Document:

EX-10.4 AGRMT. DATED 1/18/07,CHRISTOPHER PENNEWILL

 

Exhibit
(10) - 4

AGREEMENT

     This Agreement (“Agreement”), dated as of January 18, 2007, is between Superior Bank, its
successors, assigns and affiliated companies (the “Company”) and Christopher Pennewill (the
“Executive”).

     1. Replacement of Prior Agreements. This Agreement replaces and supersedes any prior
compensation agreement or benefit arrangement between the Company and the Executive which is
affected by a change in control of People’s Community Bancshares, Inc. or People’s Community Bank
of the West Coast or any other predecessor to the Company, including without limitation the Split
Dollar Agreement dated February 17, 2006, as the same may have been amended (the “Split Dollar
Agreement”), but does not supersede the Salary Continuation Agreement dated February 17, 2006,
which shall remain in full force and effect, except as may be modified by Executive and People’s
Community Bank of the West Coast with the consent of the Company. The Executive acknowledges and
agrees that in the instant immediately prior to the consummation of the merger of People’s
Community Bancshares, Inc. with and into Superior Bancorp (the “Merger”), the Split Dollar
Agreement shall no longer be in effect and the Executive shall have no remaining rights under those
agreements. As consideration for the termination of the Split Dollar Agreement, the Company shall
pay to the Executive $25,000 in the first payroll next following the Effective Date of the Merger.
The Company shall make deductions from the payment hereunder in accordance with its customary
payroll practices. The compensation payable to Executive under this Section 1 shall be absolute,
subject to no contingencies, including but not limited to continued employment with the Company,
and shall survive the Executive’s death or disability.

     2. Continued Employment of Executive. Following the date of the consummation of the Merger
(the “Effective Date of the Merger”), Executive shall be employed on an at-will basis as the
Manatee County Executive of People’s Community Bank, a division of Superior Bank at a base salary
which shall be no less than Executive’s current base salary, and Executive shall be eligible for
all welfare benefit, pension benefit, and bonus and incentive compensation plans maintained by the
Company on the same basis as other employees at Executive’s level within the Company. Executive
shall perform those duties as are customarily associated with Executive’s positions and such other
reasonable duties as may be assigned to Executive. The Company may terminate Executive’s
employment at any time for any reason; provided however, if the Company terminates Executive’s
employment, other than For Cause (as defined in Section 4 below) or on account of the Executive’s
death or total disability (as defined in this Section), prior to the second anniversary of the
Effective Date of the Merger, Executive shall, within thirty (30) days following the termination of
Executive’s employment, receive a lump sum payment as soon as practical following such termination
(but in no event later than March 15th of the calendar year immediately following the
calendar year in which such termination occurs), unreduced for early receipt, equal to Executive’s
base salary for the period from the date of termination of Executive’s employment to the second
anniversary of the Effective Date of the Merger. For purposes of this Agreement, the term “total

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disability” shall mean the Executive’s inability, as a result of illness or injury, to perform the
normal duties of his employment for a period of ninety (90) consecutive days.

     3. Retention Bonus. If Executive’s employment is not terminated (i) by the Executive or (ii)
by the Company for Cause prior to the second anniversary of the Effective Date of the Merger, the
Executive shall receive a payment in the amount of $50,000 in the second payroll next following the
second anniversary of the Effective Date of the Merger. The Company shall make deductions from the
bonus payment hereunder in accordance with its customary payroll practices.

     4. For Cause Defined. “For Cause” shall mean (i) abuse of or addiction to intoxicating drugs
(including alcohol), which has adversely affected or may adversely affect the business or
reputation of the Company; (ii) any act or omission on the part of the Executive which constitutes
fraud, misrepresentation, embezzlement, misappropriation of corporate assets or theft; (iii) a
felony indictment of the Executive; (iv) a request by federal or state banking regulatory
authorities to terminate the Executive’s services hereunder; or (v) a material breach by the
Executive of any of the terms of this Agreement. Provided, however, that in the case of (v) above,
such conduct shall not constitute Cause unless the Company shall have delivered to the Executive
notice setting forth with specificity (A) the conduct deemed to qualify as Cause, (B) reasonable
action that would remedy such objection, and (c) a reasonable time (not less than thirty (30) days)
within which the Executive may take such remedial action, and the Executive shall not have taken
such specified remedial action within such specified reasonable time.

     5. Non-Disclosure of Information. The Executive acknowledges that any documents and
information, whether written or not, that came or come into the Executive’s possession or knowledge
during the Executive’s employment by the Company, including without limitation the financial and
business conditions, business methods, goals, operations, sales techniques or services of the
Company and its affiliates or subsidiaries as the same may exist from time to time (collectively,
“Confidential Information”), are valuable, special and unique assets of the Company’s business. The
Executive will not, during or after the term of this Agreement: (a) disclose any written
Confidential Information to any person, firm, corporation, association, or other entity not
employed by or affiliated with the Company for any reason or purpose whatsoever, or (b) use any
written Confidential Information for any reason other than to further the business of the Company.
The Executive agrees to return immediately any written Confidential Information, and all copies
thereof, upon the termination of the Executive’s employment. In the event of a breach or threatened
breach by the Executive of the provisions of this Section 5, in addition to all other remedies
available to the Company, the Company shall be entitled to an injunction restraining the Executive
from disclosing any written Confidential Information or from rendering any services to any person,
firm, corporation, association or other entity to whom any written Confidential Information has
been disclosed or is threatened to be disclosed, without the need to post bond or other security.
In the event of any suit or arbitration with respect to the Executive’s obligations in this Section
5, the Executive shall pay all costs incurred by the Company in securing an

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injunction (or other equitable remedy) and/or damages, including reasonable attorneys’ fees and
expenses; provided, however, in the event the Company is unsuccessful in obtaining any such remedy,
the Executive shall have no liability for the Company’s costs in connection with such suit or
arbitration.

6. Competition.

     (a) During the period beginning on the Effective Date and ending on the second anniversary of
the Effective Date, Executive shall not, directly or indirectly: (i) form or acquire a five percent
(5%) or greater equity ownership, voting or profit participation interest in, or actively
participate in, control, manage or finance a five percent (5%) or greater interest of, or invest a
five percent (5%) or greater interest in, a Competitor (as defined below); (ii) associate
(including as an officer, employee, partner, director, consultant, agent, representative or
advisor) with any Competitor; (iii) solicit or do banking or similar business with any customer of
Company or any of its subsidiaries in the Territory (as defined below); or (iv) solicit any
employee of Company or any of its subsidiaries to leave his or her employment with Company or any
of its subsidiaries for any reason, or hire any such employee of Company or any of its
subsidiaries, without the prior written consent of Company. As used herein, “Competitor” shall
mean any bank or bank holding company, savings and loan or savings and loan holding company or
other financial institution that has a physical location within the Territory. As used herein,
“Territory” shall mean the Florida counties of Sarasota and Manatee.

     (b) In the event of any suit or arbitration with respect to the Executive’s obligations set
forth in Section 6(a), the Executive shall pay all costs incurred by the Company in securing an
injunction (or other equitable remedy) and/or damages, including reasonable attorneys’ fees and
expenses; provided, however, in the event the Company is unsuccessful in obtaining any such remedy,
the Executive shall have no liability for the Company’s costs in connection with such suit or
arbitration.

     (c) The Executive and the Company recognize that any subsidiaries or affiliates of the Company
are third-party beneficiaries to this Agreement that are intended to be protected by the covenants
in this Agreement and that any successor or assign of the Company or one of the third-party
beneficiaries to this Agreement may enforce the covenants in this Agreement as if it were a party
to these covenants. Moreover, the Executive and the Company acknowledge and agree that the Company
has legitimate business interests to protect relative to Executive, including trade secrets, other
valuable confidential and proprietary business information, substantial relationships with specific
existing customers, substantial relationships with other employees of the Company, the Company and
customer goodwill associated with the Company’s trade name, and the Company’s servicing of specific
markets provided to the Executive. The Executive agrees that the restrictions contained in this
Section 6 are necessary and reasonable for the protection of the legitimate business interests and
goodwill of the Company described above, and the Executive agrees to waive any objection to the
enforcement of this covenant and that any breach of this Section 6 will cause the Company
substantial and irrevocable damage and, therefore, the Company shall have the right, in addition to
any

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other remedies it may have, to seek specific performance and injunctive relief, without the need to
post a bond or other security. The Executive agrees that the period during which the covenant
contained in this Section 6 shall be effective shall be computed by excluding from such computation
any time during which the Employee is in violation of any provision of Section 6. The Executive
agrees that if any covenant contained in Section 6 of this Agreement is found by a court of
competent jurisdiction to contain limitations as to time, geographical area, or scope of activity
that are not reasonable and impose a greater restraint than is necessary to protect the goodwill or
other business interest of the Company, then the court shall reform the covenant to the extent
necessary to cause the limitations contained in the covenant as to time, geographical area, and
scope of activity to be restrained to be reasonable and to impose a restraint that is not greater
than necessary to protect the goodwill and other business interests of the Company and to enforce
the covenant as reformed.

     (d) The Executive specifically recognizes and affirms that each of the covenants contained in
Sections 5 and 6 of this Agreement is a material and important term of this Agreement which has
induced the Company to provide for the award of the compensation and benefits provided hereunder
and the other promises made by Company herein.

     7. Enforcement
of the Company’s Obligations. In the event of any suit or arbitration with
respect to the Company’s obligations under this Agreement, the Company shall pay all costs incurred
by the Executive in securing an injunction (or other equitable remedy) and/or damages, including
reasonable attorneys’ fees and expenses; provided, however, in the event the Executive is
unsuccessful in obtaining any such remedy, the Company shall have no liability for the Executive’s
costs in connection with such suit or arbitration.

     8. Choice of Law. This Agreement shall be governed by, and interpreted in accordance with,
the laws of the State of Florida. The exclusive venue for disputes arising out of this Agreement
shall be the courts of the State of Florida located in Sarasota County, Florida.

     9. Amendments. This Agreement may not be modified, amended or terminated except by a written
document executed by the Executive and a duly authorized representative of the Company.

     10. Entire Agreement. This Agreement sets forth the entire agreement between the Company and
the Executive with respect to the payments provided for herein.

     11. Binding Effect. This Agreement shall be binding upon, and inure to the benefit of, the
Company and the Executive, their respective heirs, successors, assigns, personal representatives
and affiliates; provided, however, that the Executive may not assign his right to any payment
hereunder.

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     12. Severability. If any one or more of the provisions of this Agreement is held to be
invalid, illegal or unenforceable for any reason, then the invalidity, illegality or
unenforceability of that provision shall not affect any other provision of this Agreement. The
Company and the Executive intend that this Agreement shall be interpreted as if any invalid,
illegal or unenforceable provision were never included herein.

	 	 	 	 	 	 	 	 	 
	CHRISTOPHER PENNEWILL	 	 	 	SUPERIOR BANK	 	 
	 
	 	 	 	 	 	 	 	 
	/s/
Christopher Pennewill

	 	 	 	By:	 	/s/ C. Marvin Scott	 	 
	Executive

	 	 
	 	 	 	 

	 	 
	 	 	 	 	President
	 	 
	 

	 	 	 	Title	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	1/18/07
	 	 	 	1/18/07
	 	 
	Date

	 	 	 	Date	 	 	 	 

5EX-4.2 WARRANT TO PURCHASE COMMON STOCK

 

EXHIBIT 4.2

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING
SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.

	 	 	 
	Warrant No. W — 1

	 	                    Number of Shares — 25,000
	Date of Issuance: October 21, 2003

	 	(subject to adjustment)

WARRANT TO PURCHASE

COMMON STOCK OF

CUMBERLAND PHARMACEUTICALS, INC.

(Void after October 21, 2013)

     THIS WARRANT TO PURCHASE COMMON STOCK OF CUMBERLAND PHARMACEUTICALS, INC. (the “Warrant”) is
issued as of this 21st day of October, 2003, by CUMBERLAND PHARMACEUTICALS, INC., a Tennessee
corporation (the “Company”), having a place of business at 2525 West End Avenue, Suite 950,
Nashville, Tennessee 37203, to BANK OF AMERICA, N.A., a national banking association (Bank of
America, N.A. and any subsequent assignee or transferee hereof are hereinafter referred to
collectively as the “Holder”).

AGREEMENT:

     For and in consideration of the Holder making available to the Company a revolving credit
facility in the maximum principal amount of Three Million Five Hundred Thousand and No/100ths
Dollars ($3,500,000.00) (the “Loan”) pursuant to the terms of an Amended and Restated Promissory
Note of even date herewith in the aforesaid amount (together with any and all extensions,
modifications, replacements and renewals thereof, the “Note”) and an Amended and Restated Loan
Agreement of even date herewith (as amended, supplemented or otherwise modified from time to time,
the “Loan Agreement”; any capitalized terms used but not otherwise defined herein shall have the
same meanings as in the Loan Agreement), and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby grants to the Holder the right to
purchase from the Company at a per share price equal to $12.00 (the “Exercise Price”), 25,000
shares of the Company’s common stock, $0 par value per share (the “Common Stock”), at any time or
from time to time, from October 21, 2003 up to and including 5:00 p.m. (Central time) on October
21, 2013 (the “Expiration Date”), upon surrender to the Company at its principal office (or at such
other location as the Company may advise the Holder in writing) of this Warrant properly endorsed
with the Notice of Exercise attached hereto as Exhibit A, duly completed and signed and, if
applicable, upon payment in cash or by check acceptable to the Company of the aggregate Exercise
Price for the number of shares for which this Warrant is being exercised determined in accordance
with the provisions hereof. The Exercise Price and the number of shares purchasable hereunder are
subject to adjustment as provided in Section 3 of this Warrant.

     This Warrant is subject to the following terms and conditions:

 

 

     1. Exercise; Issuance of Certificates; Payment for Shares.

          1.1 General. Subject to the terms of Section 1.3 below, this Warrant is exercisable at the
option of the Holder, at any time or from time to time, from the date of the issuance of this
Warrant up to the Expiration Date, for all or any part of the shares of Common Stock (but not for a
fraction of a share) that may be purchased hereunder. The Company agrees that the shares of Common
Stock purchased under this Warrant shall be and are deemed to be issued to the Holder as the record
owner of such shares as of the close of business on the date on which this Warrant shall have been
surrendered to the Company, properly endorsed, the completed, executed Form of Subscription shall
have been delivered and any required payment made for such shares. Certificates for the shares of
Common Stock so purchased, together with any other securities or property to which the Holder is
entitled upon such exercise, shall be delivered to the Holder by the Company at the Company’s
expense within a reasonable time after the rights represented by this Warrant have been so
exercised. In case of a purchase of less than all of the shares that may be purchased under this
Warrant, the Company shall cancel this Warrant and execute and deliver a new Warrant or Warrants of
like tenor for the balance of the shares purchasable under the Warrant surrendered upon such
purchase to the Holder within a reasonable time. Each stock certificate so delivered shall be in
such denominations of Common Stock as may be requested by the Holder and shall be registered in the
name of such Holder.

          1.2 Net Issue Exercise. Notwithstanding any provisions herein to the contrary, if the Fair
Market Value of one share of the Company’s Common Stock is greater than the Exercise Price (at the
date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder
may elect to receive shares equal to the value (as determined below) of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Form of Subscription and notice of such election in which event
the Company shall issue to the Holder a number of shares of Common Stock computed using the
following formula:

X = Y (A-B)

            A

     Where X = the number of shares of Common Stock to be issued to the Holder

     Y = the number of shares of Common Stock purchasable under the Warrant or, if only
a portion of the Warrant is being exercised, the portion of the Warrant being canceled
(at the date of such calculation)

     A = the Fair Market Value of one share of the Company’s Common Stock (at the date
of such calculation)

     B = Exercise Price (as adjusted to the date of such calculation)

     The “Fair Market Value” of a share of Common Stock as of a particular date shall mean: (a) if
there is an active public market for the Company’s Common Stock at the time of such exercise, the
fair market value per share shall be the average of the closing prices of the Common Stock of the
Company over the five (5) trading days ending immediately prior to the applicable date of valuation
if traded on a securities exchange or the Nasdaq National Market; or, if actively

 

 

traded over-the-counter, the average of the closing bid prices over the 30-day period ending
immediately prior to the applicable date of valuation, whichever is applicable; or (b) if there is
no active public market for the Company’s Common Stock at the time of such exercise, the Fair
Market Value shall be the value thereof as determined in good faith by the board of directors of
the Company (the “Determination”). The board of directors shall provide to the Holder a written
notice of the Determination which notice shall set forth supporting data in respect of such
calculation (the “Determination Notice”). Holder shall have 10 days following receipt of the
Determination Notice within which to deliver to the Company a written notice of an objection, if
any, to the Determination. The failure by Holder to deliver such notice within such 10-day period
shall constitute the Holder’s acceptance of the Determination as conclusive. In the event of the
timely delivery by Holder of its objection notice, the Company and the Holder shall attempt in good
faith to arrive at an agreement with respect to the Fair Market Value of a share of Common Stock of
the Company, which agreement shall be set forth in writing within 15 days following delivery of
such objection notice by Holder. If the Company and the Holder are unable to reach an agreement
within such 15-day period, the matter shall be promptly referred for determination to a regionally
or nationally recognized investment banking or valuation firm (the “Valuer”) reasonably acceptable
to the Company and the Holder. The Company and the Holder will cooperate with each other in good
faith to select such Valuer. The Valuer may select the Determination or may select any other number
or value. The Valuer’s selection will be furnished to the Company and the Holder in writing and be
conclusive and binding upon the parties and shall not be subject to collateral attack. The fees and
expenses of the Valuer shall be borne by the Company unless the Valuer’s determination of Fair
Market Value per share of the Company’s Common Stock is within 10% of the Determination, in which
case the Valuer’s fees and expenses shall be borne by the Holder.

Notwithstanding the foregoing, in the event the Warrant is exercised in connection with the
Company’s initial public offering of Common Stock, the fair market value per share shall be the per
share offering price to the public of the Company’s initial public offering.

          1.3 Vesting. Notwithstanding anything to the contrary contained herein, the Holder may
exercise its right to purchase up to 12,500 shares of the Common Stock, or any portion thereof, at
any time or from time to time from the date of the issuance of this Warrant up to the Expiration
Date. With respect to the remaining 12,500 shares of Common Stock, the Holder’s right to purchase
all or any portion of such shares shall be deemed to vest hereunder in the event that, and at such
time as, the Company fails to achieve a Successful CeraLyte® Launch.

     2. Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all
shares of Common Stock that may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and
free from all preemptive rights of any stockholder and free of all taxes, liens and charges with
respect to the issuance thereof. The Company further covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the Company will at all times
have authorized and reserved, for the purpose of issue or transfer upon exercise of the
subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but
unissued Common Stock, or other securities and property, when and as required to provide for the
exercise of the rights represented by this Warrant. The Company will take all such action as may
be necessary to assure that such shares of Common Stock may

 

 

be issued as provided herein without violation of any applicable law or regulation, or of any
requirements of any domestic securities exchange upon which the Common Stock may be listed;
provided, however, that the Company shall not be required to effect a registration under federal or
state securities laws with respect to such exercise. The Company will not take any action which
would result in any adjustment of the Exercise Price (as set forth in Section 3 hereof) if the
total number of shares of Common Stock issuable after such action upon exercise of all outstanding
warrants, together with all shares of Common Stock then outstanding and all shares of Common Stock
then issuable upon exercise of all options and upon the conversion of all convertible securities
then outstanding, would exceed the total number of shares of Common Stock then authorized by the
Company’s charter, as amended.

     3. Adjustment of Exercise Price and Number of Shares. The Exercise Price and the number of
shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to
time upon the occurrence of certain events described in this Section 3. Upon each adjustment to the
Exercise Price, the Holder shall thereafter be entitled to purchase, at the Exercise Price
resulting from such adjustment, the number of shares obtained by multiplying the Exercise Price in
effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto
immediately prior to such adjustment, and dividing the product thereof by the Exercise Price
resulting from such adjustment.

          3.1 Subdivision or Combination of Stock. In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination shall be proportionately
increased.

          3.2 Dividends in Common Stock, Other Stock, Property, Reclassification. If at any time or
from time to time the holders of Common Stock shall have received or become entitled to receive,
without further payment therefor,

               (a) Common Stock or any shares of stock or other securities that are at any time directly or
indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe
for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution,

               (b) any cash paid or payable otherwise than as a cash dividend, or

               (c) Common Stock or additional stock or other securities or property (including cash) by way
of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement
(other than shares of Common Stock issued as a stock split or adjustments in respect of which shall
be covered by the terms of Section 3.1 above), then and in each such case, the Holder shall, upon
the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common
Stock receivable thereupon, and without payment of any additional consideration therefor, the
amount of stock and other securities and property (including cash in the cases referred to in
clause (b) above and this clause (c)) that Holder would hold on the date of such exercise had
Holder been the holder of record of such Common Stock as of the date on which holders of Common
Stock received or became entitled to receive such

 

 

shares or all other additional stock and other securities and property.

          3.3 Reorganization, Reclassification, Consolidation, Merger or Sale. If any recapitalization,
reclassification or reorganization of the capital stock of the Company, or any consolidation or
merger of the Company with another company, or the sale of all or substantially all of its assets
or other transaction shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or other assets or property (an “Organic Change”), then, as a
condition of such Organic Change, lawful and adequate provisions shall be made by the Company
whereby the Holder thereafter shall have the right to purchase and receive (in lieu of the shares
of the Common Stock of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented hereby) such shares of stock, securities or other assets as may
be issued or payable with respect to or in exchange for a number of outstanding shares of such
Common Stock equal to the number of shares of such stock immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby. In the event of any Organic Change,
appropriate provision shall be made by the Company with respect to the rights and interests of the
Holder to the end that the provisions hereof (including, without limitation, provisions for
adjustments of the Exercise Price and of the number of shares purchasable and receivable upon the
exercise of this Warrant) shall thereafter be applicable, in relation to any shares of stock,
securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect
any such Organic Change unless, prior to the consummation thereof, the successor company (if other
than the Company) resulting from such consolidation or the company purchasing such assets shall
assume by written instrument reasonably satisfactory in form and substance to the Holder, executed
and mailed or delivered to the registered Holder at the last address of such Holder appearing on
the books of the Company, the obligation to deliver to such Holder such shares of stock, securities
or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.

          3.4 Certain Events. If any change in the outstanding Common Stock of the Company or any other
event occurs as to which the other provisions of this Section 3 are not strictly applicable or if
strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in
accordance with such provisions, then the Board of Directors of this Company shall make an
adjustment in the number and class of shares available under the Warrant, the Exercise Price or the
application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment
shall be such as will give the Holder, upon exercise for the same aggregate Exercise Price, the
total number, class and kind of shares as the Holder would have owned had the Warrant been
exercised prior to the event and had the Holder continued to hold such Common Stock until after the
event requiring adjustment.

     4. Issue Tax. The issuance of certificates for shares of Common Stock upon the exercise of
the Warrant shall be made without charge to the Holder for any issue tax (other than any applicable
income taxes) in respect thereof; provided, however, that the Company shall not be required to pay
any tax that may be payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the then Holder of the Warrant being exercised.

     5. Closing of Books. The Company will at no time close its transfer books against the
transfer of any warrant or of any shares of Common Stock issued or issuable upon the exercise of
any warrant in any manner which interferes with the timely exercise of this Warrant.

 

 

     6. No Voting or Dividend Rights; Limitation of Liability. Nothing contained in this Warrant
shall be construed as conferring upon the Holder the right to vote or to consent or to receive
notice as a stockholder of the Company or any other matters or any rights whatsoever as a
stockholder of the Company. Except as set forth in Section 3.2 hereof, no dividends or interest
shall be payable or accrued in respect of this Warrant or the interest represented hereby or the
shares purchasable hereunder until, and only to the extent that, this Warrant shall have been
exercised. No provisions hereof, in the absence of affirmative action by the Holder to purchase
shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of such Holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by its creditors.

     7. Rights and Obligations Survive Exercise of Warrant. The rights and obligations of the
Company, of the Holder and of the holder of shares of Common Stock (or other shares of stock,
securities or assets) issued upon exercise of this Warrant shall survive the exercise of this
Warrant.

     8. Amendments.

          (a) Any term of this Warrant may be amended with the written consent of the Company and the
Holder. Any amendment effected in accordance with this Section 8 shall be binding upon the existing
and each future holder and the Company.

          (b) No waivers of, or exceptions to, any term, condition or provision of this Warrant, in any
one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of
any such term, condition or provision.

     9. Notices.

          (a) Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted
pursuant to Section 3 hereof, the Company shall issue a certificate signed by its Chief Financial
Officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Exercise Price and number of
shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first-class mail, postage prepaid) to the Holder.

          (b) In case:

     (i) the Company shall take a record of the holders of its Common Stock
(or other stock or securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities, or to receive any other right, or

     (ii) of any capital reorganization of the Company, any reclassification of the
capital stock of the Company, any consolidation or

 

 

merger of the Company with or into another company, or any conveyance of all
or substantially all of the assets of the Company to another company, or

     (iii) of any voluntary dissolution, liquidation or winding-up of the
Company,

then, and in each such case, the Company will mail or cause to be mailed to the Holder or Holders a
notice specifying, as the case may be, (A) the date on which a record is to be taken for the
purpose of such dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right, or (B) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the
time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or
securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least 15 days prior to the
date therein specified.

          (c) Any notice, request or other document required or permitted to be given or delivered to
the Holder or the Company shall be delivered or shall be sent by certified mail, postage prepaid,
to the Holder at its address as shown on the books of the Company or to the Company at the address
indicated therefor in the first paragraph of this Warrant or such other address as either may from
time to time provide to the other. Any notice, request or other document required or permitted to
be given or delivered pursuant to this Warrant shall be deemed effectively given: (i) upon personal
delivery to the party to be notified; (iii) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid; or (iv) one day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with written verification of
receipt.

     11. Binding Effect on Successors. This Warrant shall be binding upon any company succeeding
the Company by merger, consolidation or acquisition of all or substantially all of the Company’s
assets. All of the obligations of the Company relating to the Common Stock issuable upon the
exercise of this Warrant shall survive the exercise and termination of this Warrant. This Warrant
and all rights hereunder may be transferred or assigned, in whole or in part, to any person or
business entity upon surrender of this Warrant at the principal office of the Company, accompanied
by an Assignment Form attached hereto as Exhibit B, duly completed and signed. Upon
surrender of’ this Warrant and receipt of the Assignment Form, the Company, at its expense, shall
issue to or on the order of the new Holder a new warrant or warrants of like tenor in accordance
with the Assignment Form.

     12. Descriptive Headings. The description headings of the several sections and paragraphs of
this Warrant are inserted for convenience only and do not constitute a part of this Warrant.

     13. Governing Law. This Warrant shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the laws of the State of Tennessee.

 

 

     14. Replacement Warrants. The Company represents and warrants to the Holder that upon receipt
of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation, upon surrender and
cancellation of such Warrant, the Company, at its expense, will execute and deliver a new Warrant,
of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant.

     15. Fractional Shares. No fractional shares shall be issued upon exercise of this Warrant.
The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such
fraction a sum in cash equal to such fraction multiplied by the Fair Market Value of a share of
Common Stock.

     16. Equity Participation. This Warrant and the rights of the Holder hereunder are intended to
constitute an “equity participation” for purposes of Title 47, Chapter 24, Tennessee Code
Annotated, and the consideration or value received by the Holder in respect of this Warrant shall
not be deemed to be interest, loan charges, commitment fees or brokerage commissions for purposes
of Title 47, Chapter 14, Tennessee Code Annotated.

     IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers,
thereunto duly authorized this 21st day of October, 2003.

	 	 	 	 	 
	 	CUMBERLAND PHARMACEUTICALS, INC.

 	 
	 	By:  	/s/ A.J. Kazimi
 	 
	 	Name: 	A.J. Kazimi 	 
	 	Title: 	Chief Executive & President 	 

 

 

	 	 	 	 	 

EXHIBIT A

NOTICE OF EXERCISE

To: Cumberland Pharmaceuticals, Inc.

     ? The undersigned hereby elects to exercise the attached Warrant and to purchase
thereunder
                     shares of Common Stock at a purchase price of                      Dollars
($                    ) per Share or an aggregate purchase price of ___Dollars ($___).
Pursuant to the terms of the Warrant, the undersigned has delivered the purchase price herewith in
full.

     ? The undersigned hereby elects to convert                      percent (                    %) of the
value of the Warrant pursuant to the provisions of Section 1.2 of the Warrant.

     Please issue a certificate or certificates representing said shares of Common Stock in the
name of the undersigned or in such other name as is specified below:

	 	 	 	 	 
	 

	 	 

(Name)
	 	 
	 
	 	 	 	 
	 

	 	 

(Name)
	 	 

     Please issue a new Warrant for the unexercised portion of the attached Warrant, if applicable,
in the name of the undersigned or in such other name as is specified below:

	 	 	 	 	 	 	 
	 

	 	 	 	 

(Name)
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

(Name)
	 	 
	 
	 	 	 	 	 	 
	 

(Date)

	 	 	 	 

(Signature)
	 	 

 

 

EXHIBIT B

ASSIGNMENT FORM

     FOR VALUE RECEIVED, the undersigned registered owner of the attached Warrant hereby sells,
assigns and transfers all of the rights of the undersigned under the attached Warrant with respect
to the number of shares of the security covered thereby set forth below, unto:

	 	 	 	 	 
	Name of Assignee
	 	Address
	 	No. of Shares

	 	 	 	 	 	 	 
	 

(Date)

	 	 	 	 

(Signature)

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