Document:

Exhibit 4.2

 

FIFTH AMENDED AND RESTATED
  REGISTRATION RIGHTS AGREEMENT

 

This FIFTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT dated as of July 18, 2012 among Agile Therapeutics, Inc. (the “Company”), a Delaware corporation; those persons listed on Schedule A hereto who are signatories to this Agreement (individually an “Investor” and collectively the “Investors”); and those persons listed on Schedule B hereto who are signatories to this Agreement (individually a “Management Stockholder” and collectively the “Management Stockholders”).

 

Recitals:

 

On the date hereof, certain of the Investors are purchasing shares of the Company’s Series C Convertible Preferred Stock, par value $.0001 per share (the “Series C Preferred Stock”) pursuant to a Series C Preferred Stock Purchase Agreement dated as of the date hereof (the “Purchase Agreement”).

 

The Company, the Investors who hold shares of the Company’s Series A-1 Convertible Preferred Stock, par value $.0001 per share (the “Series A-1 Preferred Stock”) and shares of the Company’s Series B Convertible Preferred Stock, par value $.0001 per share (the “Series B Preferred Stock”), and the Management Stockholders are parties to a Fourth Amended and Restated Stockholders Agreement dated as of May 25, 2010, as amended (the “Original Rights Agreement”).  The parties are amending and restating the Original Rights Agreement as provided in this Agreement in connection with, and in satisfaction of a condition to, the closing of the transactions contemplated by the Purchase Agreement.

 

All references herein to Investors shall mean such Investors in their capacity as holders of Series A-1 Preferred Stock or Series B Preferred Stock or Series C Preferred Stock and all references herein to Management Stockholders shall mean such Management Stockholders in their capacity as holders of Management Stock (as defined below).

 

NOW, THEREFORE, in consideration of the premises and covenants set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.             Definitions.  As used in this Agreement:

 

“Commission” shall mean the Securities and Exchange Commission, or any other federal agency at the time administering the Securities Act.

 

“Common Stock” shall mean the Company’s Common Stock, par value $.0001.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at that time.

 

“Initiating Holders” shall mean the holders of at least a majority of the Registrable Securities.

 

 

“Management Stock” shall mean the shares of Common Stock owned by the Management Stockholders and shares of Common Stock, or other securities convertible into Common Stock, received as a stock dividend or other distribution in respect of those shares.

 

“Preferred Stock” shall mean the Series A-1 Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, collectively.

 

“Registrable Securities” shall mean (a) any shares of Common Stock issued or issuable upon conversion of the Preferred Stock, (b) any shares of Common Stock purchased by any Investor and (c) shares of Common Stock received as, or issued or issuable upon conversion of other securities received as, a stock dividend or other distribution in respect to any of the foregoing.  For the purpose of any calculations required under Section 2, the number of Registrable Securities held by a holder shall equal the number of shares of Common Stock attributable to such holder, with the number of shares of Common Stock attributable to a holder being equal to (i) the number of shares of Common Stock held by such holder plus (ii) the number of shares of Common Stock into which any Preferred Stock held by such holder is convertible (including any shares of Preferred Stock which the Investor may acquire upon exercise of any outstanding warrant).  Notwithstanding the foregoing, a Registrable Security shall cease to be a Registrable Security when (i) a registration statement covering such Registrable Security has been declared effective by the SEC and such Registrable Security has been disposed of pursuant to such effective registration statement or (ii) (x) such Registrable Security has been sold through a broker, dealer or market maker in compliance with Rule 144 under the Securities Act (or any similar rule then in force), (y) become eligible for resale pursuant to Rule 144(b)(1) under the Securities Act, and (z) any certificate evidencing such Registrable Shares to be transferred need not bear a restrictive legend.  In no event shall shares of Series A-2 Preferred Stock owned by an Investor, shares issuable upon conversion thereof or shares received as, or issued or issuable upon a conversion of other securities received as, a stock dividend or other distribution in respect of such Series A-2 Preferred Stock be considered “Registrable Securities.”

 

“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

 

2.             Registration Rights.

 

2.1          Demand Registration Rights.

 

2.1.1       Commencing on the earlier of (i) July 18, 2017 or (ii) 180 days after the effective date of an initial public offering of Common Stock (an “IPO”), the Initiating Holders may request the Company to file a registration statement under the Securities Act for a public offering of Registrable Securities (a “Demand Registration”).  Each request for a Demand Registration by the Initiating Holders shall state the amount of the Registrable Securities proposed to be sold and the intended method of disposition thereof.  The Company shall use its best efforts to register under the Securities Act the Registrable Securities of all holders who so request and cause any such Demand Registration to become effective not later than 75 days after the date it receives a request under this Section 2.1.1; provided, however, that the Company shall

 

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not be obligated to effect (i) more than two Demand Registrations and (ii) any Demand Registration in which the aggregate offering price (based on the then current public market price) is expected to be less than $10,000,000.  The Company’s obligation to undertake a Demand Registration shall be deemed satisfied only when either (x) a registration statement covering all Registrable Securities requested to be registered as aforesaid shall have become effective and remained effective for the lesser of (i) the period during which all Registrable Securities in the Demand Registration are sold and (ii) 180 days, or (y) if such registration statement shall be withdrawn prior to the consummation of the offering at the request of the holders of Registrable Securities (other than as a result of a material adverse change in the Company’s business or operations); provided, however, that such registration shall not constitute a Demand Registration if (i) after such Demand Registration has become effective such registration or the related offer, sale or distribution of Registrable Securities thereunder is interfered with by any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason not attributable to the Initiating Holders or the other holders of Registrable Securities who have requested registration pursuant to this Section 2.1.1 (each, an “Other Demand Holder”) and such interference is not thereafter eliminated, (ii) the conditions specified in the underwriting agreement, if any, entered into in connection with such Demand Registration are not satisfied or waived, other than by reason of a failure by the Initiating Holders or (iii) the request for a Demand Registration is withdrawn at the request of the holders of a majority of the Registrable Securities to be registered and at the time of such withdrawal such holders have learned of a material adverse change in the Company’s condition, business, prospects or operations from that known to such holders at the time of their request and have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change.

 

2.1.2       Each Other Demand Holder may offer such Other Demand Holder’s Registrable Securities under any Demand Registration pursuant to this Section 2.1, subject to the procedures set forth in this Section 2.1.2.  Within five days after receipt of a request for a Demand Registration from an Initiating Holder, the Company shall (i) give written notice thereof to all of the Other Demand Holders and (ii) subject to Section 2.1.6, include in such registration all of the Registrable Securities held by such Other Demand Holders from whom the Company has received a written request for inclusion therein within 20 days of the receipt by such Other Demand Holder of such written notice referred to in clause (i) above.  Each such request by such Other Demand Holders shall specify the number of Registrable Securities proposed to be registered.  The failure of any Other Demand Holder to respond within such 15 day period referred to in clause (ii) above shall be deemed to be a waiver of such Other Demand Holder’s rights under this Section 2.1 with respect to such Demand Registration.  Any Other Demand Holder may waive its rights under this Section 2.1 prior to the expiration of such 20 day period by giving written notice to the Company, with a copy to the Initiating Holders.

 

2.1.3       Notwithstanding the foregoing, if the Company shall furnish to the Initiating Holders a certificate signed by the President of the Company stating that, in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration statement to be effective at such time, the Company shall have the right to defer such filing for a period of not more than 120 days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any 12-month period.  The Company shall give written notice

 

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of its determination of the fact that it is no longer detrimental to the Company and its stockholders for such registration statement to be effective promptly after it makes such determination.

 

2.1.4       In addition, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 2.1:

 

(i)            if the Company delivers in good faith a written notice to the Initiating Holders that the Company intends to file a registration statement for an IPO during the period commencing with the date of the giving of such notice, and ending 90 days thereafter, provided that the Company is actively employing good faith reasonable efforts to cause such registration statement to become effective; or

 

(ii)           during the period ending (A) 180 days after the effective date of the Company’s IPO or (B) 90 days after the effective date of any other registration statement pertaining to Common Stock of the Company in which the holders of Registrable Securities were entitled to participate, or such shorter periods if such shorter periods are acceptable to the underwriters of such offering.

 

2.1.5       If the Company includes in the registration required under this Section 2.1 a number of shares other than Registrable Securities that exceeds the number of shares of Registrable Securities to be registered, then such registration shall be treated for all purposes as a registration under Section 2.2 instead of this Section 2.1.  In all other cases where the Company includes in such registration any shares of Common Stock other than Registrable Securities, such registration shall remain subject to this Section 2.1.  The inclusion of such other shares shall not prevent holders of Registrable Securities from registering all Registrable Securities requested by them.

 

2.1.6       If the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders so elect, the Company shall use its best efforts to cause such Demand Registration to be in the form of a firm commitment underwritten offering and the managing underwriter or underwriters selected for such offering shall be the Approved Underwriter selected in accordance with Section 2.1.7.  The Initiating Holders shall advise the Company in writing as a part of their request made pursuant to Section 2.1.1 that they elect to offer their Registrable Securities in an underwritten offering and the Company shall include such information in the written notice referred to in Section 2.1.2.  In connection with any Demand Registration under this Section 2.1 involving an underwritten offering, none of the Registrable Securities held by any Initiating Holder or any Other Demand Holder making a request for inclusion of such Registrable Securities pursuant to Section 2.1.2 shall be included in such underwritten offering unless such Initiating Holder or Other Demand Holder accepts the terms of the offering as agreed upon by the Company, the Initiating Holders and the Approved Underwriter, and then only in such quantity as will not, in the opinion of the Approved Underwriter, jeopardize the success of such offering by the Initiating Holders.  If the Approved Underwriter advises the Company in writing that the aggregate amount of such Registrable Securities requested to be included in such offering is sufficiently large to have a material adverse effect on the success of such offering, then the Company shall include in such registration only the aggregate amount of Registrable Securities that the Approved Underwriter

 

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indicates in its written notice to the Company may be sold without any such material adverse effect and shall reduce the amount of securities to be included in such registration, first as to the Company, second as to the holders of securities other than Registrable Securities, if any, and third as to holders of Registrable Securities as a group, pro rata based on the number of Registrable Securities owned by each such holder.

 

2.1.7       The underwriter will be selected by the Initiating Holders holding a majority of the Registrable Securities held by all Initiating Holders to act as the managing underwriter of the offering, which underwriter shall be reasonably acceptable to the Company (the “Approved Underwriter”).

 

2.2          Piggyback Registration Rights.  Whenever the Company proposes to register any Common Stock for its own or others’ account under the Securities Act other than a registration relating to employee benefit plans or a transaction to which Rule 145 of the Commission applies, the Company shall promptly (and in no event less than 20 days before the anticipated filing date) give each holder of Registrable Securities and Management Stock (the “Piggyback Holders”) written notice of its intent to do so, and such notice shall set forth the material terms of such distribution, and offer such Piggyback Holders the opportunity to register the number of Registrable Securities or Management Stock as each such Piggyback Holder shall request (the “Piggyback Registration”).  The Company shall use its best efforts to cause the managing underwriter or underwriters in the case of a proposed underwritten offering (the “Company Underwriter”) to permit each of the Piggyback Holders who have requested in writing within 20 days of the date the notice is provided to participate in the Piggyback Registration to include such Piggyback Holder’s Registrable Securities or Management Stock in such offering on the same terms and conditions as the securities of the Company included therein.  In connection with any Piggyback Registration under this Section 2.2 involving an underwritten offering, the Company shall not be required to include any Registrable Securities or Management Stock in such underwritten offering unless the Piggyback Holders electing to participate in the Piggyback Registration accept the terms of the underwritten offering as agreed upon among the Company Underwriter, the Company and the stockholders of the Company, if any (other than the Piggyback Holders), participating in the registration, and then only in such quantity as the Company Underwriter believes will not jeopardize the success of the offering by the Company.  If the Company Underwriter advises the Company in writing that the registration of all or part of the Registrable Securities and Management Stock which the Piggyback Holders have requested to be included would be seriously detrimental to the success of such offering, then the Company may reduce the amount of securities to be included in such registration, first as to the Piggyback Holders who are holders of Management Stock as a group, pro rata based on the number of shares of Management Stock owned by each such Piggyback Holder as compared to the number of shares of Management Stock owned by all Piggyback Holders, and second as to the other holders of Registrable Securities as a group, pro rata based on the number of Registrable Securities owned by each such Piggyback Holder as compared to the number of Registrable Securities owned by all such Piggyback Holders.  In the event of any such limitation, shares of persons not having registration rights under this Section 2.2 will not be included in the registration unless all Registrable Securities and Management Stock requested to be included in the registration have been included.  In addition, in no event shall any such limitation with respect to Registrable Securities exceed 30% of the Registrable Securities proposed to be included in a registration other than in connection with an IPO, in which case such limitation

 

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shall be in any amount that the managing underwriter shall determine.  No agreement of the Company shall permit any person other than the Company or holders of Registrable Securities or Management Stock to participate in any registration under this Section 2.2 except on the basis that any offering limitation either applies only to such other persons or is apportioned according to the number of shares of Common Stock (including Registrable Securities and Management Stock) held by each participant.

 

2.3          Form S-3 Registration Rights.

 

2.3.1       If, at a time when the Company is eligible for use of Form S-3 (or any successor thereto) under the Securities Act in connection with a public offering of its securities, the Company shall receive from holders of 10% or more of the Registrable Securities (the “S-3 Initiating Holders”) a written request or requests that the Company register, under the Securities Act on Form S-3 (or any successor thereto), all or a portion of the Registrable Securities owned by such S-3 Initiating Holders (an “S-3 Registration”), the Company shall promptly (and in no event less than 20 days before the anticipated filing date of such Form S-3) give written notice of the proposed registration to each holder of Registrable Securities other than the S-3 Initiating Holders which have requested an S-3 Registration under this Section 2.3 (the “Other S-3 Holders”), and such notice shall offer such Other S-3 Holders the opportunity to register the number of Registrable Securities as each such Other S-3 Holder may request in writing to the Company, given within 20 days after their receipt from the Company of the written notice of such registration.  If requested by the S-3 Initiating Holders, such S-3 Registration shall be for an offering on a continuous basis pursuant to Rule 415 under the Securities Act for a period of 12 months after the effectiveness of such S-3 Registration.  With respect to each S-3 Registration, the Company shall, subject to Section 2.3.2 (i) include in such offering the Registrable Securities of the S-3 Initiating Holders and (ii) use its best efforts to (x) cause such registration pursuant to this Section 2.3.1 to become effective as soon as practicable, but in any event not later than 60 days after it receives a request therefor and (y) include in such offering the Registrable Securities of the Other S-3 Holders who have requested in writing to participate in such registration on the same terms and conditions as the Registrable Securities of the S-3 of the S-3 Initiating Holders included therein.

 

2.3.2       Any S-3 Registration effected under this Section 2.3 will not be counted as a Demand Registration under Section 2.1.

 

2.3.3       The Company shall not be obligated to effect (i) more than two S-3 Registrations in any calendar year or (ii) any S-3 Registration in which the aggregate offering price (based on the then current public market price) is expected by the Company to be less than $5,000,000.

 

2.3.4       Notwithstanding the foregoing, if the Company shall furnish to the S-3 Initiating Holders and the Other S-3 Holders, a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Form S-3 registration statement to be effective at such time, the Company shall have the right to defer such filing for a period of not more than 120 days after its receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any

 

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12-month period.  Promptly after it makes such determination, the Company shall give written notice to the S-3 Initiating Holders and the Other S-3 Holders of its determination of the fact that it is no longer detrimental to the Company and its stockholders for such Form S-3 registration statement to be effective.

 

2.4          Registration Procedures.  In connection with registrations under this Section 2, the Company shall use its best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method of distribution thereof as soon as reasonably practicable, and in connection with any such request shall, as expeditiously as possible:

 

2.4.1       prepare and file with the Commission as soon as reasonably practicable a registration statement with respect to the Registrable Securities and/or Management Stock, as the case may be, and use best efforts to cause such registration statement to become effective; provided, however, that (x) before filing a registration statement or prospectus or any amendments or supplements thereto, the Company shall provide the seller of Registrable Securities and counsel selected by the holders of a majority of the Registrable Securities being registered in such registration (“Holders’ Counsel”) and any other Inspector (as defined below) with a reasonable opportunity to review and comment on such registration statement and each prospectus included therein (and each amendment or supplement thereto) to be filed with the Commission, subject to such reasonable confidentiality requirements as may be requested by the Company, (y) the Company will include in the registration statement such information as such seller or Holders’ Counsel shall reasonably request and (z) the Company shall notify Holders’ Counsel and each seller of Registrable Securities of any stop order issued or, to the knowledge of the Company, threatened by the Commission and use its reasonable efforts to prevent the entry of such stop order or to remove it if entered;

 

2.4.2       prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the lesser of (x) 120 days and (y) such shorter period which will terminate when all Registrable Securities and Management Stock covered by such registration statement have been sold; provided, that if the S-3 Initiating Holders have requested than an S-3 Registration be for an offering on a continuous basis pursuant to Rule 415 under the Securities Act, then the Company shall use its best efforts to keep such registration statement effective and shall comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement in accordance with the intended methods of disposition by the sellers thereof set forth in such registration statement, in both cases for the time period for which the Company shall be required to keep such registration statement effective in accordance with the requirements of Section 2.3;

 

2.4.3       furnish to each seller of Registrable Securities and Management Stock such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto), and the prospectus included in such registration statement (including each preliminary prospectus) and any prospectus filed under Rule 424 of the Securities Act as each such seller may reasonably request in order to facilitate the disposition of the Registrable Securities and Management Stock owned by such seller;

 

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2.4.4       use its best efforts to register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as any seller of Registrable Securities shall reasonably request, and to use its best efforts to continue such qualification in effect in such jurisdiction for as long as permissible pursuant to the laws of such jurisdiction, or for as long as any such seller requests or until all of such Registrable Securities are sold, whichever is shortest, and do any and all other acts and things which may be reasonably necessary to enable any such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; provided, however, that the Company shall not be required to (x) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 2.4.4, (y) subject itself to taxation in any such jurisdiction or (z) consent to general service of process in any such jurisdiction;

 

2.4.5       notify each seller of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act, upon its discovery that, or upon its discovery of the happening of any event as a result of which, the prospectus included in such Registration Statement contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and the Company shall promptly prepare a supplement or amendment to such prospectus and furnish to each seller of Registrable Securities a reasonable number of copies of such supplement to or an amendment of such prospectus as may be necessary so that, after delivery to the purchasers of such Registrable Securities, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;

 

2.4.6       enter into and perform customary agreements (including an underwriting agreement in customary form with the Approved Underwriter or Company Underwriter, if any, selected as provided Sections 2.1.7 and 2.2, as the case may be);

 

2.4.7       make available its officers to participate in “road shows” and other information meetings organized by the Approved Underwriter or Company Underwriter in which such Approved Underwriter or Company Underwriter shall reasonably request such officer’s participation;

 

2.4.8       make available at reasonable times for inspection by any seller of Registrable Securities, any managing underwriter participating in any disposition of such Registrable Securities pursuant to a registration statement, Holders’ Counsel and any attorney, accountant or other agent retained by any such seller or any managing underwriter (each, an “Inspector”), all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s and its subsidiaries’ officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspector in connection with such Registration Statement.  Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors and any seller of Registrable Securities (and the Inspectors and sellers of Registrable Securities shall confirm their agreement in writing in advance to the Company if the Company so

 

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requests) unless (x) the disclosure of such records is necessary, in the Company’s judgment, to avoid or correct a misstatement or omission in the Registration Statement, (y) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction after exhaustion of all appeals therefrom or (z) the information in such Records was known to the Inspectors on a non-confidential basis prior to its disclosure by the Company or has been made generally available to the public.  Each seller of Registrable Securities agrees, and each Inspector shall agree, that it shall, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give prompt notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential;

 

2.4.9       if such sale is pursuant to an underwritten offering, obtain and furnish to the managing underwriter “cold comfort” letters dated the effective date of the registration statement and the date of the closing under the underwriting agreement from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing underwriter reasonably requests;

 

2.4.10     if such sale is pursuant to an underwritten offering, furnish, at the request of any underwriter, on the date such securities are delivered to the underwriters for sale pursuant to such registration, an opinion, dated such date, of counsel representing the Company for the purposes of such registration, addressed to the underwriters, covering such legal matters with respect to the registration in respect of which such opinion is being given as the underwriters may reasonably request and are customarily given or, if such sale is not pursuant to an underwritten offering, furnish, at the request of any seller of Registrable Securities, on the date the Registration Statement with respect to such securities becomes effective, an opinion, dated such date, of counsel representing the Company, covering such legal matters with respect to the registration in respect of which such opinion is being given as such seller may reasonably request and are customarily given for the purpose of causing the legend to be removed from the stock certificates of such seller in connection with the transfer of the shares as requested by such seller;

 

2.4.11     use its reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering a period of 12 months beginning on the first day of the Company’s full calendar quarter after the effective date of the registration statement, in a manner which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

 

2.4.12     cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system if similar securities issued by the Company are then listed on the NASD automated quotation system and if such similar securities are designated as Nasdaq “national market system securities” within the meaning of Rule 600(a) of Regulation NMS of the Commission, to cause the Registered Securities to be so designated, provided that the applicable listing requirements are satisfied;

 

2.4.13     notify Holders’ Counsel, if any, in writing as to the initiation of any registration under Sections 2.1, 2.2 and 2.3;

 

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2.4.14     provide a transfer agent and registrar for all Registrable Securities registered pursuant to Sections 2.1, 2.2 and 2.3 and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

 

2.4.15     provide such cooperation to each seller of Registrable Securities and each underwriter participating in the disposition of such Registrable Securities and their respective counsel as any of them shall reasonably request in connection with any filings required to be made with the NASD; and

 

2.4.16     take all other steps that shall be reasonably requested by any seller of Registrable Securities and that shall be necessary to effect the registration of the Registrable Securities contemplated hereby.

 

2.5          Underwriting Arrangement.  In connection with each registration pursuant to Sections 2.1, 2.2 and 2.3 covering an underwritten public offering, the Company and each holder participating in a registration pursuant to this Section 2 agree to enter into a written agreement with the managing underwriter in such form and containing such provisions as is then customary in the securities business for such an arrangement between such underwriter and companies of the Company’s size and investment stature.

 

2.6          Expenses.  All expenses incurred in connection with the registrations under this Section 2 (including without limitation all registration, filing, qualification, blue sky, printer’s and accounting fees and the fees and disbursements of one counsel for the holders, but excluding stock transfer taxes and underwriting commissions and discounts) shall be borne by the Company, regardless of whether such Registration Statement is declared effective.

 

2.7          Furnishing Information.  It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 2.1, 2.2 or 2.3 that the selling holders of Registrable Securities shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of distribution of such securities and such other information as shall be required to effect the registration of their Registrable Securities.

 

2.8          Delay.  No holder of Registrable Securities shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as a result of any controversy that might arise with respect to the interpretation for implementation of this Section 2.

 

3.             Indemnification.

 

3.1          Indemnification by the Company. The Company will indemnify and hold harmless each holder of Registrable Securities and/or Management Stock being registered and its partners, members, affiliates or officers, directors and stockholders, lawyers and accountants for such holder, and each underwriter of the Registrable Securities and/or Management Stock, and each controlling person of such holder and underwriter, against all claims, losses, damages and sliabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement relating to such Registrable Securities and/or Management Stock (or in any related registration statement,

 

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prospectus, amendment or supplement thereto, notification or the like, including any preliminary or final prospectus) or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities laws or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities laws, and the Company will reimburse each such holder and its partners, members, affiliates or officers, directors or stockholders, lawyers and accountants, and each such underwriter and controlling person, for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such claim, loss, damage, liability or action, provided, however, that the indemnity agreement contained in this Section 3.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), provided further, that the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on (i) any untrue statement or omission based upon and in conformity with written information furnished to the Company by any such holder or underwriter by an instrument duly executed by such holder or underwriter and stated to be specifically for use therein or (ii) the failure of such holder to effectively cause the prospectus deliver requirements of the Securities Act to be satisfied, provided that the Company shall have complied with the prospectus delivery requirements set forth in Section 2.4.3 of this Agreement.

 

3.2                               Indemnification by Holders.  In connection with each registration pursuant to Sections 2.1, 2.2 or 2.3, each holder of Registrable Securities and/or Management Stock, if Registrable Securities and/or Management Stock held by such holder are included in the securities as to which such registration is being effected, will hold harmless the Company, each of its directors, each of its officers who has signed the registration statement and each person, if any, who controls the Company within the meaning of the Securities Act, and each other holder of Registrable Securities and/or Management Stock selling securities in such registration statement against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement relating to the Registrable Securities and/or Management Stock (or in any related registration statement, notification or the like) or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent (and only to the extent) that such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon and in conformity with written information furnished to the Company by such holder and stated to be specifically for use therein, and such holder will reimburse the Company and each such director, officer or controlling person and other holder of Registrable Securities and/or Management Stock selling securities in such registration statement for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 3.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such holder (which consent shall not be unreasonably withheld or delayed); and provided, further, that that no holder of Registrable Securities or Management Stock will be liable under this Section 3.2 for any losses, costs or damages or expenses exceeding in the aggregate the net proceeds from the offering to such holder.

 

11

 

3.3                               Procedure for Indemnification.  Each party entitled to indemnification under this Section 3 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party’s expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 3.  No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (which consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement.

 

3.4                               Indemnification Unavailable.  If the indemnification provided for in this Section 3 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage or expense referred to herein, then each Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party, on the one hand, and of the Indemnified Party, on the other, in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations; provided, however, that no contribution by any holder of Registrable Securities and/or Management Stock, when combined with any amounts paid by such holder pursuant to Section 3.2, shall exceed the net proceeds from the offering payable to such holder or any other person to whom such holder shall direct.  The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or allegedly untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

 

3.5                               Underwriting Agreement Provisions for Indemnification.  Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with an underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

3.6                               Survival of Indemnification.  The obligations of the Company and the holders of Registrable Securities and/or Management Stock under this Section 3 shall survive the completion of any offering of Registrable Securities and/or Management Stock in a registration statement under Sections 2.1, 2.2 and 2.3, and otherwise.

 

4.                                      Reports Under Exchange Act of 1934.

 

4.1                               Obligations of the Company.  With a view to making available to the holders of Registrable Securities and Management Stock the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the Commission that may at any time permit a

 

12

 

holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:

 

4.2.1                     make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after 90 days after the effective date of the IPO so long as the Company remains subject to the periodic reporting requirements under Section 13 or 15(d) of the Exchange Act;

 

4.2.2                     file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

4.2.3                     furnish to any holder of Registrable Securities or Management Stock, so long as the holder owns any Registrable Securities or Management Stock, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144 of the Securities Act (at any time after 90 days after the effective date of the first registration statement filed by the Company), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as shall be reasonably requested in availing any holder of Registrable Securities and/or Management Stock of any rule or regulation of the Commission that permits the selling of any such securities without registration or pursuant to such form.

 

5.                                      Grants to Others.  The Company agrees that it will not grant to any other person the right to register shares of capital stock of the Company held by such other person that shall be senior to or pari passu with the rights granted to the Investors hereunder without the prior written consent of the holders of not less than at least a majority of the shares of Common Stock attributable to the holders of the Registrable Securities outstanding (the number of shares of Common Stock attributable to each holder of Registrable Securities shall equal the number of shares of Common Stock held by such holder plus the number of shares of Common Stock into which any shares of Preferred Stock held by such holder are convertible).

 

6.                                      Holdback Agreement.  In the event of an IPO, each holder of Registrable Securities and/or Management Stock and each transferee pursuant to Section 11 agrees upon request of the Company or the underwriters managing any underwritten offering of the Company’s securities, not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any equity securities of the Company (other than those included in the registration) without the prior written consent of the Company or such underwriters, as the case may be, for such period of time (not to exceed 180 days, subject to the last paragraph of this Section 6) from the effective date of such registration as the Company or the underwriters may specify; provided, however, that all directors and officers of the Company and all persons holding in excess of 1% of the shares of capital stock of the Company on a fully diluted basis and all executive officers and directors of the Company shall also have agreed not to sell publicly their Common Stock under the circumstances and pursuant to the terms set forth in this Section 6; and provided further, however, that any such lock-up agreement shall provide that if the Company or the managing underwriter releases any shares from the lock-up with respect to

 

13

 

such offering prior to the scheduled expiration date, the Company or the managing underwriter shall contemporaneously release the Registrable Securities of each holder of Registrable Securities from such lock-up, pro rata based on the number of shares held by each such holder.  Notwithstanding the foregoing, in no event shall any such lock-up apply to shares of Common Stock purchased by any Investor in the IPO.  For the avoidance of doubt, the foregoing provisions of this Section 6 shall apply only to the Company’s IPO.  The underwriters in connection with the Company’s IPO are intended third party beneficiaries of this Section 6 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.

 

In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities and Management Stock of each holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period.  Notwithstanding anything to the contrary contained herein, if (i) during the last 17 days of the 180-day restricted period, the Company issues an earnings release or material news or a material event relating to the Company occurs; or (ii) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the 180-day period, the restrictions imposed by this Section 6 shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

 

7.                                      Cooperation of Holders of Registrable Securities.  Each prospective seller of the shares of Registrable Securities and/or Management Stock registered or to be registered under any registration hereunder shall furnish to the Company such information and execute such documents regarding the shares held by such seller and the intended method of disposition thereof as the Company shall reasonably request in writing and as shall be required in connection with the registration, qualification or compliance referred to in this Agreement to be taken by the Company.

 

8.                                      Notices.  All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument delivered in person or duly sent by certified mail, postage prepaid, or by overnight delivery service, charges prepaid or by confirmed facsimile, in each case addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor:

 

To the Company:

 

Agile Therapeutics, Inc.

101 Poor Farm Road

Princeton, NJ  08540

Attention:  President

Facsimile:  609-940-0301

 

To any Investor, addressed to such Investor at the respective address set forth on Schedule A; and

 

14

 

To any Management Stockholder, addressed to such Management Stockholder at the respective address set forth on Schedule B;

 

or such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party.  Any notice under this Agreement shall be deemed to have been given when received by the party to whom it is addressed.

 

9.                                      Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

 

10.                               Counterparts.  This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute one and the same agreement.  This Agreement may, upon execution by a party, be transmitted by facsimile or other electronic transmission with the same effect as if such party had delivered an executed original counterpart to this Agreement.

 

11.                               Successors and Assigns.  This Agreement is intended to bind and inure to the benefit of and be enforceable by each of the parties hereto and their respective heirs, personal representatives, successors and assigns; provided, however, that the rights of any transferee of Registrable Securities or Management Stock to cause the Company to register the securities held by such transferee and to otherwise obtain the benefits of this Agreement shall become effective only if (a) either (i) the transferee acquires at least 5,000 shares of Registrable Securities or (ii) in connection with the distribution by an Investor of Registrable Securities to the beneficial owners (including, without limitation, to partners of a general or limited partnership, members of a limited liability company, stockholders of a corporation and beneficiaries of a trust) of the securities of an Investor, (b) the Company is given written notice of the transfer of the Registrable Securities or Management Stock to such transferee, stating the name and address of the transferee, and (c) the transferee agrees in writing to be bound by the provisions of this Agreement, whereupon such transferee shall be deemed an “Investor” or a “Management Stockholder,” as the case may be, for purposes of this Agreement.

 

12.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Delaware.

 

13.                               Entire Agreement.  This Agreement and the documents referred to herein contain the entire agreement among the parties with respect to the subject matter hereof and supersede all prior arrangements and understandings with respect thereto.  No party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein.

 

14.                               Original Rights Agreement.  The Original Rights Agreement is hereby amended and restated, and superseded in its entirety, by this Agreement.

 

15.                               Amendments and Waivers.  Changes in or additions to any provision of this Agreement may be made or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance

 

15

 

and either retroactively or prospectively), upon written consent of the Company and the holders of not less than a majority of the shares of Common Stock attributable to the holders of the Registrable Securities (the number of shares of Common Stock attributable to a holder of Registrable Securities shall equal the number of shares of Common Stock held by such holder of Registrable Securities plus the number of shares of Common Stock into which any shares of Preferred Stock held by such holder are convertible).  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Registrable Securities at the time outstanding, each future holder of all such Registrable Securities and the Company.  No waivers of or exceptions to any term, condition or provision of this Agreement, 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.  No consent shall be required from any party to this Agreement who no longer holds any Registrable Securities.

 

16.                               Additional Shares.  Any Registrable Securities and Management Stock hereafter issued to or received by a party hereto shall thereafter become subject to this Agreement and shall be deemed “Registrable Securities” or “Management Stock” (as the case may be) for purposes of this Agreement.  The addition of shares of Registrable Securities or Management Stock shall not constitute an amendment subject to the requirements of Section 15.  Notwithstanding the foregoing, the provisions of this Section 16 shall not apply to the sale of shares to the public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act.

 

17.                               Ownership Capacity.  In the event of the conversion of any shares of Preferred Stock of a party hereto into shares of Common Stock pursuant to Section III(d)(ii) or Section III(d)(iii) of the Second Amended and Restated Certificate of Incorporation of the Company, as amended, such party shall no longer have any rights hereunder with respect to the converted shares (or the shares of Common Stock issued upon conversion thereof).

 

18.                               Headings.  The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement or considered in construing or interpreting this Agreement.

 

16

 

IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the day, month and year first above written.

 

	
 
    	
AGILE   THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Al Altomari
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    

 

[SIGNATURE PAGE TO AGILE THERAPEUTICS, INC. FIFTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]

 

 

	
 
    	
INVESTOR   GROWTH CAPITAL LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Lisa Barnett
    
	
 
    	
Name:
    	
Lisa   Barnett
    
	
 
    	
Title:
    	
‘A’   Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert de Heus
    
	
 
    	
Name:
    	
Robert   de Heus
    
	
 
    	
Title:
    	
‘B’   Director
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INVESTOR   GROUP L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Investor   Growth Capital LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Stephen Campe
    
	
 
    	
Name:
    	
Stephen   Campe
    
	
 
    	
Title:
    	
President
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
IGC   FUND VI, L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Investor   Growth Capital LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Stephen Campe
    
	
 
    	
Name:
    	
Stephen   Campe
    
	
 
    	
Title:
    	
President
    

 

[SIGNATURE PAGE TO AGILE THERAPEUTICS, INC. FIFTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]

 

 

	
 
    	
CARE   CAPITAL INVESTMENTS III LP
    
	
 
    	
By   its General Partner, Care Capital III LLC
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David R. Ramsay
    
	
 
    	
Name:
    	
David   R. Ramsay
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
CARE   CAPITAL OFFSHORE INVESTMENTS III LP
    
	
 
    	
By   its General Partner, Care Capital III LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David R. Ramsay
    
	
 
    	
Name:
    	
David   R. Ramsay
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PROQUEST   INVESTMENTS III, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
ProQuest   Associates III LLC
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Pasquale DeAngelis
    
	
 
    	
 
    	
Pasquale   DeAngelis
    
	
 
    	
 
    	
A   Managing Member
    
	
 
    	
 
    	
 
    
	
 
    	
PROQUEST   INVESTMENTS IV, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
ProQuest   Associates IV LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Pasquale DeAngelis
    
	
 
    	
 
    	
Pasquale   DeAngelis
    
	
 
    	
 
    	
A   Managing Member
    
	
 
    	
 
    	
 
    
	
 
    	
NOVITAS   CAPITAL II, L.P. (f/k/a PA Early Stage Partners, II, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
NOVITAS   CAPITAL II GP, L.P.,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
NOVITAS   CAPITAL II GP MANAGER, LLC,
    
	
 
    	
 
    	
its   manager
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Paul J. Schmitt
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Managing   Director
    

 

[SIGNATURE PAGE TO AGILE THERAPEUTICS, INC. FIFTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]

 

 

	
 
    	
KAISER PERMANENTE VENTURES, LLC - SERIES A
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Thomas Meier
    
	
 
    	
Name:
    	
Thomas Meier
    
	
 
    	
Title:
    	
SVP and Treasurer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KAISER PERMANENTE VENTURES, LLC - SERIES B
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Chris Grant
    
	
 
    	
Name:
    	
Chris Grant
    
	
 
    	
Title:
    	
Management Committee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THE PERMANENTE FEDERATION LLC - SERIES I
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Glen Hentges
    
	
 
    	
Name:
    	
Glen Hentges
    
	
 
    	
Title:
    	
CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
THE PERMANENTE FEDERATION LLC - SERIES J
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Glen Hentges
    
	
 
    	
Name:
    	
Glen Hentges
    
	
 
    	
Title:
    	
CFO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AISLING CAPITAL III, LP
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lloyd Appel
    
	
 
    	
Name: 
    	
Lloyd Appel
    
	
 
    	
Title:
    	
CFO
    

 

[SIGNATURE PAGE TO AGILE THERAPEUTICS, INC. FIFTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]

 

 

	
 
    	
Daria   O. Blackwell
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Thomas M. Rossi
    
	
 
    	
Thomas   M. Rossi
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Jerry   Parrott
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Hal   S. Broderson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Charles   G. Hadley
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
RUTGERS,   THE STATE UNIVERSITY OF NEW JERSEY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Mark   Roffman
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Te-Yen   Chien
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Martin   R. Lautman
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Agis Kydonieus
    
	
 
    	
Agis   Kydonieus
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/   Marie L. Foegh
    
	
 
    	
Marie   L. Foegh
    
				

 

[SIGNATURE PAGE TO AGILE THERAPEUTICS, INC. FIFTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]

 

 

	
 
    	
Gregory   Arnold
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Thomas   P. Stagnaro
    

 

[SIGNATURE PAGE TO AGILE THERAPEUTICS, INC. FIFTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]

 

 

SCHEDULE A

 

Name and Address

 

Aisling Capital

30th Floor

888 7th Avenue

New York, NY 10106

Attention: Andrew Schiff
 Facsimile: (212) 651-6379

 

With a copy to:

 

Aisling Capital III, L.P.
 888 Seventh Avenue
 30th Floor
 New York, NY 10106
 Attn:  Chief Financial Officer 
 Facsimile: (212) 651-6379

 

and:

 

McDermott Will & Emery LLP

340 Madison Avenue

New York, NY 10173-1922

Attn: Todd Finger
 Facsimile: (212) 547-5444

 

Investor Growth Capital Limited
 Canada Court, Upland Road
 St. Peter Port, Guernsey GY1 3BQ, 
 Channel Islands
 Attention:  Lisa Crawford
 Facsimile:  +44(0)1481 744554

 

With a copy to:

Abhijeet Lele
 c/o Investor Growth Capital LLC
 One Rockefeller Plaza
 Suite 2801
 New York, NY  10020
 Facsimile:  (212) 515-9019

 

A-1

 

Name and Address

 

Investor Group L.P.
 c/o Investor Growth Capital LLC
 One Rockefeller Plaza
 Suite 2801
 New York, NY  10020
 Facsimile:  (212) 515-9019

 

With a copy to:
 Abhijeet Lele
 c/o Investor Growth Capital LLC
 One Rockefeller Plaza
 Suite 2801
 New York, NY  10020
 Facsimile:  (212) 515-9019

 

IGC Fund VI, L.P.
 c/o Investor Growth Capital LLC
 One Rockefeller Plaza
 Suite 2801
 New York, NY  10020
 Attention:  Abhijeet Lele
 Facsimile:  (212) 515-9019

 

Care Capital Investments III LP
 47 Hulfish Street
 Suite 310
 Princeton, NJ 08542
 Attention:  Lorenzo Pellegrini
 Facsimile:  (609) 683-5787

 

Care Capital Offshore Investments III LP
 47 Hulfish Street
 Suite 310
 Princeton, NJ 08542
 Attention:  Lorenzo Pellegrini
 Facsimile:  (609) 683-5787

 

Kaiser Permanente Ventures LLC — Series A

One Kaiser Plaza
 22nd Floor

Oakland, CA  94512

Attention:  Chris M. Grant
 Facsimile (510) 891-7943

 

A-2

 

Name and Address

 

Kaiser Permanente Ventures LLC — Series B

One Kaiser Plaza
 22nd Floor

Oakland, CA  94512

Attention:  Chris M. Grant

Facsimile (510) 891-7943

 

The Permanente Federation LLC — Series I

One Kaiser Plaza
 22nd Floor

Oakland, CA  94512

Attention:  Chris M. Grant
 Facsimile (510) 891-7943

 

The Permanente Federation LLC — Series J

One Kaiser Plaza
 22nd Floor

Oakland, CA  94512

Attention:  Chris M. Grant
 Facsimile (510) 891-7943

 

ProQuest Investments III, L.P.
 90 Nassau Street
 Fifth Floor
 Princeton, NJ  08542
 Attention:  Pasquale DeAngelis
 Facsimile:  (609) 919-3570

 

ProQuest Investments IV, L.P.
 90 Nassau Street
 Fifth Floor
 Princeton, NJ  08542
 Attention:  Pasquale DeAngelis
 Facsimile:  (609) 919-3570

 

Novitas Capital II, L.P. (f/k/a PA Early Stage Partners, II, L.P.) 
 435 Devon Park Drive
 Suite 801
 Wayne, PA 19087
 Attention: Lisa Joswick
 Facsimile:  (610) 254-4240

 

A-3

 

Name and Address

 

Agis Kydonieus

 

Marie Foegh

 

Gregory Arnold

 

Thomas M. Rossi

A-4

 

SCHEDULE B

 

Name and Address

 

Daria O. Blackwell

 

Hal S. Broderson, M.D.

 

Dr. Te-Yen Chien

 

Charles G. Hadley

 

Martin R. Lautman

 

Jerry Parrott

 

Dr. Mark Roffman

 

Thomas M. Rossi

 

Office of Corporate Liaison 
   and Technology Transfer
 Rutgers, The State University of New Jersey
 ASB III, 3 Rutgers Plaza
 New Brunswick, NJ  08901

 

B-1

 

Name and Address

 

Thomas P. Stagnaro

 

Agis Kydonieus

 

Marie Foegh

 

Gregory Arnold

 

B-2

 

AGILE THERAPEUTICS, INC.

 

AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

 

THIS AMENDMENT TO REGISTRATION RIGHTS AGREEMENT (this “Amendment”) is entered into effective as of May 5, 2014 by and among Agile Therapeutics, Inc. (the “Company”), a Delaware corporation, and the undersigned stockholders of the Company (the “Requisite Stockholders”).

 

Background:

 

The Company and the stockholders of the Company are parties to a certain Fifth Amended and Restated Registration Rights Agreement dated as of July 18, 2012 (the “Registration Rights Agreement”).  In anticipation of a possible underwritten offering by the Company of its Common Stock to the general public being considered by the Company (the “Offering”), the Company and the Requisite Stockholders have agreed to enter into this Amendment so as to amend certain provisions of the Registration Rights Agreement.  The Requisite Stockholders together hold sufficient shares of capital stock of the Company to approve such amendment.  Capitalized terms used but not defined herein shall have the respective meanings given to them in the Registration Rights Agreement.

 

NOW, THEREFORE, in consideration of the premises and covenants set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.                                      Amendments to the Registration Rights Agreement.

 

(a)                                 Amendment to Section 2.2. The first sentence of Section 2.2 (Piggyback Registration Rights) of the Registration Rights Agreement shall be amended and restated in its entirety so as to read as follows:

 

“Whenever the Company proposes to register any Common Stock for its own or others’ account under the Securities Act, other than a registration relating to the IPO or employee benefit plans or a transaction to which Rule 145 of the Commission applies, the Company shall promptly (and in no event less than 20 days before the anticipated filing date) give each holder of Registrable Securities and Management Stock (the “Piggyback Holders”) written notice of its intent to do so, and such notice shall set forth the material terms of such distribution, and offer such Piggyback Holders the opportunity to register the number of Registrable Securities or Management Stock as each such Piggyback Holder shall request (the “Piggyback Registration”).”

 

(b)                                 Amendment to Section 1. The definition of “Management Stock” in Section 1 of the Registration Rights Agreement shall be amended so as to add the following sentence thereto immediately following such definition:

 

“Notwithstanding the foregoing, a share of Management Stock shall cease to be Management Stock on the same basis on which a Registrable Security ceases to be a Registrable Security as set forth in the definition of Registrable Security below.”

 

 

2.                                      Effect of Amendment.  The parties acknowledge and agree that all of the terms, provisions, covenants and conditions of the Registration Rights Agreement shall hereafter continue in full force and effect in accordance with the terms thereof, except to the extent expressly modified, amended, waived or revised herein.  Notwithstanding anything to the contrary contained herein, in the event that: (i) the underwriting agreement to be entered into by the Company and the underwriters in the Offering (the “Underwriting Agreement”) is not executed by September 30, 2014; (ii) the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to the initial closing date of the sale of the shares of Common Stock to be sold thereunder; (iii) the registration statement relating to the Offering is withdrawn by the Company; or (iv) the Company notifies the Requisite Stockholders that it does not intend to proceed with the Offering, then this Amendment shall, upon the occurrence of such event, automatically be void and of no further force or effect.

 

3.                                      Governing Law.  This Amendment shall be governed by and construed under the laws of the State of Delaware, without giving effect to principles of conflicts of laws.

 

4.                                      Counterparts.  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which signed counterparts together shall constitute one and the same instrument.  This Amendment may, upon execution by a party, be transmitted by facsimile or other electronic transmission with the same effect as if such party had delivered an executed original counterpart to this Amendment.

 

(Signature pages follow.)

 

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IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date set forth in the first paragraph hereof.

 

	
 
    	
AGILE THERAPEUTICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Al Altomari
    
	
 
    	
 
    	
Name:
    	
Al   Altomari
    
	
 
    	
 
    	
Title:
    	
CEO
    

 

COMPANY SIGNATURE PAGE TO
 AGILE THERAPEUTICS, INC. AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date set forth in the first paragraph hereof.

 

	
 
    	
AISLING CAPITAL III, LP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lloyd Appel
    
	
 
    	
 
    	
Name:
    	
Lloyd Appel
    
	
 
    	
 
    	
Title:
    	
CFO
    

 

STOCKHOLDER COUNTERPART SIGNATURE PAGE TO
 AGILE THERAPEUTICS, INC. AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the undersigned has executed this Agreement as of the date set forth in the first paragraph hereof.

 

	
 
    	
IGC FUND VI, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
Investor Growth Capital LLC,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael V. Oporto
    
	
 
    	
 
    	
Name: Michael V. Oporto
    
	
 
    	
 
    	
Title: Secretary 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INVESTOR GROWTH CAPITAL LIMITED
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Michael V. Oporto
    
	
 
    	
Name: Michael V. Oporto
    
	
 
    	
Title: Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
INVESTOR   GROUP L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
Investor Growth Capital LLC,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael V. Oporto
    
	
 
    	
 
    	
Name: Michael V. Oporto
    
	
 
    	
 
    	
Title: Secretary 
    

 

STOCKHOLDER COUNTERPART SIGNATURE PAGE TO
 AGILE THERAPEUTICS, INC. AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth in the first paragraph hereof.

 

	
 
    	
CARE CAPITAL INVESTMENTS III LP
    
	
 
    	
By its General Partner, Care Capital III LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David R. Ramsay
    
	
 
    	
 
    	
Name: David R. Ramsay
    
	
 
    	
 
    	
Title: Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
CARE CAPITAL OFFSHORE 
    
	
 
    	
INVESTMENTS III LP
    
	
 
    	
By its General Partner, Care Capital III LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   David R. Ramsay
    
	
 
    	
 
    	
Name: David R. Ramsay
    
	
 
    	
 
    	
Title: Authorized Signatory
    

 

STOCKHOLDER COUNTERPART SIGNATURE PAGE TO
 AGILE THERAPEUTICS, INC. AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth in the first paragraph hereof.

 

	
 
    	
PROQUEST INVESTMENTS III, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By: 
    	
ProQuest Associates III, LLC,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Pasquale DeAngelis
    
	
 
    	
 
    	
Name: Pasquale DeAngelis
    
	
 
    	
 
    	
Title: Managing Member 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PROQUEST   INVESTMENTS IV, L.P.
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
ProQuest   Associates IV LLC,
    
	
 
    	
 
    	
its   general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Pasquale DeAngelis
    
	
 
    	
 
    	
Name: Pasquale DeAngelis
    
	
 
    	
 
    	
Title: Managing Member 
    

 

STOCKHOLDER COUNTERPART SIGNATURE PAGE TO
 AGILE THERAPEUTICS, INC. AMENDMENT TO REGISTRATION RIGHTS AGREEMENT

 

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth in the first paragraph hereof.

 

	
 
    	
KAISER PERMANENTE VENTURES, LLC —
    
	
 
    	
SERIES A
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
KAISER PERMANENTE VENTURES, LLC -
    
	
 
    	
SERIES B
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
THE PERMANENTE FEDERATION LLC -
    
	
 
    	
SERIES J
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title
    

 

STOCKHOLDER COUNTERPART SIGNATURE PAGE TO
 AGILE THERAPEUTICS, INC. AMENDMENT TO REGISTRATION RIGHTS AGREEMENTExhibit 10.4

 

AGILE THERAPEUTICS, INC.

 

2014 INCENTIVE COMPENSATION PLAN

 

ARTICLE ONE

 

GENERAL PROVISIONS

 

I.                                        PURPOSE OF THE PLAN

 

This Incentive Compensation Plan is intended to promote the interests of Agile Therapeutics, Inc., a Delaware corporation, by providing eligible persons in the Corporation’s service with the opportunity to participate in one or more cash or equity incentive compensation programs designed to encourage them to continue their service relationship with the Corporation.

 

The Plan serves as the successor to the Predecessor Plans, and no further equity awards are to be made under the Predecessor Plans on or after the Plan Effective Date.  All options and other equity awards outstanding under the Predecessor Plans on the Plan Effective Date were transferred to this Plan as part of the initial share reserve hereunder and shall continue in full force and effect in accordance with their terms, and no provision of this Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of those options or other equity awards with respect to their acquisition of shares of Common Stock thereunder.

 

Capitalized terms shall have the meanings assigned to such terms in the attached Appendix.

 

II.                                   STRUCTURE OF THE PLAN

 

A.                                    The Plan shall be divided into three separate equity incentive programs:

 

·                                          the Discretionary Grant Program under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase shares of Common Stock or stock appreciation rights tied to the value of such Common Stock,

 

·                                          the Stock Issuance Program under which eligible persons may, at the discretion of the Plan Administrator, be issued shares of Common Stock pursuant to restricted stock awards, restricted stock units or other stock-based awards which vest upon the completion of a designated service period or the attainment of pre-established performance milestones, or such shares of Common Stock may be issued through direct purchase or as a bonus for services rendered the Corporation (or any Parent or Subsidiary), and

 

 

·                                          the Incentive Bonus Program under which eligible persons may, at the discretion of the Plan Administrator, be provided with incentive bonus opportunities through performance unit awards and special cash incentive programs tied to the attainment of pre-established performance milestones.

 

B.                                    The provisions of Articles One and Five shall apply to all incentive compensation programs under the Plan and shall govern the interests of all persons under the Plan.

 

III.                              ADMINISTRATION OF THE PLAN

 

A.                                    The Primary Committee shall have sole and exclusive authority to administer the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to Section 16 Insiders. Administration of the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to all other persons eligible to participate in those programs may, at the Board’s discretion, be vested in the Primary Committee or a Secondary Board Committee, or the Board may retain the power to administer those programs with respect to all such persons.  However, all awards under the Plan to non-employee Board members shall be made by the Primary Committee (or subcommittee thereof).  The Primary Committee shall be comprised solely of independent directors, as determined in accordance with the governance standards established by the Stock Exchange on which the Common Stock is at the time primarily traded (the “Independent Directors”).  Any Awards made to the members of the Primary Committee must be authorized by a disinterested majority of the Independent Directors.

 

B.                                    Members of the Primary Committee or any Secondary Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time.  The Board may also at any time terminate the functions of any Secondary Committee and reassume all powers and authority previously delegated to such committee.

 

C.                                    Each Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Grant, Stock Issuance and Incentive Bonus Programs and to make such determinations under, and issue such interpretations of, the provisions of those programs and any outstanding Awards thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Grant, Stock Issuance and Incentive Bonus Programs under its jurisdiction or any Award thereunder.

 

D.                                    Service on the Primary Committee or the Secondary Committee shall constitute service as a Board member, and the members of each such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee.  No member of the Primary Committee or the Secondary Committee shall be liable for any act or omission made in good faith with respect to the Plan or any Award made thereunder.

 

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IV.                               ELIGIBILITY

 

A.                                    The persons eligible to participate in the Plan are as follows:

 

(i)                                     Employees,

 

(ii)                                  non-employee members of the Board or the board of directors of any Parent or Subsidiary, and

 

(iii)                               consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

 

B.                                    The Plan Administrator shall have full authority to determine, (i) with respect to Awards made under the Discretionary Grant Program, which eligible persons are to receive such Awards, the time or times when those Awards are to be made, the number of shares to be covered by each such Award, the time or times when the Award is to become exercisable, the vesting schedule (if any) applicable to an Award, the maximum term for which such Award is to remain outstanding and the status of a granted option as either an Incentive Option or a Non-Statutory Option, (ii) with respect to Awards made under the Stock Issuance Program, which eligible persons are to receive such Awards, the time or times when the Awards are to be made, the number of shares subject to each such Award, the vesting and issuance schedule (if any) applicable to the shares which are the subject of such Award and the cash consideration (if any) payable for those shares, and (iii) with respect to Awards under the Incentive Bonus Program, which eligible persons are to receive such Awards, the time or times when the Awards are to be made, the performance objectives for each such Award, the amounts payable at designated levels of attained performance, any applicable service vesting requirements, the payout schedule for each such Award and the form (cash or shares of Common Stock) in which the Award is to be settled.

 

C.                                    The Plan Administrator shall have the absolute discretion to grant options or stock appreciation rights in accordance with the Discretionary Grant Program, to effect stock issuances and other stock-based awards in accordance with the Stock Issuance Program and to grant incentive bonus awards in accordance with the Incentive Bonus Program.

 

V.                                    STOCK SUBJECT TO THE PLAN

 

A.                                    The stock issuable under the Plan shall be shares of authorized but unissued or reacquired Common Stock, including treasury shares and shares repurchased by the Corporation on the open market.  The number of shares of Common Stock reserved for issuance over the term of the Plan shall initially be limited to 2,255,050(1) shares.  Such share reserve is comprised of (i) 1,387,291 shares of Common Stock subject to outstanding awards under the Predecessor Plans that are transferred to the Plan in accordance with the provisions of Section 

 

(1)  All share numbers in the Plan reflect the 1.4 for 1 stock split effected by the Company on May 7, 2014.

 

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V.B of Article Five, plus (ii) 167,759 shares of Common Stock that are available for issuance under the Predecessor Plans as of the Plan Effective Date, plus (iii) an additional 700,000 shares of Common Stock.  The transfer of outstanding shares and awards from the Predecessor Plans shall be effected as of the Plan Effective Date, and the Predecessor Plans shall terminate at that time.

 

B.                                    The number of shares of Common Stock available for issuance under the Plan shall automatically increase on the first trading day in January each calendar year during the term of the Plan, beginning with the 2015 calendar year, by an amount equal to four percent (4%) of the total number of shares of Common Stock outstanding as measured as of the last trading day in the immediately preceding calendar year, or such lesser number of shares of Common Stock determined by the Plan Administrator in its sole discretion, but in no event shall any such annual increase exceed 1,500,000 shares.

 

C.                                    The Plan serves as the successor to the Predecessor Plans, and no further stock option grants or stock issuances are to be made under those Predecessor Plans on or after the Plan Effective Date. All options outstanding under the Predecessor Plans on the Plan Effective Date were transferred to this Plan as part of the initial share reserve hereunder and shall continue in full force and effect in accordance with their terms, and no provision of this Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of those options with respect to their acquisition of shares of Common Stock thereunder. To the extent any options outstanding under the Predecessor Plans on the Plan Effective Date expire or terminate unexercised, the number of shares of Common Stock subject to those expired or terminated options at the time of expiration or termination shall be available for one or more Awards made under this Plan.

 

D.                                    The maximum number of shares of Common Stock that may be issued pursuant to Incentive Options granted under Plan shall not exceed 2,255,050 shares.  Such share limitation shall automatically be increased on the first trading day in January each calendar year, beginning with the 2015 calendar year, by the number of shares of Common Stock added to the share reserve on that day pursuant to the provisions of Section V. B. of this Article One.

 

E.                                     Each person participating in the Plan shall be subject the following limitations:

 

·                                          no one person participating in the Plan may receive stock options and stand-alone stock appreciation rights for more than 1,500,000 shares of Common Stock in the aggregate per calendar year;

 

·                                          no one person participating in the Plan may receive direct stock issuances (whether vested or unvested) or stock-based awards (other than stock options and stand-alone stock appreciation rights) for more than 1,500,000 shares of Common Stock in the aggregate per calendar year; and

 

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·                                          for Awards denominated in terms of cash (whether payable in cash, Common Stock or a combination of both) and subject to one or more performance-vesting conditions, the maximum dollar amount for which such Awards may be made to such person in any calendar year shall not exceed 1,500,000 dollars for each calendar year within the applicable performance measurement period, with any such performance period not to exceed five (5) years and with pro-ration based on the foregoing dollar amount in the event of any fractional calendar year included within such performance period.

 

F.                                      Shares of Common Stock subject to outstanding Awards made under the Plan (including the options transferred from the Predecessor Plans) shall be available for subsequent issuance under the Plan to the extent those Awards are forfeited or cancelled for any reason prior to the issuance of the shares of Common Stock subject to those Awards. Such shares shall be added back to the number of shares of Common Stock reserved for award and issuance under the Plan as follows:

 

(i)                                     for each share of Common Stock subject to such an expired, forfeited, cancelled or terminated Award made under the Discretionary Grant Program (including the options transferred from the Predecessor Plans), one share of Common Stock shall become available for subsequent award and issuance under the Plan,

 

(ii)                                  for each share of Common Stock subject to a forfeited or cancelled Full Value Award made under the Stock Issuance or Incentive Bonus Program, one share shall become available for subsequent award and issuance, and

 

(iii)                               for each unvested share of Common Stock issued under the Discretionary Grant or Stock Issuance Program for cash consideration not less than the Fair Market Value per share of Common Stock on the Award date and subsequently repurchased by the Corporation, at a price per share not greater than the original issue price paid per share, pursuant to the Corporation’s repurchase rights under the Plan, one share shall become available for subsequent award and issuance under the Plan.

 

G.                                    Should the exercise price of an option under the Plan be paid with shares of Common Stock subject to such option, then the authorized reserve of Common Stock under the Plan shall be reduced by the net number of shares issued under the exercised stock option, and not by the gross number of shares for which that option is exercised.  Upon the exercise of any stock appreciation right under the Plan, the share reserve shall be reduced by the net number of shares actually issued by the Corporation upon such exercise, and not the gross number of shares as to which such right is exercised.  If shares of Common Stock otherwise issuable under the Plan are withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the issuance, exercise or vesting of an Award, then the number of shares of Common Stock available for issuance under the Plan shall be reduced by the net number of 

 

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shares issued, exercised or vesting under such Award, calculated in each instance after any such share withholding.

 

H.                                   Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization (including, without limitation, a Change in Control transaction), then equitable adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and class of securities by which the share reserve is to increase automatically each calendar year pursuant to the provisions Article One, Section V. B., (iii) the maximum number and/or class of securities that may be issued pursuant to Incentive Options granted under the Plan, (iv) the maximum number and/or class of securities for which any one person may receive Common Stock-denominated Awards under the Plan per calendar year, (v) the maximum number and/or class of securities for which any one person may receive stock options and stock appreciation rights under the Plan per calendar year, (vi) the maximum number and/or class of securities that may be issued pursuant to Incentive Options granted under the Plan, (vii) the number and/or class of securities and the exercise or base price per share in effect under each outstanding Award under the Discretionary Grant Program, (vii) the number and/or class of securities subject to each outstanding Award under the Stock Issuance Program and the cash consideration (if any) payable per share, (viii) the number and/or class of securities subject to each outstanding Award under the Incentive Bonus Program denominated in shares of Common Stock and (ix) the number and/or class of securities subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share.  The adjustments shall be made in such manner as the Plan Administrator deems appropriate in order to prevent the dilution or enlargement of benefits under the Plan and outstanding Awards.  The adjustments shall be final, binding and conclusive.

 

I.                                        Outstanding Awards under the Plan shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

VI.                               PROHIBITION ON REPRICING PROGRAMS

 

The Plan Administrator shall not (i) implement any cancellation/regrant program pursuant to which outstanding options or stock appreciation rights under the Plan are cancelled and new options or stock appreciation rights are granted in replacement with a lower exercise price per share, (ii) cancel outstanding options or stock appreciation rights under the Plan with exercise or base prices per share in excess of the then current Fair Market Value per share of Common Stock for consideration payable in cash, equity securities of the Corporation or in the form of any other Award under the Plan, except in connection with a Change in Control 

 

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transaction, or (iii) otherwise directly reduce the exercise price in effect for outstanding options or stock appreciation rights under the Plan, without in each such instance obtaining stockholder approval.

 

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ARTICLE TWO
 DISCRETIONARY GRANT PROGRAM

 

I.                                        OPTION TERMS

 

Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below.  Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.

 

A.                                    Exercise Price.

 

1.                                      The exercise price per share shall be fixed by the Plan Administrator; but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the option grant date.

 

2.                                      The exercise price shall become immediately due upon exercise of the option and shall, subject to the provisions of the documents evidencing the option, be payable in one or more of the forms specified below:

 

(i)                                     cash or check made payable to the Corporation,

 

(ii)                                  shares of Common Stock held for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date,

 

(iii)                               shares of Common Stock otherwise issuable under the option but withheld by the Corporation in satisfaction of the exercise price, with such withheld shares to be valued at Fair Market Value on the Exercise Date, or

 

(iv)                              to the extent the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions to (a) a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in compliance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate exercise price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

 

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Except to the extent such sale and remittance procedure is utilized, payment of the exercise price for the purchased shares must be made on the Exercise Date.

 

B.                                    Exercise and Term of Options.  Each option shall be exercisable at such time or times, during such period and for such number of shares as shall be determined by the Plan Administrator and set forth in the documents evidencing the option.  However, no option shall have a term in excess of ten (10) years measured from the option grant date.

 

C.                                    Effect of Termination of Service.

 

1.                                      The following provisions shall govern the exercise of any options granted pursuant to the Discretionary Grant Program that are outstanding at the time of the Optionee’s cessation of Service or death:

 

(i)                                     Any option outstanding at the time of the Optionee’s cessation of Service for any reason shall remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option, but no such option shall be exercisable after the expiration of the option term.

 

(ii)                                  Any option held by the Optionee at the time of the Optionee’s death and exercisable in whole or in part at that time may be subsequently exercised by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance or by the Optionee’s designated beneficiary or beneficiaries of that option.

 

(iii)                               Should the Optionee’s Service be terminated for Misconduct or should the Optionee otherwise engage in Misconduct while holding one or more outstanding options granted under this Article Two, then all of those options shall terminate immediately and cease to be outstanding.

 

(iv)                              During the applicable post-Service exercise period, the option may not be exercised for more than the number of vested shares for which the option is at the time exercisable.  No additional shares shall vest under the option following the Optionee’s cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator in its sole discretion pursuant to an express written agreement with the Optionee.  Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any shares for which the option has not been exercised.

 

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2.                                      The Plan Administrator shall have complete discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:

 

(i)                                     extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service from the limited exercise period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term,

 

(ii)                                  include an automatic extension provision whereby the specified post-Service exercise period in effect for any option granted under this Article Two shall automatically be extended by an additional period of time equal in duration to any interval within the specified post-Service exercise period during which the exercise of that option or the immediate sale of the shares acquired under such option could not be effected in compliance with applicable federal and state securities laws, but in no event shall such an extension result in the continuation of such option beyond the expiration date of the term of that option, and/or

 

(iii)                               permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested shares of Common Stock for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional installments in which the Optionee would have vested had the Optionee continued in Service.

 

D.                                    Stockholder Rights.  The holder of an option shall have no stockholder rights with respect to the shares subject to the option until such person shall have exercised the option, paid the exercise price and become a holder of record of the purchased shares.

 

E.                                     Repurchase Rights.  The Plan Administrator shall have the discretion to grant options which are exercisable for unvested shares of Common Stock.  Should the Optionee cease Service while such shares are unvested, the Corporation shall have the right to repurchase any or all of those unvested shares at a price per share equal to the lower of (i) the exercise price paid per share or (ii) the Fair Market Value per share of Common Stock at the time of repurchase.  The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.

 

F.                                      Transferability of Options. The transferability of options granted under the Plan shall be governed by the following provisions:

 

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(i)                                     Incentive Options:   During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or the laws of inheritance following the Optionee’s death.

 

(ii)                                  Non-Statutory Options.  Non-Statutory Options shall be subject to the same limitation on transfer as Incentive Options, except that the Plan Administrator may structure one or more Non-Statutory Options so that the option may be assigned in whole or in part during the Optionee’s lifetime to one or more Family Members of the Optionee or to a trust established exclusively for the Optionee and/or one or more such Family Members, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order.  The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.

 

(iii)                               Beneficiary Designations.  Notwithstanding the foregoing, the Optionee may designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Two (whether Incentive Options or Non-Statutory Options), and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding those options.  Such beneficiary or beneficiaries shall take the transferred options subject to all the terms and conditions of the applicable agreement evidencing each such transferred option, including (without limitation) the limited time period during which the option may be exercised following the Optionee’s death.

 

II.                                   INCENTIVE OPTIONS

 

The terms specified below shall be applicable to all Incentive Options.  Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Five shall be applicable to Incentive Options.  Options which are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to the terms of this Section II.

 

A.                                    Eligibility.  Incentive Options may only be granted to Employees.

 

B.                                    Dollar Limitation.  The aggregate Fair Market Value of the shares of Common Stock (determined as of the respective date or dates of grant) for which one or more options granted to any Employee under the Plan (or any other option plan of the Corporation or any Parent or Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar year shall not exceed the sum of One Hundred Thousand Dollars ($100,000).

 

To the extent the Employee holds two (2) or more such options which become exercisable for the first time in the same calendar year, the foregoing limitation on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

 

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C.                                    10% Stockholder.  If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per share shall not be less than one hundred ten percent (110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option term shall not exceed five (5) years measured from the option grant date.

 

III.                              STOCK APPRECIATION RIGHTS

 

A.                                    Authority.  The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant stock appreciation rights in accordance with this Section III to selected Optionees or other individuals eligible to receive option grants under the Discretionary Grant Program.

 

B.                                    Types.  Two types of stock appreciation rights shall be authorized for issuance under this Section III: (i) tandem stock appreciation rights (“Tandem Rights”) and (ii) stand-alone stock appreciation rights (“Stand-alone Rights”).

 

C.                                    Tandem Rights.  The following terms and conditions shall govern the grant and exercise of Tandem Rights.

 

1.                                      One or more Optionees may be granted a Tandem Right, exercisable upon such terms and conditions as the Plan Administrator may establish, to elect between the exercise of the underlying option for shares of Common Stock or the surrender of that option in exchange for a distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on the option surrender date) of the number of shares in which the Optionee is at the time vested under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise price payable for such vested shares.

 

2.                                      No such option surrender shall be effective unless it is approved by the Plan Administrator, either at the time of the actual option surrender or at any earlier time.  If the surrender is so approved, then the distribution to which the Optionee shall accordingly become entitled under this Section III may be made in shares of Common Stock valued at Fair Market Value on the option surrender date, in cash or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.

 

3.                                      If the surrender of an option is not approved by the Plan Administrator, then the Optionee shall retain whatever rights the Optionee had under the surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at any time prior to the later of (i) five (5) business days after the receipt of the rejection notice or (ii) the last day on which the option is otherwise exercisable in accordance with the terms of the instrument evidencing such option, but in no event may such rights be exercised more than ten (10) years after the date of the option grant.

 

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D.                                    Stand-Alone Rights.  The following terms and conditions shall govern the grant and exercise of Stand-alone Rights:

 

1.                                      One or more individuals eligible to participate in the Discretionary Grant Program may be granted a Stand-alone Right not tied to any underlying option under this Discretionary Grant Program.  The Stand-alone Right shall relate to a specified number of shares of Common Stock and shall be exercisable upon such terms and conditions as the Plan Administrator may establish.  In no event, however, may the Stand-alone Right have a maximum term in excess of ten (10) years measured from the grant date.  Upon exercise of the Stand-alone Right, the holder shall be entitled to receive a distribution from the Corporation in an amount equal to the excess of (i) the aggregate Fair Market Value (on the exercise date) of the shares of Common Stock underlying the exercised right over (ii) the aggregate base price in effect for those shares.

 

2.                                      The number of shares of Common Stock underlying each Stand-alone Right and the base price in effect for those shares shall be determined by the Plan Administrator in its sole discretion at the time the Stand-alone Right is granted.  In no event, however, may the base price per share be less than the Fair Market Value per underlying share of Common Stock on the grant date.  In the event outstanding Stand-alone Rights are to be assumed in connection with a Change in Control transaction or otherwise continued in effect, the shares of Common Stock underlying each such Stand-alone Right shall be adjusted immediately after such Change in Control so as to apply to the number and class of securities into which those shares of Common Stock would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time.  Appropriate adjustments to reflect such Change in Control shall also be made to the base price per share in effect under each outstanding Stand-alone Right, provided the aggregate base price shall remain the same.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation may, in connection with the assumption or continuation of the outstanding Stand-alone Rights under the Discretionary Grant Program, substitute, for the securities underlying those assumed rights, one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in the Change in Control transaction.

 

3.                                      Stand-alone Rights shall be subject to the same transferability restrictions applicable to Non-Statutory Options and may not be transferred during the holder’s lifetime, except if such assignment is in connection with the holder’s estate plan and is to one or more Family Members of the holder or to a trust established for the holder and/or one or more such Family Members or pursuant to a domestic relations order covering the Stand-alone Right as marital property.  In addition, one or more beneficiaries may be designated for an outstanding Stand-alone Right in accordance with substantially the same terms and provisions as set forth in Section I.F of this Article Two.

 

4.                                      The distribution with respect to an exercised Stand-alone Right may be made in shares of Common Stock valued at Fair Market Value on the exercise date, in 

 

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cash or partly in shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.

 

5.                                      The holder of a Stand-alone Right shall have no stockholder rights with respect to the shares subject to the Stand-alone Right unless and until such person shall have exercised the Stand-alone Right and become a holder of record of the shares of Common Stock issued upon the exercise of such Stand-alone Right.

 

E.                                     Post-Service Exercise.  The provisions governing the exercise of Tandem, and Stand-alone Stock Appreciation Rights following the cessation of the recipient’s Service shall be substantially the same as those set forth in Section I.C of this Article Two for the options granted under the Discretionary Grant Program.

 

F.                                      Net Counting.  Upon the exercise of any Tandem or Stand-alone Right under this Section III, the share reserve under Section V of Article One shall be reduced by the net number of shares actually issued by the Corporation upon such exercise and not by the gross number of shares as to which such right is exercised.

 

IV.                               CHANGE IN CONTROL

 

A.                                    In the event of a Change in Control, each outstanding option or stock appreciation right under the Discretionary Grant Program shall automatically accelerate so that each such option or stock appreciation right shall, immediately prior to the effective date of that Change in Control, become exercisable as to all the shares of Common Stock at the time subject to such option or stock appreciation right and may be exercised as to any or all of those shares as fully vested shares of Common Stock.  However, an outstanding option or stock appreciation right shall not become exercisable on such an accelerated basis if and to the extent:  (i) the Plan Administrator determines, in its sole discretion, that such option or stock appreciation right is to be assumed by the successor corporation (or parent thereof) or is otherwise to be continued in full force and effect pursuant to the terms of the Change in Control transaction, or (ii) the Plan Administrator determines in its sole discretion that such option or stock appreciation right is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Change in Control on any shares as to which the option or stock appreciation right is not otherwise at that time exercisable and provides for subsequent payout of that spread in accordance with the same exercise/vesting schedule applicable to those shares, but only if such replacement cash program would not result in the treatment of the option or stock appreciation right as an item of deferred compensation subject to Code Section 409A or (iii) the acceleration of such option or stock appreciation right is subject to other limitations imposed by the Plan Administrator at the time of the grant.  

 

B.            To the extent the Plan Administrator determines, in its sole discretion, that any option or stock appreciation right outstanding under the Discretionary Grant Program on the date of a Change in Control is not to be assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect or replaced with a cash incentive program in accordance with Section IV.A. of this Article Two, the holder of any such option or stock appreciation right shall be entitled to receive, upon consummation of the Change in Control, a lump sum cash payment in an amount equal to the spread, if any, existing on the shares of Common Stock subject to the option or stock appreciation right at the time of the Change in Control over the aggregate exercise or base price in effect for such option or stock appreciation right.  The Plan Administrator shall have the authority to determine, in its sole discretion, that any option or stock appreciation right outstanding under the Discretionary Grant Program on the date of such Change in Control that is not to be assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect or replaced with a cash incentive program in accordance with Section IV.A. of this Article Two shall be subject to cancellation and termination, without cash payment or other consideration due the award holder, if the Fair Market Value per share of Common Stock on the date of such Change in Control is less than the per share exercise or base price in effect for such option or stock appreciation right.

 

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C.                                    All outstanding repurchase rights under the Discretionary Grant Program shall automatically terminate, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of a Change in Control, except to the extent: (i) the Plan Administrator determines in its sole discretion that those repurchase rights are to be assigned to the successor corporation (or parent thereof) or are otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction or (ii) such accelerated vesting is precluded by other limitations imposed by the Plan Administrator at the time the repurchase right is issued.

 

D.                                    Immediately following the consummation of the Change in Control, all outstanding options or stock appreciation rights under the Discretionary Grant Program shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction.

 

E.                                     Each option or stock appreciation right which is assumed in connection with a Change in Control or otherwise continued in effect shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to the Optionee in consummation of such Change in Control had those shares actually been outstanding at the time.  Appropriate adjustments to reflect such Change in Control shall also be made to (i) the exercise price payable per share under each outstanding option, provided the aggregate exercise price payable for such securities shall remain the same, (ii) the maximum number and/or class of securities available for issuance over the remaining term of the Plan, (iii) the maximum number and/or class of securities for which any one person may be granted Awards under the Plan per calendar year, (iv) the maximum number and/or class of securities for which Incentive Options may be granted under the Plan, and (v) the number and/or class of securities subject to the Corporation’s outstanding repurchase rights under the Plan and the repurchase price payable per share.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the Plan Administrator may, in its sole discretion, provide in the document evidencing the Change in Control transaction that the successor corporation, in connection with the assumption or continuation of the outstanding options or stock appreciation rights under the Discretionary Grant Program, shall substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction.

 

F.                                      The Plan Administrator shall have the discretionary authority to structure one or more outstanding options or stock appreciation rights under the Discretionary Grant Program so that those options or stock appreciation rights shall, immediately prior to the effective date of a Change in Control, become exercisable as to all the shares of Common Stock at the time subject to those options or stock appreciation rights and may be exercised as to any or 

 

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all of those shares as fully vested shares of Common Stock, whether or not those options or stock appreciation rights are to be assumed in the Change in Control transaction or otherwise continued in effect.  In addition, the Plan Administrator shall have the discretionary authority to structure one or more of the Corporation’s repurchase rights under the Discretionary Grant Program so that those rights shall immediately terminate upon the consummation of the Change in Control transaction, and the shares subject to those terminated rights shall thereupon vest in full.

 

G.                                    The Plan Administrator shall have full power and authority to structure one or more outstanding options or stock appreciation rights under the Discretionary Grant Program so that those options or stock appreciation rights shall become exercisable as to all the shares of Common Stock at the time subject to those options or stock appreciation rights in the event the Optionee’s Service is subsequently terminated by reason of an Involuntary Termination within a designated period following the effective date of any Change in Control transaction in which those options or stock appreciation rights do not otherwise fully accelerate.  In addition, the Plan Administrator may structure one or more of the Corporation’s repurchase rights so that those rights shall immediately terminate with respect to any shares held by the Optionee at the time of such Involuntary Termination, and the shares subject to those terminated repurchase rights shall accordingly vest in full at that time.

 

H.                                   The portion of any Incentive Option accelerated in connection with a Change in Control shall remain exercisable as an Incentive Option only to the extent the applicable One Hundred Thousand Dollar ($100,000) limitation is not exceeded.  To the extent such dollar limitation is exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option under the Federal tax laws.

 

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ARTICLE THREE

 

STOCK ISSUANCE PROGRAM

 

I.                                        STOCK ISSUANCE TERMS

 

Shares of Common Stock may be issued under the Stock Issuance Program, either as vested or unvested shares, through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by a Stock Issuance Agreement which complies with the terms specified below.  Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to share right awards, restricted stock units or performance shares which entitle the recipients to receive the shares underlying those Awards upon the attainment of designated performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those awards or units.

 

A.                                    Issue Price.

 

1.                                      The issue price per share shall be fixed by the Plan Administrator, but shall not be less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the issuance date.

 

2.                                      Shares of Common Stock may be issued under the Stock Issuance Program for any of the following items of consideration which the Plan Administrator may deem appropriate in each individual instance:

 

(i)                                     cash or check made payable to the Corporation,

 

(ii)                                  past services rendered to the Corporation (or any Parent or Subsidiary); or

 

(iii)                               any other valid consideration under the Delaware General Corporation Law.

 

B.                                    Transferability.  Awards under the Stock Issuance Program shall be transferable by will and by the laws of descent and distribution, and during the lifetime of the recipient, such Awards shall be transferable, by gift or pursuant to a domestic relations order, to a Family Member to the extent and in the manner determined by the Plan Administrator and set forth in the applicable agreement evidencing the Award.  Notwithstanding the foregoing, the recipient of an Award under the Stock Issuance Program may designate a beneficiary of the 

 

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recipient’s Award in the event of the recipient’s death on a beneficiary designation form provided by the Plan Administrator.

 

C.                                    Vesting Provisions.

 

1.                                      Shares of Common Stock issued under the Stock Issuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service or upon the attainment of specified performance objectives.  The elements of the vesting schedule applicable to any unvested shares of Common Stock issued under the Stock Issuance Program shall be determined by the Plan Administrator and incorporated into the Stock Issuance Agreement.  Shares of Common Stock may also be issued under the Stock Issuance Program pursuant to restricted stock units or performance shares which entitle the recipients to receive the shares underlying those Awards upon the attainment of designated performance goals or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those Awards, including (without limitation) a deferred distribution date following the termination of the Participant’s Service.

 

2.                                      The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more Awards under the Stock Issuance Program so that the shares of Common Stock subject to those Awards shall vest (or vest and become issuable) upon the achievement of certain pre-established corporate performance objectives based on one or more Performance Goals and measured over the performance period (not to exceed five (5) years) specified by the Plan Administrator at the time of the Award.

 

3.                                      Any new, substituted or additional securities or other property (including money paid other than as a regular cash dividend) which the Participant may have the right to receive with respect to the Participant’s unvested shares of Common Stock by reason of any stock dividend, stock split, recapitalization, combination of shares, exchange of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested shares of Common Stock and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.  Equitable adjustments to reflect each such transaction shall also be made by the Plan Administrator to the repurchase price payable per share by the Corporation for any unvested securities subject to its existing repurchase rights under the Plan, provided the aggregate repurchase price shall in each instance remain the same.

 

4.                                      The Participant shall have full stockholder rights with respect to any shares of Common Stock issued to the Participant under the Stock Issuance Program, whether or not the Participant’s interest in those shares is vested.  Accordingly, the Participant shall have the right to vote such shares and to receive any regular cash dividends paid on such shares, subject to any applicable vesting requirements, including (without limitation) the requirement that any dividends paid on shares subject to performance-vesting conditions shall be held in escrow by the Corporation and shall not vest or actually be paid to the Award holder 

 

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prior to the time those shares vest. The Participant shall not have any stockholder rights with respect to the shares of Common Stock subject to a restricted stock unit or share right award until that award vests and the shares of Common Stock are actually issued thereunder. However, dividend-equivalent units may be paid or credited, either in cash or in actual or phantom shares of Common Stock, on outstanding restricted stock unit or share right awards, subject to such terms and conditions as the Plan Administrator may deem appropriate; provided, however, that no such dividend-equivalent units relating to restricted stock unit or share right awards subject to performance-vesting conditions shall vest or otherwise become payable prior to the time the underlying award (or portion thereof to which such dividend-equivalents units relate) vests upon the attainment of the applicable performance goals and shall accordingly be subject to cancellation and forfeiture to the same extent as the underlying award.

 

5.                                      Should the Participant cease to remain in Service while holding one or more unvested shares of Common Stock issued under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested shares of Common Stock, then those shares shall be immediately surrendered to the Corporation for cancellation, and the Participant shall have no further stockholder rights with respect to those shares.  To the extent the surrendered shares were previously issued to the Participant for consideration paid in cash or cash equivalent, the Corporation shall repay to the Participant the lower of (i) the cash consideration paid for the surrendered shares or (ii) the Fair Market Value of those shares at the time of cancellation.

 

6.                                      The Plan Administrator may in its discretion waive the surrender and cancellation of one or more unvested shares of Common Stock which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those shares.  Any such waiver shall result in the immediate vesting of the Participant’s interest in the shares of Common Stock as to which the waiver applies.  Such waiver may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives. However, no vesting requirements tied to the attainment of Performance Goals may be waived with respect to Awards which were intended at the time of grant to qualify as performance-based compensation under Code Section 162(m).

 

7.                                      Outstanding Awards of restricted stock units or performance shares under the Stock Issuance Program shall automatically terminate, and no shares of Common Stock shall actually be issued in satisfaction of those Awards, if the performance goals or Service requirements established for such Awards are not attained or satisfied.  The Plan Administrator, however, shall have the discretionary authority to issue vested shares of Common Stock under one or more outstanding Awards of restricted stock units or performance shares as to which the designated performance goals or Service requirements have not been attained or satisfied.  However, no vesting requirements tied to the attainment of Performance Goals may be waived with respect to Awards which were intended, at the time those Awards were made, to qualify as performance-based compensation under Code Section 162(m).

 

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8.                                      The following additional requirements shall be in effect for any performance shares awarded under this Article Three:

 

(i)                                     At the end of the performance period, the Plan Administrator shall determine the actual level of attainment for each performance objective and the extent to which the performance shares awarded for that period are to vest and become payable based on the attained performance levels.

 

(ii)                                  The performance shares which so vest shall be paid as soon as practicable following the end of the performance period, unless such payment is to be deferred for the period specified by the Plan Administrator at the time the performance shares are awarded or the period selected by the Participant in accordance with the applicable requirements of Code Section 409A.

 

(iii)                               Performance shares may be paid in (i) cash, (ii) shares of Common Stock or (iii) any combination of cash and shares of Common Stock, as set forth in the applicable Award Agreement.

 

(iv)                              Performance shares may also be structured so that the shares are convertible into shares of Common Stock, but the rate at which each performance share is to so convert shall be based on the attained level of performance for each applicable performance objective.

 

II.                                   CHANGE IN CONTROL

 

A.                                    Each Award outstanding under the Stock Issuance Program on the effective date of an actual Change in Control transaction may, as determined by the Plan Administrator in its sole discretion, be (i) assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction, or (ii) replaced with a cash incentive program of the successor corporation which preserves the Fair Market Value of the underlying shares of Common Stock at the time of the Change in Control and provides for the subsequent vesting and payment of that value in accordance with the same vesting schedule in effect for those shares at the time of such Change in Control.  However, to the extent that the Plan Administrator determines in its sole discretion that any Award outstanding under the Stock Issuance Program on the effective date of such Change in Control Transaction is not to be so assumed, continued or replaced, that Award shall vest in full immediately prior to the effective date of the actual Change in Control transaction and the shares of Common Stock underlying the portion of the Award that vests on such accelerated basis shall be issued in accordance with the applicable Award Agreement, unless such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.

 

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B.                                    All of the Corporation’s outstanding repurchase rights under the Stock Issuance Program shall terminate automatically, and all the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of any Change in Control, except to the extent (i) the Plan Administrator determines in its sole discretion that those repurchase rights are to be assigned to the successor corporation (or parent thereof) or are otherwise to continue in full force and effect pursuant to the terms of the Change in Control transaction,  or (ii) such accelerated vesting is precluded by other limitations imposed in the Stock Issuance Agreement.

 

C.                                    Each outstanding Award under the Stock Issuance Program which is assumed in connection with a Change in Control or otherwise continued in effect shall be adjusted immediately after the consummation of that Change in Control so as to apply to the number and class of securities into which the shares of Common Stock subject to that Award immediately prior to the Change in Control would have been converted in consummation of such Change in Control had those shares actually been outstanding at that time, and appropriate adjustments shall also be made to the cash consideration (if any) payable per share thereunder, provided the aggregate amount of such cash consideration shall remain the same. To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the Plan Administrator may, in its sole discretion, provide in the document evidencing the Change in Control transaction that the successor corporation, in connection with the assumption or continuation of the outstanding Awards, shall substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control transaction.

 

D.                                    The Plan Administrator shall have the discretionary authority to structure one or more unvested Awards under the Stock Issuance Program so that the shares of Common Stock subject to those Awards shall automatically vest (or vest and become issuable) in whole or in part immediately upon the occurrence of a Change in Control or upon the subsequent termination of the Participant’s Service by reason of an Involuntary Termination within a designated period following the effective date of that Change in Control transaction.  The Plan Administrator’s authority under this Section II.D shall also extend to any Awards under the Stock Issuance Program which are intended to qualify as performance-based compensation under Code Section 162(m), even though the actual vesting of those Awards pursuant to this Section II.D may result in their loss of performance-based status under Code Section 162(m).

 

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ARTICLE FOUR

 

INCENTIVE BONUS PROGRAM

 

I.                                        INCENTIVE BONUS TERMS

 

The Plan Administrator shall have full power and authority to implement one or more of the following incentive bonus programs under the Plan:

 

(i)                                     cash bonus awards (“Cash Awards”),

 

(ii)                                  performance unit awards (“Performance Unit Awards”), and

 

(iii)                               dividend equivalent rights (“DER Awards”)

 

A.                                    Cash Awards.  The Plan Administrator shall have the discretionary authority under the Plan to make Cash Awards which are to vest in one or more installments over the Participant’s continued Service with the Corporation or upon the attainment of specified performance objectives.  Each such Cash Award shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided however, that each such document shall comply with the terms specified below.

 

1.                                      The elements of the vesting schedule applicable to each Cash Award shall be determined by the Plan Administrator and incorporated into the Incentive Bonus Award Agreement.

 

2.                                      The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more Cash Awards so that those Awards shall vest upon the achievement of pre-established corporate performance objectives based upon one or more Performance Goals measured over the performance period (not to exceed five (5) years) specified by the Plan Administrator at the time of the Award.

 

3.                                      Outstanding Cash Awards shall automatically terminate, and no cash payment or other consideration shall be due the holders of those Awards, if the performance objectives or Service requirements established for those Awards are not attained or satisfied. The Plan Administrator may in its discretion waive the cancellation and termination of one or more unvested Cash Awards which would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those Awards.  Any such waiver shall result in the immediate vesting of the Participant’s interest in the Cash Award as to which the waiver applies.  Such wavier may be effected at any time, whether before or after the Participant’s cessation of Service or the attainment or non-attainment of the applicable performance objectives. However, no vesting requirements tied to the attainment of Performance Goals may be waived with respect to Awards which were intended, at the time those Awards

 

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were made, to qualify as performance-based compensation under Code Section 162(m), except in the event of the Participant’s cessation of Service by reason of death or Permanent Disability or as otherwise provided in Section II of this Article Four.

 

4.                                      Cash Awards which become due and payable following the attainment of the applicable performance objectives or satisfaction of the applicable Service requirement (or the waiver of such goals or Service requirement) may be paid in (i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment date or (iii) a combination of cash and shares of Common Stock as set forth in the applicable Award Agreement.

 

B.                                    Performance Unit Awards.  The Plan Administrator shall have the discretionary authority to make Performance Unit Awards in accordance with the terms of this Article Four.  Each such Performance Unit Award shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided however, that each such document shall comply with the terms specified below.

 

1.                                      A Performance Unit shall represent either (i) a unit with a dollar value tied to the level at which pre-established corporate performance objectives based on one or more Performance Goals are attained or (ii) a participating interest in a special bonus pool tied to the attainment of pre-established corporate performance objectives based on one or more Performance Goals. The amount of the bonus pool may vary with the level at which the applicable performance objectives are attained, and the value of each Performance Unit which becomes due and payable upon the attained level of performance shall be determined by dividing the amount of the resulting bonus pool (if any) by the total number of Performance Units issued and outstanding at the completion of the applicable performance period.

 

2.                                      Performance Units may also be structured to include a Service requirement which the Participant must satisfy following the completion of the performance period in order to vest in the Performance Units awarded with respect to that performance period.

 

3.                                      Performance Units which become due and payable following the attainment of the applicable performance objectives and the satisfaction of any applicable Service requirement may be paid in (i) cash, (ii) shares of Common Stock valued at Fair Market Value on the payment date or (iii) a combination of cash and shares of Common Stock, as set forth in the applicable Award Agreement.

 

C.                                    DER Awards.  The Plan Administrator shall have the discretionary authority to make DER Awards in accordance with the terms of this Article Four.  Each such DER Award shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided however, that each such document shall comply with the terms specified below.

 

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1.                                      The DER Awards may be made as stand-alone awards or in tandem with other Awards made under the Plan.  The term of each such DER Award shall be established by the Plan Administrator at the time of grant, but no DER Award shall have a term in excess of ten (10) years.

 

2.                                      Each DER shall represent the right to receive the economic equivalent of each dividend or distribution, whether in cash, securities or other property (other than shares of Common Stock), which is made per issued and outstanding share of Common Stock during the term the DER remains outstanding. A special account on the books of the Corporation shall be maintained for each Participant to whom a DER Award is made, and that account shall be credited per DER with each such dividend or distribution made per issued and outstanding share of Common Stock during the term of that DER remains outstanding.

 

3.                                      Payment of the amounts credited to such book account may be made to the Participant either concurrently with the actual dividend or distribution made per issued and outstanding share of Common Stock or may be deferred for a period specified by the Plan Administrator at the time the DER Award is made or selected by the Participant in accordance with the requirements of Code Section 409A.  In no event, however, shall any DER Award made with respect to an Award subject to performance-vesting conditions under the Stock Issuance or Incentive Bonus Program vest or become payable prior to the vesting of that Award (or the portion thereof to which the DER Award relates) upon the attainment of the applicable performance goals and shall accordingly be subject to cancellation and forfeiture to the same extent as the underlying Award in the event those performance conditions are not attained.

 

4.                                      Payment may be paid in (i) cash, (ii) shares of Common Stock or (iii) a combination of cash and shares of Common Stock, as set forth in the applicable Award Agreement. If payment is to be made in the form of Common Stock, the number of shares of Common Stock into which the cash dividend or distribution amounts are to be converted for purposes of the Participant’s book account may be based on the Fair Market Value per share of Common Stock on the date of conversion, a prior date or an average of the Fair Market Value per share of Common Stock over a designated period, as set forth in the applicable Award Agreement.

 

5.                                      The Plan Administrator shall also have the discretionary authority, consistent with Code Section 162(m), to structure one or more DER Awards so that those Awards shall vest only after the achievement of pre-established corporate performance objectives based upon one or more Performance Goals measured over the performance period (not to exceed five (5) years) specified by the Plan Administrator at the time the Award is made.

 

II.                                   CHANGE IN CONTROL

 

A.                                    The Plan Administrator shall have the discretionary authority to structure one or more Awards under the Incentive Bonus Program so that those Awards shall automatically vest in whole or in part immediately prior to the effective date of an actual Change

 

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in Control transaction or upon the subsequent termination of the Participant’s Service by reason of an Involuntary Termination within a designated period following the effective date of such Change in Control. To the extent any such Award is, at the time of such Change in Control, subject to a performance-vesting condition tied to the attainment of one or more specified performance goals, then that performance vesting condition shall automatically be cancelled on the effective date of such Change in Control, and such Award shall thereupon be converted into a Service-vesting Award that will vest upon the completion of a Service period co-terminous with the portion of the performance period (and any subsequent Service vesting component that was originally part of that Award) remaining at the time of the Change in Control.

 

B.                                    The Plan Administrator’s authority under Section II.A above shall also extend to any Award under the Incentive Bonus Program intended to qualify as performance-based compensation under Code Section 162(m), even though the automatic vesting of that Award may result in the loss of performance-based status under Code Section 162(m).

 

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ARTICLE FIVE

 

MISCELLANEOUS

 

I.                                        DEFERRED COMPENSATION

 

A.                                    The Plan Administrator may, in its sole discretion,  structure one or more awards under the Stock Issuance Program so that the Participants may be provided with an election to defer the compensation associated with those awards for federal income tax purposes.  Any such deferral opportunity shall comply with all applicable requirements of Code Section 409A.

 

B.                                    To the extent the Corporation maintains one or more separate non-qualified deferred compensation arrangements which allow the participants the opportunity to make notional investments of their deferred account balances in shares of Common Stock, the Plan Administrator may authorize the share reserve under the Plan to serve as the source of any shares of Common Stock that become payable under those deferred compensation arrangements.  In such event, the share reserve under the Plan shall be reduced on a share-for-share basis for each share of Common Stock issued under the Plan in settlement of the deferred compensation owed under those separate arrangements.

 

C.                                    To the extent there is any ambiguity as to whether any provision of any award made under the Plan that is deemed to constitute a deferred compensation arrangement under Code Section 409A would otherwise contravene one or more requirements or limitations of such Code Section 409A and the Treasury Regulations thereunder, such provision shall be interpreted and applied in a manner that complies with the applicable requirements of Code Section 409A and the Treasury Regulations thereunder.

 

II.                                   TAX WITHHOLDING

 

A.                                    The Corporation’s obligation to deliver shares of Common Stock upon the issuance, exercise or vesting of an Award under the Plan shall be subject to the satisfaction of all applicable income and employment tax withholding requirements.

 

B.                                    The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory Options, stock appreciation rights, restricted stock units or any other share right awards pursuant to which vested shares of Common Stock are to be issued under the Plan and any or all Participants to whom vested or unvested shares of Common Stock are issued in a direct issuance under the Stock Issuance Program with the right to use shares of Common Stock in satisfaction of all or part of the Withholding Taxes to which such holders may become subject in connection with the exercise of their options or stock appreciation rights, the issuance to them

 

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of vested shares or the subsequent vesting of unvested shares issued to them.  Such right may be provided to any such holder in either or both of the following formats:

 

Stock Withholding:  The election to have the Corporation withhold, from the shares of Common Stock otherwise issuable upon the exercise of such Non-Statutory Option or stock appreciation right or upon the issuance of fully-vested shares, a portion of those shares with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder.  The shares of Common Stock so withheld shall reduce the number of shares of Common Stock authorized for issuance under the Plan.

 

Stock Delivery:  The election to deliver to the Corporation, at the time the Non-Statutory Option or stock appreciation right is exercised,  the vested shares are issued or the unvested shares subsequently vest, one or more shares of Common Stock previously acquired by such holder (other than in connection with the exercise, share issuance or share vesting triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the holder.  The shares of Common Stock so delivered shall neither reduce the number of shares of Common Stock authorized for issuance under the Plan nor be added to the shares of Common Stock authorized for issuance under the Plan

 

III.                              ASSUMPTION OR SUBSTITUTION OF OPTIONS

 

A.                                    The shares of Common Stock reserved for issuance under the Plan may, in the sole discretion of the Plan Administrator, be used to fund one or more shares of Common Stock issuable upon the exercise of (i) any Code Section 422 incentive stock option originally granted by a corporation or other entity acquired by the Corporation (or any Parent or Subsidiary), whether by merger or asset or stock sale, and assumed by the Corporation in connection with that acquisition or (ii) any Incentive Option granted under this Plan in substitution for such incentive stock option of the acquired entity.  Any such assumption or substitution of options shall not be deemed to contravene the option exercise price requirements of Section I.A of Article Two, even if the exercise price per share of Common Stock under the assumed or substituted option is less than one hundred percent (100%) of the Fair Market Value per share of Common Stock on the date such assumption or substitution is effected, provided all of the following requirements are satisfied:

 

(i)                                     The excess of the aggregate Fair Market Value of the shares of Common Stock subject to the assumed or substituted option immediately after the assumption or substitution over the aggregate exercise price in effect for those shares is not greater than the excess of the aggregate fair market value of the shares of stock subject to the option immediately prior to such assumption or substitution over the aggregate exercise price payable for those shares.

 

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(ii)                                  The ratio of the exercise price to the Fair Market Value per share of Common Stock subject to the assumed or substituted option immediately after such assumption or substitution is no more favorable to the Optionee than the ratio of the exercise price to the fair market value per share immediately prior to such assumption or substitution.

 

(iii)                               The assumed or substituted option does not provide the Optionee with any additional benefits the Optionee did not otherwise have under the option immediately prior to the assumption or substitution.

 

(iv)                              In the case of a substitution, the option granted by the acquired entity must be cancelled at the time of such substitution, and the Optionee must have no further rights under that cancelled option.

 

IV.                               SHARE ESCROW/LEGENDS

 

Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in such shares vests or may be issued directly to the Participant with restrictive legends on the certificates evidencing those unvested shares.

 

V.                                    EFFECTIVE DATE AND TERM OF THE PLAN

 

A.                                    The Plan shall become effective on the Plan Effective Date.

 

B.                                    The Plan shall serve as the successor to the Predecessor Plans, and no further option grants, restricted stock unit awards or other stock-based awards shall be made under the Predecessor Plans.  All awards outstanding under the Predecessor Plans on the Plan Effective Date shall be transferred to the Plan at that time and shall be treated as outstanding awards under the Plan.  However, each outstanding award so transferred shall continue to be governed solely by the terms of the documents evidencing such award, and no provision of the Plan shall be deemed to affect or otherwise modify the rights or obligations of the holders of such transferred awards with respect to their acquisition of shares of Common Stock thereunder.  Should any of those transferred awards expire or terminate unexercised, the shares of Common Stock subject to those awards at the time of expiration or termination shall be available for subsequent award and issuance under the Plan in accordance with the provisions of Section V.E of Article One.

 

C.                                    The Plan shall terminate upon the earliest to occur of (i) [          ], 2024, (ii) the date on which all shares available for issuance under the Plan shall have been issued as fully vested shares or (iii) the termination of all outstanding Awards in connection with a Change in Control.  Should the Plan terminate on [           ], 2024, then all Awards outstanding at that time shall continue to have force and effect in accordance with the provisions of the documents evidencing those Awards.

 

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VI.                               AMENDMENT OF THE PLAN

 

A.                                    The Board shall have complete and exclusive power and authority to amend or modify the Plan in any or all respects.  However, no such amendment or modification shall adversely affect the rights and obligations with respect to Awards at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification.  In addition, amendments to the Plan will be subject to stockholder approval to the extent required under applicable law or regulation or pursuant to the listing standards of the Stock Exchange on which the Common Stock is at the time primarily traded, and no amendment that would reduce or limit the scope of the prohibition on repricing programs set forth in Section V of Article Two or otherwise eliminated such prohibition shall be effective unless approved by the stockholders.

 

B.                                    The Primary Committee of the Board shall have the discretionary authority to adopt and implement from time to time such addenda or subplans to the Plan as it may deem necessary in order to bring the Plan into compliance with applicable laws and regulations of any foreign jurisdictions in which grants or awards are to be made under the Plan and/or to obtain favorable tax treatment in those foreign jurisdictions for the individuals to whom the grants or awards are made.

 

C.                                    Awards may be made under the Plan that involve shares of Common Stock in excess of the number of shares then available for issuance under the Plan, provided no shares shall actually be issued pursuant to those Awards until the number of shares of Common Stock available for issuance under the Plan is sufficiently increased by stockholder approval of an amendment of the Plan authorizing such increase.  If stockholder approval is required and is not obtained within twelve (12) months after the date the first excess Award is made, then all Awards granted on the basis of such excess shares shall terminate and cease to be outstanding.

 

D.                                    The provisions of the Plan and the outstanding Awards under the Plan shall, in the event of any ambiguity, be construed, applied and interpreted in a manner so as to ensure that all Awards and Award Agreements provided to Optionees or Participants who are subject to U.S. income taxation either qualify for an exemption from the requirements of Section 409A of the Code or comply with those requirements; provided, however, that the Corporation shall not make any representations that any Awards made under the Plan will in fact be exempt from the requirements of Section 409A of the Code or otherwise comply with those requirements, and each Optionee and Participant shall accordingly be solely responsible for any taxes, penalties or other amounts which may become payable with respect to his or her Awards by reason of Section 409A of the Code.

 

VII.                          USE OF PROCEEDS

 

Any cash proceeds received by the Corporation from the sale of shares of Common Stock under the Plan shall be used for general corporate purposes.

 

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VIII.                     REGULATORY APPROVALS

 

A.                                    The implementation of the Plan, the grant of any Award and the issuance of shares of Common Stock in connection with the issuance, exercise or vesting of any Award made under the Plan shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the shares of Common Stock issuable pursuant to those Awards.

 

B.                                    No shares of Common Stock or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of applicable securities laws, including the filing and effectiveness of the Form S-8 registration statement for the shares of Common Stock issuable under the Plan, and all applicable listing requirements of any Stock Exchange on which Common Stock is then listed for trading.

 

IX.                              NO EMPLOYMENT/SERVICE RIGHTS

 

Nothing in the Plan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each, to terminate such person’s Service at any time for any reason, with or without cause.

 

X.                                   RECOUPMENT

 

Optionees and Participants shall be subject to any clawback, recoupment or other similar policy adopted by the Board as in effect from time to time, and Awards and any cash, shares of Common Stock or other property or amounts due, paid or issued to the holder of an Award shall be subject to the terms of such policy, as in effect from time to time.

 

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APPENDIX

 

The following definitions shall be in effect under the Plan:

 

A.                                    Award shall mean any of the following awards authorized for issuance or grant under the Plan: stock options, stock appreciation rights, direct stock issuances, restricted stock or restricted stock unit awards, performance shares, performance units, dividend-equivalent rights and cash incentive awards.

 

B.                                    Board shall mean the Corporation’s Board of Directors.

 

C.                                    Change in Control shall have the meaning assigned to such term in the award agreement for the particular award or in any other agreement incorporated by reference into the award agreement for purposes of defining such term, and in the absence of such a Change in Control definition shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

 

(i)                                     the closing of a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction,

 

(ii)                                  the closing of a stockholder-approved sale, transfer or other disposition (including in whole or in part through one or more licensing arrangements) of all or substantially all of the Corporation’s assets,

 

(iii)                               the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) acquires directly or indirectly beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or

 

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series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders, or

 

(iv)                              a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

 

D.                                    Code shall mean the Internal Revenue Code of 1986, as amended.

 

E.                                     Common Stock shall mean the Corporation’s common stock.

 

F.                                      Corporation shall mean Agile Therapeutics, Inc., a Delaware corporation, and any corporate successor to all or substantially all of the assets or voting stock of Agile Therapeutics, Inc. which has by appropriate action assumed the Plan.

 

G.                                    Discretionary Grant Program shall mean the discretionary grant program in effect under Article Two of the Plan pursuant to which stock options and stock appreciation rights may be granted to one or more eligible individuals.

 

H.                                   Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

 

I.                                        Exercise Date shall mean the date on which the Corporation shall have received written notice of the option exercise.

 

J.                                        Fair Market Value per share of Common Stock on any relevant date shall be the closing selling price per share of Common Stock at the close of regular trading hours (i.e., before after-hours trading begins) on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is reported by the National Association of Securities Dealers (if primarily traded on the Nasdaq Global or Global Select Market) or as officially quoted in the composite tape of transactions on any other Stock Exchange on which the Corporation’s common stock is then primarily traded.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

K.                                   Family Member means, with respect to a particular Optionee or Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former

 

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spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law.

 

L.                                     Full Value Award means any of the following Awards made under the Stock Issuance or Incentive Bonus Programs that are settled in shares of Common Stock: restricted stock awards (unless issued for cash consideration equal to the Fair Market Value of the shares of Common Stock on the award date), restricted stock unit awards, performance shares, performance units, cash incentive awards and any other Awards under the Plan other than (i) stock options and stock appreciation rights issued under the Discretionary Grant Program and (ii) dividend equivalent rights under the Incentive Bonus Program.

 

M.                                 Incentive Bonus Program shall mean the incentive bonus program in effect under Article Four of the Plan.

 

N.                                    Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

 

O.                                    Involuntary Termination shall have the meaning assigned to such term in the award agreement for the particular award or in any other agreement incorporated by reference into the award agreement for purposes of defining such term, and in the absence of such an Involuntary Termination definition shall mean the termination of the Service of any individual which occurs by reason of:

 

(i)                                     such individual’s involuntary dismissal or discharge by the Corporation (or any Parent or Subsidiary) for reasons other than Misconduct, or

 

(ii)                                  such individual’s voluntary resignation following (A) a change in his or her position with the Corporation (or any Parent or Subsidiary) which materially reduces his or her duties and responsibilities or the level of management to which he or she reports, (B) a reduction in his or her level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of such individual’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation (or any Parent or Subsidiary) without the individual’s consent.

 

P.                                      Misconduct shall have the meaning assigned to such term in the award agreement for the particular award or in any other agreement incorporated by reference into the award agreement for purposes of defining such term, and in the absence of such a Misconduct definition shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by such person adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner.  The foregoing definition shall

 

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not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, to constitute grounds for termination for Misconduct.

 

Q.                                    1934 Act shall mean the Securities Exchange Act of 1934, as amended.

 

R.                                    Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

 

S.                                      Optionee shall mean any person to whom an option is granted under the Discretionary Grant Program.

 

T.                                     Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

U.                                    Participant shall mean any person who is issued (i) shares of Common Stock, restricted stock units, performance shares, performance units or other stock-based awards under the Stock Issuance Program or (ii) an incentive bonus award under the Incentive Bonus Program.

 

V.                                    Performance Goals shall mean any of the following performance criteria upon which the vesting of one or more Awards under the Plan may be based: (i) revenue, organic revenue, net sales, or new-product revenue or net sales, (ii) achievement of specified milestones in the discovery and development of the Corporation’s technology or of one or more of the Corporation’s products, (iii) achievement of specified milestones in the commercialization of one or more of the Corporation’s products, (iv) achievement of specified milestones in the manufacturing of one or more of the Corporation’s products, (v) expense targets, (vi) share price, (vii) total shareholder return, (viii) earnings per share, (ix) operating margin, (x) gross margin, (xi) return measures (including, but not limited to, return on assets, capital, equity, or sales), (xii) productivity ratios, (xiii) operating income, (xiv) net operating profit, (xv) net earnings or net income (before or after taxes), (xvi) cash flow (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital), (xvii) earnings before or after interest, taxes, depreciation, amortization and/or stock-based compensation expense, (xviii) economic value added, (xix) market share, (xx) working capital targets, (xxi) achievement of specified milestones relating to corporate partnerships, collaborations, license transactions, distribution arrangements, mergers, acquisitions, dispositions or similar business transactions, and (xxii) employee retention and recruiting and human resources management. In addition, such performance goals may be based upon the attainment of specified levels of the Corporation’s performance under one or more of the measures described above relative to the performance of other entities and may also be based on the performance of any of the Corporation’s business

 

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units or divisions or any Parent or Subsidiary.  Performance goals may include a minimum threshold level of performance below which no award will be earned, levels of performance at which specified portions of an award will be earned and a maximum level of performance at which an award will be fully earned.  Each applicable performance goal may be structured at the time of the Award to provide for appropriate adjustments or exclusions for one or more of the following items: (A) asset impairments or write-downs; (B) litigation or governmental investigation expenses and any judgments, verdicts and settlements in connection therewith; (C) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reported results; (D) accruals for reorganization and restructuring programs; (E) any extraordinary or nonrecurring items; (F) items of income, gain, loss or expense attributable to the operations of any business acquired by the Corporation or costs and expenses incurred in connection with mergers and acquisitions; (G) items of income, gain, loss or expense attributable to one or more business operations divested by the Corporation or the gain or loss realized upon the sale of any such business the assets thereof, (H) accruals for bonus or incentive compensation costs and expenses associated with cash-based awards made under the Plan or other bonus or incentive compensation plans of the Corporation, and (I) the impact of foreign currency fluctuations or changes in exchange rates.

 

W.                                 Permanent Disability or Permanently Disabled have the meaning assigned to such term in the award agreement for the particular award or in any other agreement incorporated by reference into the award agreement for purposes of defining such term, and in the absence of such a definition shall mean the inability of the Optionee or the Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.

 

X.                                    Plan shall mean the Corporation’s 2014 Incentive Compensation Plan as set forth in this document and as subsequently amended or restated from time to time.

 

Y.                                    Plan Administrator shall mean the particular entity, whether the Primary Committee, the Board or the Secondary Committee, which is authorized to administer the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to one or more classes of eligible persons, to the extent such entity is carrying out its administrative functions under those programs with respect to the persons under its jurisdiction.

 

Z.                                     Plan Effective Date shall mean the date upon which the Plan shall become effective and shall be coincident with the Underwriting Date.

 

AA.                           Predecessor Plans shall mean the Corporation’s 1997 and 2008 Equity Incentive Plans as each such Plan is in effect immediately prior to the Plan Effective Date.

 

BB.                           Primary Committee shall mean the committee of two (2) or more non-employee Board members appointed by the Board to administer the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to Section 16 Insiders.

 

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CC.                           Secondary Committee shall mean a committee of one or more Board members appointed by the Board to administer the Discretionary Grant, Stock Issuance and Incentive Bonus Programs with respect to eligible persons other than Section 16 Insiders.

 

DD.                           Section 16 Insider shall mean an officer or director of the Corporation subject to the short-swing profit liabilities of Section 16 of the 1934 Act.

 

EE.                             Service shall mean the performance of services for the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established) by a person in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor, except to the extent otherwise specifically provided in the documents evidencing the option grant or stock issuance. For purposes of the Plan, an Optionee or Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) the Optionee or Participant no longer performs services in any of the foregoing capacities for the Corporation or any Parent or Subsidiary or (ii) the entity for which the Optionee or Participant is performing such services ceases to remain a Parent or Subsidiary of the Corporation, even though the Optionee or Participant may subsequently continue to perform services for that entity. Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that should such leave of absence exceed three (3) months, then for purposes of determining the period within which an Incentive Option may be exercised as such under the federal tax laws, the Optionee’s Service shall be deemed to cease on the first day immediately following the expiration of such three (3)-month period, unless Optionee is provided with the right to return to Service following such leave either by statute or by written contract. Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period the Optionee or Participant is on a leave of absence.

 

FF.                               Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

 

GG.                           Stock Issuance Agreement shall mean the agreement entered into by the Corporation and the Participant at the time of issuance of shares of Common Stock under the Stock Issuance Program.

 

HH.                         Stock Issuance Program shall mean the stock issuance program in effect under Article Three of the Plan.

 

II.                                   Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

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JJ.                                   10% Stockholder shall mean the owner of stock (as determined under Code Section 424(d)) possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).

 

KK.                         Underwriting Agreement shall mean the agreement between the Corporation and the underwriter or underwriters managing the initial public offering of the Common Stock.

 

LL.                             Underwriting Date shall mean the date on which the Underwriting Agreement is executed and priced in connection with the initial public offering of the Common Stock.

 

MM.                     Withholding Taxes shall mean the applicable federal and state income and employment withholding taxes to which the holder of an Award under the Plan may become subject in connection with the issuance, exercise, vesting or settlement of that Award.

 

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AGILE THERAPEUTICS, INC.

 

STOCK OPTION AGREEMENT

 

RECITALS

 

A.                                    The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

 

B.                                    Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee.

 

C.                                    All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1.                                      Grant of Option.  The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice.  The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price.

 

2.                                      Option Term.  This option shall have a maximum term of ten (10) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.

 

3.                                      Limited Transferability.

 

(a)                                 This option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s lifetime, only by Optionee.  However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding this option.  Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

 

(b)                                 If this option is designated a Non-Statutory Option in the Grant Notice, then this option may be assigned in whole or in part during Optionee’s lifetime to one or more of the Optionee’s Family Members or to a trust established for the exclusive benefit of Optionee and/or one or more such Family Members, to the extent such assignment is in

 

 

connection with the Optionee’s estate plan or pursuant to a domestic relations order.  The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment.  The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment.

 

4.                                      Dates of Exercise.  This option shall become exercisable for the Option Shares in one or more installments in accordance with the Exercise Schedule set forth in the Grant Notice.  As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term under Paragraph 5 or 6.

 

5.                                      Cessation of Service.  The option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

 

(a)                                 Should Optionee cease to remain in Service for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then Optionee (or any person or persons to whom this option is transferred pursuant to a permitted transfer under Paragraph 3) shall have a period of three (3) months (commencing with the first date following such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date.

 

(b)                                 Should Optionee die while this option is outstanding, then this option may be exercised by (i) the personal representative of Optionee’s estate or (ii) the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance following Optionee’s death or to whom the option is transferred during Optionee’s lifetime pursuant to a permitted transfer under Paragraph 3, as the case may be. However, if Optionee dies while holding this option and has an effective beneficiary designation in effect for this option at the time of his or her death, then the designated beneficiary or beneficiaries shall have the exclusive right to exercise this option following Optionee’s death.  Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the expiration of the twelve (12)-month period following the date of Optionee’s death or (ii) the Expiration Date.

 

(c)                                  Should Optionee cease Service by reason of Permanent Disability while this option is outstanding, then Optionee (or any person or persons to whom this option is transferred pursuant to a permitted transfer under Paragraph 3) shall have a period of twelve (12) months (commencing with the first date following such cessation of Service) during which to exercise this option.  In no event shall this option be exercisable at any time after the Expiration Date.

 

(d)                                 During the limited period of post-Service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which this option is, at the time of Optionee’s cessation of Service, vested and exercisable pursuant to the Exercise Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6.  This option shall not vest or become exercisable for any additional Option Shares,

 

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whether pursuant to the normal Exercise Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6, following the Optionee’s cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator pursuant to an express written agreement with the Optionee.  Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any exercisable Option Shares for which the option has not otherwise been exercised.

 

(e)                                  Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in any Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding.

 

6.                                      Change in Control.

 

(a)                                 This option, to the extent outstanding at the time of a Change in Control but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Change in Control, become exercisable for all of the Option Shares at the time subject to this option and may be exercised for any or all of those Option Shares as fully vested shares of Common Stock.  However, this option shall not become exercisable on such an accelerated basis, if and to the extent, the Plan Administrator determines in its sole discretion that this option is to be assumed by the successor corporation (or parent thereof) or is otherwise to be continued in full force and effect pursuant to the terms of the Change in Control transaction.

 

(b)                                 If this option is outstanding at the time of a Change in Control and the Plan Administrator determines in its sole discretion that this option is not to be assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction in accordance with Paragraph 6(a) above, the Optionee shall be entitled to receive, upon consummation of the Change in Control, a lump sum cash payment in an amount equal to the spread existing on the Option Shares at the time of the Change in Control (the excess of the Fair Market Value of those shares over the aggregate Exercise Price payable for such shares), if any.

 

(c)                                  Immediately following the Change in Control, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.

 

(d)                                 If this option is assumed in connection with a Change in Control or otherwise continued in effect, then this option shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Change in Control had those shares actually been outstanding at the time, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the Plan Administrator may, in its sole

 

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discretion, provide in the document evidencing the Change in Control transaction, that the successor corporation, in connection with the assumption or continuation of this option, shall substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control.

 

(e)                                  If this Option is assumed by the successor corporation (or the parent thereof) in connection with a Change in Control or is otherwise to be continued in full force and effect pursuant to the terms of the Change in Control transaction, then none of the Option Shares shall, in accordance with Paragraph 6(a) above, vest on an accelerated basis upon the occurrence of that Change in Control, and Optionee shall accordingly continue, over his or her period of Service following the Change in Control, to vest in the Option Shares in one or more installments in accordance with the Exercise Schedule set forth in the Grant Notice.  However, upon an Involuntary Termination of Optionee’s Service within twelve (12) months following such Change in Control, all the Option Shares at the time subject to this option (as so assumed or continued in effect) shall automatically vest in full on an accelerated basis so that this option shall immediately become exercisable for all the Option Shares as fully-vested shares and may be exercised for any or all of those Option Shares as vested shares.

 

(f)                                   This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

7.                                      Adjustment in Option Shares.  Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution or should there occur any merger, consolidation or other reorganization (including, without limitation, a Change in Control transaction), then equitable adjustments shall be made to (i) the total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

 

8.                                      Stockholder Rights.  The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become a holder of record of the purchased shares.

 

9.                                      Manner of Exercising Option.

 

(a)                                 In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

 

(i)                                     Execute and deliver to the Corporation a Notice of Exercise for the Option Shares for which the option is exercised or comply with

 

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such other procedures as the Corporation may establish for notifying the Corporation of the exercise of this option for one or more Option Shares.

 

(ii)                                  Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

 

(A)                               cash or check made payable to the Corporation;

 

(B)                               shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date;

 

(C)                               shares of Common Stock otherwise issuable under the option but withheld by the Corporation in satisfaction of the exercise price, with such withheld shares to be valued at Fair Market Value on the Exercise Date, or

 

(D)                               through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (i) to a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in accordance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (ii) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm on such settlement date in order to complete the sale.

 

Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Notice of Exercise delivered to the Corporation in connection with the option exercise.

 

(iii)                               Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

 

(iv)                              Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the

 

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satisfaction of all applicable income and employment tax withholding requirements applicable to the option exercise.

 

(b)                                 As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto.

 

(c)                                  In no event may this option be exercised for any fractional shares.

 

10.                               Compliance with Laws and Regulations.

 

(a)                                 The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance.

 

(b)                                 The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained.  The Corporation, however, shall use its best efforts to obtain all such approvals.

 

11.                               Successors and Assigns.  Except to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

 

12.                               Notices.  Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices.  Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant Notice.  All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

 

13.                               Construction.  This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan.  All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

 

14.                               Governing Law.  The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to that State’s conflict-of-laws rules.

 

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15.                               Excess Shares.  If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may without stockholder approval be issued under the Plan, then this option shall be void with respect to those excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan.

 

16.                               Recoupment.  The Option Shares covered by this Agreement shall be subject to any clawback, recoupment or other similar policy adopted by the Board as in effect from time to time, and this option and any cash, shares of Common Stock or other property or amounts due, paid or issued to Optionee shall be subject to the terms of such policy, as in effect from time to time.

 

17.                               Additional Terms Applicable to an Incentive Option.  In the event this option is designated an Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the grant:

 

(a)                                 This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent) this option is exercised for one or more Option Shares: (A) more than three (3) months after the date Optionee ceases to be an Employee for any reason other than death or Permanent Disability or (B) more than twelve (12) months after the date Optionee ceases to be an Employee by reason of Permanent Disability.

 

(b)                                 No installment under this option shall qualify for favorable tax treatment as an Incentive Option if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which such installment first becomes exercisable hereunder would, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or other securities for which this option or any other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate.  Should such One Hundred Thousand Dollar ($100,000) limitation be exceeded in any calendar year, this option shall nevertheless become exercisable for the excess shares in such calendar year as a Non-Statutory Option.

 

(c)                                  Should the exercisability of this option be accelerated upon a Change in Control, then this option shall qualify for favorable tax treatment as an Incentive Option only to the extent the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this option first becomes exercisable in the calendar year in which the Change in Control transaction occurs does not, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or other securities for which this option or one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate.  Should the applicable One Hundred Thousand Dollar ($100,000)

 

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limitation be exceeded in the calendar year of such Change in Control, the option may nevertheless be exercised for the excess shares in such calendar year as a Non-Statutory Option.

 

(d)                                 Should Optionee hold, in addition to this option, one or more other options to purchase Common Stock which become exercisable for the first time in the same calendar year as this option, then the foregoing limitations on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

 

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APPENDIX

 

The following definitions shall be in effect under the Agreement:

 

A.                                    Agreement shall mean this Stock Option Agreement.

 

B.                                    Board shall mean the Corporation’s Board of Directors.

 

C.                                    Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

 

(i)                                     the closing of a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction,

 

(ii)                                  the closing of a stockholder-approved sale, transfer or other disposition (including in whole or in part through one or more licensing arrangements) of all or substantially all of the Corporation’s assets,

 

(iii)                               the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) acquires directly or indirectly beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders, or

 

(iv)                              a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least

 

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a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

 

D.                                    Code shall mean the Internal Revenue Code of 1986, as amended.

 

E.                                     Common Stock shall mean shares of the Corporation’s common stock.

 

F.                                      Corporation shall mean Agile Therapeutics, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Agile Therapeutics, Inc. which shall by appropriate action adopt the Plan.

 

G.                                    Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

 

H.                                   Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.

 

I.                                        Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.

 

J.                                        Exercise Schedule shall mean the schedule set forth in the Grant Notice pursuant to which the option is to become exercisable for the Option Shares in one or more installments over the Optionee’s period of Service.

 

K.                                   Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

 

L.                                     Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

 

(i)                                     If the Common Stock is at the time traded on the Nasdaq Global or Global Select Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on that Stock Exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(ii)                                  If the Common Stock is at the time listed on any other Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market

 

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Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

M.                                 Family Member shall mean any of the following members of the Optionee’s family: any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, bother-in-law or sister-in-law.

 

N.                                    Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

 

O.                                    Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

 

P.                                      Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

 

Q.                                    Involuntary Termination shall have the meaning assigned to such term or substantially similar term (e.g. a definition of a resignation for “good reason”) set forth in any employment agreement between Optionee and the Corporation.  To the extent not otherwise defined in any employment agreement between Optionee and the Corporation, the term Involuntary Termination shall mean the termination of Optionee’s Service by reason of:

 

(i)                                     Optionee’s involuntary dismissal or discharge by the Corporation (or any Parent or Subsidiary) for reasons other than Misconduct, or

 

(ii)                                  Optionee’s voluntary resignation following (A) a change in Optionee’s position with the Corporation (or any Parent or Subsidiary) which materially reduces Optionee’s duties and responsibilities or the level of management to which Optionee reports, (B) a reduction in Optionee’s level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of Optionee’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation (or any Parent or Subsidiary) without Optionee’s consent.

 

R.                                    Misconduct shall have the meaning assigned to such term or substantially similar term (e.g. a definition of a termination for “cause”) set forth in any employment agreement between Optionee and the Corporation.  To the extent not otherwise defined in any employment agreement between Optionee and the Corporation, the term Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner.

 

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The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss Optionee or any other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan or this Agreement, to constitute grounds for termination for Misconduct.

 

S.                                      Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

 

T.                                     Notice of Exercise shall mean the notice of option exercise in the form prescribed by the Corporation.

 

U.                                    Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.

 

V.                                    Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

 

W.                                 Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

X.                                    Permanent Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which is expected to result in death or to be of continuous duration of twelve (12) months or more.

 

Y.                                    Plan shall mean the Corporation’s 2014 Incentive Compensation Plan.

 

Z.                                     Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

 

AA.                           Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established) in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor.  Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that for a leave which exceeds ninety (90) days, Service shall be deemed, for purposes of determining the period within which any outstanding option held by the Optionee in question may be exercised as an Incentive Option, to cease on the ninety-first (91st) day of such leave, unless the Optionee’s right to return to Service following such leave is guaranteed by law or statute.  Except to the extent otherwise required by law or expressly authorized by the Plan Administrator, no Service credit shall be given for vesting purposes for any period the Optionee is on a leave of absence.

 

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BB.                           Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market, or the New York Stock Exchange.

 

CC.                           Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

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AGILE THERAPEUTICS, INC.

 

NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT

 

RECITALS

 

A.                                    The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

 

B.                                    Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee.

 

C.                                    All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1.                                      Grant of Option.  The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice.  The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price.

 

2.                                      Option Term.  This option shall have a maximum term of ten (10) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.

 

3.                                      Limited Transferability.

 

(a)                                 This option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s lifetime, only by Optionee.  However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding this option.  Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

 

(b)                                 This option may be assigned in whole or in part during Optionee’s lifetime to one or more of the Optionee’s Family Members or to a trust established for the exclusive benefit of Optionee and/or one or more such Family Members, to the extent such assignment is in connection with the Optionee’s estate plan or pursuant to a domestic relations order.  The assigned portion shall be exercisable only by the person or persons who acquire a

 

 

proprietary interest in the option pursuant to such assignment.  The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment.

 

4.                                      Dates of Exercise.  This option shall become exercisable for the Option Shares in one or more installments in accordance with the Exercise Schedule set forth in the Grant Notice.  As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term under Paragraph 5 or 6.

 

5.                                      Cessation of Board Service.  The option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

 

(a)                                 Should Optionee cease to remain in Service for any reason (other than death, Permanent Disability or Misconduct) while this option is outstanding, then Optionee (or any person or persons to whom this option is transferred pursuant to a permitted transfer under Paragraph 3) shall have a period of three (3) months (commencing with the first date following such cessation of Service) during which to exercise this option, but in no event shall this option be exercisable at any time after the Expiration Date.

 

(b)                                 Should Optionee die while this option is outstanding, then this option may be exercised by (i) the personal representative of Optionee’s estate or (ii) the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance following Optionee’s death or to whom the option is transferred during Optionee’s lifetime pursuant to a permitted transfer under Paragraph 3, as the case may be. However, if Optionee dies while holding this option and has an effective beneficiary designation in effect for this option at the time of his or her death, then the designated beneficiary or beneficiaries shall have the exclusive right to exercise this option following Optionee’s death.  Any such right to exercise this option shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the expiration of the twelve (12)-month period following the date of Optionee’s death or (ii) the Expiration Date.

 

(c)                                  Should Optionee cease Service by reason of Permanent Disability while this option is outstanding, then Optionee (or any person or persons to whom this option is transferred pursuant to a permitted transfer under Paragraph 3) shall have a period of twelve (12) months (commencing with the first date following such cessation of Service) during which to exercise this option.  In no event shall this option be exercisable at any time after the Expiration Date.

 

(d)                                 During the limited period of post-Service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which this option is, at the time of Optionee’s cessation of Service, vested and exercisable pursuant to the Exercise Schedule specified in the Grant Notice or the special vesting acceleration provisions of Paragraph 6.  This option shall not vest or become exercisable for any additional Option Shares, whether pursuant to the normal Exercise Schedule specified in the Grant Notice or the special

 

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vesting acceleration provisions of Paragraph 6, following the Optionee’s cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator pursuant to an express written agreement with the Optionee.  Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any exercisable Option Shares for which the option has not otherwise been exercised.

 

(e)                                  Should Optionee’s Service terminate as a result of Misconduct or should Optionee otherwise engage in any Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding.

 

6.                                      Change in Control.

 

(a)                                 This option, to the extent outstanding at the time of a Change in Control but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Change in Control, become exercisable for all of the Option Shares at the time subject to this option and may be exercised for any or all of those Option Shares as fully vested shares of Common Stock.

 

(b)                                 To the extent this option is outstanding at the time of a Change in Control, the Plan Administrator shall have the authority to determine, in its sole discretion, if this option is to be assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction. If this option is outstanding at the time of a Change in Control and is not assumed by the successor corporation (or parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction, the Optionee shall be entitled to receive, upon consummation of the Change in Control, a lump sum cash payment in an amount equal to the spread existing on the Option Shares at the time of the Change in Control (the excess of the Fair Market Value of those shares over the aggregate Exercise Price payable for such shares), if any.

 

(c)                                  Immediately following the Change in Control, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) or otherwise continued in effect pursuant to the terms of the Change in Control transaction.

 

(d)                                 If this option is assumed in connection with a Change in Control or otherwise continued in effect, then this option shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Change in Control had those shares actually been outstanding at the time, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.  To the extent the actual holders of the Corporation’s outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the Plan Administrator may, in its sole discretion, provide in the document evidencing the Change in Control transaction, that the successor corporation shall, in connection with the assumption or continuation of this option,

 

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substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Change in Control.

 

(e)                                  This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

7.                                      Adjustment in Option Shares.  Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution or should there occur any merger, consolidation or other reorganization (including, without limitation, a Change in Control transaction), then equitable adjustments shall be made to (i) the total number and/or class of securities subject to this option and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

 

8.                                      Stockholder Rights.  The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become a holder of record of the purchased shares.

 

9.                                      Manner of Exercising Option.

 

(a)                                 In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

 

(i)                                     Execute and deliver to the Corporation a Notice of Exercise for the Option Shares for which the option is exercised or comply with such other procedures as the Corporation may establish for notifying the Corporation of the exercise of this option for one or more Option Shares.

 

(ii)                                  Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

 

(A)                               cash or check made payable to the Corporation;

 

(B)                               shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date;

 

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(C)                               shares of Common Stock otherwise issuable under the option but withheld by the Corporation in satisfaction of the exercise price, with such withheld shares to be valued at Fair Market Value on the Exercise Date, or

 

(D)                               through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (i) to a brokerage firm (reasonably satisfactory to the Corporation for purposes of administering such procedure in accordance with the Corporation’s pre-clearance/pre-notification policies) to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable income and employment taxes required to be withheld by the Corporation by reason of such exercise and (ii) to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm on such settlement date in order to complete the sale.

 

Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Notice of Exercise delivered to the Corporation in connection with the option exercise.

 

(iii)                               Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

 

(b)                                 As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto.

 

(c)                                  In no event may this option be exercised for any fractional shares.

 

10.                               Compliance with Laws and Regulations.

 

(a)                                 The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance.

 

(b)                                 The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such

 

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approval shall not have been obtained.  The Corporation, however, shall use its best efforts to obtain all such approvals.

 

11.                               Successors and Assigns.  Except to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

 

12.                               Notices.  Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices.  Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee’s signature line on the Grant Notice.  All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

 

13.                               Construction.  This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan.  All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

 

14.                               Governing Law.  The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to that State’s conflict-of-laws rules.

 

15.                               Excess Shares.  If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may without stockholder approval be issued under the Plan, then this option shall be void with respect to those excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan.

 

16.                               Recoupment.  The Option Shares covered by this Agreement shall be subject to any clawback, recoupment or other similar policy adopted by the Board as in effect from time to time, and this option and any cash, shares of Common Stock or other property or amounts due, paid or issued to Optionee shall be subject to the terms of such policy, as in effect from time to time.

 

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APPENDIX

 

The following definitions shall be in effect under the Agreement:

 

A.                                    Agreement shall mean this Stock Option Agreement.

 

B.                                    Board shall mean the Corporation’s Board of Directors.

 

C.                                    Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

 

(i)                                     the closing of a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction,

 

(ii)                                  the closing of a stockholder-approved sale, transfer or other disposition (including in whole or in part through one or more licensing arrangements) of all or substantially all of the Corporation’s assets,

 

(iii)                               the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) acquires directly or indirectly beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders, or

 

(iv)                              a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least

 

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a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

 

D.                                    Code shall mean the Internal Revenue Code of 1986, as amended.

 

E.                                     Common Stock shall mean shares of the Corporation’s common stock.

 

F.                                      Corporation shall mean Agile Therapeutics, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Agile Therapeutics, Inc. which shall by appropriate action adopt the Plan.

 

G.                                    Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.

 

H.                                   Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.

 

I.                                        Exercise Schedule shall mean the schedule set forth in the Grant Notice pursuant to which the option is to become exercisable for the Option Shares in one or more installments over the Optionee’s period of Service.

 

J.                                        Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

 

K.                                   Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

 

(i)                                     If the Common Stock is at the time traded on the Nasdaq Global or Global Select Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers on that Stock Exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(ii)                                  If the Common Stock is at the time listed on any other Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

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L.                                     Family Member shall mean any of the following members of the Optionee’s family: any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, bother-in-law or sister-in-law.

 

M.                                 Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

 

N.                                    Grant Notice shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

 

O.                                    Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner.

 

P.                                      Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

 

Q.                                    Notice of Exercise shall mean the notice of option exercise in the form prescribed by the Corporation.

 

R.                                    Option Shares shall mean the number of shares of Common Stock subject to the option as specified in the Grant Notice.

 

S.                                      Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

 

T.                                     Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

U.                                    Permanent Disability shall mean the inability of Optionee to perform his or her usual duties as a member of the Board by reason of any medically determinable physical or mental impairment which is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more.

 

V.                                    Plan shall mean the Corporation’s 2014 Incentive Compensation Plan.

 

W.                                 Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

 

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X.                                    Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary, whether now existing or subsequently established) in the capacity of a non-employee member of the board of directors.

 

Y.                                    Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market, or the New York Stock Exchange.

 

Z.                                     Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

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AGILE THERAPEUTICS, INC.

 

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

 

RECITALS

 

A.                                    The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

 

B.                                    Participant is to render valuable services to the Corporation (or a Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s issuance of shares of Common Stock to the Participant under the Stock Issuance Program.

 

C.                                    All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix A.

 

NOW, THEREFORE, it is hereby agreed as follows:

 

1.                                      Grant of Restricted Stock Units.  The Corporation hereby awards to the Participant, as of the Award Date, Restricted Stock Units under the Plan. Each Restricted Stock Unit represents the right to receive one share of Common Stock on the specified issuance date following the vesting of that unit.  The number of shares of Common Stock subject to the awarded Restricted Stock Units, the applicable vesting schedule for those shares, the date on which those vested shares shall become issuable to Participant and the remaining terms and conditions governing the award (the “Award”) shall be as set forth in this Agreement.

 

AWARD SUMMARY

 

	
Award   Date:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Number   of Shares Subject to Award:
    	
 
    	
[             ]   shares of Common Stock (the “Shares”)
    
	
 
    	
 
    	
 
    
	
Vesting   Schedule:
    	
 
    	
The   Shares shall vest in a series of four successive equal annual installments   upon the Participant’s completion of each year of Service over the four year   period measured from the Award Date. However, one or more Shares may be   subject to accelerated vesting in accordance with the provisions of Paragraph   5 of this Agreement.
    

 

 

	
Issuance   Schedule:
    	
 
    	
Each   Share in which the Participant vests in accordance with the Vesting Schedule   above shall be issued, subject to the Corporation’s collection of all   applicable Withholding Taxes, on the date that particular Share vests or as   soon after that scheduled vesting date as administratively practicable, but   in no event later than the later of (i) the close of the calendar year   in which such vesting date occurs or (ii) the fifteenth day of the third   calendar month following such vesting date (the “Issue Date”). The issuance   of the Shares shall be subject to the Corporation’s collection of all   applicable Withholding Taxes. The procedures pursuant to which the applicable   Withholding Taxes are to be collected are set forth in Paragraph 7 of this   Agreement. Any Shares which vest pursuant to the accelerated vesting   provisions of Paragraph 5 of this Agreement shall be issued in accordance   with the provisions of that paragraph.
    

 

2.                                      Limited Transferability.  Prior to the actual issuance of the Shares which vest hereunder, the Participant may not transfer any interest in the Award or the underlying Shares; provided, however, any Shares which vest hereunder but which otherwise remain unissued at the time of the Participant’s death may be transferred pursuant to the provisions of the Participant’s will or the laws of inheritance or to the Participant’s designated beneficiary or beneficiaries of this Award.  The Participant may also direct the Corporation to issue stock certificates for any Shares which in fact vest and become issuable hereunder to one or more designated Family Members or a trust established for the Participant and/or his or her Family Members.  The Participant may make a beneficiary designation or certificate directive for this Award at any time by filing the appropriate form with the Plan Administrator or its designee.

 

3.                                      Cessation of Service.  Except as otherwise provided in Paragraph 5 below, should the Participant cease Service for any reason prior to vesting in one or more Shares subject to this Award, then the Award will be immediately cancelled with respect to those unvested Shares, and the number of Restricted Stock Units will be reduced accordingly.  The Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units.

 

4.                                      Stockholder Rights.  The holder of this Award shall not have any stockholder rights, including voting or dividend rights, with respect to the Shares subject to the Award until the Participant becomes the record holder of those Shares following their actual issuance upon the Corporation’s collection of the applicable Withholding Taxes.

 

5.                                      Change in Control.

 

(a)                                 Any Restricted Stock Units subject to this Award at the time of a Change in Control may be assumed by the successor entity or otherwise continued in full force and effect.  In the event of such assumption or continuation of the Award, no accelerated vesting of the Restricted Stock Units shall occur at the time of the Change in Control.

 

(b)                                 In the event the Award is assumed or otherwise continued in effect, the Restricted Stock Units subject to the Award shall be adjusted immediately after the consummation of the Change in Control so as to apply to the number and class of securities into 

 

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which the Shares subject to those units immediately prior to the Change in Control would have been converted in consummation of that Change in Control had those Shares actually been issued and outstanding at that time.

 

(c)                                  Any restricted stock units which are assumed or otherwise continued in effect in connection with a Change in Control shall be subject to accelerated vesting in accordance with the following provision:

 

·                                          If an Involuntary Termination of the Participant’s Service occurs within twelve (12) months following the Change in Control, then the Participant shall immediately vest in all of the Shares subject to the Award.  The Shares that vest in accordance with the foregoing shall be issued to the Participant, subject to the Corporation’s collection of all applicable Withholding Taxes, on the date of such Involuntary Termination or as soon thereafter as administratively practicable, but in no event later than the close of the calendar year in which such Involuntary Termination occurs or (if later) the fifteenth day of the third calendar month following the date of such termination.

 

(d)                                 If the Restricted Stock Units subject to this Award at the time of the Change in Control are not assumed or otherwise continued in effect in accordance with Paragraph 5(a), then those units will vest immediately upon the closing of the Change in Control. The Shares subject to those vested units will be issued immediately at that time or as soon as administratively practicable thereafter, but in no event more than fifteen (15) business days after such closing, or will otherwise be converted into the right to receive the same consideration per share of Common Stock payable to the other shareholders of the Corporation in consummation of the Change in Control and distributed at the same time as such stockholder payments, but the distribution to the Participant shall in no event be made later than the later of (i) the close of the calendar year in which the Change in Control is effected or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the effective date of such Change in Control.

 

(e)                                  This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

6.                                      Adjustment in Shares.  Should any change be made to the outstanding Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, or should the value of the outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution or should there occur any merger, consolidation or other reorganization (including, without limitation, a Change in Control transaction) then equitable adjustments shall be made to the total number and/or class of securities issuable pursuant to this Award in such manner as the Plan Administrator deems appropriate in order to reflect such change and thereby prevent the dilution or enlargement of benefits hereunder.

 

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7.                                      Collection of Withholding Taxes.

 

(a)                                 Upon the applicable Issue Date, the Corporation shall issue to or on behalf of the Participant a certificate (which may be in electronic form) for the applicable number of underlying shares of Common Stock, subject, however, to the Corporation’s collection of the applicable Withholding Taxes.

 

(b)                                 Until such time as the Corporation provides the Participant with written or electronic notice to the contrary, the Corporation shall collect the Withholding Taxes required to be withheld with respect to the issuance of the vested Shares hereunder through an automatic share withholding procedure pursuant to which the Corporation will withhold, at the time of such issuance, a portion of the Shares with a Fair Market Value (measured as of the issuance date) equal to the amount of those taxes (the “Share Withholding Method”); provided, however, that the amount of any Shares so withheld shall not exceed the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes that are applicable to supplemental taxable income.  The Participant shall be notified in writing or electronically in the event such Share Withholding Method is no longer available.

 

(c)                                  Should any Shares be distributed at a time that the Share Withholding Method is not available, then the Withholding Taxes required to be withheld with respect to those Shares shall be collected from the Participant through either of the following alternatives:

 

·                                          the Participant’s delivery of his or her separate check payable to the Corporation in the amount of such taxes, or

 

·                                          the use of the proceeds from a next-day sale of the Shares issued to the Participant, provided and only if (i) such a sale is permissible under the Corporation’s trading policies governing the sale of Common Stock, (ii) the Participant makes an irrevocable commitment, on or before the Issue Date for those Shares, to effect such sale of the Shares and (iii) the transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the Sarbanes-Oxley Act of 2002.

 

(d)                                 Notwithstanding the provisions of subparagraphs (a) and (b) of this Paragraph 7, the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting of the Shares (the “Employment Taxes”) shall in all events be collected from the Participant no later than the last business day of the calendar year in which the Shares vest hereunder.  Accordingly, to the extent the Issue Date for one or more vested Shares is to occur in a year subsequent to the calendar year in which those Shares vest, the Participant shall, on or before the last business day of the calendar year in which the Shares vest, deliver to the Corporation a check payable to its order in the dollar amount equal to the Employment Taxes required to be withheld with respect to those Shares.

 

(e)                                  Except as otherwise provided in Paragraph 5, the settlement of all Restricted Stock Units which vest under the Award shall be made solely in shares of Common Stock.  In no event, however, shall any fractional shares be issued.  Accordingly, the total 

 

4

 

number of shares of Common Stock to be issued pursuant to the Award shall, to the extent necessary, be rounded down to the next whole share in order to avoid the issuance of a fractional share.

 

8.                                      Compliance with Laws and Regulations.  The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and the Participant with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange on which the Common Stock may be listed for trading at the time of such issuance.

 

9.                                      Notices.  Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices.  Except to the extent electronic notice is expressly authorized hereunder, any notice required to be given or delivered to the Participant shall be in writing and addressed to the Participant at the address indicated below the Participant’s signature line on this Agreement.  All notices shall be deemed effective upon personal delivery (or electronic delivery to the extent authorized hereunder) or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

 

10.                               Successors and Assigns.  Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and the Participant, the Participant’s assigns, the legal representatives, heirs and legatees of the Participant’s estate and any beneficiaries of the Award designated by the Participant.

 

11.                               Construction.  This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan.  All decisions of the Committee with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

 

12.                               Code Section 409A  It is the intention of the parties that the provisions of this Agreement shall comply with the requirements of the short-term deferral exception to Section 409A of the Code and Treasury Regulations Section 1.409A-1(b)(4).  Accordingly, to the extent there is any ambiguity as to whether one or more provisions of this Agreement would otherwise contravene the requirements or limitations of Code Section 409A applicable to such short-term deferral exception, then those provisions shall be interpreted and applied in a manner that does not result in a violation of the requirements or limitations of Code Section 409A and the Treasury Regulations thereunder that apply to such exception.

 

13.                               Governing Law.  The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to that State’s conflict-of-laws rules.

 

14.                               Employment at Will.  Nothing in this Agreement or in the Plan shall confer upon the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or 

 

5

 

Subsidiary employing or retaining the Participant) or of the Participant, which rights are hereby expressly reserved by each, to terminate the Participant’s Service at any time for any reason, with or without cause.

 

15.                               Recoupment.  This Award shall be subject to any clawback, recoupment or other similar policy adopted by the Board as in effect from time to time, and this Award and any cash, shares of common stock or other property or amounts due, paid or issued to Participant shall be subject to the terms of such policy, as in effect from time to time.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

 

	
 
    	
AGILE   THERAPEUTICS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 [                            ],   PARTICIPANT
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Signature:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Address:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    

 

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APPENDIX A

 

DEFINITIONS

 

The following definitions shall be in effect under the Agreement:

 

A.                                    Agreement shall mean this Restricted Stock Unit Issuance Agreement.

 

B.                                    Award shall mean the award of Restricted Stock Units made to the Participant pursuant to the terms of this Agreement.

 

C.                                    Award Date shall mean the date the Restricted Stock Units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

 

D.                                    Board shall mean the Corporation’s Board of Directors.

 

E.                                     Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

 

(i)                                     the closing of a merger, consolidation or other reorganization approved by the Corporation’s stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation’s outstanding voting securities immediately prior to such transaction,

 

(ii)                                  the closing of a stockholder-approved sale, transfer or other disposition (including in whole or in part through one or more licensing arrangements) of all or substantially all of the Corporation’s assets,

 

(iii)                               the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) acquires directly or indirectly beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation’s securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or 

 

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series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation’s existing stockholders, or

 

(iv)                              a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

 

F.                                      Code shall mean the Internal Revenue Code of 1986, as amended.

 

G.                                    Corporation shall mean Agile Therapeutics, Inc., a Delaware corporation, and any successor corporate successor to all or substantially all of the assets or voting stock of Agile Therapeutics, Inc. which shall by appropriate action adopt the Plan.

 

H.                                   Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

 

I.                                        Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions:

 

(i)                                     If the Common Stock is at the time traded on the Nasdaq Global or Global Select Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers for that particular Stock Exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

(ii)                                  If the Common Stock is at the time listed on any other Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal.  If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

 

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J.                                        Family Member shall mean any of the following members of the Participant’s family; any child, stepchild, grandchild, grandparent, parent, stepparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law.

 

K.                                   Involuntary Termination shall have the meaning assigned to such term or substantially similar term (e.g. a definition of a resignation for “good reason”) set forth in any employment agreement between Participant and the Corporation.  To the extent not otherwise defined in any employment agreement between Participant and the Corporation, the term Involuntary Termination shall mean the termination of Participant’s Service by reason of:

 

(i)                                     Participant’s involuntary dismissal or discharge by the Corporation (or any Parent or Subsidiary) for reasons other than Misconduct, or

 

(ii)                                  Participant’s voluntary resignation following (A) a change in Participant’s position with the Corporation (or any Parent or Subsidiary) which materially reduces Participant’s duties and responsibilities or the level of management to which Participant reports, (B) a reduction in Participant’s level of compensation (including base salary, fringe benefits and target bonus under any corporate-performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of Participant’s place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation (or any Parent or Subsidiary) without Participant’s consent.

 

L.                                     Misconduct shall have the meaning assigned to such term or substantially similar term (e.g. a definition of a termination for “cause”) set forth in any employment agreement between Participant and the Corporation.  To the extent not otherwise defined in any employment agreement between Participant and the Corporation, the term Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Participant, any unauthorized use or disclosure by Participant of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Participant adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner.  The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss Participant or any other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan or this Agreement, to constitute grounds for termination for Misconduct.

 

M.                                 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

N.                                    Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock 

 

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possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one or more of the other corporations in such chain.

 

O.                                    Participant shall mean the person to whom the Award is made pursuant to the Agreement.

 

P.                                      Plan shall mean the Corporation’s 2014 Incentive Compensation Plan.

 

Q.                                    Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

 

R.                                    Service shall mean the Participant’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor.  Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation’s written policy on leaves of absence, no Service credit shall be given for vesting purposes for any period the Participant is on a leave of absence.

 

S.                                      Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

 

T.                                     Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

U.                                    Withholding Taxes shall mean the federal, state and local income and employment taxes required to be withheld by the Corporation in connection with the vesting and concurrent issuance of the shares of Common Stock under the Award.

 

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