Document:

Exhibit 10.1

 

APTARGROUP, INC.
 2016 EQUITY INCENTIVE PLAN

 

1.    Purpose.    The purpose of the AptarGroup, Inc. 2016 Equity Incentive Plan (the “Plan”) is to promote the long-term financial interests of the Company and its Affiliates by (a) attracting and retaining employees and non-employee directors, (b) motivating award recipients by means of growth-related incentives, (c) providing incentive compensation opportunities that are competitive with those of other major corporations and (d) furthering the identity of interests of award recipients with those of the stockholders of the Company.

 

2.    Definitions.    The following definitions are applicable to the Plan:

 

(a)   “Affiliate” means (a) any subsidiary and (b) any other entity in which the Company has a direct or indirect equity interest which is designated an “Affiliate” by the Committee.

 

(b)   “Board of Directors” means the Board of Directors of the Company.

 

(c)   “Change in Control” has the meaning specified in Appendix A to the Plan.

 

(d)   “Code” means the Internal Revenue Code of 1986, as amended.

 

(e)   “Committee” means the Compensation Committee or other committee of the Board of Directors which, pursuant to Section 3, has authority to administer the Plan.

 

(f)    “Common Stock” means Common Stock, par value $.01 per share, of the Company.

 

(g)   “Company” means AptarGroup, Inc., a Delaware corporation, and its successors.

 

(h)   “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(i)    “Market Value” on any date means the closing price of Common Stock on the New York Stock Exchange on that date (or, if such date is not a trading date, on the next preceding date which was a trading date).

 

(j)    “participant” means any non-employee director of the Board or employee of the Company or an Affiliate who has been granted an Award pursuant to the Plan.

 

(k)   “performance goals” means the objectives established by the Committee which shall be satisfied or met during the applicable performance period as a condition to a participant’s receipt of all or a part of a performance-based award under the Plan. With respect to any Award intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code, the applicable performance goals shall be tied to one or more of the following objective corporate-wide or Affiliate, business segment, division, operating unit or individual measures:

 

(i)    Profitability Measures: (1) earnings per share, (2) earnings before interest and taxes (“EBIT”), (3) earnings before interest, taxes, depreciation and amortization (“EBITDA”), (4) business segment income, (5) net income, (6) operating income, (7) revenues, (8) profit margin, (9) cash flow(s) and (10) expense reduction;

 

(ii)   Capital Return Measures: (1) return on equity, (2) return on assets, (3) return on invested capital, (4) EBIT to capital ratio, (5) EBITDA to capital ratio, (6) business segment income to business segment capital ratio, (7) working capital ratios and (8) total shareholder return; and

 

 

(iii)  Other Performance Measures: (1) successful implementation of strategic initiatives relating to cost reduction, revenue production and/or productivity improvement, and (2) successful integration of acquisitions.

 

Each such goal may be measured (A) on an absolute or relative basis; (B) on a pre-tax or post-tax basis or (C) comparatively with current internal targets, the past performance of the Company (including the performance of one or more Affiliates, business segments, divisions, or operating units) or the past or current performance of other companies (or a combination of such past and current performance). In the case of earnings based measures, in addition to the ratios specifically enumerated above, performance goals may include comparisons relating to capital (including, but not limited to, the cost of capital), shareholders’ equity, shares outstanding, assets or net assets, or any combination thereof. If the Committee desires that compensation payable pursuant to any Award subject to performance goals be “qualified performance-based compensation” within the meaning of Section 162(m) of the Code, the performance goals (x) shall be established by the Committee no later than 90 days after the beginning of the applicable performance period (or such other time designated by the Internal Revenue Service) and (y) shall satisfy all other applicable requirements imposed under Treasury Regulations promulgated under Section 162(m) of the Code, including the requirement that such performance goals be stated in terms of an objective formula or standard. With respect to participants who are not covered employees and who, in the Committee’s judgment, are not likely to be covered employees at any time during the applicable performance period or during any period in which an Award may be paid following a performance period, the performance goals may consist of any objective or subjective corporate-wide or Affiliate, division, operating unit or individual measures, whether or not listed herein.

 

(l)    “performance period” means the time period during which the performance goals applicable to a performance-based award must be satisfied or met.

 

(m)  “Rule 16b-3” means such rule adopted under the Securities Exchange Act of 1934, as amended, or any successor rule.

 

(n)   “subsidiary” means any corporation fifty percent or more of the voting stock of which is owned, directly or indirectly, by the Company.

 

3.    Administration.    The Plan shall be administered by the Committee. A majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, or actions approved in writing by all members of the Committee, shall constitute the acts of the Committee.

 

Subject to the limitations of the Plan, the Committee shall have full authority and discretion: (1) to select participants, (2) to make Awards in such forms and amounts as it shall determine, (3) to impose such limitations, restrictions and conditions upon such Awards as it shall deem appropriate, (4) to approve the forms to carry out the purposes and provisions of the Plan, (5) to interpret the Plan and to adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan, (6) to correct any defect or omission or to reconcile any inconsistency in the Plan or in any Award granted hereunder and (7) to make all other determinations and to take all other actions necessary or advisable for the implementation and administration of the Plan. Notwithstanding the foregoing, except for any adjustment pursuant to Section 7(b), neither the Board of Directors nor the Committee shall without the approval of stockholders (i) amend the terms of outstanding Awards to reduce the exercise price of outstanding stock options or SARs, (ii) cancel outstanding stock options or SARs in exchange for cash, other Awards or stock options or SARs with an exercise price that is less than the exercise price of the original stock options or SARs, or (iii) take any other action with respect to a stock option or SAR that would be treated as a repricing under the rules and regulations of the New York Stock Exchange.

 

The Committee’s determinations on matters within its authority shall be final, binding and conclusive. The Committee may delegate any of its authority hereunder to such persons as it deems appropriate, except to the extent that any such delegation will prevent an Award from complying with Rule 16b-3 or, in the case of an Award that is intended to constitute “qualified performance-based compensation” under such Section 162(m) of the Code, from satisfying the conditions of Section 162(m) of the Code.

 

 

4.    Shares Subject to Plan.    Subject to adjustment as provided in Section 7(b), 4,000,000 shares of Common Stock shall be available for Awards under the Plan, reduced by the sum of the aggregate number of shares of Common Stock which become subject to outstanding Awards. Any shares of Common Stock that are subject to Awards of stock options or SARs shall be counted against this limit as one (1) share of Common Stock for every one (1) share of Common Stock granted (with the full number of shares of Common Stock subject to an SAR being counted rather than only the net shares granted). Any shares of Common Stock that are subject to Awards other than stock options or SARs shall be counted against this limit as four-and-eighteen one-hundredths (4.18) shares of Common Stock for every one (1) share of Common Stock granted. To the extent that shares of Common Stock subject to an outstanding award granted under either this Plan or any equity compensation plan previously maintained by the Company on behalf of employees or non-employee directors are not issued or delivered by reason of (i) the expiration, termination, cancellation or forfeiture of such award (except in the case of an option to the extent shares of Common Stock are issued or delivered by the Company in connection with the exercise of a tandem SAR) or (ii) the cash settlement of such award, then such shares of Common Stock shall again be available under the Plan (using the same formula used to count the award against the share limit as set forth above). Shares of Common Stock shall not again be available under the Plan (i) if tendered to satisfy all or a portion of tax withholding obligations relating to such Award, (ii) if withheld to pay the exercise price of stock options or SARs awarded hereunder or (iii) if repurchased by the Company on the open market with the proceeds of an option exercise. Shares of Common Stock available under the Plan may be treasury shares reacquired by the Company or authorized and unissued shares, or a combination of both.

 

To the extent required by Section 162(m) of the Code and the rules and regulations thereunder, the maximum number of shares of Common Stock subject to all options, SARs, performance-based restricted stock, and performance-based restricted stock units that in each case are granted during any calendar year to any person shall be 500,000, subject to adjustment as provided in Section 7(b); provided, however, that the per person limit set forth in this sentence shall be multiplied by two for Awards granted to a participant in the year in which such participant’s employment with the Company commences. The aggregate grant date fair value of shares of Common Stock that may be granted during any fiscal year of the Company to any non-employee director shall not exceed $350,000; provided, however, that (i) the limit set forth in this sentence shall be multiplied by two in the year in which a non-employee director commences service on the Board of Directors and (ii) the limit set forth in this sentence shall not apply to Awards made pursuant to an election to receive the Award in lieu of all or a portion of fees received for service on the Board of Directors or any committee thereunder.

 

5.    Eligibility.    Participants in this Plan shall consist of such employees and non-employee directors and persons expected to become employees and non-employee directors of the Company and its Affiliates as the Committee in its sole discretion may select from time to time. The Committee’s selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. Except as provided otherwise in an Award agreement, for purposes of this Plan, references to employment by the Company shall also mean employment by an Affiliate, and references to employment shall include service as a non-employee director. The Committee shall determine, in its sole discretion, the extent to which a participant shall be considered employed during any periods during which such participant is on a leave of absence.

 

6.    Awards.    The Committee may grant to eligible employees and non-employee directors, in accordance with this Section 6 and the other provisions of the Plan, stock options, stock appreciation rights (“SARs”), restricted stock and restricted stock units (each, an “Award” and, collectively, the “Awards”).

 

(a)   Options.

 

(1)   Options granted under the Plan may be incentive stock options (“ISOs”) within the meaning of Section 422 of the Code or any successor provision, or in such other form consistent with the Plan, as the Committee may determine; except that, so long as so provided in such Section 422, no ISO may be granted under the Plan to any employee of an Affiliate which is not a subsidiary corporation (as such term is used in subsection (b) of Section 422 of the Code) of the Company or any non-employee director. To the extent that the aggregate Market Value (determined as of the date of grant) of shares of Common Stock with respect to which options designated as ISOs are exercisable for the first time by a participant during any calendar year (under this Plan or any other plan of the

 

 

Company, or any parent or subsidiary) exceeds the amount (currently $100,000) established by the Code, such options shall constitute nonqualified stock options.

 

(2)   The option price per share of Common Stock shall be fixed by the Committee at not less than 100% of Market Value on the date of the grant; provided that if an ISO is granted to any person who, at the time such option is granted, owns capital stock possessing more than 10 percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or subsidiary) (a “Ten Percent Holder”), the purchase price per share of Common Stock shall not be less than the price (currently 110% of Market Value) required by the Code in order to constitute an ISO.

 

(3)   Subject to the minimum vesting requirements of Section 6(f), each option shall be exercisable at such time or times as the Committee shall determine at grant, provided that no option shall be exercised later than 10 years after its date of grant; provided that if an ISO shall be granted to a Ten Percent Holder, such option shall not be exercised later than five years after its date of grant.

 

(4)   An option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) in cash, (B) in cash delivered by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, (C) by delivery of previously owned whole shares of Common Stock (for which the optionee has good title, free and clear of all liens and encumbrances) having a Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (D) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered upon exercise of the option having an aggregate Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, or (E) a combination of (A), (C) and (D), in each case to the extent set forth in the agreement relating to the option, (ii) by executing such documents as the Company may reasonably request and (iii) if applicable, by surrendering to the Company any tandem SARs which are cancelled by reason of the exercise of the option. The Committee shall have sole discretion to disapprove of an election pursuant to clauses (B), (C), (D) or (E), except that the Committee may not disapprove of an election made by a participant subject to Section 16 of the Exchange Act. No shares of Common Stock shall be issued or delivered until the full purchase price therefore and any withholding taxes have been paid (or arrangement made for such payment to the Company’s satisfaction). No dividends, or dividend equivalents, shall be paid on any options.

 

(5)   Except as otherwise provided by the Committee at the time of grant, upon a termination of employment for any reason during the vesting period the portion of the option still subject to vesting provisions shall be forfeited by the participant.

 

(b)   SARs.

 

(1)   An SAR shall entitle its holder to receive from the Company, at the time of exercise or settlement of such right, an amount equal to the excess of Market Value (at the date of exercise) over a base price fixed by the Committee multiplied by the number of SARs which the holder is exercising or which are being settled. SARs may be tandem with any previously or contemporaneously granted option or independent of any option. The base price of a tandem SAR shall be the option price of the related option. The base price of an independent SAR shall be fixed by the Committee at not less than 100% of the Market Value of a share of Common Stock on the date of grant of the SAR. The amount payable may be paid by the Company in Common Stock (valued at its Market Value on the date of exercise) or, to the extent provided in the Award agreement, cash or a combination thereof. No dividends, or dividend equivalents, shall be paid on any SAR.

 

(2)   Subject to the minimum vesting requirements of Section 6(f), each SAR shall be exercisable at such time or times as the Committee shall determine at grant, provided that no SAR shall be exercised later than 10 years after its date of grant.

 

 

(3)   An SAR may be exercised (i) by giving written notice to the Company specifying the number of whole SARs then being exercised and (ii) by executing such documents as the Company may reasonably request. To the extent a tandem SAR is exercised or settled, the related option will be cancelled and to the extent the related option is exercised, the tandem SAR will be cancelled.

 

(4)   Except as otherwise provided by the Committee at the time of grant, upon a termination of employment for any reason during the vesting period the portion of the SAR still subject to vesting provisions shall be forfeited by the participant.

 

(c)   Restricted Stock.

 

(1)   The Committee may award to any participant shares of Common Stock, subject to this Section 6(c) and such other terms and conditions as the Committee may prescribe (such shares being called “restricted stock”). During the restriction period, the shares of restricted stock shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates for restricted stock shall be registered in the name of the participant or a nominee of the Company and deposited, together with a stock power endorsed in blank if requested by the Company, with the Company.

 

(2)   Subject to the minimum vesting requirements of Section 6(f), there shall be established for each restricted stock award a restriction period (the “restriction period”) of such length as shall be determined by the Committee. A restricted stock award may be subject to such other conditions to vesting, including performance goals, as the Committee shall establish. Shares of restricted stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as hereinafter provided, during the restriction period. Except for such restrictions on transfer and such other restrictions as the Committee may impose, the participant shall have all the rights of a holder of Common Stock as to such restricted stock; provided, however, that any distributions, including regular cash dividends, payable on the Common Stock during the restriction period or the performance period, as the case may be, shall be subject to the same restrictions as the shares of restricted stock with respect to which such distribution was made. Upon the lapse of all restrictions on a restricted stock award, the Company shall remove the restrictions on any certificates held in book entry form pursuant to Section 6(c)(1) or deliver to the participant (or the participant’s legal representative or designated beneficiary) the certificates deposited pursuant to Section 6(c)(1).

 

(3)   Except as otherwise provided by the Committee at the time of grant, upon a termination of employment for any reason during the restriction period all shares still subject to restriction shall be forfeited by the participant.

 

(d)   Restricted Stock Units.

 

(1)   The Committee may award to any participant restricted stock units (“restricted stock units”), subject to this Section 6(d) and such other terms and conditions as the Committee may prescribe. Upon termination of the restrictions related thereto, each restricted stock unit shall be converted into one share of Common Stock or, in lieu thereof and to the extent provided in the applicable Award agreement, the Market Value of such share of Common Stock in cash.

 

(2)   Subject to the minimum vesting requirements of Section 6(f), there shall be established for each restricted stock unit award a restriction period (the “restricted stock unit restriction period”) of such length as shall be determined by the Committee. A restricted stock unit award may be subject to such other conditions to vesting, including performance goals, as the Committee shall establish. Restricted stock units may not be sold, assigned, transferred, pledged or otherwise encumbered, except as hereinafter provided, during the restricted stock unit restriction period. Upon the lapse of all restrictions on a restricted stock unit award, each restricted stock unit shall be settled by delivery of one share of Common Stock and the Company shall deliver to the participant (or the participant’s legal representative or designated beneficiary) the certificates representing the number of shares of Common Stock.

 

 

(3)   Prior to the settlement of a restricted stock unit award in shares of Common Stock, the holder of such Award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such Award. Holders of restricted stock units shall not be entitled to dividends, or dividend equivalents.

 

(4)   Except as otherwise provided by the Committee at the time of grant, upon a termination of employment for any reason during the restricted stock unit restriction period all restricted stock units still subject to restrictions shall be forfeited by the participant.

 

(e)   Qualified Performance-Based Awards.

 

With respect to any Award granted under the Plan that is intended to constitute “qualified performance-based compensation” within the meaning of Section 162(m) of the Code:

 

(1)   In no event shall any participant receive a payment with respect to any such Award if the minimum threshold performance goals requirement applicable to the payment is not achieved during the performance period. No dividends, or dividend equivalents, shall be paid on any unvested performance-based Awards.

 

(2)   The Committee retains sole discretion to reduce the amount of or eliminate any payment otherwise payable to a participant with respect to any Award. The Committee may exercise such discretion by establishing conditions for payments with respect to Awards in addition to the performance goals, including the achievement of financial, strategic or individual goals, which may be objective or subjective, as it deems appropriate.

 

(3)   The performance goals for any given performance period shall be determined in accordance with generally accepted accounting principles (“GAAP”) and in a manner consistent with the methods used in the Company’s audited consolidated financial statements, to the extent applicable, without regard to (a) extraordinary or other nonrecurring or unusual items, as determined by the Company’s independent public accountants in accordance with GAAP, (b) changes in accounting, as determined by the Company’s independent public accountants in accordance with GAAP, or (c) special charges, such as restructuring or impairment charges, unless, in each case, the Committee decides otherwise during the first 90 days after the beginning of the performance period or, if earlier, the date on which 25% of the performance period has been completed and in accordance with Section 162(m) of the Code. Following the conclusion of each performance period and prior to the payment or settlement of an Award, the Committee shall determine and certify in writing the extent to which performance goals have been attained.

 

(f)    Minimum Vesting and Performance Period Requirements.    The Committee shall determine the vesting schedule and performance period, if applicable, for each Award; provided that no Award shall become exercisable or vested prior to the one-year anniversary of the date of grant and no performance period shall be less than one (1) year; provided, however, that, such restrictions shall not apply to Awards granted under this Plan with respect to the number of shares of Common Stock which, in the aggregate, does not exceed five percent (5%) of the total number of shares available for Awards under this Plan. Notwithstanding the foregoing, the Board of Directors or Committee may provide that all or a portion of the shares subject to such Award shall vest immediately upon a Change in Control or may provide in any agreement relating to an Award that an Award shall vest immediately or, alternatively, continue to vest in accordance with the vesting schedule but without regard to the requirement for continued employment or service, including in the case of a termination without cause, constructive discharge or termination due to death, disability, or retirement.

 

(g)   Deferral of Awards.    The Committee may determine that the delivery of shares of Common Stock or the payment of cash, or a combination thereof, upon the exercise or settlement of all or a portion of any Award (other than Awards of ISOs, stock options and SARs) made hereunder shall be deferred, or the Committee may, in its sole discretion, approve deferral elections made by holders of Awards. Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion, subject to the requirements of Section 409A of the Code. Payment of deferred amounts may be in cash, Common Stock or a combination thereof, as the Committee may determine. Deferred amounts shall be considered an Award under the Plan. The Committee may establish a trust or trusts to hold deferred amounts or any portion thereof for the benefit of participants.

 

 

(h)   Surrender.    If so provided by the Committee at the time of grant, an Award may be surrendered to the Company on such terms and conditions, and for such consideration, as the Committee shall determine.

 

7.    Miscellaneous Provisions.

 

(a)   Nontransferability.    No Award under the Plan shall be transferable other than (i) by will or the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company or (ii) a transfer of stock options without value to a “family member” (as defined in Form S-8) if approved by the Committee. Except to the extent permitted by the foregoing sentence, each Award may be exercised or received during the participant’s lifetime only by the participant or the participant’s legal representative or similar person. Except as permitted by the second preceding sentence, no Award shall be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any Award, such Award and all rights thereunder shall immediately become null and void. For the sake of clarity, no Award may be transferred by a participant for value or consideration.

 

(b)   Adjustments.    In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation) that causes the per share value of shares of Common Stock to change, such as a share dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary cash dividend, the number and class of securities available under this Plan, the terms of each outstanding stock option and SAR (including the number and class of securities subject to each outstanding stock option or SAR and the purchase price or base price per share), the terms of each outstanding restricted stock Award and restricted stock unit Award (including the number and class of securities subject thereto), the maximum number of securities with respect to which shares of Common Stock that may be awarded during any fiscal year of the Company to any one Participant shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding stock options and SARs without an increase in the aggregate purchase price or base price and in accordance with Section 409A of the Code. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants. In either case, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

 

(c)   Tax Withholding.    The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an Award, payment by the holder of such Award of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with such Award. An agreement relating to an Award may provide that (1) the Company shall withhold cash or whole shares of Common Stock which would otherwise be delivered upon exercise or settlement of the Award having, in the case of Common Stock, an aggregate Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with the Award (the “Tax Date”) in the amount necessary to satisfy any such obligation or (2) the holder of the Award may satisfy any such obligation by any of the following means: (i) a cash payment to the Company, (ii) in the case of an option a cash payment by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, (iii) delivery to the Company of previously owned whole shares of Common Stock (for which the holder has good title, free and clear of all liens and encumbrances) having an aggregate Market Value determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (iv) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered upon exercise or settlement of the Award having an aggregate Market Value determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, or (v) any combination of (i), (iii) and (iv), in each case to the extent set forth in the agreement relating to the Award; provided, however, that the Committee shall have sole discretion to disapprove of an election pursuant to clauses (ii) through (v), except that the Committee may not disapprove of an election made by a participant subject to Section 16 of the Exchange Act. Shares of Common Stock to be delivered or withheld may not have an aggregate Market Value in excess of the minimum amount required to be withheld. Any fraction of a share of Common Stock which would be required to satisfy such an obligation shall be disregarded and the remaining amount due shall be paid in cash by the holder.

 

 

(d)   Listing and Legal Compliance.    The Committee may suspend the exercise or payment of any Award if it determines that securities exchange listing or registration or qualification under any securities laws is required in connection therewith and has not been completed on terms acceptable to the Committee

 

(e)   Beneficiary Designation.    To the extent permitted by the Company, participants may name, from time to time, beneficiaries (who may be named contingently or successively) to whom benefits under the Plan are to be paid in the event of their death before they receive any or all of such benefits. Each designation will revoke all prior designations by the same participant, shall be in a form prescribed by the Company, and will be effective only when filed by the participant in writing with the Company during the participant’s lifetime. In the absence of any such designation, benefits remaining unpaid at a participant’s death shall be paid to the participant’s estate.

 

(f)    Rights of Participants.    Nothing in the Plan shall interfere with or limit in any way the right of the Company or any Affiliate to terminate any participant’s employment or service at any time, nor confer upon any participant any right to continue in the employ or service of the Company or any Affiliate for any period of time or to continue his or her present or any other rate of compensation. No employee or non-employee director shall have a right to be selected as a participant, or, having been so selected, to be selected again as a participant.

 

(g)   Foreign Employees.    Without amending this Plan, the Committee may grant Awards to eligible persons who are foreign nationals and/or reside outside the U.S. on such terms and conditions different from those specified in this Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of this Plan and, in furtherance of such purposes the Committee may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which the Company or its Affiliates operates or has employees.

 

(h)   Amendment.    The Committee may amend the Plan as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 162(m) of the Code. No amendment may materially impair the rights of a holder of an outstanding Award without the consent of such holder.

 

(i)    Governing Law.    This Plan, each Award hereunder and the related Award agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.

 

(j)    Awards Subject to Clawback.    The Awards granted under this Plan and any cash payment or shares of Common Stock delivered pursuant to an Award shall be subject to forfeiture, recovery by the Company or other action pursuant to the applicable Award agreement or any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by applicable law.

 

8.    Effective Date and Term of Plan.    The Plan shall be submitted to the stockholders of the Company for approval and, if approved by the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at a meeting of stockholders, shall become effective on the date of such approval. In the event that the Plan is not approved by the stockholders of the Company, the Plan and any outstanding Awards shall be null and void. The Plan shall terminate ten years after its effective date, unless terminated earlier by the Board or Committee; provided, however, that no ISOs shall be granted after the tenth anniversary of the date on which the Plan was approved by the Board of Directors. Termination of the Plan shall not affect the terms or conditions of any Award granted prior to termination.

 

As adopted by the Board of Directors on February 25, 2016

 

 

Appendix A to the Plan

 

“Change in Control” shall mean:

 

(1)   the acquisition by any individual, entity or group (a “Person”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of more than 50% of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of a conversion or exchange privilege in respect of outstanding convertible or exchangeable securities unless such outstanding convertible or exchangeable securities were acquired directly from the Company), (B) any acquisition by the Company, (C) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (D) any acquisition by any corporation pursuant to a reorganization, merger or consolidation involving the Company, if, immediately after such reorganization, merger or consolidation, each of the conditions described in clauses (i), (ii) and (iii) of subsection (3) of this Appendix A shall be satisfied; and provided, further that, for purposes of clause (B), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of more than 50% of the Outstanding Company Common Stock or more than 50% of the Outstanding Company Voting Securities by reason of an acquisition by the Company and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Company Common Stock or any additional Outstanding Company Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control;

 

(2)   individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of such Board; provided, however, that any individual who becomes a director of the Company subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed to have been a member of the Incumbent Board; and provided, further, that no individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the purpose of opposing a solicitation by any other Person with respect to the election or removal of directors or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall be deemed to have been a member of the Incumbent Board;

 

(3)   consummation of a reorganization, merger or consolidation unless, in any such case, immediately after such reorganization, merger or consolidation, (i) 50% or more of the then outstanding shares of common stock of the corporation resulting from such reorganization, merger or consolidation and 50% or more of the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals or entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such reorganization, merger or consolidation and in substantially the same proportions relative to each other as their ownership, immediately prior to such reorganization, merger or consolidation, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no Person (other than the Company, any employee benefit plan (or related trust) sponsored or maintained by the Company or the corporation resulting from such reorganization, merger or consolidation (or any corporation controlled by the Company) and any Person which beneficially owned, immediately prior to such reorganization, merger or consolidation, directly or indirectly, more than 50% of the Outstanding Company Common Stock or the Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, more than 50% of the then outstanding shares of common stock of such corporation or more than 50% of the combined voting power of the then outstanding securities of such corporation entitled to vote generally in the election of directors and (iii) at least a majority of the members of the board of directors of the corporation resulting from such reorganization, merger or consolidation were members of the Incumbent Board at the time of the

 

 

execution of the initial agreement or action of the Board providing for such reorganization, merger or consolidation; or

 

(4)   consummation of (i) a plan of complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company other than to a corporation with respect to which, immediately after such sale or other disposition, (A) 50% or more of the then outstanding shares of common stock thereof and 50% or more of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such sale or other disposition and in substantially the same proportions relative to each other as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) sponsored or maintained by the Company or such corporation (or any corporation controlled by the Company) and any Person which beneficially owned, immediately prior to such sale or other disposition, directly or indirectly, more than 50% of the Outstanding Company Common Stock or the Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, more than 50% of the then outstanding shares of common stock thereof or more than 50% of the combined voting power of the then outstanding securities thereof entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors thereof were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition.Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of                         , 2016, by and between AGILE THERAPEUTICS, INC., a Delaware corporation (the “Company”), and                        (the “Executive”), collectively referred to as the “parties.”

 

Recitals:

 

The Company desires to continue to employ the Executive and to have the benefit of the Executive’s skills and services, and the Executive desires to accept such continued employment with the Company, on the terms and conditions set forth herein.

 

In consideration of the mutual promises, covenants, and conditions set forth in this Agreement, the parties agree as follows:

 

SECTION 1.        EMPLOYMENT

 

a.                                      Position.  The Company wishes to continue to employ the Executive as                         of the Company, and the Executive hereby agrees to continue in such position for the term of this Agreement and to perform those duties and responsibilities as shall be assigned to the Executive by the Board of Directors of the Company (the “Board”) or its designee and that are consistent with the Executive’s position.

 

b.                                      The Executive’s Commitment.  The Executive shall consider the Executive’s employment by the Company as the Executive’s principal employment, shall devote the Executive’s full working time and attention to the Executive’s duties and responsibilities under this Agreement, and shall perform the Executive’s duties and responsibilities to the best of the Executive’s abilities.  While subject to any provision of this Agreement, the Executive shall maintain loyalty to the Company and shall take no action that would directly or indirectly promote any competitor or injure the Company’s interests.  Subject to the foregoing, the Executive may engage in other business activities to the extent that they do not interfere with the Executive’s obligations under this Agreement, provided that each of those activities is first disclosed to and approved by the Board.  Schedule A to this Agreement contains a list of the other business activities in which the Executive is currently engaged and, to the extent applicable, the dates by which certain of those activities will be terminated.

 

SECTION 2.        TERMINATION OF EMPLOYMENT

 

a.                                      Term.  The Executive’s employment with the Company shall commence on the date hereof and shall continue until terminated in accordance with Section 2b, 2c, 2d, or 2e hereof.

 

b.                                      Termination for “Reasonable Cause.”  The Executive’s employment may be terminated by the Company at any time, without prior notice, upon a showing of “Reasonable

 

 

Cause,” as defined below.  Should the Executive’s employment be terminated by the Company for “Reasonable Cause,” no severance or other unearned compensation shall be payable by the Company to the Executive nor shall the Company be obligated to continue to provide to the Executive at the Company’s expense, or reimburse the Executive for, any health insurance benefits after the effective date of the termination.  “Reasonable Cause” shall be defined for the purposes of this Agreement as being any of the following:

 

(i)                                     any act or omission by the Executive that reasonably constitutes dishonesty, disloyalty, fraud, deceit, gross negligence, willful misconduct, or recklessness, including, but not limited to the Executive’s willful violation of the Company’s bylaws or code of regulations, and that is directly or indirectly materially detrimental to the Company’s best interest;

 

(ii)                                  the Executive’s intentional failure to perform any lawful duties assigned to the Executive by the Board or its designee after receiving notice and a reasonable opportunity to cure;

 

(iii)                               the commission of any act by the Executive that constitutes a felony under the laws of the United States or the state of the Company’s principal place of business; and

 

(iv)                              any material breach by the Executive of Section 5, 6, 7, or 8 of this Agreement.

 

Furthermore, the termination by the Executive of the Executive’s employment with the Company for any reason other than for Good Reason pursuant to Section 2d shall be deemed to be a termination of the Executive’s employment for “Reasonable Cause” without any notice or other action on the part of the Company.

 

c.                                       Death or Disability.  The Executive’s employment shall terminate immediately upon the Executive’s death.  The Executive’s employment shall terminate immediately upon disability of the Executive to the extent consistent with applicable law.  For purposes of this Agreement, the Executive shall be deemed to have a “disability” if, in the reasonable opinion of the Board, the Executive is unable to perform the essential functions of the Executive’s job, with or without reasonable accommodation(s), for at least ninety (90) consecutive days because of illness, incapacity, or physical or mental disability, and the Executive’s inability to do so perform poses an undue hardship for the Company.

 

d.                                      Termination by the Executive for Good Reason.  The Executive may resign from employment with the Company for Good Reason, but only in accordance with the terms of this Section 2d.  “Good Reason” shall be deemed to exist with respect to any termination by the Executive of the Executive’s employment for any of the following reasons: (i) the relocation of the office of the Company at which the Executive is principally employed to a location that is more than fifty (50) miles from the location of such office as of the date of this Agreement; (ii) any failure by the Company to comply with any material term of this Agreement; or (iii) the demotion of the Executive to a lesser position than described in Section 1a hereof or a substantial diminution of the Executive’s authority, duties, or responsibilities as in effect on the date of this Agreement or as may be hereafter increased; provided, however, that “Good Reason” shall not

 

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include a termination of the Executive’s employment pursuant to Sections 2b or 2c hereof or, following a Change of Control (as defined in Section 4d below), a reduction in title, position, responsibilities, or duties solely by virtue of the Company being acquired and made part of, or operated as a subsidiary of, a larger company or organization, so long as such new duties and responsibilities are reasonably commensurate with the Executive’s experience.

 

The Executive may not resign with Good Reason pursuant to this Section 2d, and shall not be considered to have done so for any purpose of this Agreement, unless (i) the Executive, within sixty (60) days after the initial existence of the act or failure to act by the Company that constitutes “Good Reason” within the meaning of this Agreement, provides the Company with written notice that describes, in particular detail, the act or failure to act that the Executive believes to constitute “Good Reason” and identifies the particular clause of this Section 2d that the Executive contends is applicable to such act or failure to act; (ii) the Company, within thirty (30) days after its receipt of such notice, fails or refuses to rescind such act or remedy such failure to act so as to eliminate “Good Reason” for the termination by the Executive of the Executive’s employment relationship with the Company, and (iii) the Executive actually resigns from employment with the Company on or before that date that is six (6) calendar months after the initial existence of the act or failure to act by the Company that constitutes “Good Reason.”  If the requirements of the preceding sentence are not fully satisfied on a timely basis, then the resignation by the Executive from the Executive’s employment with the Company shall not be deemed to have been for “Good Reason,” the Executive shall not be entitled to any of the benefits to which the Executive would have been entitled if the Executive had resigned from employment with the Company for “Good Reason,” and the Company shall not be required to pay any amount that would otherwise have been due to the Executive under Section 4a had the Executive resigned with “Good Reason.”

 

e.                                       Other Termination.  The Executive’s employment may also be terminated by the Company for any reason other than as set forth in Section 2b, 2c, or 2d.

 

SECTION 3.        COMPENSATION, BENEFITS AND EXPENSES

 

a.                                      Salary.  The Company shall pay the Executive an annual base salary at the rate of $                   (the “Base Salary”), payable in accordance with the Company’s payroll practices in effect from time to time.

 

b.                                      Bonus.  The Executive shall be eligible to receive an annual bonus (“Annual Bonus”).  The Executive’s Annual Bonus Target shall be      % of the Executive’s Base Salary.  Whether the bonus will be awarded to the Executive and the amount of the annual bonus shall be determined by the Board or its Compensation Committee based upon achievement of such goals that shall be established by the Board.  The bonus, if awarded to the Executive, shall be paid within two and one-half (2 1⁄2) months after the close of each fiscal year.

 

c.                                       Equity Program.  The Executive shall be eligible to participate in equity incentive programs established by the Company from time to time in the future to provide stock options and other equity-based incentives to key employees of the Company.  All such stock options and other equity-based incentives shall be awarded in the discretion of the Board pursuant to the terms of the Company’s Amended and Restated 2008 Equity Incentive Plan

 

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and/or such other plans as shall from time to time be established by the Company (the “Equity Plan”).

 

d.                                      Health and Long-Term Disability Insurance.  The Executive shall be entitled to participate in such employee benefit plans (collectively the “Plans”) as are implemented by the Company and available to executive officers of the Company.  The Company shall have the right, from time to time and in its sole discretion, to modify and amend the Plans and benefits provided to its executive officers and other employees, including the Executive.  In addition to any key man insurance taken out by the Company, and provided that the Executive can pass the required physical examinations, during the term of this Agreement the Company shall, at its election, either provide to the Executive or reimburse the Executive for the premiums for $1,000,000 of term life insurance, with Executive designating the beneficiary of such policy.

 

e.                                       Vacation.  The Executive shall be entitled to four (4) weeks paid vacation per year during the term of the Executive’s employment pursuant to this Agreement, provided that such vacation shall be taken at times mutually agreeable to the Executive and the Company and otherwise pursuant to applicable workplace policies governing the use of vacation.  Vacation shall be administered according to the applicable policies of the Company.

 

f.                                        Effect of Termination on Salary and Benefits.  The Executive’s Base Salary and benefits under this Section 3 shall terminate effective immediately on the date of the termination of the Executive’s employment by the Company, and from that date the Executive shall be entitled to severance benefits under Section 4 if and only to the extent such benefits are then payable in accordance with the terms and provisions of this Agreement.

 

g.                                      Effect of Termination on Other Provisions.  This Agreement shall continue in effect upon and after the termination of the Executive’s employment for any reason necessary to enforce the provisions of this Agreement that apply subsequent to any such termination, including any provisions relating to confidentiality, invention assignment, non-solicitation, and non-competition.

 

i.                                         Expense Reimbursement.  The Company shall reimburse the Executive for all reasonable out-of-pocket expenses incurred in connection with the Company’s business and the Executive’s performance of the Executive’s obligations under this Agreement, in accordance with the applicable expense reimbursement policy of the Company, upon submission by the Executive to the Company of such written evidence of such expense as the Company may require.  Any disputes as to the eligibility of an expense for reimbursement shall be resolved in the sole discretion of the Company.

 

h.                                      Recovery of Incentive Compensation.  Notwithstanding anything herein to the contrary, the Executive agrees that all incentive compensation, including cash and equity awards payable to the Executive under this Agreement or otherwise, shall be subject to any clawback policy adopted or implemented by the Board and all other applicable Company policies, consistent with applicable law.

 

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SECTION 4.        PAYMENTS AND BENEFITS UPON TERMINATION

 

a.                                      Payments and Benefits upon Termination.  Subject to the satisfaction of the terms of Section 4b, if during the term of this Agreement (i) the Executive’s employment under this Agreement is terminated by the Company pursuant to Section 2e (i.e., other than a termination for Reasonable Cause pursuant to Section 2b or a termination upon death or disability pursuant to Section 2c), or the Executive resigns from employment with the Company with Good Reason pursuant to Section 2d (each a “Qualifying Termination”), or (ii) the Executive’s employment under this Agreement terminates due to the Executive’s disability pursuant to Section 2c, the Executive shall be entitled to receive from the Company the benefits set forth in subsection (i), (ii), or (iii) below, as applicable.

 

(i)                                     Qualifying Termination Not in Connection with a Change of Control.  If the Qualifying Termination occurs prior to the effective date of a Change of Control, or the Qualifying Termination occurs more than 12 months after a Change of Control, the Executive shall be entitled to:

 

A.                                    continuation of the Executive’s Base Salary (at the salary rate then in effect) for              months (the “Severance Period”), in accordance with the Company’s payroll schedule, commencing on the sixtieth (60th) day after the Executive’s effective date of termination, with the first such installment payment including any unpaid severance payments that would have been made on the normal payroll dates occurring during the first sixty (60) days following the date of termination, provided that if there is a Change of Control before all of the payments under this subsection (A) have been paid, such remaining payments shall be accelerated and paid in a lump sum within sixty (60) days following the Change of Control to the extent permitted by section 409A of the Internal Revenue Code of 1986, as amended (the “Code”); and

 

B.                                    provided that the Executive is eligible for and timely elects to receive continued health coverage under the Company’s health plan under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), and the Executive pays the full monthly COBRA premium cost for such health coverage, the Company shall reimburse the Executive monthly an amount equal to the monthly COBRA premium paid by the Executive, less the amount that the Executive would be required to contribute for similar coverage under the Company’s medical plan if the Executive were an active employee for the Company, for the Severance Period, or until the Executive becomes employed by another employer offering any such benefits (whichever is earlier).  The Executive agrees to provide the Company with notice of eligibility under another health plan within two (2) weeks of such eligibility.  Such amounts shall commence on the sixtieth (60th) day after the Executive’s effective date of termination, with the first such installment payment including any unpaid severance payments that would have been made on the normal payroll dates occurring during the first sixty (60) days following the date of termination.  Notwithstanding the foregoing, the Company reserves the right to restructure the foregoing reimbursement arrangement in any manner necessary or appropriate to avoid penalties or adverse tax consequences to the Executive or the Company or any affiliate, as determined by the Company in its sole discretion.

 

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(ii)                                  Qualifying Termination In Connection with Change of Control.  If the Qualifying Termination occurs on the date of, or within 12 months after, the effective date of a Change of Control (a “CoC Qualifying Termination”), the Executive shall be entitled to the same payments and benefits set forth under Section 4a(i) above, except that (A) the Severance Period for purposes of Sections 4a(i)(A) and (B) shall extend for                months instead of                 months, (B) the continued salary payments in Section 4a(i)(A) shall be paid in a lump sum within sixty (60) days following the Executive’s termination date, instead of in the form of installment payments, (C) the Executive shall be entitled to a lump sum payment equal to the Executive’s target Annual Bonus for the year in which the Executive’s CoC Qualifying Termination occurs, payable within sixty (60) days following the Executive’s termination date, and (D) each equity award granted to the Executive under the Equity Plan shall automatically vest in full upon the CoC Qualifying Termination.

 

(iii)                               Disability.  If the Executive’s employment under this Agreement terminates due to a disability pursuant to Section 2c, either before or after a Change of Control, the Executive shall be entitled to the same payments and benefits set forth under Section 4a(i) above.

 

(iv)                              No Duplication of Benefits.  Notwithstanding anything to the contrary, the Executive shall be eligible to receive payments under subsection (i), (ii), or (iii) of this Section 4a (and, for the avoidance of doubt, shall not be eligible to receive payments under more than one such subsection).  Additionally, the Executive shall not be eligible to participate in the Company’s Change of Control Severance Plan, or any successor plan.

 

b.                                      Execution of Release.  The Executive shall not be entitled to any payments or benefits under Section 4a unless the Executive executes and does not revoke a Release and Agreement (the “Release”), as drafted by the Company at the time of the Executive’s termination of employment, including, but not limited to:

 

(i)                                     an unconditional release of all rights to any claims, charges, complaints, or grievances, known or unknown to the Executive, against the Company or its affiliates or assigns, through the date of the Executive’s termination from employment other than post termination payments and benefits pursuant to this Agreement;

 

(ii)                                  a representation and warranty that the Executive has not filed or assigned any claims, charges, complaints, or grievances against the Company or its affiliates, or assigns;

 

(iii)                               an agreement not to use, disclose, or make copies of any confidential information of the Company, as well as to return any such confidential information and property to the Company upon execution of the Release; and

 

(iv)                              an agreement to indemnify the Company, or its affiliates or assigns, in the event that the Executive breaches any portion of the Agreement or Release.

 

c.                                       No Admission.  The Executive acknowledges such a Release shall not be construed as an admission by the Company or any other releasee of any wrongdoing whatsoever against the Executive, and all of the releasees specifically deny any such wrongdoing.

 

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d.                                      Definition of Change of Control.  As used in this Agreement, the term “Change of Control” means:

 

(i)                                     any merger or consolidation in which voting securities of the Company possessing more than 50% of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from the person holding those securities immediately prior to such transaction and the composition of the Board following such transaction is such that the directors of the Company prior to the transaction constitute less than 50% of the Board membership following the transaction;

 

(ii)                                  any acquisition, directly or indirectly, by a person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership of voting securities of the Company possessing more than 50% of the total combined voting power of the Company’s outstanding securities; provided, however, that, no Change of Control shall be deemed to occur by reason of the acquisition of shares of the Company’s capital stock by an investor or group of investors in the Company in a capital-raising transaction; or

 

(iii)                               any sale, transfer, exclusive worldwide license or other disposition of all or substantially all of the assets of the Company.

 

e.                                       Parachute Provisions.  In the event the Company determines in good faith that any payments or benefits (whether made or provided pursuant to this Agreement or otherwise) (“Total Payments”) provided to the Executive would otherwise exceed the amount (the “Safe Harbor Amount”) that could be received by the Executive without the imposition of an excise tax under section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), then the Total Payments shall be reduced to the extent, and only to the extent, necessary to assure that their aggregate present value, as determined in accordance the applicable provisions of section 280G of the Code and the regulations thereunder, does not exceed the greater of the following dollar amounts: (i) the Safe Harbor Amount, or (ii) the greatest after-tax amount payable to the Executive after taking into account any excise tax imposed under section 4999 of the Code on the Total Payments.  The Company shall pay all of the fees, including legal and accounting fees, associated with calculating the amounts set forth in this subsection 4e.

 

SECTION 5.        CONFIDENTIALITY AND INVENTIONS

 

a.                                      Confidential Information.  Confidential Information means trade secrets, know-how, and other information relating to the Company’s business and not generally available to the public, which is disclosed to the Executive or with which the Executive becomes familiar during the Executive’s term of employment with the Company.  Confidential Information includes information relating to the Company’s business practices and prospective business interests, products, processes, equipment, manufacturing operations, marketing programs, research, product development, and engineering.  From the date of this Agreement and during or after the Executive’s term of employment, unless the Executive receives the Company’s written consent or except as permitted by Section 5(e), the Executive will not disclose, use, disseminate, lecture upon, or publish any part of the Company’s Confidential Information, whether or not developed by the Executive.  Also, the Executive will have the same obligations with respect to the secret

 

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or confidential information of any other company or individual (including the Company’s parent company), to which the Executive gains access in connection with the Executive’s employment.  The Executive agrees that the Executive will not disclose to the Company or induce the Company to use any secret confidential information of others, including former employers, with whom the Executive has obligations of secrecy.  The Executive expressly agrees to be solely and individually liable to any previous employers for any breach of the Executive’s obligations to those previous employers, contractual or otherwise.

 

b.                                      Inventions.  Inventions means discoveries, improvements, and ideas, whether patentable or not, made by the Executive solely or jointly with others, that relate to the business of the Company, including any of its products, processes, equipment, manufacturing operations, marketing programs, research, product development, or engineering activities.  The Executive agrees that the Executive will promptly disclose to the Company all Inventions (including those in the formative stages) that relate to the business of the Company made during the Executive’s term of employment whether or not during the Executive’s normal working hours.  The Executive agrees that the Executive will also promptly disclose to the Company any Inventions that relate to the business of the Company made during the period of one (1) year after the termination of the term of the Executive’s employment that relate to or constitute an improvement upon the Company’s Confidential Information.  The Executive shall keep and maintain written records concerning such Inventions and make these available to the Company at all times.  The Company will hold such written records with the same degree of care as it does with other business documents of a confidential nature.

 

c.                                       Assignment of Inventions.  Inventions made in accordance with this Section 5 shall be the sole and exclusive property of the Company, except that the Executive shall retain full rights and title to any Inventions to which all of the following conditions apply:

 

(i)                                     no equipment, supplies, facilities, or Confidential Information of the Company was used in the Invention’s development;

 

(ii)                                  the Invention was developed entirely on the Executive’s own time;

 

(iii)                               the Invention does not relate to the Company’s business or to the Company’s actual or clearly anticipated research and development program; and

 

(iv)                              the Invention does not result from any work performed by the Executive for the Company.

 

During and after the Executive’s term of employment, the Executive or the Executive’s legal representative shall, at the Company’s request and expense, execute domestic and foreign patent applications and assignments to the Company concerning Inventions owned by the Company under this section, and take all other actions as the Company may request to perfect and maintain the Company’s rights in same.

 

d.                                      Documents.  The Executive acknowledges that all originals and copies of drawings, blueprints, manuals, reports, notebooks, computer programs, photographs and any other recorded, written, or printed matter relating to research, manufacturing operations, or the

 

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business affairs of the Company made or received by the Executive during the Executive’s employment are the property of the Company.  The rights comprised in the copyright of any of the above documents made by the Executive during the Executive’s employment shall be owned exclusively by the Company.  The Executive agrees to promptly surrender such property at the request of the Company and will not retain such property or copies thereof after termination of the term of the Executive’s employment.  The Executive agrees to similarly return all other property of the Company such as equipment, samples, and models.

 

e.                                       Permitted Conduct.  Nothing in this Agreement, including in this Section 5, restricts or prohibits the Executive or the Executive’s counsel from initiating communications directly with, responding to any inquiry from, volunteering information to, or providing testimony before a self-regulatory authority or a governmental, law enforcement, or regulatory authority, including the U.S. Equal Employment Opportunity Commission (“EEOC”), the Department of Labor (“DOL”), the National Labor Relations Board (“NLRB”), the Department of Justice (“DOJ”), the Securities and Exchange Commission (“SEC”), FINRA, the Congress, and any agency Inspector General (collectively, the “Regulators”), from participating in any reporting of, investigation into, or proceeding regarding suspected violations of law, or from making other disclosures that are protected under the whistleblower provisions of state or federal law or regulation.  The Executive does not need the prior authorization of the Company to engage in such communications with the Regulators, respond to such inquiries from the Regulators, provide Confidential Information or documents containing Confidential Information to the Regulators, or make any such reports or disclosures to the Regulators.  The Executive is not required to notify the Company that the Executive has engaged in such communications with the Regulators.  The Executive recognizes and agrees that, in connection with any such activity outlined above, the Executive must inform the Regulators that the information the Executive is providing is confidential.  Despite the foregoing, the Executive is not permitted to reveal to any third-party, including any governmental, law enforcement, or regulatory authority, information the Executive came to learn during the course of the Executive’s employment with the Company that is protected from disclosure by any applicable privilege, including but not limited to the attorney-client privilege and/or attorney work product doctrine.  The Company does not waive any applicable privileges or the right to continue to protect its privileged attorney-client information, attorney work product, and other privileged information.

 

SECTION 6.        RESTRICTIVE COVENANT

 

From and after the date of this Agreement and through the       month period after the termination of the term of the Executive’s employment hereunder (the “Restricted Period”), the Executive shall not engage in any “competitive business.”  As used in this Agreement, a “competitive business” shall mean any business that is engaged in the research, development, manufacturing, distribution, licensing or sale of technology, products, or services relating to hormonal contraception; provided, however, that a “competitive business” shall not include the acquiring, surviving, or licensing company in a Change of Control transaction if the Executive shall become an employee of or a consultant to such company with the knowledge and consent of the Company.

 

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SECTION 7.        NON-SOLICITATION

 

a.                                      Non-Solicitation of Customers.  During the Restricted Period, the Executive shall not solicit, entice or induce any person, firm or company with which or for which, at any time during the eleven (11) months immediately preceding the termination, the Executive has had personal dealings, contact or responsibility as a customer or client of the Executive, and in respect of whom the Executive has had access to confidential information to become in competition with the Executive or to become a client or customer of the Executive or any other person, firm, company, or association with whom the Executive has an interest, and the Executive shall not approach any such person, firm, company, or association for any such purpose or authorize or knowingly approve the taking of such actions by any other person or entity.

 

b.                                      Non-Solicitation of Employees.  During the Restricted Period, the Executive shall not solicit, entice, or induce any person, whom at any time during the eleven (11) months immediately preceding the termination, was and remains an employee of the Company in a senior managerial capacity, or as a highly skilled employee with access to and responsibility for any confidential information, to become employed or engaged by the Executive or any person, firm, company, or association in which the Executive has an interest, and the Executive shall not approach any such person for any such purpose or authorize or knowingly approve the taking of such actions by any other person or entity.

 

SECTION 8.        REPRESENTATION AND WARRANTY BY THE EXECUTIVE

 

The Executive hereby represents and warrants to the Company, the same being part of the essence of this Agreement that, as of the date of this Agreement, the Executive is not a party to any agreement, contract, or understanding, and that no facts or circumstances exist, that would in any way restrict or prohibit the Executive in any material way from undertaking or performing any of the Executive’s obligations under this Agreement.  The foregoing representation and warranty shall remain in effect throughout the term of the Executive’s employment hereunder.

 

SECTION 9.        REMEDIES

 

a.                                      Equitable Relief.  The parties acknowledge and agree that irreparable harm would result in the event of a breach or threat of a breach by the Executive of Section 5, 6, 7, or 10 or the making of any untrue representation or warranty by the Executive in this Agreement.  Therefore, in such an event, and notwithstanding any other provision of this Agreement:

 

(i)                                     the Company shall be entitled to a restraining order, order of specific performance, or other injunctive relief, without showing actual damage and without bond or other security; and

 

(ii)                                  the Company’s obligation to make any payment or provide any benefit under this Agreement, including without limitation any severance benefits, shall immediately cease.

 

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b.                                      Remedies Not Exclusive.  The Company’s remedies under this Section 9 are not exclusive, and shall not prejudice or prohibit any other rights or remedies under this Agreement or otherwise.  To the extent required to be enforceable by applicable law, the cessation of the Company’s obligation to make payments or continue benefits under this Section 9 shall be deemed to be in the nature of liquidated damages.

 

SECTION 10.      RETURN OF COMPANY PROPERTY

 

Immediately upon termination of the term of the Executive’s employment or upon the Company’s earlier request, the Executive shall return to the Company all Confidential Information and other items described in Section 5 and all originals and copies of any other property or information owned by the Company or relating to its business, that the Executive has in the Executive’s possession or under the Executive’s control, including all credit cards, papers, books, equipment, files, and samples.  To the extent that the Executive made use of the Executive’s own personal computing device(s) (e.g., PDA, laptop, iPad, thumbdrive, etc.) during and in connection with the term of the Executive’s employment, the Executive agrees to deliver such personal computing device(s) to the Company for review and permit the Company to delete all of the Company’s Confidential Information from such personal computing device(s), and/or permit the Company to remotely delete all of the Company’s Confidential Information from such personal computing device(s).

 

SECTION 11.      MISCELLANEOUS PROVISIONS

 

a.                                      Notices.  Unless otherwise agreed in writing by a party entitled to notice, all notices required by this Agreement shall be in writing and shall be deemed given when physically delivered to and acknowledged by receipt by a party or its duly authorized attorney or legal representative, or when deposited postage paid, registered or certified mail, addressed to the party at its principal business or residence as set forth in the Company’s records or as known to or reasonably ascertainable by the party required to give notice.

 

b.                                      General Rules of Construction.  The parties have participated jointly in negotiating and drafting of this Agreement.  If a question concerning intent or interpretation arises, no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of authorship.  Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all related rules and regulations unless the context requires otherwise.

 

c.                                       Meaning of Certain Words.  The word “including” shall mean “including without limitation.”

 

d.                                      Waivers.  No assent, express or implied, by any party to any breach or default under this Agreement shall constitute a waiver of or assent to any breach or default of any other provision of this Agreement or any breach or default of the same provision on any other occasion.

 

e.                                       Binding Effect; No Third Party Beneficiaries.  This Agreement shall bind and benefit the parties and their respective heirs, devisees, beneficiaries, grantees, donees, legal

 

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representatives, successors, and assigns.  Nothing in this Agreement shall be construed to confer any rights or benefits on third party beneficiaries.

 

f.                                        Assignment.  Neither party may assign this Agreement or any interest herein without the other’s prior written consent; provided that the Company may assign its interest to another entity that it controls, is controlled by, or is under common control with or to a successor in interest upon a Change of Control.

 

g.                                      Captions.  Titles or captions contained in this Agreement are for convenience and are not intended to affect the substantive meaning of any provision.

 

h.                                      Severability.  If any provision of this Agreement, including the Confidential Information provision of this Agreement, is found in binding arbitration or by a court or other tribunal of competent jurisdiction to be invalid or unenforceable, the attempt shall first be made to read that provision in such a way as to make it valid and enforceable in light of the parties’ apparent intent as evidenced by this Agreement.  If such a reading is impossible, the tribunal having jurisdiction may revise the provision in any reasonable manner, to the extent necessary to make it binding and enforceable.  If no such revision is possible, the offending provision shall be deemed stricken from the Agreement, and every other provision shall remain in full force and effect.

 

i.                                         Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

j.                                         Survival.  The provisions of this Agreement that by their terms are intended to continue beyond the termination of the term of the Executive’s employment shall survive such termination of employment and shall continue in effect for the respective periods therein provided or contemplated.

 

k.                                      Tax Withholding.  All payments under this Agreement shall be made subject to applicable tax withholding, and the Company shall withhold from any payments under this Agreement all federal, state, and local taxes as the Company is required to withhold pursuant to any law or governmental rule or regulation.  The Executive shall be solely responsible for all federal, state, and local taxes due with respect to any payment received under this Agreement or otherwise in connection with the Executive’s employment.

 

l.                                         Section 409A.  This Agreement is intended to comply with the requirements of Section 409A of the Code and the regulations thereunder (“Section 409A”), and shall in all respects be administered in accordance with Section 409A.  Notwithstanding anything in this Agreement to the contrary, distributions may only be made under this Agreement upon an event and in a manner permitted by Section 409A or an applicable exemption.  If the payment of severance benefits would otherwise be accelerated under this Agreement and paid in a lump sum upon a Change of Control, and such Change of Control is not a “change in control event” under Section 409A, such severance payments shall not be accelerated and shall instead be paid on the regularly scheduled payment date.  Severance benefits provided under this Agreement are intended to be exempt from Section 409A under the “separation pay exception” to the maximum

 

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extent applicable.  Further, any payments that qualify for the “short-term deferral” exception or another exception under Section 409A shall be paid under the applicable exception.  All separation payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” under Section 409A.  For purposes of Section 409A, each payment hereunder shall be treated as a separate payment and the right to a series of payments under this Agreement shall be treated as a right to a series of separate payments.  With respect to payments that are subject to Section 409A, in no event may the Executive, directly or indirectly, designate the calendar year of a payment, and if a payment that is subject to execution of a Release Agreement could be made in more than one taxable year, payment will be made in the later taxable year.  If and to the extent that reimbursements or other in-kind benefits under this Agreement constitute “nonqualified deferred compensation” for purposes of Section 409A, such reimbursements or other in-kind benefits shall be made or provided in accordance with the requirements of Section 409A.  Notwithstanding the foregoing, although the Company has made every effort to ensure that the payments and benefits provided under this Agreement comply with Section 409A, in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

 

m.                                  Governing Law.  This Agreement shall be governed by and construed under the laws of the United States and the State of New Jersey.

 

n.                                      Board Information.  The Executive shall at all times promptly give to the Board (in writing if so requested) all such information as it may require in connection with matters relating to the Executive’s employment or with the Company or the business of the Company.

 

o.                                      Effective Date.  This Agreement shall be effective immediately on the date duly executed by both parties.

 

p.                                      Full Agreement; Modification.  This Agreement supersedes the Employment Agreement/Employment Offer letter agreement dated as of                       between the Executive and the Company, as amended, and all other consulting and employment arrangements between the Executive and the Company.  This Agreement constitutes the entire agreement of the parties concerning its subject matter and supersedes all other oral or written understandings, discussions, and agreements, and may be modified only in a writing signed by both parties.  The parties acknowledge that they have read and fully understand the contents of this Agreement and execute it after having an opportunity to consult with legal counsel.

 

q.                                      Counterparts; Delivery.  This Agreement may be executed by the parties in separate counterparts and may be delivered by either or both parties by facsimile or electronic transmission.

 

(Signature page follows.)

 

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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties have executed this Agreement to be effective as of the date specified above.

 

	
 
    	
 
    	
AGILE THERAPEUTICS,   INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
Name:   [INSERT NAME OF EXECUTIVE]
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

14

 

SCHEDULE A

 

Permitted Activities

 

	
Description
   of Activity
    	
 
    	
Nature of Work
    	
 
    	
Hours Per
   Week
    	
 
    	
Anticipated
   Compensation
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

A-1

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