EMPLOYMENT AGREEMENT FOR STEFANIE CAVANAUGH
Exhibit 10.3
FIRST AMENDMENT TO
EMPLOYMENT AGREEMENT FOR XXXXXXXX XXXXXXXXX
This First Amendment to Employment Agreement (this “Amendment”) is made and entered into by and between Apollo Endosurgery, Inc., a Delaware corporation (the “Company”), and Xxxxxxxx Xxxxxxxxx (“Executive”).
RECITALS
A. The Company and Executive entered into that certain Employment Agreement, effective March 2, 2015 (the “Employment Agreement”). Unless otherwise defined herein, all capitalized terms shall have the meanings assigned to them in the Employment Agreement.
B. Section 8(d) of the Employment Agreement provides benefits that are payable to Executive in the event of Executive’s termination for Good Reason or without Cause. On May 23, 2018, the Company’s Board of Directors approved certain amendments to Section 8(d) of the Employment Agreement.
C. The Company and Executive desire to amend the Employment Agreement as set forth herein with all terms to be effective as of May 23, 2018.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1.Section 8(d) of the Employment Agreement is hereby revised and replaced in its entirety as set forth below.
“(d) Termination for Good Reason or Without Cause.
(i)Executive may terminate Executive’s employment for Good Reason (as defined below), provided the Company has not previously notified her of its intent to terminate her employment for Cause and the Company may terminate Executive’s employment without Cause (that is, other than by death, Disability or for Cause, in accordance with Section 8(a), 8(b) or 8(c), respectively, collectively, an “Involuntary Termination”)). “Good Reason” shall mean the occurrence, without Executive’s prior written consent, of any of the following events: (a) a material reduction in the nature or scope of Executive’s responsibilities, duties and/or authority; provided, that a change in job position (including a change in title) shall not be deemed a “material reduction” in and of itself unless Executive’s responsibilities, duties and/or authority are materially reduced; (b) a material reduction in Executive’s then-current Base Salary, which the Company and Executive agree is at least 10% of Executive’s then-current Base Salary; provided, that a reduction in Base Salary shall not be “Good Reason” to the extent that the salary reduction is made as part of a broader salary reduction program of the Company affecting a majority of similarly situated employees; (c) a material change in the location at which Executive must perform her services; provide that in no event will the relocation of Executive to a facility or location of fifty (50) miles or less from Executive’s then current office location be deemed material for purposes of this Agreement; and (d) a material breach of this
Agreement by the Company; provided, that any such event described above shall not constitute Good Reason unless Executive delivers to the Company a Notice of Termination for Good Reason within ninety (90) days after the initial existence of the circumstances giving rise to Good Reason, within thirty (30) days following the receipt of such Notice of Termination for Good Reason the Company has failed to reasonably cure the circumstances giving rise to Good Reason, and Executive terminates her employment within thirty (30) days following the end of the cure period.
(ii)Upon an Involuntary Termination pursuant to this Section 8(d), and provided such termination constitutes a “separation from service” (as defined under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definitions thereunder, a “Separation from Service”), Executive shall receive the Accrued Amounts, and, subject to Executive’s (a) returning all Company property; (b) complying with her post-termination obligations under this Agreement and the Non-Competition Agreement; (c) execution, delivery and non-revocation of an agreement that includes an effective release of all claims against the Company (the “Release”) within the sixty (60) day period following the date of Executive’s Involuntary Termination, and (d) complying with the Release including without limitation any non-disparagement and confidentiality provisions contained therein, Executive shall receive the following severance benefits (the “Severance Benefits”):
(1)an amount equal to six (6) months of Executive’s then-current Base Salary, ignoring any decrease in Base Salary that forms the basis for Good Reason, paid in equal installments on the Company’s normal payroll schedule over the 6-month period immediately following the date of Involuntary Termination, except as set forth below (the “Salary Continuation”), plus an amount equal to the Annual Bonus, if any, earned in connection with completion of the fiscal year prior to Executive’s Involuntary Termination that would have been payable to Executive under Section 3(b) had Executive remained an employee of the Company through the Annual Bonus payment date for that fiscal year.
(iii)If such Involuntary Termination (and provided that such termination constitutes a Separation from Service) occurs within three (3) months prior to (contingent upon the occurrence of the Change in Control), on or within twelve (12) months after a Change in Control, in lieu of the Severance Benefits described in Section 8(d)(ii)(1) above, Executive shall receive the following severance benefits (the “Change in Control Severance Benefits”):
(1)an amount equal to twelve (12) months of Executive’s then-current Base Salary, ignoring any decrease in Base Salary that forms the basis for Good Reason, paid in equal installments on the Company’s normal payroll schedule over the 12-month period immediately following the date of Involuntary Termination, except as set forth below (the “Change in Control Salary Continuation”), plus an amount equal to the Annual Bonus, if any, earned in connection with completion of the fiscal year prior to Executive’s Involuntary Termination that would have been payable to Executive under Section 3(b) had Executive remained an employee of the Company through the Annual Bonus payment date for that fiscal year;
(2)Should Executive elect to continue her medical, dental and/or vision insurance benefits pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and any analogous provisions of applicable state law, the Company shall reimburse Executive for the COBRA premiums necessary to continue COBRA coverage for Executive and her eligible dependents (“COBRA Premiums”) from the date of Executive’s Involuntary Termination until the earliest to occur of (a) twelve (12) months following the Involuntary Termination, (b) the expiration of Executive’s eligibility for the continuation coverage under COBRA, and (c) the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment (such period from the date of the Change in Control Termination through the earliest of (a) through (c) is referred to herein as the “COBRA Benefits Payment Period”). Notwithstanding the foregoing, if the Company determines, in its sole discretion, that the Company cannot provide the COBRA Premium benefits without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company shall in lieu thereof pay Executive a taxable cash amount, which payment shall be made regardless of whether Executive or Executive’s eligible family members elect health care continuation coverage (the “Health Care Benefit Payment”). The Health Care Benefit Payment shall be paid in monthly installments on the same schedule that the COBRA Premiums would otherwise have been paid to the insurer. The Health Care Benefit Payment shall be equal to the amount that the Company would have otherwise paid for COBRA insurance premiums (which amount shall be calculated based on the premium for the first month of coverage), and shall be paid until the expiration of the COBRA Benefits Payment Period. If Executive becomes eligible for coverage under another employer’s group health plan or otherwise ceases to be eligible for COBRA during the twelve (12) months following the Involuntary Termination, Executive must immediately notify the Company of such event; and
(3)One hundred percent (100%) of the shares subject to the Options (and any other options and other equity awards subsequently granted to Executive) shall become vested and exercisable (if applicable) as of the date of Executive’s Involuntary Termination.
(iv)The Severance Benefits and Change in Control Severance Benefits will be subject to deductions for applicable tax withholdings. No Severance Benefits or Change in Control Severance Benefits will be paid prior to the day that is sixty (60) days following the date of Involuntary Termination. On the sixtieth (60th) day following the date of Involuntary Termination, the Company shall pay in a lump sum the aggregate amount of the Salary Continuation or the Change in Control Salary Continuation, as applicable, that the Company would have paid Executive through such date had the payments commenced on the Involuntary Termination through such sixtieth (60th) day, with the balance paid thereafter on the applicable schedules described above.
(v)All other benefits, if any, due Executive following a termination pursuant to this Section 8(d) shall be determined in accordance with the plans, policies and practices of the Company; provided, that Executive shall not be entitled to any payments or benefits under any severance plan, policy or program of the Company. Payments under this Agreement are intended to fulfill any statutory obligation to provide notice or pay in lieu of notice. Executive shall not accrue any additional compensation (including any Base Salary or
Annual Bonus) or other benefits under this Agreement following such termination of employment.”
2.Except as herein modified and amended, all the terms and conditions of the Employment Agreement shall remain in full force and effect, and the execution of this Amendment shall in no event be deemed to constitute a waiver of any right or claim of any of the parties hereto under, or by virtue of, the Employment Agreement, except as otherwise specifically set forth herein. This Amendment and the Employment Agreement constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof.
3.This Agreement is executed by the parties in the State of Texas and shall be interpreted in accordance with the laws of such State (except their provisions governing the choice of law).
4.This Amendment may be executed in one or more counterparts, all of which shall be considered one and the same agreement. A facsimile shall be deemed an original for all purposes.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date set forth above.
THE COMPANY: | ||
a Delaware corporation | ||
By: | ||
Xxxx Xxxxxx, Chief Executive Officer | ||
EXECUTIVE: | ||
Xxxxxxxx Xxxxxxxxx, individually | ||
