Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Effective June
1, 2020 (the “Effective Date”), TherapeuticsMD, Inc., a Nevada corporation (the “Company”), entered into
an Employment Agreement with Mr. James C. D’Arecca (the “Employment Agreement”), who became Chief Financial
Officer of the Company on the Effective Date. Mr. D’Arecca succeeds Mr. Daniel A. Cartwright who has retired from the Company
effective on the Effective Date and will remain with the Company for a transitional period.
Prior to joining
the Company, Mr. D’Arecca, age 49, served as Senior Vice President and Chief Accounting Officer of Allergan plc (formerly
known as Actavis plc) from August 2013 until its merger with AbbVie Inc. in May 2020. Mr. D’Arecca was a key member of the
finance team through Allergan’s journey from a generics manufacturer (Watson/Actavis) to a leading global pharmaceutical
company. Mr. D’Arecca joined Actavis from Bausch & Lomb, where he served as its Chief Accounting Officer. Prior to Bausch & Lomb, Mr. D’Arecca served in various roles of increasing responsibility at Merck & Co. Inc. and Schering-Plough
in finance and business development. He also spent 13 years with PricewaterhouseCoopers, with an industry focus on pharmaceuticals,
medical devices, and consumer products. Mr. D’Arecca holds an M.B.A. from Columbia University and a B.S. in accounting from
Rutgers University. He is a Certified Public Accountant.
Pursuant to the
Employment Agreement, Mr. D’Arecca will receive an annual base salary of $420,000, subject to annual review by the Compensation
Committee of the Company’s Board of Directors (the “Compensation Committee”). In addition, Mr. D’Arecca
will be eligible to receive an annual performance bonus in accordance with the Company’s annual short-term incentive compensation
program, with a target bonus payment equal to 75% of his base salary; any 2020 bonus paid to Mr. D’Arecca will not be prorated
due to his start date with the Company. The Employment Agreement also provides for Mr. D’Arecca’s participation in
customary Company benefit plans and incentive compensation plans and for Mr. D’Arecca’s entitlement to certain perquisites,
benefits, and other compensation currently provided to other Company executives.
In connection with
his appointment, Mr. D’Arecca will be granted pursuant to the Company’s 2019 Stock Incentive Plan (the “Plan”):
(i) 651,500 restricted stock units (“RSUs”), which RSUs will vest in equal annual installments on each of June 1, 2021,
2022, and 2023, and (ii) 151,500 performance share units (“PSUs”), which PSUs will vest if the Company achieves quarterly
earnings before interest, taxes, depreciation, and amortization (EBITDA) breakeven for a fiscal quarter no later than the quarter
ending December 31, 2022, otherwise the PSUs will be forfeited, in each case subject to Mr. D’Arecca’s continued employment
with the Company and the terms and conditions in the Plan and award agreements to be entered into between the Company and Mr. D’Arecca.
Upon the termination
of Mr. D’Arecca’s employment for certain specified reasons, the Employment Agreement provides for severance payments
of up to 12 to 18 months of Mr. D’Arecca’s base salary, a bonus for the year in which his employment terminates in
an amount ranging from a pro rata portion of his bonus up to one and one-half times his bonus, depending on the basis and timing
of his termination, and the continuation of certain fringe benefits for specified periods. In addition, depending on the basis
for Mr. D’Arecca’s termination, all equity awards granted to Mr. D’Arecca by the Company prior to such termination
will become fully vested and, if applicable, exercisable, as of the effective date of such termination. Notwithstanding the foregoing,
as condition precedent to receiving any such post-termination payments or benefits, Mr. D’Arecca must execute, and not revoke,
a full and complete release of all claims against the Company and its affiliates in the form attached to the Employment Agreement.
The Employment Agreement
provides for customary protections of the Company’s confidential information and intellectual property and that Mr. D’Arecca
will not, during the term of his employment and for a period of 18 months thereafter (subject to a 12-month extension under certain
limited circumstances), compete with the Company and, for a period of 24 months thereafter, hire away from or solicit to leave
the Company its employees and independent contractors, or solicit actual or targeted prospective customers or clients of the Company.
The Employment Agreement has a three-year term and is subject to automatic renewals for successive one-year terms.
The foregoing description
of the Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Employment Agreement,
a copy of which will be filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the quarter ending June
30, 2020.
There are no arrangements
or understandings between Mr. D’Arecca and any other person pursuant to which he was appointed as an officer of the Company
and no family relationship between Mr. D’Arecca and any director or executive officer of the Company. Other than as described
in this Current Report on Form 8-K, since the beginning of the Company’s last fiscal year, the Company has not engaged in
any transactions, and there are no proposed transactions, or series of similar transactions, in which the Company was or is to
be a participant and in which Mr. D’Arecca had a direct or indirect material interest in which the amount involved exceeds
or exceeded $120,000.
Mr. Cartwright’s
retirement from the Company is a termination without “Cause,” as defined in that certain employment agreement, dated
November 8, 2012, by and between Mr. Cartwright and the Company, and Mr. Cartwright will receive the separation benefits provided
therein. Mr. Cartwright and the Company will also enter into a consulting agreement with a term of not less than three years
pursuant to which Mr. Cartwright will provide financial consulting services for the Company. Under the terms of the consulting
agreement, Mr. Cartwright will receive aggregate payments of $200,000 and will vest into Performance Stock Units previously issued
to Mr. Cartwright.