting powers, full or limited, or no voting powers, and such designations, preferences and relative participating,
optional or other special rights, and qualifications, limitations or restrictions thereof, including without limitation thereof, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be stated and expressed in such resolutions, all to the full extent now or hereafter permitted by Delaware law. Without limiting the generality of the foregoing, the resolutions providing for issuance of any series of Preferred Stock may provide that such series shall be superior or rank equally or be junior to the Preferred Stock of any other series to the extent permitted by law. Except as otherwise provided in this Certificate, no vote of the holders of the Preferred Stock or Common Stock shall be a prerequisite to the designation or issuance of any shares of any series of the Preferred Stock authorized by and complying with the conditions of this Certificate, the right to have such vote being expressly waived by all present and future holders of the capital stock of the Corporation.
The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares then outstanding) by the affirmative vote of the holders of a majority of the stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the DGCL.
ARTICLE FIFTH
This ARTICLE FIFTH is inserted for the management of the business and for the conduct of the affairs of the Corporation.
1. Number of Directors. The number of directors of the Corporation shall not be less than two. The exact number of directors within the limitations specified in the preceding sentence shall be fixed from time to time by, or in the manner provided in, the By-Laws of the Corporation (as amended from time to time, the "BY-LAWS").
2. Classes of Directors. The Board of Directors shall be and is divided into three classes: Class I, Class II and Class III. No one class shall have more than one director more than any other class. If a fraction is contained in the quotient arrived at by dividing the designated number of directors by three, then, if such fraction is one-third, the extra director shall be a member of Class III, and if such fraction is two-thirds, one of the extra directors shall be a member of Class III and one of the extra directors shall be a member of Class II, unless otherwise provided from time to time by resolution adopted by the Board of Directors.
3. Election of Directors. Elections of directors need not be by written ballot except as and to the extent provided in the By-laws.
4. Terms of Office. Except as provided in Section 6 of this ARTICLE FIFTH, each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, however, that each initial director in Class I shall serve for a term ending on the date of the annual meeting in 2006; each initial director in Class II shall serve for a term ending on the date of the annual meeting in 2007; and each initial director in Class III shall serve for a term ending on the date of the annual meeting in 2008; and provided, further, that the term of each
director shall be subject to the election and qualification of his or her successor and to his or her earlier death, resignation or removal.
5. Allocation of Directors Among Classes in the Event of Increases or Decreases in the Number of Directors. In the event of any increase or decrease in the authorized number of directors, (i) each director then serving as such shall nevertheless continue as a director of the class of which he or she is a member and (ii) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classes whose terms of offices are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution adopted by the Board of Directors.
6. Removal. The directors of the Corporation may not be removed without cause and may be removed for cause only by the affirmative vote of the holders of at least 75% of the shares of the capital stock of the Corporation issued and outstanding and entitled to vote generally in the election of directors cast at a meeting of the stockholders called for that purpose, notwithstanding the fact that a lesser percentage may be specified by law.
7. Vacancies. Any vacancy in the Board of Directors, however occurring, including a vacancy resulting from an enlargement of the Board, shall be filled only by vote of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office, and a director chosen to fill a position resulting from an increase in the number of directors shall hold office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of his or her successor and to his or her earlier death, resignation or removal.
8. Stockholder Nominations and Introduction of Business. Advance notice of stockholder nominations for election of directors and other business to be brought by stockholders of the Corporation before either an annual or special meeting of stockholders shall be given in the manner provided by the By-laws.
9. Amendment to Article. Notwithstanding any other provisions of law, this Certificate or the By-laws, and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate or the By-laws, the affirmative vote of at least 75% of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors shall be required to amend or repeal, or to adopt any provisions inconsistent with the purpose or intent of, this ARTICLE FIFTH.
ARTICLE SIXTH
1. Indemnification. To the fullest extent permitted by the DGCL, a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty as a director. The Corporation shall, to the fullest extent permitted under the DGCL or applicable law and except as set forth below, indemnify, hold harmless and, upon request, advance expenses to, each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, including any employee benefit plan (any such person being referred to hereafter as an "INDEMNITEE"), or by reason of any action alleged to have been taken or omitted in such capacity, against all liability and loss suffered and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Notwithstanding anything to the contrary in this ARTICLE SIXTH, the Corporation shall not indemnify an Indemnitee seeking indemnification in connection with any action, suit, proceeding, claim or counterclaim, or part thereof, initiated by the Indemnitee unless the initiation thereof was authorized in the specific case by the Board of Directors.
2. Advance of Expenses. Notwithstanding any other provisions in this Certificate, the By-laws, or any agreement, vote of stockholder or disinterested directors, or arrangement to the contrary, the Corporation shall, to the fullest extent not prohibited by applicable law, advance payment of expenses (including attorneys' fees) incurred by an Indemnitee in defending any proceeding in advance of the final disposition of any matter only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as authorized in this ARTICLE SIXTH. Such undertaking may be accepted without reference to the financial ability of the Indemnitee to make such repayment. The indemnification and advancement of expenses provided by this ARTICLE SIXTH shall not be deemed exclusive of any other rights to which a person seeking indemnification or advancement of expenses may be entitled under any law, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office or while employed by or acting as agent for the Corporation.
3. Subsequent Amendment. No amendment, termination or repeal of this ARTICLE SIXTH or of the relevant provisions of the DGCL or any other applicable laws shall (i) adversely affect any right or protection of a director of the Corporation existing under this ARTICLE SIXTH with respect to any act or
omission occurring prior to such repeal or modification or (ii) affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.
4. Other Rights. The Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this ARTICLE SIXTH.
5. Reliance. Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain a director, officer, employee or agent of a subsidiary of the Corporation, shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses and other rights contained in this ARTICLE SIXTH in entering into or continuing such service. The rights to indemnification and to the advance of expenses conferred in this ARTICLE SIXTH shall apply to claims made against an indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof.
6. Merger or Consolidation. If the Corporation is merged into or consolidated with another corporation and the Corporation is not the surviving corporation, the surviving corporation shall assume the obligations of the Corporation under this ARTICLE SIXTH with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the date of such merger or consolidation.
7. Insurance. The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was, or has agreed to become, a director, officer, employee or agent of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust or other enterprise, including any employee benefit plan, against all expenses (including attorney's fees) judgments, fines or amounts paid in settlement incurred by such person in any such capacity or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such expenses under the DGCL.
8. Savings Clause. If this ARTICLE SIXTH or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses, including attorneys' fees, judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this ARTICLE SIXTH that shall not have been invalidated and to the fullest extent permitted by applicable law.
ARTICLE SEVENTH
In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, and subject to the terms of any series of Preferred Stock, the Board of Directors shall have the power to adopt, amend, alter or repeal the By-laws. The affirmative vote of a majority of the directors present at any regular or special meeting of the Board of Directors at which a quorum is present shall be required to adopt, amend, alter or repeal the By-laws. The By-laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least 75% of the votes which all the stockholders of the Corporation would be entitled to cast in any annual election of directors or class of directors, in addition to any other vote required by this Certificate. Notwithstanding any other provisions of law, this Certificate or the By-laws, and notwithstanding the fact that a lesser percentage may be specified by law, the affirmative vote of the holders of at least 75% of the votes which all the stockholders of the Corporation would be entitled to cast in any annual election of directors or class of directors shall be required to amend or repeal, or to adopt any provision inconsistent with, this ARTICLE SEVENTH.
ARTICLE EIGHTH
The Corporation is to have perpetual existence.
ARTICLE NINTH
The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate in the manner now or hereafter prescribed by statute, and to add thereto any other provision authorized by the laws of the State of Delaware, and except as expressly provided herein, all rights, preferences and privileges conferred upon stockholders, directors or officers of the Corporation or any other person are granted subject to this reservation.
ARTICLE TENTH
The Corporation expressly elects to be governed by Section 203 of the
DGCL.
ARTICLE ELEVENTH
The Board of Directors, when evaluating any offer of another party to make a tender or exchange offer for any equity security of the Corporation, shall, in connection with the exercise of its judgment in determining what is in the best interests of the Corporation as a whole, be authorized to give due consideration to any such factors as the Board of Directors determines to be relevant, including without limitation: (i) the interests of the stockholders of the Corporation; (ii) whether the proposed transaction might violate federal or state laws; (iii) not only the consideration being offered in the proposed transaction, in relation of the then current market price for the outstanding capital stock of the Corporation, but also to the market price for the capital stock of the Corporation over a period of years, the estimated price that might be achieved in a negotiated sale of the Corporation as a whole or in part or through orderly liquidation, the premiums over market price for the securities
of other corporations in similar transactions, current political, economic and other factors bearing on securities prices and the Corporation's financial condition and future prospects; and (iv) the social, legal and economic effects upon employees, suppliers, customers and others having similar relationships with the Corporation, and the communities in which the Corporation conducts its business.
In connection with any such evaluation, the Board of Directors is authorized to conduct such investigations and to engage in such legal proceedings as the Board of Directors may determine.
ARTICLE TWELFTH
Special meetings of stockholders of the Corporation may be called at any time by only the Chairman of the Board of Directors, the Chief Executive Officer (or if there is no Chief Executive Officer, the President), or by the Board of Directors of the Corporation pursuant to a resolution adopted by the affirmative vote of a majority of the total number of directors then in office. Any business transacted at any special meeting of stockholders of the Corporation shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. Notwithstanding any other provisions of law, this Certificate or the By-laws, and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate or the By-laws, the affirmative vote of 75% of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors shall be required to amend or repeal, or to adopt any provisions inconsistent with the purpose or intent of, this ARTICLE TWELFTH.
ARTICLE THIRTEENTH
At any time during which a class of capital stock of the Corporation is registered under Section 12 of the Securities Exchange Act of 1934, as amended, stockholders of the Corporation may not take any action by written consent in lieu of a meeting. Notwithstanding any other provisions of law, this Certificate or the By-laws, and notwithstanding the fact that a lesser percentage may be specified by law, this Certificate or the By-laws, the affirmative vote of 75% of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors shall be required to amend or repeal, or to adopt any provisions inconsistent with the purpose or intent of, this ARTICLE THIRTEENTH.
ARTICLE FOURTEENTH
1. Dividends. The Board of Directors shall have authority from time to time to set apart out of any assets of the Corporation otherwise available for dividends a reserve or reserves as working capital or for any other purpose or purposes, and to abolish or add to any such reserve or reserves from time to time as the Board of Directors may deem to be in the interest of the Corporation; and the Board of Directors shall likewise have power to determine in its discretion, except as herein otherwise provided, what part of the assets
of the Corporation available for dividends in excess of such reserve or reserves shall be declared in dividends and paid to the stockholders of the Corporation.
2. Issuance of Stock. The shares of all classes of stock of the Corporation may be issued by the Corporation from time to time for such consideration as from time to time may be fixed by the Board of Directors, provided that shares of stock having a par value shall not be issued for a consideration less than such par value, as determined by the Board of Directors. At any time, or from time to time, the Corporation may grant rights or options to purchase from the Corporation any shares of its stock of any class or classes to run for such period of time, for such consideration, upon such terms and conditions, and in such form as the Board of Directors may determine. The Board of Directors shall have authority, as provided by law, to determine that only a part of the consideration which shall be received by the Corporation for the shares of its stock which it shall issue from time to time, shall be capital; provided, however, that, if all the shares issued shall be shares having a par value, the amount of the part of such consideration so determined to be capital shall be equal to the aggregate par value of such shares. The excess, if any, at any time, of the total net assets of the Corporation over the amount so determined to be capital, as aforesaid, shall be surplus. All classes of stock of the Corporation shall be and remain at all times nonassessable.
The Board of Directors is hereby expressly authorized, in its discretion, in connection with the issuance of any obligations or stock of the Corporation (but without intending hereby to limit its general power so to do in other cases), to grant rights or options to purchase stock of the Corporation of any class upon such terms and during such period as the Board of Directors shall determine, and to cause such rights to be evidenced by such warrants or other instruments as it may deem advisable.
3. Inspection of Books and Records. The Board of Directors shall have power from time to time to determine to what extent and at what times and places and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the stockholders of the Corporation; and no stockholder of the Corporation shall have any right to inspect any account or book or document of the Corporation, except as conferred by the laws of the State of Delaware, unless and until authorized so to do by resolution of the Board of Directors or of the stockholders of the Corporation.
4. Location of Meetings, Books and Records. Except as otherwise provided in the By-laws, the stockholders of the Corporation and the Board of Directors may hold their meetings and have an office or offices outside of the State of Delaware and, subject to the provisions of the laws of the State of Delaware, may keep the books of the Corporation outside the State of Delaware at such places as may, from time to time, be designated by the Board of Directors or by the By-laws.
EPICEPT CORPORATION
2005 EQUITY INCENTIVE PLAN
(AMENDED AND RESTATED MAY 23, 2007)
1. PURPOSE. The EpiCept Corporation 2005 Equity Incentive Plan (the "Plan") is intended to attract, retain and motivate officers and employees of, consultants to, and non-employee directors providing services to the EpiCept Corporation (the "Company") and its subsidiaries and affiliates by providing them with appropriate incentives and rewards either through a proprietary interest in the long-term success of the Company or compensation based on their performance in fulfilling their personal responsibilities.
2. ADMINISTRATION.
(a) Committee. The Plan will be administered by a committee (the "Committee") appointed by the Board of Directors of the Company (the "Board") from among its members and shall be comprised, unless otherwise determined by the Board, of not less than two (2) members each of whom shall be (i) a "Non-Employee Director" within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) "outside directors" within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and (iii) an "independent directors" within the meaning of the listing requirements of the NASDAQ (and each other exchange on which the Company may be listed).
(b) Authority. The Committee is authorized, subject to the provisions of the Plan, to establish such rules as it deems necessary for the proper administration of the Plan and to make such determinations and interpretations in its sole discretion and to take such action in connection with the Plan and any awards granted hereunder as it deems necessary or advisable, including the right to accelerate the vesting or exerciseability of awards, establish the terms and conditions of awards and cancel awards upon a Change of Control. All determinations and interpretations made by the Committee shall be binding and conclusive on all participants and their legal representatives.
(c) Indemnification. Except in circumstances involving bad faith or willful misconduct of the person acting or failing to act, no member of the Committee and no employee of the Company shall be liable for any act or failure to act hereunder or for any act or failure to act hereunder by any other member or employee or by any agent to whom duties in connection with the administration of this Plan have been delegated. The Company shall indemnify members of the Committee and any agent of the Committee who is an employee of the Company, a subsidiary or an affiliate against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to act with respect to their duties on behalf of the Plan, except in circumstances involving such person's bad faith or willful misconduct.
(d) Delegation and Advisers. The Committee may delegate to one or more of its members, or to one or more agents, such administrative duties as it may deem advisable. Any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company, or the subsidiary or affiliate whose employees have benefited from the Plan, as determined by the Committee.
3. PARTICIPANTS. Participants will consist of such officers, employees, consultants, and non-employee directors of the Company and its subsidiaries and affiliates as the Committee in its sole discretion determines and whom the Committee may designate from time to time to receive awards under the Plan. Designation of a participant in any year shall not require the Committee to designate such person to receive an award in any other year or, once designated, to receive the same type or amount of award as granted to the participant in any other year. The Committee shall consider such factors as it deems pertinent in selecting participants and in determining the type and amount of their respective awards.
4. TYPE OF AWARDS. Awards under the Plan may be granted in any one or a combination of: (a) stock options, (b) restricted stock, (c) restricted stock units and (d) cash. Restricted stock, restricted stock units and cash awards may, as determined by the Committee in its discretion, constitute performance-based awards, as described in Section 10 hereof. Awards granted under the Plan shall be evidenced by agreements (which need not be identical) that provide additional terms and conditions associated with such awards, as determined by the Committee in its sole discretion; provided, however, that in the event of any conflict between the provisions of the Plan and any such agreement, the provisions of the Plan shall prevail.
5. COMMON STOCK AVAILABLE UNDER THE PLAN.
(a) Maximum Shares. The aggregate number of shares of common stock of the Company, par value $0.0001("Shares") that may be issued under this Plan shall be 7,000,000 Shares, which may be authorized and unissued or treasury Shares, subject to Section 5(c) hereof and Section 12 hereof ("Maximum Shares"). The maximum number of Shares with respect to which awards may be granted or measured to any individual participant under the Plan in any calendar year during the term of the Plan shall not exceed 1,500,000 Shares (subject to adjustments made in accordance with Section 12 hereof) (the "Individual Maximum").
(b) Counting Shares. Shares shall be charged against the Maximum Shares and Individual Maximum, and, if applicable, the ISO Maximum, upon the grant of each award (other than cash awards to be settled only in cash and performance
based awards which are not denominated in common stock) regardless of the vested status of the award.
(c) Additional Shares. Any Shares subject to an outstanding award granted under the Plan which are, for any reason, forfeited, expired, canceled or settled in cash without delivery to the award recipient of Shares, shall again be available for awards under the Plan.
Any Shares delivered to the Company as part or full payment for the exercise or purchase price of an award granted under this Plan or, to the extent the Committee determines that the availability of ISOs under the Plan will not be compromised to satisfy the Company's withholding obligation with respect to an award granted under this Plan, shall again be available for awards under the Plan, provided however, that such Shares shall continue to be counted as outstanding for purposes of determining whether an Individual Maximum has been attained.
6. STOCK OPTIONS.
(a) Generally. Stock options will consist of awards from the Company that will enable the holder to purchase a number of Shares at set terms. Options shall be either incentive stock options or nonqualified stock options. The Committee shall have the authority to grant to any participant stock options. A stock option granted as an incentive stock option shall, to the extent it fails to qualify as an incentive stock option, be treated as a nonqualified option. Each stock option shall be subject to such terms and conditions, including vesting, consistent with the Plan as the Committee may impose from time to time, subject to the following limitations.
(b) Exercise Price. Each stock option granted hereunder shall have such per-Share exercise price as the Committee may determine at the date of grant. Except as hereafter provided, the per-Share exercise price of a stock option shall not be less than the fair market value (as defined in Section 16 of the Plan) of a Share on the date of grant; provided, however, that if a stock option is granted to a participant upon assumption of or in substitution of an award granted by another entity in connection with a corporate transaction between the Company and the granting entity, such as a merger, consolidation or acquisition, the exercise price may be less than fair market value of a Share on the date the substitute stock option is granted if the aggregate fair market value of the Shares subject to the substitute stock option over the aggregate exercise price of the substitute stock option does not exceed the aggregate fair market value of the shares of the predecessor entity subject to the award being assumed or substituted as of the date immediately preceding the corporate transaction (as determined by the Committee), over the aggregate grant price or exercise price of any such award.
(c) Payment of Exercise Price. The option exercise price may be paid in cash or, in the discretion of the Committee, by the delivery of Shares. In the discretion of the Committee, payment may also be made by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale
proceeds to pay the exercise price. The Committee may prescribe any other method of paying the exercise price that it determines to be consistent with applicable law and the purpose of the Plan.
(d) Exercise Period. Stock options granted under the Plan shall be exercisable to the extent vested, at such time or times and subject to such terms and conditions as shall be determined by the Committee; provided, however, that no stock option shall be exercisable later than ten (10) years after the date it is granted except in the event of a participant's death within six (6) months prior to such expiration date, in which case, the exercise period of such participant's stock options may be extended beyond such period but no later than one (1) year after the participant's death. All stock options shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in such option agreement at the date of grant.
(e) Limitations on Incentive Stock Options. Incentive stock options may be granted only to participants who are employees of the Company or of a "parent corporation" or "subsidiary corporation" (as defined in Sections 424(e) and (f) of the Code, respectively) at the date of grant. The aggregate fair market value (determined as of the time the stock option is granted) of the Shares with respect to which incentive stock options are exercisable for the first time by a participant during any calendar year (under all option plans of the Company and of any parent corporation or subsidiary corporation) shall not exceed one hundred thousand dollars ($100,000). For purposes of the preceding sentence, incentive stock options will be taken into account in the order in which they are granted. The per-Share exercise price of an incentive stock option shall not be less than 100% of the fair market value of the common stock on the date of grant, and no incentive stock option may be exercised later than 10 years after the date it is granted or, in the case of the death of a participant, such longer period as permitted by Section 6(d).
(f) Additional Limitations on Incentive Stock Options for Ten Percent
Shareholders. Incentive stock options may not be granted to any participant who,
at the time of grant, owns stock possessing (after the application of the
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any parent
corporation or subsidiary corporation, unless the exercise price of the option
is fixed at not less than 110% of the fair market value of the common stock on
the date of grant and the exercise of such option is prohibited by its terms
after the expiration of five years from the date of grant of such option or, in
the case of the death of a participant, such longer period as permitted by
Section 6(d).
7. RESTRICTED STOCK AWARDS.
(a) Generally. The Committee may, in its discretion, grant restricted stock awards consisting of common stock issued or transferred to participants with or without other payments therefor, which are subject to transferability restrictions and/or a substantial risk of forfeiture. Restricted stock awards shall be construed as an offer by the Company to the participant to purchase the
number of shares of common stock subject to the restricted stock award at the purchase price, if any, established therefor, and shall be subject to acceptance by a participant.
(b) Payment of the Purchase Price. If a restricted stock award requires payment therefor, the purchase price of any shares of common stock subject to a restricted stock award may be paid in any manner authorized by the Committee, which may include any manner authorized under the Plan for the payment of the exercise price of a stock option. Restricted stock awards may also be made in consideration of services rendered to the Company or its subsidiaries or affiliates.
(c) Additional Terms. Restricted stock awards may be subject to such
terms and conditions, including vesting, as the Committee determines
appropriate, including, without limitation, restrictions on the sale or other
disposition of such shares, the right of the Company to reacquire such shares
for no consideration upon termination of the participant's employment within
specified periods, and may constitute performance-based awards, as described in
Section 10 hereof. The Committee may require the participant to deliver a duly
signed stock power, endorsed in blank, relating to the common stock covered by
such an award. The Committee may also require that the stock certificates
evidencing such shares be held in custody or bear restrictive legends until the
restrictions thereon shall have lapsed.
(d) Rights as a Shareholder. Holders of restricted stock awards have the right to receive dividends and to vote the shares; provided, however, unless the Committee or the award agreement provides otherwise, dividends on restricted stock awards shall be held in escrow and shall be payable, at such time as the restrictions on the shares lapse, in either cash, shares or if applicable the kind of property distributed as a dividend or any combination thereof.
8. STOCK UNITS.
(a) Stock Unit. A "Stock Unit" is a notional unit representing one share of Common Stock. If a Stock Unit is subject to a vesting schedule, such Stock Unit may be referred to as a "restricted stock unit". If the issuance or vesting of a Stock Unit is contingent upon the satisfaction of performance criteria, such Stock Unit may be referred to as a "performance unit", which may constitute performance-based awards, as described in Section 10 hereof. If a participant is granted a Stock Unit which will be settled on a fixed future date or upon the occurrence of a particular event such Stock Unit may be referred to as a "deferred stock unit".
(b) Authority to Grant. The Committee shall have the authority to grant Stock Units to participants hereunder, which are settled in cash, shares of Common Stock or other Awards. If Stock Units will be settled in shares of Common Stock, such shares may be issued with or without payments or other consideration therefor, as may be required by applicable law or as may be determined by the Committee.
(c) Terms. Except as otherwise provided herein, the Committee shall determine the criteria for the vesting and settlement of Stock Units, including whether the participant may defer such payment pursuant to a valid deferral agreement. Any such deferral shall comply with Section 409A of the Code.
9. CASH AWARDS. The Committee may grant awards to be settled in cash; provided, however, that non-employee directors shall not be eligible for cash awards. Cash awards may be subject to such terms and conditions, including vesting, as the Committee determines to be appropriate. Cash awards may constitute performance-based awards, as described in Section 10 hereof. The Company may, in its discretion, permit participants to defer settlement of cash awards. The maximum award that may be granted to any participant as a cash award in any calendar year is $1,500,000.00.
10. PERFORMANCE-BASED AWARDS.
(a) Generally. Any awards granted under the Plan may be granted in a manner such that the awards qualify for the performance-based compensation exemption of Section 162(m) of the Code ("performance-based awards"). As determined by the Committee in its sole discretion, either the granting or vesting of such performance-based awards shall be based on achievement of hurdle rates, growth rates, and/or reductions in one or more business criteria determined by the Committee that apply to the individual participant, one or more business units or the Company as a whole.
(b) Establishment of Performance Goals. With respect to performance-based awards, the Committee shall establish in writing (i) the performance goals applicable to a given period, and such performance goals shall state, in terms of an objective formula or standard, the method for computing the amount of compensation payable to the participant if such performance goals are obtained and (ii) the individual employees or class of employees to which such performance goals apply no later than 90 days after the commencement of such period (but in no event after 25% of such period has elapsed).
(c) Certification of Performance. No performance-based awards shall be payable to or vest with respect to, as the case may be, any participant for a given period until the Committee certifies in writing that the objective performance goals (and any other material terms) applicable to such period have been satisfied.
(d) Modification of Performance-Based Awards. With respect to any awards intended to qualify as performance-based awards, after establishment of a performance goal, the Committee shall not revise such performance goal or increase the amount of compensation payable thereunder (as determined in accordance with Section 162(m) of the Code) upon the attainment of such performance goal. However, the measurement of performance against goals shall exclude the impact of charges for restructurings, discontinued operations, extraordinary items and other unusual or non-recurring items, and the cumulative effects of accounting changes, each as defined by generally accepted accounting principles as identified in the financial statements, notes to the financial statements or management's discussion or analysis. In accordance with Section
162(m) of the Code, the Committee may only exercise negative discretion with respect to the amount of a performance-based award.
11. FOREIGN LAWS. The Committee may grant awards to individual participants who are subject to the tax laws of nations other than the United States, which awards may have terms and conditions as determined by the Committee as necessary to comply with applicable foreign laws. The Committee may take any action which it deems advisable to obtain approval of such awards by the appropriate foreign governmental entity; provided, however, that no such awards may be granted pursuant to this Section 11 and no action may be taken which would result in a violation of the Exchange Act, the Code or any other applicable law.
12. ADJUSTMENT PROVISIONS; CHANGE OF CONTROL.
(a) Adjustment Generally. If there shall be any change in the common stock of the Company, through merger, consolidation, reorganization, recapitalization, stock or special one-time cash dividend, stock split, reverse stock split, split up, spin-off, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, an adjustment shall be made to each outstanding award such that each such award shall thereafter be exercisable for such securities, cash and/or other property as would have been received in respect of the common stock subject to such award had such award been exercised in full immediately prior to such change or distribution, and such an adjustment shall be made successively each time any such change shall occur.
(b) Modification of Awards. In the event of any change or distribution described in subsection (a) above, in order to prevent dilution or enlargement of participants' rights under the Plan, the Committee will have authority to adjust, in an equitable manner, the number and kind of shares that may be issued under the Plan, the number and kind of shares subject to outstanding awards, the exercise price applicable to outstanding awards, and the fair market value of the common stock and other value determinations applicable to outstanding awards; provided, however, that any such arithmetic adjustment to a performance-based award shall not cause the amount of compensation payable thereunder to be increased from what otherwise would have been due upon attainment of the unadjusted award. Appropriate adjustments may also be made by the Committee in the terms of any awards under the Plan to reflect such changes or distributions and to modify any other terms of outstanding awards on an equitable basis, including modifications of performance targets and changes in the length of performance periods; provided, however, that any such arithmetic adjustment to a performance-based award shall not cause the amount of compensation payable thereunder to be increased from what otherwise would have been due upon attainment of the unadjusted award. In addition, other than with respect to stock options and other awards intended to constitute performance-based awards, the Committee is authorized to make adjustments to the terms and conditions of, and the criteria included in, awards in recognition of unusual or nonrecurring events affecting the Company or the financial statements
of the Company, or in response to changes in applicable laws, regulations, or accounting principles.
(c) Effect of a Change of Control. Notwithstanding any other provision of this Plan, if there is a Change of Control (as defined in subsection (d) below) of the Company, the Committee may provide at anytime prior to the Change of Control that all then outstanding stock options and unvested cash awards shall immediately vest and become exercisable and any restrictions on restricted stock awards shall immediately lapse. In addition, the Committee may provide that all awards held by participants who are at the time of the Change of Control in the service of the Company a subsidiary or affiliate shall remain exercisable for the remainder of their terms notwithstanding any subsequent termination of a participant's service. All awards shall be subject to the terms of any agreement effecting the Change of Control, which agreement may provide, without limitation, that in lieu of continuing the awards, each stock option outstanding hereunder shall terminate within a specified number of days after notice to the holder, and that such holder shall receive, with respect to each share of common stock subject to such stock option, an amount equal to the excess of the fair market value of such shares of common stock immediately prior to the occurrence of such Change of Control over the exercise price (or base price) per Share underlying such stock option with such amount payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine. A provision like the one contained in the preceding sentence shall be inapplicable to a stock option granted within 6 months before the occurrence of a Change of Control if the holder of such stock option is subject to the reporting requirements of Section 16(a) of the Exchange Act and no exception from liability under Section 16(b) of the Exchange Act is otherwise available to such holder.
(d) Definitions.
(i) For purposes of this Section 12, a "Change of Control" of the Company shall be deemed to have occurred upon any of the following events:
(A) Any person(s), as such term is defined in Section 13(d)
of the Exchange Act as of the Effective Date, or group of persons,
becomes directly or indirectly, a "beneficial owner" as such term is
used as of the Effective Date in Rule 13d-3 promulgated under the
Exchange Act, of 50% or more of the Voting Securities of the Company
(measured either by number of Voting Securities or voting power);
(B) a majority of the Board of Directors consists of individuals other than "Incumbent Directors" which term means the members of the Board of Directors on the Effective Date; provided that any individual becoming a director subsequent to such date whose election or nomination for election was supported (other than in connection with any actual or threatened proxy contest) by
two-thirds of the directors who then comprised the Incumbent Directors shall be considered to be an Incumbent Director; or
(C) (A) the Company combines with another entity and is the surviving entity, or (B) all or substantially all of the assets or business of the Company is disposed of pursuant to a sale, merger, consolidation, liquidation, dissolution or other transaction or series of transactions (collectively, a "Triggering Event") unless the holders of Voting Securities of the Company immediately prior to such Triggering Event beneficially own, directly or indirectly, by reason of their ownership of Voting Securities of the Company immediately prior to such Triggering Event, more than 50% of the Voting Securities (measured both by number of Voting Securities and by voting power) of (x) the Company, in the case of a combination in which the Company is the surviving entity and (y) in any other case, the entity if any that succeeds to substantially all of the Company's business and assets.
(ii) For purposes of this Section 12, "Voting Securities" shall mean issued and outstanding securities of any class or classes having general voting power, under ordinary circumstances in the absence of contingencies, to elect, the members of the Board of Directors, or other governing body, of the Company.
13. TERMINATION OF SERVICE.
(a) Termination (other than for Cause). Unless the Committee or the applicable award agreement provides otherwise, if a participant's service with the Company or any subsidiary or affiliate terminates for any reason other than for "cause" (which shall have the meaning defined in the applicable award agreement or, in the absence of such definition shall be defined by the Committee).
(i) Stock Options. Except as provided in Section 12(c) hereof, any outstanding stock options shall expire on the earlier of:
(A) the expiration of their term,
(B) 90 days following termination of the participant's service other than termination of service on account of death or Disability.
provided, however, that a participant (or in the case of the participant's death or Disability, the participant's representative) may exercise all or part of the participant's stock options at any time before the expiration of such stock options following termination of service only to the extent that the stock options are vested on or before the date participant's service terminates. The balance of the stock options s (which are not vested on the date participant's service terminates) shall lapse when the participant's service terminates.
If by virtue of this provision, an incentive stock option is not exercised within three (3) months after a participant's employment terminates, then unless such participant's employment termination is due to his or her death or Disability (defined for this purpose only as described in Section 22(e)(3) of the Code), the incentive stock option shall be treated as a nonqualified stock option.
(ii) Restricted Stock Awards and Stock Units. All unvested restricted stock awards and stock units (other than deferred stock units) shall expire upon termination of service. Deferred stock units shall be settled on the deferral date established in the award unless such units are to be settled only upon the occurrence of an event in which case they shall expire upon termination of service.
(iii) Cash Awards/Performance-Based Awards. All cash awards and performance-based awards shall be forfeited upon termination of service.
(b) Termination of Service (for Cause). All of a participant's awards (including any exercised stock options for which shares or cash have not been delivered to the participant) shall be cancelled and forfeited immediately on the date of the participant's termination of service with the Company or any subsidiary if such termination is for cause or cause exists on such date, and the Company shall return to the participant the price (if any) paid for any undelivered shares. Should a participant die at a time when cause exists, all of the participant's awards (including any exercised stock options for which shares have not been delivered to the participant) shall be cancelled and forfeited immediately as of the date of the participant's death.
(c) Leave of Absence. For purposes of this Section 13, service shall be deemed to continue while the participant is on a bona fide leave of absence, if such leave was approved by the Company in writing or if continued crediting of service for this purpose is expressly required by the terms of such leave or by applicable law (as determined by the Committee).
14. NONTRANSFERABILITY. Each award granted under the Plan to a participant shall not be transferable except by will or the laws of descent and distribution or as permitted by the Committee to a participant's spouse, lineal descendants, siblings, parents, heirs, executors, administrators, testamentary trustees, legatees, beneficiaries or a trust for the exclusive benefit of any of the foregoing persons, or to any charitable organizations described in Section 501(c)(3) of the Code, which shall have discretion to permit transferability to third parties under such terms and conditions as it shall determine. In the event of the death of a participant (which for this purpose only shall include any transferee), each stock option theretofore granted to him or her shall be exercisable during such period after his or her death as described in Section 13 hereof but unless the Committee or the award agreement provides otherwise, such award shall only be exercisable by the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant's rights under the stock option shall pass by will or the laws of descent and distribution.
15. OTHER PROVISIONS. The granting of or distribution under any award under the Plan may also be subject to such other provisions (whether or not applicable to the awards of any other participant) as the Committee determines appropriate, including, without limitation, for the forfeiture of, or restrictions on resale or other disposition of, common stock acquired under any form of award, for the acceleration of exercisability or vesting of awards in the event of a Change of Control, for the payment of the value of awards to participants in the event of a Change of Control, or to comply with federal and state securities laws, or understandings or conditions as to the participant's employment in addition to those specifically provided for under the Plan.
16. FAIR MARKET VALUE. For purposes of this Plan and any awards awarded hereunder, fair market value per Share as of a particular date shall mean (i) if shares are then listed on a national stock exchange, the closing price per Share on the exchange for the last preceding date on which there was a sale of shares on such exchange, as determined by the Committee, (ii) if shares are not then listed on a national stock exchange but are then traded on an over-the-counter market, the average of the closing bid and asked prices for such shares in such over-the-counter market for the last preceding date on which there was a sale of such shares in such market, as determined by the Committee, or (iii) if shares are not then listed on a national exchange or traded on an over-the-counter market, such value as the Committee in its discretion may in good faith determine; provided that, where such shares are so listed or traded, the Committee may make discretionary determinations upon the reasonable application of a reasonable valuation method where the shares have not been traded for 10 trading days.
17. WITHHOLDING. All payments or distributions of awards made pursuant to the Plan shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax withholding requirements at the minimum statutory withholding rates. If the Company proposes or is required to distribute common stock pursuant to the Plan, it may require the recipient to remit to it or to the corporation that employs such recipient an amount sufficient to satisfy such tax withholding requirements prior to the delivery of any certificates for such common stock. In lieu thereof, the Company or the employing corporation shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the recipient as the Committee shall prescribe. The Committee may, in its discretion and subject to such rules as it may adopt (including any as may be required to satisfy applicable tax and/or non-tax regulatory requirements), permit an optionee or award or right holder to pay all or a portion of the federal, state and local withholding taxes arising in connection with any award consisting of shares of common stock by electing to have the Company withhold shares of common stock having a fair market value equal to the amount of tax to be withheld, such tax calculated at minimum statutory withholding rates.
18. TENURE. A participant's right, if any, to continue to serve the Company or any of its subsidiaries or affiliates as an officer, employee, or otherwise, shall not be enlarged or otherwise affected by his or her designation as a participant under the Plan.
19. UNFUNDED PLAN. Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.
20. NO FRACTIONAL SHARES. No fractional shares of common stock shall be issued or delivered pursuant to the Plan or any award. The Committee shall determine whether cash, or awards, or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
21. DURATION, AMENDMENT AND TERMINATION. No award shall be granted more than 10 years after the Effective Date. The Committee may amend the Plan from time to time or suspend or terminate the Plan at any time. No amendment of the Plan may be made without approval of the stockholders of the Company if the amendment will: (i) increase the aggregate number of shares of common stock that may be delivered through stock options under the Plan; (ii) increase the Maximum Shares or the Individual Maximum as set forth in Section 5 hereof; (iii) permit the re-pricing of an award to a lower exercise price, base price or purchase price, as applicable, (including, without limitation, the cancellation of an award followed by a re-grant of that award six (6) months later); (iv) modify the requirements as to eligibility for participation in the Plan; or (v) change the legal entity authorized to make awards under the Plan.
22. GOVERNING LAW. This Plan, awards granted hereunder and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).
23. EFFECTIVE DATE. The Plan was originally effective September 1, 2005 ("Effective Date"), subject to shareholder approval, which was obtained on September 5, 2005 in connection with the Company's merger with Maxim Pharmaceuticals, Inc.
TERM SECTION Board 2(a) Cash Award 8 Cause 13(a) Change of Control 12(d)(i) Code 2(a) Committee 2(a) Common Stock 5(a) Company 1 Effective Date 23 Exchange Act 2(a) Fair Market Value 16 Independent Director 2(a) Individual Maximum 5(a) Maximum Shares 5(a) Non-Employee Director 2(a) Parent Corporation 6(e) Performance-Based Awards 10(a) Plan 1 Restricted Stock Award 7 Share 5(a) Stock Options 6 Stock Units 8 Subsidiary Corporation 6(e) Voting Securities 11(d)(ii) |
EPICEPT CORPORATION
ANNUAL SHAREHOLDER MEETING
INTRODUCTORY REMARKS
ROBERT G. SAVAGE
CHAIRMAN OF THE BOARD
Good morning and welcome to EpiCept Corporation's 2007 Annual Shareholder Meeting.
2006 was a transformative year in the corporate history of EpiCept. Over the course of the year, the company evolved from its historical focus on topical pain therapies to a company possessing a balanced portfolio of pain management programs and a pipeline of a registration-stage cancer product and promising early stage cancer compounds.
I would like to commend the leadership team for their ability to meet a number of aggressive goals and milestones which enabled this transformation to occur.
With respect to EpiCept's cancer programs, the team's achievements included the submission of a Marketing Authorization Application for Ceplene to the EMEA and its subsequent validation, the commencement of a Phase I clinical study for the cancer compound EPC2407, and the reporting of positive Phase I clinical results for Azixa, a cancer compound licensed to Myriad Genetics.
The leadership team also continued to make important strides in the advancement of the promising pain products in EpiCept's clinical pipeline. Most recently, this included the initiation of two Phase IIb trials for EpiCept NP-1 for the treatment of neuropathic pain.
I would also like to commend the leadership team for its ability to establish and extend its partnerships with leaders in the industry. This includes a new agreement reached late last year with DURECT Corporation for a patent held by EpiCept in back pain as well as the Company's existing and potentially highly lucrative partnerships with Myriad and Endo Pharmaceuticals.
EpiCept's pursuit of the advancement of new treatment paradigms for pain and cancer, which are supported by sound scientific findings, demonstrated safety and efficacy and unique and proven technologies is moving forward with impressive momentum. This approach, when combined with EpiCept's validating industry partnerships, its strong intellectual property position and the expertise of its senior management team, creates an exciting environment for both near-term and long-term value-building opportunities.
Before concluding, I would like to briefly acknowledge those individuals who have joined EpiCept's management team since 2006, including Dr. Stephane Allard, chief medical officer and vice president of medical affairs and Micahel Chen, vice president for global business development.
Once again, I would like to thank you for your attendance and participation here today. I will now take questions from the audience.
EPICEPT CORPORATION
ANNUAL SHAREHOLDER MEETING
REMARKS
JACK TALLEY
PRESIDENT AND CEO
Good morning and thank you all for joining us today at EpiCept Corporation's Annual Shareholder Meeting.
Since we gathered for our 2006 annual meeting last May, many important developments have taken place that have validated and propelled forward our core business strategy of advancing two distinct and valuable programs in oncology and pain management.
As a result of these developments, EpiCept stands today as a more dynamic, balanced company with a highly diversified portfolio of valuable product candidates. These candidates include a oncology compound undergoing regulatory review in Europe; a neuropathic pain medication entering a Phase III clinical trial this year and currently being studied in two other trials intended to broaden its market potential; an oncology compound that has entered Phase II trials for brain cancer and solid tumors; and an apoptosis inducer for solid vascularized tumors that has entered Phase I trials.
The important achievements made over the last year have positioned us well to continue the evolution of EpiCept and to execute on the key value - building
milestones that lie before us over the next 12 months. I would like to touch upon several of these milestones with you today.
Beginning with our oncology program, we are continuing to make important progress with Ceplene, our lead oncology product candidate for the maintenance of remission of AML. The application review for Ceplene by the EMEA is continuing at its expected pace and we are now in the process of preparing responses to the "Day 120" list of questions from the EMEA. We met earlier this week with the EMEA, the raporteur and co-raporteur to review the status of the application and to clarify how to best formulate our responses to the questions raised in the review process. This meeting was very helpful in advancing the prospects for approval for Ceplene in Europe. Additionally the agency has been conducting GCP audits of two of our investigators to be assured about the proper conduct of the pivotal study upon which this application is based. I am pleased to report that these audits are proceeding smoothly. The agency clearly understands that Ceplene represents an unprecedented accomplishment in the treatment of acute myeloid leukemia. The state of medicine today for this disease is that once induction and consolidation is achieved, patients can only hope and pray that their leukemia does not return or relapse. Sadly, for half of these patients relapse happens within a year and this is usually a death sentence. With Ceplene and low dose interleukin-2 patients have improved prospects, they even have hope for a cure. This is because Ceplene improves disease free survival for patients in their first remission by a mean of 23 weeks. More importantly, at three years post therapy 40% of Ceplene treated patients are leukemia free whereas just 26% of untreated patients are leukemia free or alive at three years. It is for these 40% patients that are leukemia free at three years that we can offer the hope of a cure. I promise we will
continue to dedicate all of our energies to gain approval for this important new medicine.
Assuming the application continues to follow the anticipated EU regulatory timeline, we expect to file our responses to the Day 120 list of questions in September of this year, later we anticipate the Day 181 oral explanation to take place either in the fourth quarter of this year or in the first quarter of 2008, after which the CHMP's recommendation as to the approvability of the compound will be forwarded to the European Commission for a final decision.
The work we are doing to advance Ceplene has tremendous implications for the future of treatment for AML patients. Our analysis of the quality of life measurements from Ceplene's pivotal trial demonstrated that both treatment groups, namely the combined active group and the no therapy group, experienced a statistically equivalent quality of life. This is a compelling indication of the safety and tolerability of Ceplene. From a commercialization perspective, we project Ceplene to be an approximate $200 million dollar drug annually in Europe for AML alone.
As our work continues with Ceplene, we will also be focused on capitalizing on the promise of our earlier-stage cancer programs, which is driven by our proprietary anti-cancer screening apoptosis program, or ASAP. There are two compounds currently advancing through clinical trials which demonstrate the potential of this ASAP technology. Both of these compounds are VDAs or vascular disruption agents. VDAs have recently gained increased notoriety from big pharma
due to their potential to offer an important new treatment paradigm for cancer. We too believe in VDAs and it is important to note that to our knowledge EpiCept is the only company in the world with two VDAs in the clinic.
The first is Azixa, which is licensed to our partner Myriad Genetics as part of an exclusive worldwide development and commercialization agreement. Last month, Myriad presented findings at the American Association of Cancer Research characterizing a dual-mode of action of Azixa, which points to its potential to act as a VDA, in addition to its previously demonstrated apoptosis-inducing abilities. Myriad has announced that Azixa is currently being evaluated in two human Phase II clinical trials, the first in primary glioblastoma and the other in brain metastases due to melanoma.
We believe Azixa will be an important clinical opportunity for us, as our agreement with Myriad includes milestone payments, sublicensing income, as well as future royalties in the event Myriad's development of Azixa continues to progress successfully. Myriad has announced that an NDA for Azixa could be filed as early as 2008 for this important new therapy. We expect to be able to provide further updates on Myriad's advancement of Phase II oncology trials for Azixa later this year.
The second ASAP-generated compound in clinical development is EPC2407, our novel small molecule, vascular disruption agent and apoptosis inducer for the treatment of patients with advanced solid tumors and lymphomas. A Phase I trial for EPC2407 is ongoing and the third cohort of patients with advanced cancer in the trial is currently receiving the drug. To date, EPC2407 is following the
expected pharmacokinetic and safety profile. We expect to initiate a second Phase I trial as a combination therapy in the second half of this year in patients with well-vascularized solid tumors. We intend to achieve a vascularized solid tumor target for the compound's Phase II trials within the next 12 to 18 months.
As we advance these high potential cancer candidates we are continuing to move forward with our valuable pain management programs.
Last month, we announced the initiation of two Phase IIb trials for EpiCept NP-1, our topical prescription analgesic for the long-term relief from the pain of peripheral neuropathies.
The first of the two trials for NP-1 is a 200-patient, placebo-controlled study of four weeks duration in patient with Diabetic Peripheral Neuropathy, or DPN, which is the most common cause of neuropathic pain. We saw initial evidence of the activity of NP-1 in a smaller Phase II study and are looking to confirm and expand upon this efficacy signal with this current trial. We expect to report top-line results in the fourth quarter of this year. The market for treatments for DPN is a highly attractive one. Pfizer's Lyrica and Lilly's Cymbalta are the only approved drugs for this indication and each is currently a billion dollar drug.
The second ongoing trial for NP-1 is a four week, 500-patient placebo- and active-controlled trial in peripheral herpetic neuropathy, or PHN. This study is designed to compare the efficacy and safety of NP-1 against the market leader, Neurontin, or Gabapentin, for this use. While a strong efficacy signal for NP-1
in PHN was demonstrated in an earlier placebo-controlled trial, the ability to demonstrate superiority in terms of either safety or efficacy in this trial will be an important achievement for EpiCept and the field of neuropathic pain treatment. These results are expected in the first quarter of 2008.
We are also continuing to conduct research into a reformulation of LidoPAIN SP, our sterile analgesic patch designed to provide sustained topical delivery of lidocaine to a post-surgical or post-traumatic sutured wound. This work is designed to help improve the onset of action of this product candidate, increase its potency and improve the probability of a successful outcome in future clinical trials. We believe LidoPAIN SP is an attractive commercial opportunity for the company and are continuing to pursue its advancement. We hope to be able to be in a position to commence our next clinical trial for LidoPAIN SP in early 2008.
We are proud of the depth and diversification we have been able to establish for our product pipeline. The successful commercialization of any one of these candidates will generate significant financial returns for the company and its shareholders and we believe we possess the expertise and commitment needed to bring their promise to reality.
To that end, our focus over the next year will be in the steadfast pursuit of our key clinical milestones. Namely, to advance Ceplene towards European approval in AML; report on the outcome of the EPC2407 single agent oncology trial; initiate the EPC2407 Phase Ib combination therapy trial, report on Myriad's advancement of Phase II oncology trials for Azixa, report findings from
the Phase IIb trials for EpiCept NP-1 and initiate NP-1's pivotal scale trial.
We see many exciting opportunities before us this year. As was the case in 2006, the talents and dedication of our professionals will be the driving force in bringing these opportunities to reality.
Thank you for your participation here today. We look forward to sharing our progress on each of these initiatives with you in the coming months. At this time both Bob Savage and myself would be delighted to take any questions you may have.
With that, I would like to now open up the floor for questions.