Document:

Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of April 12, 2016, by and between AGILE THERAPEUTICS, INC., a Delaware corporation (the “Company”), and Elizabeth Garner, M.D. (the “Executive”), collectively referred to as the “parties.”

 

Recitals:

 

WHEREAS, the Company previously provided an Employment Offer letter to the Executive dated December 9, 2013 (the “Offer Letter”) and entered into an Employee Non-Disclosure, Invention Assignment, Non-Solicitation and Non-Compete Agreement executed by the Executive as of January 6, 2014 (the “Restrictive Covenant Agreement”) (the Offer Letter and the Restrictive Covenant Agreement collectively, the “Prior Agreements”); and

 

WHEREAS, 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; and

 

WHEREAS, this Agreement shall supersede and replace the Prior Agreements which shall be of no further force or effect.

 

NOW, THEREFORE, 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 the Chief Medical Officer and Senior VP of Clinical Development for the Company reporting to the President and Chief Executive Officer 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.

 

 

SECTION 2.        TERMINATION OF EMPLOYMENT

 

a.                                      Term.  The term of this Agreement shall commence on the date hereof and shall continue until the Executive’s employment with the Company is 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 written 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.

 

2

 

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 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 $360,500 (the “Base Salary”), payable in accordance with the Company’s payroll practices in effect from time to time.

 

3

 

b.                                      Bonus.  The Executive shall be eligible to receive an annual bonus (“Annual Bonus”).  The Executive’s Annual Bonus Target shall be 35% 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 Annual 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 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.  The Company will pay the Executive a commuting allowance in the amount of $5,000 per calendar quarter, which shall be paid within 60 days after the end of each calendar quarter and prorated for any portion of a quarter.  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 term life insurance in an amount equal to two times the sum of the Executive’s Base Salary plus target Annual Bonus, up to $1,000,000, 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,

 

4

 

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.

 

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 twelve (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 six (6) 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

 

5

 

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.

 

(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 twelve (12) months instead of six (6) 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

 

6

 

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.

 

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

 

7

 

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 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.

 

8

 

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 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

 

9

 

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

 

During 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.  For purposes of this Agreement, the term “Restricted Period” shall mean the period from and after the date of this Agreement and through the six (6) month period after the termination of the term of the Executive’s employment hereunder, provided that the Restricted Period shall be for a period of twelve (12) months (instead of six (6) months) after the termination of the term of the Executive’s employment hereunder if the Executive has a CoC Qualifying Termination.

 

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 twelve (12) 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 twelve (12) 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

 

10

 

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.

 

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

 

11

 

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 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

 

12

 

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 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,

 

13

 

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 Prior Agreements 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.)

 

14

 

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.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/   Elizabeth Garner
    	
 
    	
By:
    	
/s/   Al Altomari
    
	
Name:   Elizabeth Garner, M.D.
    	
 
    	
 
    	
Name:   Al Altomari
    
	
 
    	
 
    	
 
    	
Title:   Chief Executive Officer
    

 

15Exhibit 10.1

 

EXECUTION COPY

 

THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

This Third Amended and Restated Employment Agreement (the “Agreement”) is entered into on May 6, 2016, and effective as of July 1, 2016 (the “Effective Date”), by and between William A. (“Kip”) Tindell, III (the “Chairman”) and The Container Store Group, Inc. (formerly known as TCS Holdings, Inc.), a Delaware corporation (“Parent”), and any of its subsidiaries and affiliates as may employ the Chairman from time to time (collectively, and together with any successor thereto, the “Company”).

 

RECITALS

 

WHEREAS, the Company and the Chairman are currently parties to that certain Second Amended and Restated Employment Agreement, dated as of September 13, 2013 (the “Prior Agreement”);

 

WHEREAS, the Company desires to assure itself of the continued services of the Chairman by engaging the Chairman to perform services on the terms and subject to the conditions set out in this Agreement;

 

WHEREAS, the Chairman desires to provide services to the Company on the terms and subject to the conditions set out in this Agreement; and

 

WHEREAS, the Company and the Chairman desire to enter into this Agreement and this Agreement shall supersede the Prior Agreement;

 

NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below, the parties hereto, intending to be legally bound hereby, agree as follows:

 

ARTICLE I.
 DEFINED TERMS

 

1.1                               Previously Defined Terms.  As used herein, each term defined in the first paragraph and recitals of this Agreement shall have the meaning set forth above.

 

1.2                               Definitions.  As used herein, the following terms shall have the following respective meanings:

 

(a)                                 “Affiliate” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person. As used in the preceding sentence, “control” has the meaning given such term under Rule 405 of the Securities Act of 1933, as amended.

 

(b)                                 “Annual Base Salary” has the meaning set forth in Section 3.1.

 

(c)                                  “Annual Bonus” has the meaning set forth in Section 3.2.

 

 

(d)                                 “Board” means the Board of Directors of the Parent.

 

(e)                                  The Company shall have “Cause” to terminate the Chairman’s employment hereunder upon the occurrence of any one or more of the following events:  (i) a material breach by the Chairman of any material provision of this Agreement which is not corrected by the Chairman within thirty (30) days after receipt of written notice from the Company specifying such breach, to the extent such breach is capable of cure; (ii) the Chairman’s conviction of, or entry by the Chairman of a guilty or nolo contendere plea to, the commission of a felony or a crime involving moral turpitude, other than vicarious liability or traffic violations; (iii) the Chairman’s intentional breach of Company policies constituting theft or embezzlement from the Company or any of its customers or suppliers; or (iv) the Chairman’s gross neglect or intentional misconduct in connection with the performance of any material portion of the Chairman’s duties (which, in the case of the Chairman’s gross neglect, is not corrected by the Chairman within thirty (30) days after receipt of written notice from the Company specifying such neglect, to the extent that such neglect is capable of cure).

 

(f)                                   “Compensation Committee” means the Compensation Committee of the Board.

 

(g)                                  “Competitive Business” has the meaning set forth in Section 6.1.

 

(h)                                 “Continuation Period” has the meaning set forth in Section 5.2.

 

(i)                                     “Date of Termination” means: (i) if the Chairman’s employment is terminated by his death, the date of his death; (ii) if the Chairman’s employment is terminated pursuant to Sections 4.1(b)—(f), either the date indicated in the Notice of Termination or the date specified by the Company pursuant to Section 4.2, whichever is earlier; or (iii) if the Chairman’s employment is terminated due to the expiration of the Term under Section 2.2, the date of expiration of the Term.

 

(j)                                    “Disability” means the Chairman’s incapacity to perform the essential duties of his position for any six (6) months (whether or not consecutive) during any twelve (12) month period due to the Chairman’s physical or mental illness, as determined by a physician mutually acceptable to, and agreed to in good faith by, a majority of the Board and the Chairman.

 

(k)                                 “Fiscal Year” means the fiscal year of the Company, as in effect from time to time.

 

(l)                                     The Chairman shall have “Good Reason” to resign from his employment hereunder upon the occurrence of any one or more of the following events without his prior written consent:  (i) an adverse change in the Chairman’s title or reporting line or the Chairman’s material duties, authorities or responsibilities; (ii) the assignment to the Chairman of duties materially inconsistent with his position; (iii) a material breach by the Company of any material provision of this Agreement; (iv) a reduction of the Chairman’s Annual Base Salary or benefits hereunder or Annual Bonus opportunity; (v) failure of the Company to pay any portion of the Annual Base Salary or Annual Bonus otherwise payable to the Chairman or to provide the benefits set forth in Section 3.4; or (vi) the Company’s requiring the Chairman to be headquartered at any office or location more than fifty (50) miles from Coppell, Texas, except

 

2

 

for required travel on the Company’s business to an extent substantially consistent with the Chairman’s present business travel obligations; provided, however, that notwithstanding any of the foregoing the Chairman may not resign from his employment for Good Reason unless: (A) the Chairman provides the Company with at least sixty (60) days prior written Notice of Termination of his intent to resign for Good Reason and (B) the Company has not corrected the circumstances constituting Good Reason prior to the Date of Termination specified in the Notice of Termination; provided that such Notice of Termination may not be given later than ninety (90) days after the initial occurrence of the event constituting Good Reason.

 

(m)                             “Health Gross-Up Payment” means an additional amount equal to the federal, state and local income and payroll taxes that the Chairman incurs on each monthly Health Payment.

 

(n)                                 “Health Payment” means the monthly premium amount paid by the Chairman pursuant to Section 5.2.

 

(o)                                 “Notice of Termination” has the meaning set forth in Section 4.2.

 

(p)                                 “Performance Target” has the meaning set forth in Section 3.2.

 

(q)                                 “Person” means an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

 

(r)                                    “Proprietary Information” has the meaning set forth in Section 7.1.

 

(s)                                   “Restricted Period” has the meaning set forth in Section 6.1.

 

(t)                                    “Section 409A” means Section 409A of the United States Internal Revenue Code of 1986, as amended, and the Department of Treasury regulations and other interpretive guidance issued with respect thereto.

 

(u)                                 “Term” has the meaning set forth in Section 2.2.

 

ARTICLE II.
 EMPLOYMENT

 

2.1                               Employment and Directorship of Chairman.  During the Term, the Chairman shall be an employee of the Company, a director on the Board and chairman of the Board.

 

2.2                               Term.  The term of employment under this Agreement (the “Term”) shall be for the period beginning on the Effective Date and ending on the date of the annual meeting of the  Company’s shareholders in 2019, unless earlier terminated as provided in Section 4.1.

 

2.3                             Position and Duties.  The Chairman shall serve as the Company’s Chairman with such responsibilities, duties and authority as may from time to time be agreed upon between the Chairman and the Board.  The Chairman shall remain on the board of directors of Elfa International AB for so long as he is on the Board.  The Chairman’s duties, responsibilities and

 

3

 

authority may include services for one or more other subsidiaries or Affiliates of the Company.  The Chairman shall report directly to the Board.  The Chairman agrees to observe and comply with the Company’s rules and policies, as the same may be adopted and amended from time to time. The Chairman shall be entitled to serve on civic, charitable, educational, religious and/or not-for-profit boards to the extent such activities do not materially interfere with the performance of the Chairman’s duties and responsibilities hereunder and subject to Article VI.

 

ARTICLE III.
 COMPENSATION AND RELATED MATTERS

 

3.1                               Annual Base Salary.  In Fiscal Year 2016, the Chairman shall receive an annual base salary (the “Annual Base Salary”) at the rate of $675,000 per annum.  Thereafter during the Term, the Annual Base Salary shall be $350,000 per annum.  The Annual Base Salary shall be paid in accordance with the customary payroll practices of the Company.

 

3.2                             Annual Bonus.  With respect to the Company’s 2016 Fiscal Year, the Chairman shall be eligible to receive an annual cash bonus (the “Annual Bonus”) based upon Company annual EBITDA and/or other financial and non-financial performance targets (the “Performance Targets”), established by the Board; provided that if any such Performance Target is based on Company annual EBITDA, EBITDA shall be determined in the same manner, and with the same adjustments, as Consolidated EBITDA (as defined in the Credit Agreement, entered into as of April 6, 2012, among the Company, the Guarantors (as defined therein) party thereto, the Lenders (as defined therein), JPMorgan Chase Bank, N.A., and the other parties thereto, as amended from time to time (the “Credit Agreement”)), is determined for purposes of the Credit Agreement.  With respect to Fiscal Year 2016, the Performance Targets for the Annual Bonus shall be total consolidated annual sales (25%), Company consolidated adjusted annual EBITDA (50%) and adjusted annual EBITDA determined on a store-by-store basis for stores that have been open for at least 12 months as of April 1, 2016 (25%), subject to the scale previously agreed between the parties hereto.  The target Annual Bonus shall be 20% of the Annual Base Salary and the maximum Annual Bonus shall be 40% of the Annual Base Salary.  The amount of the Annual Bonus shall be based upon the Company’s attainment of the Performance Targets, as determined by the Board (or any authorized committee of the Board).   If the percentile level of achievement of a Performance Target is between two levels, the amount earned shall be determined on the basis of a straight-line interpolation between such levels. Each such Annual Bonus shall be payable within thirty (30) days following the completion of the audited financials for the Fiscal Year to which such Annual Bonus relates, but in any event within the period required by Section 409A such that it qualifies as a “short-term deferral” pursuant to Section 1.409A-1(b)(4) of the Department of Treasury Regulations.  Notwithstanding the foregoing, except as set forth in Article V, no bonus shall be payable with respect to any Fiscal Year unless the Chairman remains continuously employed with the Company during the period beginning on the Effective Date and ending on the last day of such Fiscal Year.  To the extent that the Company becomes subject to Section 162(m) of the Code (and all applicable post-initial public offering transition periods have expired with respect to applicable Company plans), the Annual Bonus for any applicable Fiscal Year will be payable pursuant to a “qualified performance-based compensation” bonus plan that has been approved by the stockholders of the Company in accordance with the provisions for such approval under Section 162(m) of the Code and the regulations promulgated thereunder, and on the basis of the Chairman’s or the Company’s

 

4

 

attainment of objective financial or other operating criteria established by the Compensation Committee in its sole good faith discretion and in accordance with Section 162(m) of the Code and the regulations promulgated thereunder.  The Chairman shall not be eligible to receive any annual cash bonus in the Company’s 2017 or 2018 Fiscal Year.

 

3.3                               Annual Equity-based Compensation.  During the Term, the Company shall grant to the Chairman one or more equity-based awards in the same amount and on the same general terms and conditions as provided generally to non-employee directors in the Non-Employee Director Compensation Policy (or any successor thereto) as in effect from time to time (the “Non-Employee Director Compensation Policy”) or as otherwise are granted generally to the Company’s non-employee directors.

 

3.4                               Benefits.  During the Term, the Chairman shall be entitled to the following benefits: (a) participation in the Company’s employee health and welfare benefit plans and programs and arrangements which are applicable to the Company’s senior executives as may be adopted by the Company from time to time, subject to the terms and conditions of the applicable employee benefit plan, program or arrangement, and (b) indemnification and/or directors and officers liability insurance coverage insuring the Chairman against insurable events which occur while the Chairman is a director or executive officer of the Company, on terms and conditions that are comparable to those then provided to other current or former directors or executive officers of the Company.

 

3.5                                   Vacation and Holidays.  During the Term, the Chairman shall be entitled to paid vacation and holidays in accordance with the Company’s policies applicable to senior executives of the Company, provided that the Chairman shall be entitled to paid vacation of no less than four (4) weeks for each full Fiscal Year during the Term.  Any vacation shall be taken at the reasonable and mutual convenience of the Company and the Chairman.

 

3.6                               Expenses.  During the Term, the Company shall reimburse the Chairman for all reasonable travel and other business expenses incurred by him in the performance of his duties to the Company in accordance with the Company’s expense reimbursement policy.

 

ARTICLE IV.
 TERMINATION

 

4.1                               Circumstances.  During the Term, the Chairman’s employment hereunder may be terminated by the Company or the Chairman, as applicable, without any breach of this Agreement only under the following circumstances:

 

(a)                                 Death.  The Chairman’s employment hereunder shall terminate upon his death.

 

(b)                                 Disability.  If the Chairman has incurred a Disability, the Company may terminate the Chairman’s employment due thereto.

 

(c)                                  Termination for Cause.  The Company may terminate the Chairman’s employment for Cause.

 

5

 

(d)                                 Termination without Cause.  The Company may terminate the Chairman’s employment without Cause.

 

(e)                                  Resignation for Good Reason.  The Chairman may resign from his employment for Good Reason.

 

(f)                                   Resignation without Good Reason.  The Chairman may resign from his employment without Good Reason.

 

4.2                               Notice of Termination.  Any termination of the Chairman’s employment by the Company or by the Chairman pursuant to Section 4.1 (other than termination due to death pursuant to Section 4.1(a)) shall be communicated by a written notice to the other party hereto.  Such written notice (a “Notice of Termination”) shall: (a) indicate the specific termination provision in this Agreement relied upon; and (b) specify a Date of Termination which, (i) if submitted by the Chairman, shall be at least sixty (60) days, but no more than six (6) months, following the date of such notice and (ii) if submitted by the Company in connection with a termination of employment by the Company without Cause, shall be at least thirty (30) days following the date of such notice. Notwithstanding the foregoing, the Company may, in its sole discretion, change the Chairman’s proposed Date of Termination to any date following the Company’s receipt of the Chairman’s Notice of Termination and prior to the date specified in such Notice of Termination.  A Notice of Termination submitted by the Company in connection with a termination of employment by the Company for Cause may provide for a Date of Termination on the date the Chairman receives the Notice of Termination, or any date thereafter chosen by the Company in its sole discretion; provided that, notwithstanding the foregoing, any Notice of Termination submitted by the Company in connection with a termination of the Chairman’s employment for Cause within the meaning of Section 1.2(e)(i) (due to the Chairman’s material breach of any material provision of this Agreement) or Section 1.2(e)(iv) (due to the Chairman’s gross neglect in connection with the performance of any material portion of the Chairman’s duties) shall indicate a Date of Termination that is at least thirty (30) days following the date of such notice, provided that such breach is capable of cure.  The failure by the Company or the Chairman to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause, Good Reason or Disability shall not waive any right of the Company or the Chairman hereunder or preclude the Company or the Chairman from asserting such fact or circumstance in enforcing the Company’s or the Chairman’s rights hereunder; provided that a Notice of Termination submitted by the Chairman of his intent to resign for Good Reason may not be given later than 90 days after the initial occurrence of the event constituting Good Reason.

 

4.3                               Company Obligations upon Termination.  Upon termination of the Chairman’s employment, the Chairman (or, in the event of the Chairman’s death, such person as the Chairman shall designate prior to the Chairman’s death in a written notice to the Company or, if no such person is designated, the Chairman’s estate) shall be entitled to receive: (a) any amount of the Annual Base Salary through the Date of Termination not theretofore paid; (b) any reimbursement of expenses incurred through the Date of Termination owing to the Chairman under Section 3.6; (c) any accrued but unused vacation pay owed to the Chairman pursuant to Section 3.5; and (d) any amount arising from the Chairman’s participation in, or benefits under, any employee benefit plans, programs or arrangements under Section 3.4, which amounts shall

 

6

 

be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (including, if applicable, any death benefits).   Any equity-based awards the Chairman holds on the Date of Termination shall be paid at the times provided in the applicable plan or award agreement.  Except as otherwise set forth in Sections 5.1 and 5.2 below, the payments and benefits described in this Section 4.3 shall be the only payments and benefits payable in the event of the Chairman’s termination of employment for any reason (other than, for the avoidance of doubt, any payments or benefits to which the Chairman is entitled by virtue of his being a stockholder of the Company).  The amounts in subsections (a)-(c) above shall be paid within sixty (60) days after the Date of Termination or, if earlier, on or before the time required by law, but in any event within the period required by Section 409A such that it qualifies as a “short-term deferral” pursuant to Section 1.409A-1(b)(4) of the Department of Treasury Regulations.

 

4.4                               Effect of Termination on Board Service.  If the Chairman’s employment is terminated pursuant to Section 4.1(c), the Chairman shall resign from the Board.  If the Chairman’s employment is terminated for any other reason, the Chairman shall resign from the Board if requested by the Board.

 

ARTICLE V.
 SEVERANCE PAYMENTS

 

5.1                             Termination due to Death.  If the Chairman’s employment is terminated pursuant to Section 4.1(a) due to the Chairman’s death, then, notwithstanding the penultimate sentence of Section 3.2, in addition to the amounts set forth in Section 4.3, (a) all unvested equity awards held by the Chairman immediately prior to the Date of Termination shall, be treated as provided in the Non-Employee Director Compensation Policy, and (b) the Company shall pay to the Chairman (or to such person as the Chairman shall designate prior to the Chairman’s death in a written notice to the Company or, if no such person is designated, the Chairman’s estate) a prorated amount of the Annual Bonus for the Fiscal Year in which the Date of Termination occurs that the Chairman would have received to the extent he remained employed through the end of the Fiscal Year in which the Date of Termination occurred based on the Company’s actual attainment of the applicable Performance Targets (prorated based on the number days that the Chairman is employed by the Company during the Fiscal Year in which the Date of Termination occurs), payable at the same time such Annual Bonus would have been paid had the Chairman remained employed through the end of the Fiscal Year in which the Date of Termination occurs but in any event within the period required by Section 409A such that it qualifies as a “short-term deferral” pursuant to Section 1.409A-1(b)(4) of the Department of Treasury Regulations (but in no event earlier than January 1, or later than December 31, of the calendar year immediately following the calendar year in which the Date of Termination occurs).

 

7

 

5.2                               Termination without Cause; Resignation for Good Reason; Due to Disability. If (a) the Chairman’s employment is terminated by the Company without Cause pursuant to Section 4.1(d) or due to Disability pursuant to Section 4.1(b), or (b) the Chairman resigns from his employment for Good Reason pursuant to Section 4.1(e), then in addition to the amounts set forth in Section 4.3, (i) the Company shall pay the Chairman an amount equal to the Annual Base Salary as in effect immediately prior to the Date of Termination (but prior to any reduction that constitutes Good Reason), payable in equal installments in accordance with the Company’s payroll practices (disregarding, however, any past or future changes in the Company’s payroll practices that would result in an impermissible change in the timing of payments under this provision for purposes of Section 409A), during the one (1)-year period beginning on the first payroll date that follows the thirtieth (30th) day following the Date of Termination, (ii) all unvested equity awards held by the Chairman immediately prior to the Date of Termination shall be treated as provided in the Non-Employee Director Compensation Policy, and (iii) during the two (2)-year period beginning on the Date of Termination (such period, the “Continuation Period”), the Chairman and his eligible dependents, if applicable, shall be entitled to continued participation in the Company’s medical, health, disability and similar welfare benefit plans in which he and his eligible dependents, if applicable, were participating on the Date of Termination at the Company’s sole expense; provided that if such continued participation is not permitted under such plans, the Company shall provide to the Chairman and his eligible dependents, if applicable, substantially similar benefits during the Continuation Period; provided, further, that in order to receive such continued coverage, the Chairman shall be required to pay to the Company at the same time that premium payments are due for the month an amount equal to the full monthly premium payments required for such coverage. The Company shall reimburse to the Chairman monthly the Health Payment no later than the next payroll date of the Company that occurs after the date the premium for the month is paid by the Chairman.  In addition, on each date on which the monthly Health Payments are made, the Company shall pay to the Chairman the Health Gross-Up Payment.  The COBRA health continuation period under Section 4980B of the Code shall run concurrently with the period of continued health coverage following the termination date.  The Health Payment paid to the Chairman during the period of time during which the Chairman would be entitled to continuation coverage under the Company’s group health plan under COBRA is intended to qualify for the exception from deferred compensation as a medical benefit provided in accordance with the requirements of Section 1.409A-1(b)(9)(v)(B) of the Department of Treasury Regulations.  The Health Payment and the Health Gross-up Payment shall be reimbursed to the Chairman in a manner that complies with the requirements of Section 1.409A-3(i)(1)(iv) of the Department of Treasury Regulations.  If the Chairman dies after the Chairman becomes entitled to any payments pursuant to Section 4.3 or this Section 5.2, any remaining unpaid amounts shall be paid, at the time and in the manner such payments otherwise would have been paid to the Chairman, to such person as the Chairman shall designate in a written notice to the Company (or, if no such person is designated, to his estate)

 

5.3                               Section 409A.  Notwithstanding any provision to the contrary in this Agreement, no cash payments or other benefits described in Section 5.2 will be paid or made available to the Chairman unless the Chairman’s termination of employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations, and unless, on or prior to the thirtieth (30th) day following the Date of Termination, (a) the Chairman shall have executed a waiver and release of claims in the form attached as Exhibit A hereto, and (b) such release shall not have been revoked by the Chairman

 

8

 

prior to such thirtieth (30th) day.  Notwithstanding any provision to the contrary in this Agreement, if the Chairman is deemed at the time of his separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the termination benefits to which the Chairman is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, then such portion of the Chairman’s termination benefits shall not be provided to the Chairman prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Chairman’s “separation from service” with the Company (as such term is defined in the Department of Treasury Regulations issued under Section 409A of the Code) or (ii) the date of the Chairman’s death.  Upon the expiration of the applicable deferral period under Section 409A(a)(2)(B)(i) of the Code, all payments deferred pursuant to Section 5.2 shall be paid in a lump sum to the Chairman, and any remaining payments due under this Agreement shall be paid as otherwise provided herein.  For the avoidance of doubt, no payments or benefits shall be payable under Section 5.2 in the event of the Chairman’s termination of employment due to expiration of the Term under Section 2.2.

 

5.4                               Survival.  The expiration or termination of the Term shall not impair the rights or obligations of any party hereto that shall have accrued prior to such expiration or termination.

 

ARTICLE VI.
 NON-COMPETITION; NON-SOLICITATION

 

6.1                               Non-Competition Obligation.  The Chairman shall not, at any time during the period commencing on the Effective Date and ending on the second (2nd) anniversary of the Date of Termination (the “Restricted Period”), directly or indirectly, enter the employ of, or render any services to, any Person engaged in any business in North America or anywhere in the world in which the Company conducts business as of the Date of Termination (a) which derives more than fifteen percent (15%) of its consolidated revenues from the marketing or distribution of products sold by the Company, (b) which participates in the manufacturing or design of modular or component shelving or drawer systems or other material products of Elfa Group AB and its subsidiaries, or (c) which, as of the Date of Termination, the Board (including any committee thereof) or senior management of the Company has taken active steps to engage in or acquire (any such business, a “Competitive Business”); and the Chairman shall not become interested in any such Competitive Business, directly or indirectly, as an individual, partner, shareholder, director, officer, principal, agent, employee, trustee, consultant, or in any other relationship or capacity; provided, however, that nothing contained in this Section 6.1 shall be deemed to prohibit the Chairman from working for another retail organization, provided that the Chairman is not engaged in any aspect of the business of such retail organization (including, but not limited to, starting any division or other segment of such retail organization in a Competitive Business), whether in a supervisory, consultative or other capacity, relating to a Competitive Business.  For the avoidance of doubt, the Chairman’s position as a senior executive officer of a retail organization, of which a Competitive Business is an immaterial aspect of its general retail business, shall not be prohibited by, or constitute a violation of, the terms of this Section 6.1; provided that the Chairman does not participate in any day-to-day operations or in any strategic or other decisions relating to the conduct of such retail organization as it relates to a Competitive Business and, to the extent necessary, has delegated such responsibilities to other management personnel of such retail organization.  It is expressly agreed that nothing contained in this Section

 

9

 

6.1 shall be deemed to prohibit the Chairman from acquiring, solely as an investment, up to five percent (5%) of the outstanding shares of capital stock of any public corporation or working for a retail organization, provided that the Chairman is not, directly or indirectly, engaged in a business relating to a Competitive Business.

 

6.2                               Non-Solicitation Obligation.  The Chairman shall not, at any time during the Restricted Period, for his benefit or for the benefit of any other Person, solicit the employment or services of, or hire (or cause any Person to so solicit or hire), any person who upon the termination of the Chairman’s employment hereunder, or within twelve (12) months prior thereto, was (a) employed by the Company or (b) a consultant to the Company. The restrictions in this Section 6.2 shall not apply to (i) general solicitations that are not specifically directed to employees of or consultants to the Company, (ii) at the request of a former employee, serving as an employment reference for such former employee, (iii) solicitations or hirings of former employees of the Company whose employment was terminated by the Company without “Cause” or who terminated their employment for “Good Reason” (as such terms are defined in the applicable employment agreement or, in the absence of such an agreement, as determined by a majority of the Board in its good faith discretion), (iv) except as would constitute a breach of the covenants in Section 6.1, the solicitation or hiring of Melissa Reiff following her termination of employment by the Company without “Cause” or by her for “Good Reason” (as such terms are defined in Melissa Reiff’s employment agreement), or (v) except as would constitute a breach of the covenants in Section 6.1, the solicitation or hiring of Sharon Tindell following her termination of employment by the Company for any reason.

 

6.3                               Definition.  As used in this Article VI, the term “Company” shall include the Company (as defined in the preamble hereof) and any of its direct or indirect subsidiaries.

 

6.4                               Amendment.  The provisions contained in Sections 6.1 and 6.2 may be altered and/or waived only with the prior written consent of a majority of the Board or the Compensation Committee.

 

ARTICLE VII.
 NONDISCLOSURE OF PROPRIETARY INFORMATION

 

7.1                               Nondisclosure.  Except as required in the faithful performance of the Chairman’s duties hereunder or pursuant to Section 7.3, the Chairman shall, during the Term and after the Date of Termination, maintain in confidence and shall not directly or indirectly, use, disseminate, disclose or publish, or use for his benefit or the benefit of any Person, any confidential or proprietary information or trade secrets of or relating to the Company, including, without limitation, information with respect to the Company’s operations, processes, protocols, products, inventions, business practices, finances, principals, vendors, suppliers, customers, potential customers, marketing methods, costs, prices, contractual relationships, regulatory status, compensation paid to employees or other terms of employment (“Proprietary Information”), or deliver to any Person any document, record, notebook, computer program or similar repository of or containing any such Proprietary Information.  The Chairman’s obligation to maintain and not use, disseminate, disclose or publish, or use for his benefit or the benefit of any Person any Proprietary Information after the Date of Termination shall continue so long as such Proprietary Information is not, or has not by legitimate means become, generally known

 

10

 

and in the public domain (other than by means of the Chairman’s direct or indirect disclosure of such Proprietary Information) and continues to be maintained as Proprietary Information by the Company.  The parties hereby stipulate and agree that as between them, the Proprietary Information identified herein is important, material and affects the successful conduct of the businesses of the Company (and any successor or assignee of the Company).  Notwithstanding anything herein to the contrary, during the Term and following the Date of Termination, each of the Chairman and the Company shall retain the right to use the seven “Foundation Principles” described in the Company’s news release, dated as of January 10, 2005 (with “Communication Is Leadership” having been added in 2008), without payment of royalties or other consideration, and nothing in this Agreement shall have any effect on the ownership of such Foundation Principles as of the Effective Date.

 

7.2                               Return of Proprietary Information.  Upon termination of the Chairman’s employment with the Company for any reason, the Chairman shall promptly deliver to the Company all Proprietary Information in the Chairman’s possession, including without limitation all correspondence, drawings, manuals, letters, notes, notebooks, reports, programs, plans, proposals, financial documents, or any other documents concerning the Company’s customers, business plans, marketing strategies, products or processes.  Notwithstanding anything to the contrary in this Section 7.2 or in Section 7.1, the Executive shall be entitled to retain and disclose to the Executive’s counsel, financial or other professional advisors and to the Executive’s immediate family (provided that such advisors and family members agree to the restrictions in Section 7.1 with respect to such information): (a) information showing the Executive’s equity awards or other compensation or relating to expense reimbursements, (b) copies of employee benefit and compensation plans, programs, agreements and other arrangements of the Company in which the Executive was a participant or covered and (c) compensation information that the Executive reasonably believes the Executive requires for the Executive’s personal tax preparation.

 

7.3                               Response to Legal Process; Contents of Book.  Notwithstanding Section 7.1, (a) the Chairman may respond to a lawful and valid subpoena or other legal process relating to the Company or its business or operations; provided that the Chairman shall: (i) give the Company the earliest possible notice thereof; (ii) as far in advance of the return date as possible, at the Company’s sole cost and expense, make available to the Company and its counsel the documents and other information sought; and (iii) at the Company’s sole cost and expense, assist such counsel in resisting or otherwise responding to such process, (b) the Chairman’s reporting of possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation shall not violate or constitute a breach of this Agreement, and (c) the disclosure of information, including Proprietary Information, in the Book (as defined in the Indemnification and Hold Harmless Agreement by and between Parent and Kip Tindell, dated as of June 13, 2012) authored by Kip Tindell shall not violate or constitute a breach of this Agreement.

 

11

 

7.4                               Non-Disparagement.

 

(a)                                 The Chairman agrees not to disparage the Company, any of its products or practices, or any of its directors, officers, agents, representatives, members or Affiliates, either orally or in writing, at any time; provided that the Chairman may confer in confidence with his legal representatives and make truthful statements as required by law.

 

(b)                                 The Company agrees to instruct the members of the Board and the executive officers of the Company not to disparage the Chairman, either orally or in writing, at any time; provided that the Company may confer in confidence with its legal representatives and make truthful statements as required by law.

 

7.5                               As used in this Article VII, the term “Company” shall include the Company (as defined in the preamble hereof), its parent, related entities, and any of its direct or indirect subsidiaries.

 

ARTICLE VIII.
 REMEDIES

 

8.1                               Acknowledgement; Blue Pencil.  The Chairman acknowledges and agrees that the benefits and payments provided under this Agreement represent adequate consideration for the Chairman’s agreement to be bound by the restrictive covenants set forth in Articles VI and VII, and that the Chairman’s agreement to be bound by such restrictive covenants is a material inducement to the Company’s entering into this Agreement.  In the event, however, that any restrictive covenant set forth in Articles VI or VII shall be determined by any court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it is the intention of the Chairman and Company that it will be interpreted to extend only over the maximum period of time for which it may be enforceable, and/or over the maximum geographical area as to which it may be enforceable and/or to the maximum extent in all other respects as to which it may be enforceable, all as determined by such court in such action.

 

8.2                               Injunctive Relief.  The Chairman acknowledges and agrees that a breach of the covenants contained in Articles VI or VII will cause irreparable damage to Company and its goodwill, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate.  Accordingly, the Chairman agrees that in the event of a breach of any of the covenants contained in Articles VI or VII, in addition to any other remedy which may be available at law or in equity, the Company will be entitled to specific performance and injunctive relief with any requirement to post a bond.  The Company acknowledges and agrees that a breach of the covenants contained in Section 7.4(b) will cause irreparable damage to the Chairman, the exact amount of which will be difficult or impossible to ascertain, and that the remedies at law for any such breach will be inadequate.  Accordingly, the Company agrees that in the event of a breach of any of the covenants contained in Section 7.4(b), in addition to any other remedy which may be available at law or in equity, the Chairman will be entitled to specific performance and injunctive relief without any requirement to post a bond.

 

12

 

ARTICLE IX.
 MISCELLANEOUS

 

9.1                               Assignment.  The Company may assign its rights and obligations under this Agreement to any entity, including any successor to all or substantially all the assets of the Company, by merger or otherwise.  The Chairman may not assign his rights or obligations under this Agreement to any individual or entity.  This Agreement shall be binding upon and inure to the benefit of the Company, the Chairman and their respective successors, assigns, personnel and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable.

 

9.2                               Governing Law.  This Agreement shall be governed, construed, interpreted and enforced in accordance with the substantive laws of the State of New York, without reference to the principles of conflicts of law of New York or any other jurisdiction, and where applicable, the laws of the United States.

 

9.3                               Notices.  Any notice, request, claim, demand, document and other communication hereunder to any party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by telex, telecopy, or certified or registered mail, postage prepaid, as follows:

 

(a)                                 If to the Company:

 

The Container Store Group, Inc.

500 Freeport Parkway

Coppell, TX 75019

ATTN:  General Counsel

 

with a copy to:

 

Latham & Watkins LLP

885 Third Avenue

Suite 1000

New York, NY 10022

ATTN:  Howard Sobel; Bradd Williamson

 

(b)                                 If to the Chairman, to the address set forth in the Company’s records

 

or at any other address as any party shall have specified by notice in writing to the other party.

 

9.4                               Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.

 

9.5                               Entire Agreement.  As of the Effective Date, the terms of this Agreement and the other agreements and instruments contemplated hereby or referred to herein are intended by the parties to be the final expression of their agreement with respect to the employment of the

 

13

 

Chairman by the Company and may not be contradicted by evidence of (and supersede) any prior or contemporaneous agreement (including without limitation the Prior Agreement and any term sheet or similar agreement entered into between the Company and the Chairman).  The parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.

 

9.6                               Amendments; Waivers.  This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by the Chairman and a duly authorized officer of Company and approved by a majority of the Board, which expressly identifies the amended provision of this Agreement.  By an instrument in writing similarly executed and approved by a majority of the Board, the Chairman or a duly authorized officer of the Company may waive compliance by the other party or parties with any provision of this Agreement that such other party was or is obligated to comply with or perform, provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure to comply or conform.  No failure to exercise and no delay in exercising any right, remedy, or power hereunder shall preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.

 

9.7                               No Inconsistent Action.  The parties hereto shall not voluntarily undertake or fail to undertake any action or course of action inconsistent with the provisions or essential intent of this Agreement.  Furthermore, it is the intent of the parties hereto to act in a fair and reasonable manner with respect to the interpretation and application of the provisions of this Agreement.

 

9.8                               Construction.  This Agreement shall be deemed drafted equally by both the parties. Its language shall be construed as a whole and according to its fair meaning.  Any presumption or principle that the language is to be construed against any party shall not apply.  The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation.  Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary.  Also, unless the context clearly indicates to the contrary: (a) the plural includes the singular and the singular includes the plural; (b) “and” and “or” are each used both conjunctively and disjunctively; (c) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (d) “includes” and “including” are each “without limitation”; (e) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (f) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.

 

9.9                               Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before an arbitrator in New York, New York in accordance with the Employment Arbitration Rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitration award in any court having jurisdiction. Notwithstanding the foregoing, (a) the Company shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Articles VI or VII of this Agreement and the

 

14

 

Chairman hereby consents that such restraining order or injunction may be granted without requiring the Company to post a bond, and (b) the Chairman shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent any continuation of any violation of the provisions of Section 7.4(b) of this Agreement and the Company hereby consents that such restraining order or injunction may be granted without requiring the Chairman to post a bond.  Only individuals who are: (i) lawyers engaged full-time in the practice of law and (ii) on the AAA register of arbitrators shall be selected as an arbitrator.  Within twenty (20) days of the conclusion of the arbitration hearing, the arbitrator shall prepare written findings of fact and conclusions of law.  It is mutually agreed that the written decision of the arbitrator shall be valid, binding, final and non-appealable, provided, however, that the parties hereto agree that the arbitrator shall not be empowered to award punitive damages against any party to such arbitration.  The arbitrator shall require the non-prevailing party to pay the arbitrator’s full fees and expenses or, if in the arbitrator’s opinion there is no prevailing party, the arbitrator’s fees and expenses shall be borne equally by the parties thereto.  In the event action is brought to enforce the provisions of this Agreement pursuant to this Section 9.9, the non-prevailing parties shall be required to pay the reasonable attorney’s fees and expenses of the prevailing parties, except that if in the opinion of the court or arbitrator deciding such action there is no prevailing party, each party shall pay its own attorney’s fees and expenses.

 

9.10                        Enforcement.  In the event any provision of this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect: (a) such provision shall be fully severable; (b) this Agreement shall be construed and enforced as if such invalid, illegal or unenforceable provision had never comprised a portion of this Agreement; and (c) the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by such invalid, illegal or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such invalid, illegal or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in substance to such invalid, illegal or unenforceable provision as may be possible and be valid, legal and enforceable.

 

9.11                        Withholding.  The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on an opinion of counsel if any questions as to the amount or requirement of withholding shall arise.

 

9.12                        Employee Acknowledgment.  The Chairman acknowledges that he has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on his own judgment.

 

9.13                        Section 409A.

 

(a)                                 To the extent applicable, this Agreement shall be interpreted in accordance with Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that a majority of the Board determines that any amounts payable pursuant to this Agreement may be subject to Section 409A, the Company may adopt such amendments to this Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Company determines are

 

15

 

necessary or appropriate to: (i) exempt such payments from Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to such payments or (ii) comply with the requirements of Section 409A and thereby avoid the application of penalty taxes under Section 409A; provided that no such amendments, policies, procedures or actions shall reduce the economic value to the Chairman of this Agreement from the value of this Agreement (without taking into account the effect of Section 409A) prior to the adoption or taking of such amendments, policies, procedures or actions.  No provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Chairman or any other individual to the Company or any of its Affiliates, employees or agents.

 

(b)                                 To the extent that any installment payments under this Agreement are deemed to constitute “nonqualified deferred compensation” within the meaning of Section 409A, for purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), each such payment that the Chairman may be eligible to receive under this Agreement shall be treated as a separate and distinct payment.

 

(c)                                  To the extent that any reimbursements or corresponding in-kind benefits provided to the Chairman under this Agreement (including, without limitation, the Health Payment and the Health Gross-Up Payment) are deemed to constitute “deferred compensation” within the meaning of Section 409A to the Chairman, such amounts shall be paid or reimbursed reasonably promptly, but not later than December 31 of the year following the year in which the expense was incurred, and in any event in accordance with Section 1.409A-3(i)(1)(iv) of the Department of Treasury Regulations.  The amount of any such payments or expense reimbursements in one calendar year shall not affect the expenses or in-kind benefits eligible for payment or reimbursement in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and the Chairman’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

 

9.14                        Cooperation.  During the Term hereof and thereafter, the Chairman shall cooperate with the Company in any disputes with third parties, internal investigations or administrative, regulatory or judicial proceedings as reasonably requested by the Company  and at the Company’s sole cost and expense (including, without limitation, the Chairman being available to the Company upon reasonable notice for interviews and factual investigations, at times and on schedules that are reasonably consistent with the Chairman’s other permitted activities and commitments).

 

9.15                        Indemnification.  To the maximum extent allowed under applicable law and the Company’s By-Laws and other corporate organizational documents, in the event that the Chairman is a party to any threatened, pending or completed action, suit or proceeding (other than any action, suit or proceeding arising under or related to this Agreement or any other compensation agreement), whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, the Company shall indemnify the

 

16

 

Chairman and hold him harmless against all expenses (including reasonable and documented attorneys’ fees and costs incurred by the Chairman), judgments, fines and amounts paid in settlement (subject to the Company’s consent, with such consent not to be unreasonably withheld) actually and reasonably incurred by him, as and when incurred, in connection with such action, suit or proceeding; provided that the Chairman acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.  The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Chairman did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, or that, with respect to any criminal action or proceeding, the Chairman had reasonable cause to believe that his conduct was unlawful.  The provisions of this Section 9.15 shall not be deemed exclusive of any other rights of indemnification to which the Chairman may be entitled or which may be granted to him, and it shall be in addition to any rights of indemnification to which he may be entitled under any policy of insurance.  These provisions shall continue in effect after Chairman has ceased to be an officer or director of the Company.

 

9.16                        No Mitigation.  The Chairman shall have no obligation to mitigate any payments due hereunder.

 

[Signature Pages Follow]

 

17

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
 
    	
THE CONTAINER STORE   GROUP, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Melissa Reiff
    
	
 
    	
 
    	
Name:
    	
Melissa Reiff
    
	
 
    	
 
    	
Title:
    	
President and Chief   Operating Officer
    

 

[TCS Third Amended and Restated Employment Agreement with Kip Tindell]

 

 

	
 
    	
CHAIRMAN
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ William A. (“Kip”)   Tindell, III
    
	
 
    	
 
    	
William A. (“Kip”)   Tindell, III.
    

 

 

EXHIBIT A

 

Form of Release Agreement

 

William A. (“Kip”) Tindell, III (the “Chairman”) agrees for the Chairman, the Chairman’s spouse (solely in her capacity as the Chairman’s spouse) and child or children (if any), the Chairman’s heirs, beneficiaries, devisees, executors, administrators, attorneys, personal representatives, successors and assigns, hereby forever to release, discharge, and covenant not to sue The Container Store Group, Inc., a Delaware corporation (the “Company”), the Company’s past, present, or future parent, affiliated, related, and/or subsidiary entities, and all of their past and present directors, shareholders, officers, general or limited partners, employees, agents, and attorneys, and agents and representatives of such entities, and employee benefit plans in which the Chairman is or has been a participant by virtue of his employment with the Company, from any and all claims, debts, demands, accounts, judgments, rights, causes of action, equitable relief, damages, costs, charges, complaints, obligations, promises, agreements, controversies, suits, expenses, compensation, responsibility and liability of every kind and character whatsoever (including attorneys’ fees and costs), whether in law or equity, known or unknown, asserted or unasserted, suspected or unsuspected, which the Chairman has or may have had against such entities based on any events or circumstances arising or occurring on or prior to the date this release (the “Release”) is executed, arising directly or indirectly out of, relating to, or in any other way involving in any manner whatsoever, (a) Chairman’s employment with the Company or the termination thereof or (b) Chairman’s status as a holder of any securities of the Company based on any events or circumstances arising or occurring on or prior to the date this Release is executed, and any and all claims based on, relating to, or arising under federal, state, or local laws, including without limitation claims of discrimination, harassment, retaliation, wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, liability in tort, or for violation of public policy, claims of any kind that may be brought in any court or administrative agency, any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act, the Family and Medical Leave Act, the Securities Act of 1933, the Securities Exchange Act of 1934, the Texas Commission on Human Rights Act, the Texas Anti-Retaliation Act, the Texas Labor Code, the Sarbanes-Oxley Act, and similar state or local statutes, ordinances, and regulations; provided, however, notwithstanding anything to the contrary set forth herein, that this general release shall not extend to (i) benefit claims under employee pension benefit plans in which the Chairman is a participant by virtue of his employment with the Company or to benefit claims under employee welfare benefit plans (e.g., claims for medical care, death, or onset of disability), (ii) accrued and vested benefits under applicable employee benefit plans, or the Chairman’s right to continue or convert coverage under certain employee benefit plans, in accordance with the terms of those plans and applicable law; and (iii) any obligation under this Release, or under that certain Third Amended and Restated Employment Agreement entered into on May 6, 2016 by and between the Company and the Chairman, assumed by any party thereto.

 

The Chairman understands that this Release includes a release of claims arising under the Age Discrimination in Employment Act (ADEA).  The Chairman understands and warrants that he has been given a period of twenty-one (21) days to review and consider this

 

 

Release and such period shall not be affected or extended by any changes, whether material or immaterial, that might be made to this Release.  The Chairman is hereby advised to consult with an attorney prior to executing the Release.  By his signature below, the Chairman warrants that he has had the opportunity to do so and to be fully and fairly advised by that legal counsel as to the terms of this Release.  The Chairman further warrants that he understands that he may use as much or all of his twenty-one (21)-day period as he wishes before signing, and warrants that he has done so.

 

The Chairman further warrants that he understands that he has seven (7) days after signing this Release to revoke the Release by notice in writing to                                                                              .  This Release shall be binding, effective, and enforceable upon both parties upon the expiration of this seven (7)-day revocation period without               having received such revocation, but not before such time.

 

*  *  *  *  *

 

The Chairman acknowledges and agrees that this Release is a legally binding document and the Chairman’s signature will commit the Chairman to its terms.  Chairman acknowledges and agrees that the Chairman has carefully read and fully understands all of the provisions of this Release and that voluntarily enters into this Release by signing below.  Upon execution, the Chairman agrees to deliver a signed copy of this Release to                   .

 

	
 
    	
 
    
	
 
    	
William A. (“Kip”)   Tindell, III.
    
	
 
    	
 
    
	
 
    	
Date:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00258-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00258-of-00352.parquet"}]]