Document:

EX-10.26

 Exhibit 10.26 

GUARANTY 
 THIS AGREEMENT,
dated as of February 27, 2017, is entered into by and among CARVANA, LLC, an Arizona limited liability company (“Guarantor”), and VERDE INVESTMENTS, INC., an Arizona corporation (“Agent”), as agent on behalf of
the lenders (“Lenders”) from time to time party to that certain Master Loan Agreement of even date herewith (as amended, restated, supplemented, or otherwise modified from time to time, the “Loan Agreement”) by and
between Carvana Group, LLC, a Delaware limited liability company, as borrower (“Borrower”), Lenders and Agent. 
 W I
T N E S S E T H: 
 WHEREAS, pursuant to the Loan Agreement, Lenders have agreed to make certain financial accommodations
available to Borrower from time to time pursuant to the terms and conditions thereof; and 
 WHEREAS, in order to induce the Lenders
to enter into the Loan Agreement and to induce the Lenders to make financial accommodations to Borrower as provided for in the Loan Agreement, Guarantor has agreed to guaranty the Guaranteed Obligations (as hereinafter defined); and 

WHEREAS, Guarantor is an Affiliate of Borrower and, as such, will benefit by virtue of the financial accommodations extended to
Borrower by the Lenders. 
 NOW, THEREFORE, for and in consideration of the recitals made above and other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 
 1.
Definitions 
 1.1 Construction. All initially capitalized terms used herein (including in the preamble and recitals
hereof) without definition shall have the meanings ascribed thereto in the Loan Agreement. When the terms are used in the plural, the plural forms of the meanings shall apply. Any terms (whether capitalized or lower case) used in this Agreement that
are defined in the UCC shall be construed and defined as set forth in the UCC unless otherwise defined herein or in the Loan Agreement; provided, that to the extent that the UCC is used to define any term used herein and if such term is defined
differently in different Articles of the UCC, the definition of such term contained in Article 9 of the UCC shall govern. 
 1.2
Definitions. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings: 

Agreement: this Agreement. 

Guaranteed Obligations: all liabilities and obligations (i) of Borrower to Agent and Lenders with respect to the
Obligations evidenced by the Loan Documents, (ii) of Guarantor to Agent and Lenders with respect to the Obligations evidenced by the Loan Documents, in each 

 
case, however and whenever incurred or evidenced, whether primary, secondary, direct, indirect, absolute, contingent, due or to become due, now existing or hereafter contracted or acquired, and
all modifications, extensions and renewals thereof, fees and expenses incurred by Agent or Lenders (including any fees or expenses that accrue after the commencement of an insolvency proceeding, regardless of whether allowed or allowable in whole or
in part as a claim in any such insolvency proceeding), or otherwise, and any and all expenses (including reasonable counsel fees and expenses) incurred by Agent and Lenders, in enforcing any rights under this Agreement. Without limiting the
generality of the foregoing, Guaranteed Obligations shall include all amounts that constitute part of the Guaranteed Obligations and would be owed by Borrower to Agent and Lenders but for the fact that they are unenforceable or not allowable,
including due to the existence of a bankruptcy, reorganization, other insolvency proceeding or similar proceeding involving Borrower or Guarantor. 

2. Guaranty 
 2.1
Guaranty. In recognition of the direct and indirect benefits to be received by Guarantor from the proceeds of the Loans, Guarantor hereby unconditionally and irrevocably guarantees as a primary obligor and not merely as a surety the
full and prompt payment when due, whether upon maturity, acceleration, or otherwise, of all of the Guaranteed Obligations. If any or all of the Guaranteed Obligations becomes due and payable, Guarantor, unconditionally and irrevocably, and without
the need for demand, protest, or any other notice or formality, promises to pay such indebtedness to Agent and Lenders, together with any and all expenses that may be incurred by Agent and Lenders in demanding, enforcing, or collecting any of the
Guaranteed Obligations (including the enforcement of any Collateral for such Guaranteed Obligations or any Collateral for the obligations of the Guarantor under this Agreement). If claim is ever made upon Agent or Lenders for repayment or recovery
of any amount or amounts received in payment of or on account of any or all of the Guaranteed Obligations and Agent or a Lender repays all or part of said amount by reason of (i) any judgment, decree, or order of any court or administrative
body having jurisdiction over such payee or any of its property, or (ii) any settlement or compromise of any such claim effected by such payee with any such claimant (including Borrower or Guarantor), then and in each such event, Guarantor
agrees that any such judgment, decree, order, settlement, or compromise shall be binding upon the Guarantor, notwithstanding any revocation (or purported revocation) of this Agreement or other instrument evidencing any liability of Guarantor, and
the Guarantor shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee. 

2.2 Bankruptcy. Additionally, Guarantor unconditionally and irrevocably guarantees the payment of any and all of the
Guaranteed Obligations to Agent and Lenders, whether or not due or payable by Borrower upon the occurrence of any of the events specified in Section 5.1.3 of the Loan Agreement, and irrevocably and unconditionally promises to pay such
indebtedness to Agent and Lenders, without the requirement of demand, protest, or any other notice or other formality, in lawful money of the United States. 

  
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 2.3 Nature of Liability. The
liability of Guarantor hereunder is primary, absolute, and unconditional, and is independent of any security for or other guaranty of the Obligations, whether executed by any other guarantor or by any other Person, and the liability of Guarantor
hereunder shall not be affected or impaired by (i) any direction as to application of payment by Borrower or by any other Person, (ii) any payment on, or in reduction of, any such other guaranty or undertaking, (iii) any dissolution,
termination, or increase, decrease, or change in personnel by Borrower or Guarantor, (iv) any payment made to Agent or Lenders on account of the Guaranteed Obligations which Lenders repays to Borrower or Guarantor pursuant to court order in any
bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding (or any settlement or compromise of any claim made in such a proceeding relating to such payment), and Guarantor waives any right to the deferral or modification
of its obligations hereunder by reason of any such proceeding, (v) any action or inaction by Agent or Lenders, or (vi) any invalidity, irregularity, avoidability, or unenforceability of all or any part of the Guaranteed Obligations or of
any security therefor. 
 2.4 Continuing Guaranty. This Agreement includes all present and future
Guaranteed Obligations including any under transactions continuing, compromising, extending, increasing, modifying, releasing, or renewing the Guaranteed Obligations, changing the interest rate, payment terms, or other terms and conditions thereof,
or creating new or additional Guaranteed Obligations after prior Guaranteed Obligations have been satisfied in whole or in part. To the maximum extent permitted by law, Guarantor hereby waives any right to revoke this Agreement as to future
Guaranteed Obligations. If such a revocation is effective notwithstanding the foregoing waiver, Guarantor acknowledges and agrees that (i) no such revocation shall be effective until written notice thereof has been received by Agent and
Lenders, (ii) no such revocation shall apply to any Guaranteed Obligations in existence on the date of receipt by Agent and Lenders of such written notice (including any subsequent continuation, extension, or renewal thereof, or change in the
interest rate, payment terms, or other terms and conditions thereof), (iii) no such revocation shall apply to any Guaranteed Obligations made or created after such date to the extent made or created pursuant to a legally binding commitment of Agent
and Lenders in existence on the date of such revocation, (iv) no payment by Guarantor, Borrower, or from any other source, prior to the date of Agent and Lenders’ receipt of written notice of such revocation shall reduce the maximum
obligation of such Guarantor hereunder, and (v) any payment by Borrower or from any source other than such Guarantor subsequent to the date of such revocation shall first be applied to that portion of the Guaranteed Obligations as to which the
revocation is effective and which are not, therefore, guaranteed hereunder, and to the extent so applied shall not reduce the maximum obligation of such Guarantor hereunder. This Agreement shall be binding upon Guarantor, its successors and assigns
and inure to the benefit of and be enforceable by Agent and Lenders and their successors, transferees, or assigns. 
 2.5
Independent Obligations. The guaranty by Guarantor hereunder is a guaranty of payment and not of collection. The obligations of Guarantor hereunder are independent of the obligations of any other guarantor or
Borrower or any other Person and a separate action or actions may be brought and prosecuted against Guarantor whether or not action is brought against Borrower or any other Person and whether or not Borrower or any other Person be joined in any such
action or actions. Guarantor waives, to the fullest extent permitted 

  
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by law, the benefit of any statute of limitations affecting its liability hereunder or the enforcement hereof. Any payment by Borrower or other circumstance which operates to toll any statute of
limitations as to Borrower shall operate to toll the statute of limitations as to Guarantor. 
 2.6 Authorization.
Guarantor authorizes Agent and Lenders, without notice or demand, and without affecting or impairing its liability hereunder, from time to time to: 

2.6.1 change the manner, place, or terms of payment of, or change or extend the time of payment of, renew, increase, accelerate, or alter,
any of the Obligations (including any increase or decrease in the principal amount thereof or the rate of interest or fees thereon), any security therefor, or any liability incurred directly or indirectly in respect thereof, and this Agreement shall
apply to the Obligations as so changed, extended, renewed, or altered; 
 2.6.2 take and hold security for the payment of the Obligations
and sell, exchange, release, impair, surrender, realize upon, collect, settle, or otherwise deal with in any manner and in any order any property at any time pledged or mortgaged to secure the Obligations or any of the Guaranteed Obligations
(including any of the obligations of Guarantor under this Agreement) incurred directly or indirectly in respect thereof or hereof, or any offset on account thereof; 

2.6.3 exercise or refrain from exercising any rights against Borrower or any other guarantor; 

2.6.4 release or substitute any one or more endorsers, guarantors, Borrower, or other obligors; 

2.6.5 settle or compromise any of the Obligations, any security therefor, or any liability (including any of those of Guarantor under this
Agreement) incurred directly or indirectly in respect thereof or hereof, and may subordinate the payment of all or any part thereof to the payment of any liability (whether due or not) of Borrower to its creditors; 

2.6.6 apply any sums by whomever paid or however realized to any liability or liabilities of Borrower to Agent and Lenders, regardless of
what liability or liabilities of such Borrower remain unpaid; and 
 2.6.7 consent to or waive any breach of, or any act, omission, or
default under, this Agreement, any other Loan Document, or any of the instruments or agreements referred to herein or therein, or otherwise amend, modify, or supplement this Agreement, any other Loan Document, or any of such other instruments or
agreements. 
 2.7 Reliance. It is not necessary for Agent or Lenders to inquire into the capacity or powers of
Guarantor or the officers, directors, partners or agents acting or purporting to act on their behalf, and any Obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed hereunder. 

  
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 2.8 Guaranty Absolute. Guarantor guarantees that the
Guaranteed Obligations will be paid strictly in accordance with the terms of the Loan Documents, regardless of any law, regulation, or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of Agent and
Lenders with respect thereto. The obligations of Guarantor under this Agreement are independent of the Guaranteed Obligations, and a separate action or actions may be brought and prosecuted against Guarantor to enforce such obligations, irrespective
of whether any action is brought against Borrower or any other guarantor or whether Borrower or any other guarantor is joined in any such action or actions. The liability of Guarantor under this Agreement shall be absolute and unconditional
irrespective of, and Guarantor hereby irrevocably waives any defense it may now or hereafter have in any way relating to, any or all of the following: 

2.8.1 any lack of validity or enforceability of any Loan Document or any agreement or instrument relating thereto; 

2.8.2 any change in the time, manner, or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other
amendment or waiver of or any consent to departure from any Loan Document, including any increase in the Guaranteed Obligations resulting from the extension of additional credit; 

2.8.3 any taking, exchange, release, or non-perfection of any Lien in and to any Collateral, or any
taking, release, amendment, waiver of, or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations; 

2.8.4 the existence of any claim, set-off, defense, or other right that Guarantor may have at any
time against any Person, including Lenders; 
 2.8.5 any defense, set-off, counterclaim, or claim,
of any kind or nature, arising directly or indirectly from the present or future lack of perfection, sufficiency, validity, or enforceability of the Guaranteed Obligations or any security therefor; 

2.8.6 any right or defense arising by reason of any claim or defense based upon an election of remedies by Agent or Lenders, including any
defense based upon an impairment or elimination of such Guarantor’s rights of subrogation, reimbursement, contribution, or indemnity of such Guarantor against Borrower or sureties; 

2.8.7 any change, restructuring, or termination of the corporate, limited liability company, or partnership structure or existence of
Borrower or any other guarantor; or 
 2.8.8 any other circumstance that might otherwise constitute a defense available to, or a discharge
of, Borrower or any other guarantor or surety. 
 2.9 Waivers. 

2.9.1 Guarantor waives any right (except as shall be required by applicable statute and cannot be waived) to require Agent and Lenders to
(i) proceed against 

  
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Borrower or any other guarantor or any other Person, (ii) proceed against or exhaust any security held from Borrower or any other guarantor or any other Person, or (iii) protect,
secure, perfect, or insure any security interest or Lien on any property subject thereto or exhaust any right to take any action against Borrower, any other guarantor, any other Person, or any Collateral, or (iv) pursue any other remedy in
Lenders’ power whatsoever. Guarantor waives any defense based on or arising out of any defense of Borrower or Guarantor or any other Person, other than payment of the Obligations to the extent of such payment, based on or arising out of the
disability of Borrower or Guarantor or any other Person, or the validity, legality, or unenforceability of the Obligations or any part thereof from any cause, or the cessation from any cause of the liability of Borrower or any other guarantor other
than payment of the Obligations to the extent of such payment. 
 2.9.2 Agent may, and upon request of a Lender, shall take immediate
possession of each, any and all Property or any part thereof (which Guarantor agrees to surrender to Agent) and manage, control or lease the same to such Persons and at such rental as it may deem proper and collect and apply Rents (as defined in the
applicable Mortgage) to the payment of: (i) the Obligations, together with all costs and attorneys’ fees; (i) all levies, assessments or liens which may be prior in lien or payment to the Obligations, and premiums for insurance, with
interest on all such items; and (iii) the cost of all alterations, repairs, replacements and expenses incident to taking and retaining possession of each, any and all Property and the management and operation thereof; all in such order or
priority as Agent in its sole discretion may determine. The taking of possession shall not prevent concurrent or later proceedings for the foreclosure sale of each, any and all Property. Agent may, and upon request of a Lender, shall exercise all
the remedies of a mortgagee as provided by law and in equity including, without limitation, foreclosure upon the Mortgage and sale of each, any and all Property, or any part of the Property, at public sale conducted according to applicable law
(referred to as “Sale”) and conduct additional Sales as may be required until all of the Property is sold or the Obligations are satisfied. With respect to any portion of each, any and all Property governed by the UCC, Agent shall have all
of the rights and remedies of a secured party thereunder. Agent may elect to foreclose upon any Property that is Fixtures under law applicable to foreclosure of interests in real estate or law applicable to personal property. Agent may, and upon
request of a Lender, shall bid at Sale and may accept, as successful bidder, credit of the bid amount against the Obligations as payment of any portion of the purchase price. Agent shall apply the proceeds of Sale, first to any fees or attorney fees
permitted Agent by law in connection with Sale, second to expenses of foreclosure, publication, and sale permitted Agent by law in connection with Sale, third to the Obligations, and any remaining proceeds as required by law. 

2.9.3 Guarantor waives all presentments, demands for performance, protests and notices, including notices of nonperformance, notices of
protest, notices of dishonor, notices of acceptance of this Agreement, and notices of the existence, creation, or incurring of new or additional Obligations. Guarantor assumes all responsibility for being and keeping itself informed of each
Borrower’s and Guarantor’s financial condition and assets and of all other circumstances bearing upon the risk of nonpayment of the Obligations and the nature, scope, and extent of the risks which Guarantor assumes and incurs hereunder,
and agrees that Lenders shall not have any duty to advise Guarantor of information known to them regarding such circumstances or risks. 

  
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 2.9.4 No Guarantor will exercise any rights that it may now or hereafter acquire against
Borrower or Guarantor that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under this Agreement, including any right of subrogation, reimbursement, exoneration, contribution or indemnification and
any right to participate in any claim or remedy of Agent or Lenders against Borrower, any other guarantor or any Collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including the right to
take or receive from Borrower or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security solely on account of such claim, remedy or
right, unless and until all of the Guaranteed Obligations and all other amounts payable under this Agreement shall have been paid in full in cash and Lenders’ obligation to make Loans under the Loan Agreement has been terminated. If any amount
shall be paid to Guarantor in violation of the immediately preceding sentence, such amount shall be held in trust for the benefit of Lenders, and shall forthwith be paid to Lenders to be credited and applied to the Guaranteed Obligations and all
other amounts payable under this Agreement, whether matured or unmatured, in accordance with the terms of the Loan Agreement, or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Agreement thereafter
arising. 
 2.9.5 Guarantor represents, warrants, and agrees that each of the waivers set forth above is made with full knowledge of its
significance and consequences and that if any of such waivers are determined to be contrary to any applicable law or public policy, such waivers shall be effective to the maximum extent permitted by law. 

3. Representations and Warranties of Guarantor 

3.1 Organization; Powers; Etc. Guarantor (i) is duly formed, validly
existing, and in good standing under the laws of the state of its formation, (ii) is duly qualified to do business and is in good standing in each jurisdiction in which the character of its properties or the nature of its business requires such
qualification, except where failure to be so qualified could not reasonably be expected to have a Material Adverse Effect, and (iii) has all requisite legal power and limited liability company power to own and operate its assets and to carry on
its business and to enter into and perform its obligations under this Agreement. 
 3.2 Due
Authorization; No Violations; Etc. The execution and delivery by Guarantor of, and the performance by Guarantor of its obligations under, this Agreement have been duly
authorized by all requisite limited liability company action and do not and will not (i) violate its articles or certificate of formation or operating agreement, any provision of any law of any Governmental Authority, any agreement or any
indenture, mortgage, or other instrument to which Guarantor is a party or by which Guarantor or its properties are bound, or (ii) conflict with, result in a breach of, or constitute with the giving of notice or lapse of time, or both, a default
under any such agreement, indenture, mortgage, or other instrument. 

  
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 3.3 Binding Agreement. This Agreement is the legal,
valid, and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, subject only to limitations on enforceability imposed by (i) applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting creditors’ rights generally, and (ii) general equitable principles. 
 3.4 Consents
and Approvals. No consent or approval of any Governmental Authority or of any party to any agreement to which Guarantor is a party or by which it or any of its property is bound in connection with the execution
and delivery by Guarantor of, and the performance by Guarantor of its obligations under, this Agreement, is necessary, except as such have been obtained and are in full force and effect. 

3.5 Title. Borrower, Guarantor or a Subsidiary of Borrower has insurable title to the Property. Borrower, Guarantor or a
Subsidiary of Borrower owns the Property free and clear of all Liens, except Permitted Liens. 
 3.6 Collateral. Other
than Permitted Liens, the security interests granted to Lenders pursuant to any Mortgage, to the extent so pledged, (i) constitute and, as to subsequently acquired property included in the Collateral covered by the Mortgage or security
agreement, will constitute, security interests entitled to all of the rights, benefits and priorities provided by the UCC and applicable State law and (ii) are, and as to such subsequently acquired Collateral will be, fully perfected, superior
and prior to the rights of all third persons, now existing or hereafter arising. 
 3.7 Environmental. Except as
disclosed on Exhibit 3.10 to the Loan Agreement, Guarantor warrants and represents to Lenders, that: (i) Guarantor has undertaken all appropriate inquiry and investigation as to the environmental condition of each Property;
(ii) each Property and Guarantor, and any occupants of the Property, are in compliance with and shall continue to be in compliance with all applicable Environmental Laws; (iii) each Property is not and has never been used to generate,
handle, treat, store or dispose of Hazardous Materials in excess of De Minimis Amounts or otherwise in violation of any Environmental Laws; (iv) no Hazardous Materials (including asbestos, mold or lead paint in any form) in excess of De Minimis
Amounts are located on or under any Property or emanate from any Property or have been disposed of, stored or treated on or about any Property; (v) there are no unregistered underground storage tanks on the Property that are subject to any
underground storage tank registration laws or regulations; (vi) no notice has been received with regard to any Hazardous Material on any Property; (vii) no action, investigation or proceeding is pending or to Guarantor’s knowledge
threatened which seeks to enforce any right or remedy against Guarantor or any Property under any Environmental Law; (viii) neither Guarantor nor any occupant of the Property, is subject to any remedial obligations as to the Property under
Environmental Laws relating to Hazardous Materials, health or the environment; (ix) Guarantor has not, nor will Guarantor, release or waive the liability of any previous owner, lessee or operator of the Property or any party who may be
potentially responsible for the presence of or removal of Hazardous Material from the Property, nor has it made promises of indemnification regarding Hazardous Material on the Property to any party, except as contained herein and in the Loan
Documents; 

  
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and (x) all licenses, permits and other governmental or regulatory actions necessary for each Property to comply with Environmental Laws shall be obtained and maintained and Guarantor shall
assure compliance therewith. 
 3.8 Utilities. With respect to each Property on which Guarantor is currently operating
its business: 
 3.8.1 To Guarantor’s knowledge, each Property has rights of access to public ways and is served by public water,
sewer, sanitary sewer and drain facilities adequate to service such Property for its intended use; 
 3.8.2 All public utilities necessary
or convenient to the full use and enjoyment of each Property are located either in the public right of way abutting such Property (which are connected so as to serve such Property without passing over other property) or in recorded easements serving
such Property; and 
 3.8.3 To the best of Guarantor’s knowledge after due inquiry, all roads necessary for the use of each Property
for its current respective purpose have been completed, are physically open and dedicated to public use and have been accepted by all Governmental Authorities. 

3.9 Certificate of Occupancy; Licenses. With respect to
each Property on which Guarantor is currently operating its business: 
 3.9.1 To Guarantor’s knowledge, all material certifications,
permits, licenses and approvals, including without limitation, certificates of completion and occupancy permits required for the legal use, occupancy and operation of the Property (collectively, the “Licenses”) have been obtained
and are in full force and effect and are not subject to revocation, suspension or forfeiture; 
 3.9.2 Guarantor shall keep and maintain
all Licenses necessary for the operation of the Property for its permitted use; and 
 3.9.3 To Guarantor’s knowledge, the use being
made of the Property is in conformity with the certificate of occupancy issued for the Property. 
 3.10 Flood
Zone. To Guarantor’s knowledge, none of the Improvements on the Property are located in an area as identified by the Federal Emergency Management Agency as an area having special flood hazards or, if so located, Guarantor has
obtained flood insurance with respect to the Property in an amount that a prudent, similarly situated real property owner would obtain. 

3.11 Physical Condition. Except as disclosed on Exhibit 3.14 to the Loan Agreement, the
Property, including, without limitation, all buildings, improvements, parking facilities, sidewalks, storm drainage systems, roofs, plumbing systems, HVAC systems, fire protection systems, electrical systems, equipment, elevators, exterior sidings
and doors, 

  
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landscaping, irrigation systems and all structural components, is in good condition, order and repair in all material respects; there exists no structural or other material defects or damages in
the Property, whether latent or otherwise, and Guarantor has not received notice from any insurance company or bonding company of any defects or inadequacies in the Property, or any part thereof, which would adversely affect the insurability of the
same or cause the imposition of extraordinary premiums or charges thereon or of any termination or threatened termination of any policy of insurance or bond. The Property is free from material damage caused by fire or other casualty. To
Guarantor’s knowledge after due inquiry, all liquid and solid waste disposal, septic and sewer systems located on the Property are in a good and safe condition and repair and in material compliance with all applicable legal requirements. 

3.12 Boundaries. All of the Improvements which were included in determining the appraised value of the Property lie
wholly within the boundaries and building restriction lines of the Property, and no improvements on adjoining properties encroach upon the Property, and no easements or other encumbrances upon the Property encroach upon any of the Improvements, so
as to affect the value or marketability of the Property. 
 3.13 Leases. No Person has any possessory interest in or
right to occupy any Property other than the Guarantor, other than pursuant to billboard licenses or easements which do not, individually or in the aggregate, materially adversely affect Borrower’s or such Subsidiary’s interest in such
Property. 
 3.14 Fixtures. Guarantor is the owner of all Fixtures at the Property. 

4. Covenants of Guarantor. The following covenants shall remain in effect until
the payment and performance of all of the Guarantor’s obligations to the Lenders: 
 4.1 Existence. Guarantor will
do or cause to be done all things necessary to preserve and keep in full force and effect its existence in accordance with its organizational documents, and the material rights, licenses and franchises of Guarantor, provided that Guarantor is not
required to preserve any such right, license or franchise if the maintenance or preservation thereof is no longer desirable in the conduct of its business. 

4.2 Liens. Except for Permitted Liens, Guarantor will not, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind on the Property. 
 4.3 Maintain Properties. Guarantor shall maintain,
preserve and keep or cause each applicable Tenant to maintain preserve and keep each Property in good repair, working order and condition (ordinary wear and tear excepted), making all replacements, additions and improvements thereto necessary for
the proper conduct of its business, unless prohibited by the Loan Documents. 
 4.4 Use of
Property. Guarantor shall use and operate, and require its lessees or licensees to use and operate, each Property in compliance with all applicable laws (including, for example, the Americans with Disabilities Act) and ordinances,
covenants, and restrictions, and with all applicable requirements of any Lease now or hereafter affecting each Property. 

  
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Guarantor shall not permit any unlawful use of any Property or any use that may give rise to a claim of forfeiture of any of such Property. Guarantor shall not allow changes in the stated use of
any Property from that disclosed to Lenders at the time of execution hereof. Guarantor shall not initiate or acquiesce to a zoning change of any Property without prior notice to, and written consent of, Lenders. 

4.5 Maintenance, Repairs and Alterations. Without the
prior written consent of Lenders (which consent shall not be unreasonably withheld or delayed), Guarantor will not remove, demolish or structurally alter, or permit any Tenant to remove, demolish or structurally alter, any of the buildings or other
Improvements on any Property after Guarantor has opened such Property to the public for business (“Alterations”). Guarantor shall promptly notify Lenders in writing of any material loss, damage or adverse condition affecting any
Property. Notwithstanding anything to the contrary set forth in the foregoing, Guarantor may make or permit Tenant to make Alterations without the consent of Lenders in the event that such Alterations (i) may be required by laws, ordinances or
regulations, (ii) would not have a Material Adverse Effect on a Property, or (iii) are improvement work which are commercially reasonable to facilitate or compliment to the current and future operations on such Property and do not
materially and adversely affect the value of such Property. 
 4.6 Environmental Condition
of Property and Indemnity. Guarantor agrees to notify Agent and Lenders immediately upon receipt of any citations, warnings, orders, notices, consent agreements,
process or claims alleging or relating to violations of any Environmental Laws or to the environmental condition of each Property and shall conduct and complete all investigations and all cleanup actions necessary to comply with the Environmental
Laws and to remove, in accordance with Environmental Laws, any Hazardous Material in excess of De Minimis Amounts from each Property. GUARANTOR SHALL DEFEND, AND HOLD AGENT, LENDERS AND ANY PARTICIPANTS, SUCCESSORS OR ASSIGNS TO LENDERS’
INTEREST IN THE LOANS, AND ANY OTHER PARTY WHO ACQUIRES ANY PORTION OF THE LOANS AT A FORECLOSURE SALE OR OTHERWISE THROUGH THE EXERCISE OF AGENT’S AND LENDERS’ RIGHTS AND REMEDIES UNDER THE LOAN DOCUMENTS, AND ALL DIRECTORS, OFFICERS,
EMPLOYEES AND AGENTS OF ALL OF THE AFOREMENTIONED INDEMNIFIED PARTIES, HARMLESS FROM AND AGAINST ANY AND ALL ACTUAL OR POTENTIAL DAMAGES, PENALTIES, FINES, CLAIMS, SUITS, LIABILITIES, COSTS, JUDGMENTS AND EXPENSES, INCLUDING REASONABLE
ATTORNEYS’, CONSULTANTS’ OR EXPERTS’ FEES OF EVERY KIND AND NATURE INCURRED, SUFFERED BY OR ASSERTED AGAINST AGENT OR LENDERS AS A DIRECT OR INDIRECT RESULT OF OR WHICH ARISE OUT OF OR RELATE IN ANY WAY TO: (I) REPRESENTATIONS
MADE BY GUARANTOR IN THIS SECTION BEING OR BECOMING UNTRUE IN ANY MATERIAL RESPECT; (II) GUARANTOR’S VIOLATION OF OR FAILURE TO MEET THE REQUIREMENTS OF ANY ENVIRONMENTAL LAWS; OR (III) HAZARDOUS MATERIALS WHICH, WHILE ANY PROPERTY IS
SUBJECT TO THE MORTGAGE, EXIST ON ANY PROPERTY IN EXCESS OF DE MINIMIS AMOUNTS OR OTHERWISE IN VIOLATION OF ANY ENVIRONMENTAL LAW. HOWEVER, GUARANTOR’S OBLIGATIONS UNDER THIS SECTION SHALL NOT APPLY TO ANY ACT OF AGENT

  
 11 

 
OR LENDERS WHICH TAKES PLACE AFTER FORECLOSURE OR SATISFACTION OF THE MORTGAGE. THESE INDEMNIFICATION OBLIGATIONS ARE IN ADDITION TO GENERAL INDEMNIFICATION PROVISIONS SET FORTH HEREAFTER.
GUARANTOR’S OBLIGATIONS UNDER THIS SECTION SHALL CONTINUE, SURVIVE AND REMAIN IN FULL FORCE AND EFFECT NOTWITHSTANDING THE REPAYMENT OF THE OBLIGATIONS, A FORECLOSURE OF OR EXERCISE OF POWER OF SALE UNDER THIS INSTRUMENT, A DELIVERY OF A DEED
IN LIEU OF FORECLOSURE, A CANCELLATION OR TERMINATION OF RECORD OF THIS INSTRUMENT AND THE TRANSFER OF ANY PROPERTY. 
 4.7
Further Assurances. Upon written request of Borrower or Agent, within twenty-five (25) days of such request, Guarantor shall execute and deliver to Agent for recording Mortgages for each Property in form and
substance reasonably satisfactory to Guarantor and Lenders. If, after the date of such recording, Guarantor directly or indirectly through a Subsidiarity acquires any real property, upon request of Borrower or any Lender, Guarantor shall, or shall
cause such Subsidiary to, execute and deliver to Agent for recording in the applicable county recorder’s office, a Mortgage in substantially the form as prior Mortgages, subject to those changes deemed necessary by Agent and its counsel to
provide for local law requirements. 
 5. Events of Default; Remedies 

5.1 Default. An event of default (“Event of Default”) under this Agreement shall exist if there shall be an
Event of Default under any of the Loan Documents. If an Event of Default occurs, the Guaranteed Obligations shall be due immediately and payable upon demand and Lenders may exercise any rights and remedies as provided in this Agreement and other
Loan Documents, or as provided at law or equity. Guarantor shall pay interest on the Guaranteed Obligations from such Event of Default at the highest rate of interest charged on any of the Guaranteed Obligations. 

5.2 Remedies. Upon the occurrence and during the continuance of an Event of Default, Agent and Lenders may exercise in respect
of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies set forth in the Loan Agreement. The rights and remedies shall be cumulative, and
not exclusive, except to the extent required by law. The exercise of any right, remedy or attorney-in-fact appointment by Agent of any Lender shall not relieve the
Guarantor of any of their obligations hereunder. 
 5.3 Injunctive Relief. Guarantor recognizes
that if there is an Event of Default then, depending on the nature of the Event of Default, it may be that no remedy at law will provide complete or adequate relief to Agent or Lenders, and Agent shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual damages. The injunctive relief shall not be a waiver of Lenders’ rights to other relief and remedies. 

  
 12 

 6. Indemnities and Expenses. 

6.1 Indemnification. Guarantor agrees to indemnify Lenders and any other Person acting on behalf of Lenders from and against all
claims, lawsuits and liabilities (including reasonable attorneys fees) growing out of or resulting from this Agreement (including enforcement of this Agreement) or any other Loan Document to which such Guarantor is a party, except claims, losses or
liabilities resulting from the gross negligence or willful misconduct of the party seeking indemnification as determined by a final non-appealable order of a court of competent jurisdiction. This provision
shall survive the termination of this Agreement and the Loan Agreement and the repayment of the Guaranteed Obligations. 
 6.2
Fees and Expenses. Guarantor shall, upon demand, pay to Lenders and any other Person acting on its behalf all the fees and expenses which Lenders or such Person may incur in connection with
(i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement
and the other Loan Documents, (iii) the exercise or enforcement of any of the rights of Lenders hereunder, or (iv) the failure by Guarantor to perform or observe any of the provisions hereof. 

7. General Terms and Conditions. 

7.1 Applicable Law. This Agreement shall be governed and construed in accordance with the laws of
the State of Arizona without reference to the choice of law doctrine. 
 7.2 Notices. Any notice or other communication
hereunder to any party hereto shall be by hand delivery, overnight delivery via nationally recognized overnight delivery service, telegram, or registered or certified United States mail with return receipt and unless otherwise provided herein shall
be deemed to have been given or made when delivered, telegraphed, or, if sent via United States mail, when receipt signed by the receiver, postage prepaid, addressed to the party at its address specified below (or at any other address that the party
may hereafter specify to the other parties in writing): 
  

			
	If to the Guarantor:	 	 Carvana, LLC
 4020 East Indian School Road

Phoenix, Arizona 85018
 Attention: General Counsel

Email: DL-CarvanaLegal@carvana.com

		
	With a copy to:	 	 Snell & Wilmer L.L.P.
 One Arizona
Center
 Phoenix, Arizona 85004
 Attention: Brian William
Burke
 Facsimile No.: (602) 382-6070

Telephone No.: (602) 382-6379

Email: bburke@swlaw.com

  
 13 

					
	If to the Agent:	 		 	 Verde Investments, Inc.
 1720 W. Rio Salado
Parkway
 Tempe, Arizona 85281
 Attention: Steven
Johnson

		
	If to the Lenders:	 	At the address set forth on the signature pages to the Loan Agreement.

 7.3 Headings. Section and paragraph headings have been inserted in this Agreement as a
matter of convenience for reference only. The section and paragraph headings shall not be used in the interpretation of this Agreement. 

7.4 Severability. If any one or more of the provisions of this Agreement are held to be invalid, illegal or unenforceable
in any respect for any reason, the validity, legality and enforceability of any such provision or provision in every other respect and of the remaining provisions of this Agreement shall not be in any way impaired. 

7.5 Successors and Assigns. This Agreement shall be binding upon Guarantor and Agent, and shall inure to the benefit of
Guarantor, Agent, Lenders, and their respective successors and assigns. 
 7.6 Amendments. This Agreement may not be modified,
altered or amended, and no provision hereof may be waived, except by an agreement in writing signed by the Guarantor and Agent and, upon approval of the Lenders. The rights of the Agent and Lenders granted in or referred to in this Agreement shall
apply to any modification of or supplement to the Loan Documents. 
 7.7 Assignments and Participation. Guarantor may not assign any
of their rights hereunder without the prior written consent of Lenders, and any such assignment made without such consent will be void. Each Lender may from time to time, without the consent of Guarantor, sell, transfer, pledge, assign and convey
the Note, the Loan, this Agreement and the other Loan Documents (or any interest therein), and delegate any and all of its obligations with respect thereto, and may grant participations in the Loan to another financial institution or other Person on
terms and conditions reasonably acceptable to Agent and split the Loan into multiple parts, or the Note into multiple component notes or tranches. In connection with any such sale, transfer, assignment, conveyance or participation, Lenders may,
acting for this purpose as an agent of Guarantor, maintain at its offices a register for the recordation of the names and addresses of Lenders’ participants or assignees, and the amount and terms of Lenders’ sales, transfers, assignments,
conveyances and participations including specifying any such participant’s or assignee’s entitlement to payments of principal and interest, and any payments made, with respect to each such sale, transfer, assignment, conveyance or
participation. Upon prior notice to Guarantor of such participation or assignment, Guarantor shall thereafter furnish to such participant or assignee any information furnished by Guarantor to Lenders pursuant to the terms of the Loan Documents.
Nothing in this Agreement or any other Loan Document shall prohibit Lenders from pledging or assigning this Agreement and Lenders’ rights under any of the other Loan Documents, including Collateral therefor, to any Federal Reserve Lenders in
accordance with applicable law. 
 7.8 Waiver by Guarantor. Except as otherwise provided for in this Agreement, Guarantor waives
(i) notice and consummation of presentment, demand, protest, dishonor, intent to accelerate, and acceleration; (ii) all rights to notice and a hearing prior to taking possession or control of, or the Lenders’ replevy, attachment or
levy upon, the Collateral; (iii) any bond or security in a judicial proceeding as a condition to the Lenders exercising any of the Lenders’ remedies; and (iv) the benefit of all valuation, appraisement and exemption laws. The failure
or delay of Guarantor to strictly enforce the terms of this Agreement shall not be a waiver of such Guarantor’s right to do so. 

7.9 Counterparts; Electronic Execution. This Agreement may be executed in two or more counterparts, with the same effect as if all
parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. Delivery of an executed counterpart of this Agreement by telefacsimile or other
electronic method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of
transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall
apply to each other Loan Document mutatis mutandis. 

  
 14 

 7.10 Entire Agreement. This Agreement, together with the other Loan Documents, reflects
the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. 

7.11 Survival. The obligations of the Guarantor under 6.1 and 6.2 hereof shall survive the repayment of the Loans and the termination
of this Agreement. In addition, each representation and warranty made, or deemed to be made by a request for a borrowing, herein or pursuant hereto shall survive the making of such representation and warranty, and the Lenders shall not be deemed to
have waived, by reason of making any Loan, any Default that may arise by reason of such representation or warranty proving to have been false or misleading, notwithstanding that the Lenders may have had notice or knowledge or reason to believe that
such representation or warranty was false or misleading at the time such Loan was made. 
 7.12 LIMITATION ON LIABILITY; WAIVER OF
PUNITIVE DAMAGES. EACH OF THE PARTIES HERETO, INCLUDING LENDER, BY ACCEPTANCE HEREOF, AGREES THAT IN ANY JUDICIAL, MEDIATION OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY BETWEEN OR AMONG THEM (A “DISPUTE”) THAT MAY ARISE
OUT OF OR BE IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY OTHER AGREEMENT OR DOCUMENT BETWEEN OR AMONG THEM OR THE OBLIGATIONS EVIDENCED HEREBY OR RELATED HERETO, IN NO EVENT SHALL ANY PARTY HAVE A REMEDY OF, OR BE LIABLE TO
ANY OTHER PARTY FOR, (A) INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OR (B) PUNITIVE OR EXEMPLARY DAMAGES. EACH OF THE PARTIES HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY MAY HAVE OR WHICH MAY ARISE IN
THE FUTURE IN CONNECTION WITH ANY DISPUTE ARISING HEREUNDER, WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE. 

7.13 WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES HERETO, INCLUDING LENDER BY 

  
 15 

 
ACCEPTANCE HEREOF, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT EACH MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY WITH RESPECT HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT TO EACH PARTY TO ACCEPT THIS AGREEMENT. EACH OF
THE PARTIES AGREES THAT THE TERMS HEREOF SHALL SUPERSEDE AND REPLACE ANY PRIOR AGREEMENT RELATED TO ARBITRATION OF DISPUTES BETWEEN THE PARTIES CONTAINED IN ANY OTHER DOCUMENT OR AGREEMENT HERETOFORE EXECUTED IN CONNECTION WITH, RELATED TO OR BEING
REPLACED, SUPPLEMENTED, EXTENDED OR MODIFIED BY, THIS AGREEMENT. 
 Signature pages to follow. 

  
 16 

 Exhibit 10.26 

IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement effective as of the date first written above. 

 

							
	 GUARANTOR: 
	 		 	CARVANA, LLC
				
		 		 	By:	 	 /s/ Paul Breaux 

		 		 	Name:	 	Paul Breaux
		 		 	Title:	 	Vice President

  

							
	 AGENT:
	 		 	VERDE INVESTMENTS, INC.
				
		 		 	By:	 	 /s/ Steven P. Johnson 

		 		 	Name:	 	Steven P. Johnson
		 		 	Title:	 	Vice PresidentEXHIBIT 10.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED AGREEMENT (this “Agreement”) is made effective as of the 2nd day of April, 2017 (the “Effective Date”), between Ralph Lauren Corporation, a Delaware corporation (the “Company”), and Ralph Lauren (the “Executive”).

RECITALS

WHEREAS, the Executive is the founder of the predecessor entities of the Company and has acted as Chief Executive Officer of such entities and the Company for approximately fifty years;

WHEREAS, the Executive is currently employed by the Company pursuant to an employment agreement made effective as of June 26, 2012, as amended on April 1, 2015, and on September 25, 2015 (such agreement, as amended, the “2012 Agreement”).  Prior to his employment under the 2012 Agreement, the Executive was employed by the Company pursuant to an employment agreement made effective as of March 30, 2008, as amended on June 29, 2009, and on November 9, 2010 (such agreement, as amended, the “2008 Agreement”);

WHEREAS, the Company recognizes that the Executive’s talents and abilities are unique and continue to be integral to the success of the Company.  The Company wishes to retain the services of the Executive and recognizes that the Executive’s contribution to the growth and success of the Company will be substantial.  The Company desires to provide for the continued employment of the Executive and to make employment arrangements that will reinforce and encourage the attention and dedication to the Company of the Executive as a member of the Company’s senior management, in the best interest of the Company.  The Executive is willing to serve the Company, on the terms and conditions herein provided; and

WHEREAS, the Company and the Executive wish to amend and restate the 2012 Agreement as evidenced by this Agreement, effective as of the Effective Date.

NOW THEREFORE, in order to effect the foregoing, the Company and the Executive wish to enter into an Agreement on the terms and conditions set forth below.  Accordingly, in consideration of the premises and the respective covenants and agreements of the parties herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

Section 1.                 Employment.  Effective as of the Effective Date, the Executive’s employment with the Company shall be governed by this Agreement.

Section 2.                 Term.  The term of the Executive’s employment hereunder shall commence as of the Effective Date and shall remain in effect through April 2, 2022, the last day of the Company’s fiscal year (a “Fiscal Year”) which ends in calendar year 2022, subject to earlier termination in accordance with the terms of this Agreement (the “Term”).

 

Section 3.                 Position and Duties.

(a)            Title and Duties.  The Executive shall serve as Chief Creative Officer of the Company and Executive Chairman of the Board of Directors of the Company (the “Board”) and shall have such duties, authority and responsibilities as are normally associated with, and appropriate for, such positions, including, but not limited to, those authorities as may be agreed between the Executive and the Board from time to time.  The Executive shall report directly to the Board.  The Executive shall devote substantially all of his working time and efforts to the business and affairs of the Company.  During the Term, it shall not be a violation of this Agreement for the Executive to (i) serve on corporate, civic or charitable boards or committees; (ii) deliver lectures, fulfill speaking engagements or teach at educational institutions; and (iii) manage personal investments, so long as (A) such activities do not interfere (other than in immaterial respects) with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement and (B) any service on a corporate board on which the Executive is not serving as of the Effective Date is approved by the Compensation & Organizational Development Committee of the Board (the “Compensation Committee”). It is expressly understood and agreed that to the extent that any such activities have been conducted by the Executive prior to the Effective Date, the continued conduct of such activities (or the conduct of activities similar in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the performance of the Executive’s responsibilities to the Company.

(b)            Office and Facilities.  During the Term and for so long as the Executive serves as Executive Chairman, the Executive shall be provided with office and secretarial support and facilities in each of the Company’s principal executive offices and any other location that the Executive reasonably deems necessary to have an office and secretarial support and facilities in order for the Executive to perform his duties for the Company, in each case, that are appropriate to the Executive’s status and on a basis no less favorable than was provided to the Executive immediately prior to the Effective Date.  At his request, whether during or after the Term, the Executive shall also be provided with an office and secretary at the Company’s principal executive office for so long as the Executive serves as a non-executive member of the Board.

Section 4.                 Compensation.

(a)            Base Salary.  During the Term, the Company shall pay to the Executive an annual base salary of $1,750,000.  The Executive’s base salary shall be paid in substantially equal installments on a basis consistent with the Company’s payroll practices and shall be subject to such increases, if any, as may be determined in the sole discretion of the Board.  The Executive’s base salary, as in effect at any time, is hereinafter referred to as the “Base Salary.”

(b)            Annual Bonus.  Beginning with the Fiscal Year that ends in calendar year 2017 (“Fiscal Year 2017”), for each Fiscal Year that occurs during the Term the Executive shall be eligible to earn an annual cash bonus (the “Bonus”) under the Company’s Executive Officer Annual Incentive Plan, as amended from time to time (the “Bonus Plan”), based upon the achievement of performance goals by the Company and its subsidiaries for each such Fiscal Year established by the Compensation Committee.  The Compensation Committee shall establish 

 

2

objective criteria to be used to determine the extent to which such performance goals have been satisfied.  The range of the Bonus opportunity for each Fiscal Year will be as determined by the Compensation Committee based upon the extent to which such performance goals are achieved; provided that the annual target Bonus opportunity shall be $6 million for each such Fiscal Year (the “Target Bonus”), and provided, further, that for each Fiscal Year, the maximum Bonus payable, pursuant to this Section 4(b), shall equal two hundred percent (200%) of the Target Bonus for such Fiscal Year.  Notwithstanding the foregoing, in no case may the Bonus for any Fiscal Year exceed the maximum annual bonus payable to any single individual pursuant to the Bonus Plan, it being agreed that said maximum amount shall in no event be less than $12 million per Fiscal Year.  The performance goals, metrics and targets (and percentage payouts at Threshold, Target and Maximum) (collectively, “Performance Conditions”) applicable to the Executive’s Bonus for each Fiscal Year shall be consistent with the Performance Conditions that are applicable to annual bonuses for the Company’s other named executive officers under Item 402(a)(3) of Regulation S-K (the “SEC Named Executive Officers”); provided, however, (i) the strategic financial goal that is applicable to the other SEC Named Executive Officers shall not be applicable to the Executive, (ii) this sentence shall not apply to any one-time bonus arrangements made in connection with the hiring of any new SEC Named Executive Officer and (iii) nothing herein shall be construed as precluding or limiting the Compensation Committee from applying a higher range for outperformance for Executive as compared to other SEC Named Executive Officers in a manner no less favorable to the Executive than its past practice.  The Bonus, if any, payable to the Executive in respect of any Fiscal Year, will be paid at the same time that bonuses are paid to other executives of the Company, but in any event, within two and one-half (21⁄2) months after the conclusion of such Fiscal Year.

(c)            Equity Awards.

(1)            In General.  Subject to the terms of this Section 4(c), beginning with Fiscal Year 2016 and on an annual basis during the remainder of the Term, at the same time as equity awards are granted to other SEC Named Executive Officers, the Executive will be granted performance share units (“PSUs”) pursuant to the terms of the Company’s 2010 Long-Term Stock Incentive Plan or any successor thereto (the “Incentive Plan”) with an aggregate target grant date fair value of $11 million.  The number of PSUs to be granted each year shall be determined by dividing $11 million by the average of the high and low price per share of Class A Common Stock of the Company (each a “Common Share”) on the date of grant (or, if such date is not a trading day, on the next preceding trading day) and rounding the result to the nearest whole number.  In the event of any stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Common Shares or other similar corporate transaction or event that affects the Common Shares such that an adjustment is appropriate and necessary in order to prevent dilution or enlargement of the benefits, or potential benefits, intended to be made available hereunder, the number of Common Shares subject to PSUs (and any other equity awards held by the Executive, including an Alternative Award Form or New Award) will be subject to equitable adjustment, on a basis no less favorable to the Executive than as set forth in the Incentive Plan as in effect on the date hereof.  In no event shall any PSU contain single trigger acceleration provisions upon a “Change in Control” (as defined in the Incentive Plan), except in circumstances where the acquirer fails to assume the award 

 

3

in connection with such Change in Control; provided, however, the PSUs (and any Alternative Award Form or New Award) shall be subject to vesting upon a termination of employment following a Change in Control on terms consistent with this Agreement or, if more favorable, the terms of any award agreement applicable to any other SEC Named Executive Officer; and provided further that any performance conditions applicable to PSUs (and any other outstanding performance-based equity awards, including any applicable Alternative Award Form or New Award) with a performance period that is incomplete as of a Change in Control shall be deemed satisfied at the greater of target and actual performance as of the Change in Control (or such more favorable treatment as applies to other SEC Named Executive Officers).

(2)            PSUs.  PSUs granted hereunder shall vest, if at all, following a three (3)-year performance period, and shall be subject to the Executive’s employment with the Company on the applicable PSU Certification Date (as defined below), except as otherwise provided herein, and, subject to Section 4(c)(3)(B), the attainment of the applicable performance goals set forth below, which shall be no less favorable to the Executive than the Performance Conditions applicable to PSUs granted to any of the other SEC Named Executive Officers.  Each annual grant of PSUs hereunder shall vest and be paid out based on attainment by the Company of a metric established by the Compensation Committee, in its sole discretion; but for the Fiscal Year that ends in calendar year 2017, shall be a level of cumulative earnings per share (“EPS”) established by the Compensation Committee, in its sole discretion, for the three (3)-year performance period.  With respect to each such annual grant of PSUs, the Executive shall be entitled to vest in, and receive payment with respect to, a percentage of such PSUs determined as follows:

	
1.

 

Performance Level

 

	2.

Percentage of Goal(s) 

Achieved

(%)

	
3.

Percentage of Cumulative 

Earnings PSUs Vested/Paid

(%)

	
Below Threshold

	 	
<70

	
0

	
Threshold

	 	
70

	
75

	
Target

	 	
100

	
100

	
Maximum

	 	
110 or more

	
150

For purposes of determining the number of PSUs that shall vest by reason of attainment of cumulative EPS levels, or other performance levels, as applicable, PSU vesting shall be interpolated for performance between identified performance levels, except that no PSUs shall vest for performance below the threshold level.  Not later than thirty (30) days prior to March 15th of the calendar year immediately following the end of the applicable three (3)-year performance period, the Compensation Committee shall certify the level of performance achieved with respect to such three (3)-year performance period (the date of such certification being referred to as the “PSU Certification Date”).  Any PSUs that remain unvested following such certification shall be immediately forfeited without payment of any consideration.

 

4

Payment in respect of each vested PSU, if any, shall be made in Common Shares as soon as practicable (but in no event later than thirty (30) days) following the PSU Certification Date.

In the event of an issuance of any cash or stock dividend on the Common Shares (a “Dividend”), the Executive shall be credited with an additional number of PSUs (each, a “Dividend PSU”), determined as follows:

(x)            in the event of a cash dividend, equal to the quotient obtained by dividing:  (a) the product of (i) the number of PSUs that the Executive holds at the time of the record date for such Dividend multiplied by (ii) the amount of the Dividend per Common Share, divided by (b) the fair market value per Common Share on the payment date for such Dividend; and

(y)            in the event of a stock dividend, equal to the number of Common Shares (including fractions thereof) issued with respect to each Common Share, multiplied by the number of PSUs.

Once credited, each Dividend PSU shall be treated as a PSU hereunder and shall be subject to the same terms and conditions as the PSU from which such Dividend PSU is derived, including, but not limited to, the applicable vesting schedule and rights to Dividend PSUs with respect to future Dividends.

For the avoidance of doubt, the Executive shall continue to be entitled to be credited with “Dividend RPSUs” as defined in, and under the terms and conditions set forth in, Section 4(c)(3)(C) of the 2012 Agreement as it was in effect prior to the effective date of Amendment No. 1 to the 2012 Agreement.

Each annual grant of PSUs may be evidenced by a certificate and/or summary of terms (in accordance with the Company’s past practice) which shall not be inconsistent with the terms of this Agreement.

(3)            Other Conditions.  Notwithstanding anything herein to the contrary:  (A) the performance targets established for PSU grants for each Fiscal Year shall be approved in writing by the Compensation Committee not later than the latest date required for such PSUs to qualify as “qualified performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”); and (B) PSUs granted to the Executive in respect of any Fiscal Year shall have Performance Conditions which are no less favorable to the Executive than those applicable to PSUs granted to any other SEC Named Executive Officers in respect of such Fiscal Year.  It is contemplated that no more than fifty percent (50%) (the “Maximum Variance Percentage”) of the long term equity incentive award target opportunity granted to any other SEC Named 

 

5

Executive Officer in respect of any Fiscal Year (a “FY LTI Award”) shall be in the form of awards which differ (including with respect to Performance Conditions) from the PSUs to be granted to the Executive pursuant to Sections 4(c)(1) and (2) of this Agreement (an “Alternative Award Form”).  In the event that, with respect to any Fiscal Year, the percentage of any SEC Named Executive Officer’s FY LTI Award that is in an Alternative Award Form (for the avoidance of doubt, which may include PSUs having Performance Conditions which are more favorable than those applicable to the PSUs contemplated to be granted to the Executive hereunder) exceeds the Maximum Variance Percentage (such excess percentage being referred to as the “Excess Percentage”) then, the Executive shall be informed of such circumstances and at his request, a percentage of the aggregate Equity Award made to the Executive with respect such Fiscal Year equal to the Excess Percentage shall be granted to the Executive on terms consistent with such Alternative Award Form.  The terms of any such Alternative Award Form granted to the Executive that are related to a termination of employment shall be no less favorable to the Executive than the equity award vesting provisions of Section 7 (or, if more favorable, the corresponding provisions of the equivalent Alternative Award Form granted to any other SEC Named Executive Officer).  Subsection (B) of this Section 4(c)(3) shall not apply to any initial one-time equity awards granted in connection with the hiring of an SEC Named Executive Officer.

(4)            New Form of Award.  If, for any Fiscal Year during the Term, the Compensation Committee changes all or some of the PSU portion of the other SEC Named Executive Officers’ annual equity award to a new form of award with different vesting and other terms and conditions (a “New Award”), then an equal portion of the Executive’s PSUs for that particular Fiscal Year shall be replaced with such New Award, which shall have the same terms and conditions (including Performance Conditions), as apply to the New Award granted to the other SEC Named Executive Officers.  The Executive shall have the same rights under Section 4(c)(3)(B) with respect to the New Award as he had with respect to the PSUs granted under this Agreement; provided that Alternative Award Form shall in such circumstances mean the form of awards which differ (including with respect to Performance Conditions) from both the Executive’s PSUs and the Executive’s New Award, and the Maximum Variance Percentage shall be determined relative to the aggregate percentage of the FY LTI Award composed of PSUs and the New Award.  The terms of any such New Award granted to the Executive that are related to a termination of employment shall be no less favorable to the Executive than the equity award vesting provisions of Section 7 (or, if more favorable, the corresponding provisions of the equivalent New Award granted to any other SEC Named Executive Officer).

(5)            Stock Options and RPSUs.  All stock options and restricted performance share units (“RPSUs”) granted to the Executive under the 2012 Agreement prior to that agreement being amended on April 1, 2015, and all Dividend RPSUs granted to the Executive before and after the Effective Date, shall continue to be governed by the terms of the 2012 Agreement as they existed prior to the effective date of Amendment No. 1 to the 2012 Agreement; provided, however, that the provisions applicable upon termination of employment or a Change in Control, in each case, as set forth in this Agreement shall apply to such awards to the extent more favorable than the provisions applicable under the 2012 Agreement.

 

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Section 5.                 Employee Benefits.

(a)            Benefit Plans.  The Executive shall continue to participate in all existing employee benefit plans, perquisite and fringe benefit arrangements of the Company or its affiliates in which he is currently participating and shall be entitled to participate in any future employee benefit plans, perquisite and fringe benefit arrangements of the Company or its affiliates that are provided to other senior executives of the Company on terms no less favorable than are provided to any other senior executive of the Company.

(b)            Expenses.  The Executive shall be entitled to receive prompt reimbursement for all reasonable and customary expenses incurred by the Executive in performing services hereunder, including all expenses of travel and living expenses while away from home on business or at the request of, and in the service of, the Company (collectively, “Business Expenses”); provided that such Business Expenses are incurred and accounted for in accordance with the policies and procedures established by the Company, which policies and procedures shall in no event be in substance less favorable to the Executive than those policies applied to the Executive as of the Effective Date.

(c)            Air Travel.  For security purposes, the Executive and his family members who are traveling with him shall be required to use the Executive’s or other acceptable private aircraft for any travel.  For any expense (whether or not a Business Expense) incurred as a result of the Executive’s use of his or other private aircraft, the Executive shall be reimbursed by the Company (with no tax gross-up).  For any such expense incurred as a result of travel on any private aircraft (other than the Executive’s personal aircraft), the Executive shall be entitled to reimbursement at the lesser of market rates or the Executive’s out-of-pocket cost.  Notwithstanding anything to the contrary in this Section 5(c), in no event shall the Company reimburse the Executive for any amounts over $200,000 for expenses incurred in a Fiscal Year resulting from the Executive’s use of his private aircraft, or other acceptable private aircraft, for personal travel.

(d)            Perquisites.  During the Term, the Company shall provide the Executive with a car and driver for his use and any other perquisites that are generally provided to senior executives of the Company.

(e)            Vacations.  The Executive shall be entitled to vacations and holidays on a basis consistent with that offered to other senior executives of the Company.

(f)            Indemnification.  The Company shall indemnify the Executive, to the fullest extent permitted by applicable law, against damages and expenses (including fees and disbursements of counsel) in connection with his status or his performance of duties as an officer or director of the Company and its affiliates (including any predecessor entities) and, while the potential for such liability exists, shall maintain customary and appropriate directors’ and officers’ liability insurance for the Executive’s protection that is no less favorable in any respect than that provided to any other director or officer of the Company.  Without limiting the generality of the foregoing, if an investigation or proceeding is initiated that involves claims contemplated by this Section 5(f) or as to which the Executive is otherwise entitled to indemnification under law, the Company shall advance to the Executive any reasonable amounts 

 

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he requests in connection with legal and other fees, costs and expenses incurred by the Executive in connection with such investigation or proceeding.  However, the Executive agrees to repay any fees, costs or expenses that are either paid to him or incurred by him and reimbursed by the Company if it is ultimately determined in a final, non-appealable judgment that the Executive is not legally entitled to be indemnified by the Company.  The Company’s obligations under this Section 5(f), as well as under any other indemnification arrangement (including the Company’s bylaws), shall survive any termination of the Executive’s employment hereunder.

Section 6.                 Transition to Executive Chairman.  Notwithstanding anything to the contrary herein, at any time during the Term and upon at least thirty (30) days written notice to the Company, the Executive, in his sole discretion, may step down as Chief Creative Officer and continue as Executive Chairman (and shall have such duties, authority and responsibility as are normally associated with, and appropriate for, the position of non-full time public company executive chairman). Upon such transition, in the Board’s absolute and sole discretion, (a) the Executive’s Base Salary may be reduced, (b) the Board will determine in its absolute and sole discretion the Executive’s eligibility for a Bonus (except that in any case the Executive shall receive a pro rata portion of the Bonus that the Executive would otherwise have received for the Fiscal Year in which the transition occurs, such Bonus to be paid at the same time that bonuses are paid to other executives of the Company), (c) the Board will determine in its absolute and sole discretion whether the Executive shall be entitled to the grant of future equity awards under Section 4(c), and (d) on termination of the Executive’s employment, the Executive will no longer be eligible for the benefit under Section 7(a)(1)(III).  From and following such transition all other provisions of this Agreement (including all provisions of Section 7 other than Section 7(a)(1)(III)) would remain in full force and effect.  For the avoidance of doubt, such transition would not constitute a termination of employment by the Executive.

Section 7.                 Termination of Employment.  The Company and the Executive may each terminate the Executive’s employment hereunder and the Term for any reason.

(a)            Termination by the Company without Cause, or Termination by the Executive for Good Reason.  If the Company shall terminate the Executive’s employment without “Cause” (as defined in Section 7(g)(1)), or if the Executive resigns for “Good Reason” (as defined in Section 7(g)(2)):

(1)            the Executive shall be entitled to receive a lump sum cash payment (to be paid within thirty (30) days following the date of termination, except as provided in (IV) below) equal to the sum of:

(I)                the Executive’s Base Salary that would be payable for the period from the date of the Executive’s termination of employment through the second  (2nd) anniversary thereof (the “Severance Period”);

(II)              any accrued but unpaid compensation as of the date of termination of employment, including accrued but unpaid Base Salary, accrued but unused vacation and unpaid Bonuses in respect of completed performance periods, and any unreimbursed business expenses incurred prior to the date of the Executive’s termination of employment (collectively, the “Accrued Obligations”);

 

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(III)            a bonus equal to two (2) times the average annual Bonus paid to the Executive in respect of each of the immediately preceding two Fiscal Years prior to the Fiscal Year in which the Executive’s termination of employment occurs; and

(IV)            a pro rata portion of the Bonus that the Executive would otherwise have received for the Fiscal Year in which the Executive’s termination of employment occurs, such Bonus to be paid at the same time that bonuses are paid to other executives of the Company (any pro rata portion of the Executive’s Bonus provided under this Section 7 shall be prorated based on the number of days the Executive was employed during the applicable Fiscal Year);

(2)            during the Severance Period, the Company shall:  (A) continue to provide the Executive with office facilities and secretarial assistance in New York City and any other location that the Executive maintained an office during the term of his employment that the Executive reasonably deems necessary, (B) permit the Executive to continue to participate in all welfare and medical plans on the same terms as active officers of the Company (in the case of medical plans, limited to the first eighteen months of the Severance Period, unless the Executive elects to continue participation in such medical plan for the remainder of the Severance Period provided that there are no adverse tax consequences to the Company), and (C) continue to provide the Executive with the use of a car and driver on the same basis that such perquisites were provided prior to the date of termination; provided that the amount of any in-kind benefits described in this Section 7(a)(2) that is provided to the Executive in any calendar year shall not affect the amount of any such in-kind benefits to be provided to the Executive in any other calendar year, and all expenses or other reimbursements to the Executive paid pursuant herewith that are taxable income shall in no event be paid later than the end of the calendar year next following the calendar year in which the Executive incurs such expense or pays such related tax;

(3)            any unvested stock options then held by the Executive will continue to vest on their scheduled vesting dates, subject to, and conditioned upon, the Executive’s compliance with Section 9 hereof.  In addition, subject to, and conditioned upon, the Executive’s compliance with Section 9 hereof, any vested options (and any options that continue to vest as described above) shall remain exercisable until the later to occur of (A) one (1) year from the date of the Executive’s termination of employment or (B) thirty (30) days from the date the options become vested and exercisable, but in no event later than the originally scheduled expiration date of the options;

(4)            RPSUs and PSUs granted under the 2012 Agreement and under this Agreement will vest and be settled based upon actual performance over the applicable performance period as if the Executive had remained employed to the applicable RPSU Certification Date (as defined in Section 4(c)(3)(C) of the 2012 Agreement as it was in effect prior to the effective date of Amendment No. 1 to the 2012 Agreement) or PSU Certification Date, as applicable;

 

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(5)            to the extent not theretofore paid or provided, the Company and its affiliates shall timely pay or provide to the Executive, in accordance with the terms of the applicable plan, program, policy, practice or contract, any other amounts or benefits required to be paid or provided or that the Executive is eligible to receive under any plan, program, policy, practice or contract of the Company or its affiliates through the date of termination (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and

(6)            except as expressly provided above, and except for the Company’s obligations under Section 5(f) hereof, the Company shall have no further obligations to the Executive hereunder following the Executive’s termination of employment under the circumstances described in this Section 7(a).

(b)            Termination Due to Death or Disability.  If the Executive’s employment is terminated due to his death or “Disability” (as defined in Section 7(g)):

(1)            the Executive (or his estate) shall be entitled to a lump sum cash payment (to be paid within thirty (30) days following the date of termination, except as provided in (III) below) equal to the sum of:

(I)                the Accrued Obligations; and

(II)              a pro rata portion of the Bonus he would otherwise have received for the Fiscal Year in which his termination due to death or Disability occurred, such Bonus to be paid at the same time that bonuses are paid to other executives of the Company;

(2)            any unvested stock options then held by the Executive will vest immediately and options held by the Executive, or his estate, will remain exercisable for three (3) years from the date of the Executive’s termination of employment, but in no event later than until the originally scheduled expiration date of the options;

(3)            any RPSUs and PSUs granted under this Agreement and then held by the Executive shall vest in their entirety at target on the Executive’s date of termination of employment, with payment in respect of each vested RPSU and PSU being made in Common Shares as soon as practicable (but in no event later than thirty (30) days following the date of termination); provided that if the date of death occurs in the last year of a performance period, the RPSUs and PSUs granted in respect of such performance period shall vest and be paid out based upon actual performance over such performance period as if the Executive had remained employed to the applicable RPSU or PSU Certification Date, as applicable; provided, further, in the case of a termination due to Disability, the settlement of any RPSUs or PSUs may be delayed to such later date as is required for the awards to comply with Section 409A of the Code;

(4)            to the extent not theretofore paid or provided, the Company and its affiliates shall timely pay or provide to the Executive the Other Benefits; and

 

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(5)            except as expressly provided above, and except for the Company’s obligations under Section 5(f) hereof, the Company will have no further obligations to the Executive hereunder following the Executive’s termination of employment under the circumstances described in this Section 7(b).

(c)            Termination by the Company for Cause or by the Executive other than for Good Reason.  If the Executive’s employment is terminated by the Company for Cause or by the Executive other than for Good Reason:

(1)            the Executive shall be entitled to an immediate lump sum cash payment (to be paid within thirty (30) days following the date of termination) equal to the Accrued Obligations;

(2)            any unvested stock options then held by the Executive that have not previously been exercised shall be forfeited, and any vested stock options then held by the Executive that have not previously been exercised shall (x) be forfeited if such termination is by the Company for Cause, or (y) remain exercisable for one (1) year from the date of the Executive’s termination of employment if such termination is by the Executive other than for Good Reason;

(3)            any unvested RPSUs and PSUs shall be forfeited;

(4)            to the extent not theretofore paid or provided, the Company and its affiliates shall timely pay or provide to the Executive the Other Benefits; and

(5)            except as expressly provided above, and except for the Company’s obligations under Section 5(f) hereof, the Company will have no further obligations to the Executive hereunder following the Executive’s termination of employment under the circumstances described in this Section 7(c).

(d)            Termination by Reason of Non-Renewal of Agreement.  If the Executive’s employment terminates at the end of the Term as a result of the Company’s failure to offer to extend the Term of the Agreement or offer to enter into a new employment agreement on substantially the same terms as in effect immediately prior to the end of the Term:

(1)            the Executive shall be entitled to an immediate lump sum cash payment (to be paid within thirty (30) days following the date of termination) equal to the Accrued Obligations;

(2)            the Executive shall be entitled to receive his Bonus for the Fiscal Year ending on the last day of the Term, such Bonus to be paid at the same time that bonuses are paid to other executives of the Company;

(3)            the Executive’s then outstanding stock options, RPSUs and PSUs shall be treated in the manner described in Sections 7(a)(3) and 7(a)(4), respectively;

(4)            to the extent not theretofore paid or provided, the Company and its affiliates shall timely pay or provide to the Executive the Other Benefits; and

 

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(5)            except as expressly provided above, and except for the Company’s obligations under Section 5(f) hereof, the Company shall have no further obligations to the Executive hereunder following the Executive’s termination of employment under the circumstances described in this Section 7(d).

(e)            Payment Delay.  If the Executive is deemed at the time of his termination of employment to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code (as determined by the Company in accordance with the terms of Section 409A of the Code and applicable guidance thereunder (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto)), to the extent delayed commencement of any portion of the termination benefits to which the Executive is entitled under this Agreement (or in accordance with an award granted to the Executive pursuant to the 2012 Agreement or the 2008 Agreement), including, without limitation, any portion of the additional compensation awarded pursuant to this Section 7, is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of the Executive’s termination benefits shall not be provided to the Executive prior to the earlier of (I) the expiration of the six (6)-month period measured from the date of the Executive’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 Executive’s death.  Upon the earlier of such dates, all payments delayed pursuant to this Section 7(e) shall be paid in a lump sum to the Executive, and any remaining payments due under this Agreement (or in accordance with an award granted to the Executive pursuant to the 2012 Agreement or the 2008 Agreement) shall be paid as otherwise provided in accordance with its terms.

(f)            Notice of Termination.  For the avoidance of doubt, the Executive’s continued service as an employee of the Company or its affiliates in any capacity (whether as Chief Creative Officer, Executive Chairman or another role) shall be treated as continued employment for all purposes under this Agreement, including with respect to Executive’s equity awards. Any termination of the Executive’s employment by the Company or by the Executive (other than termination pursuant to the Executive’s death) shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 11 hereof.  If the Company terminates the Executive’s employment for Cause or due to Disability or if the Executive resigns for Good Reason, the “Notice of Termination” shall mean a notice that shall indicate the specific termination provision in this Agreement relied upon and shall set forth, in reasonable detail, the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.  Other than in connection with termination of the Executive’s employment for Cause, the Notice of Termination shall be provided to the other party no later than thirty (30) days prior to the date of termination.

(g)            Definitions.  For purpose of this Agreement:

(1)            “Cause” shall mean:  (A) the willful and continued failure by the Executive to substantially perform his duties hereunder that is not cured within thirty (30) days after demand for substantial performance that specifically identifies the manner in which the Company believes the Executive has not substantially performed his duties is delivered by the Company; or (B) the Executive’s conviction of, or plea of, nolo contendere to a crime (whether or not involving the Company) constituting a felony; or 

 

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(C) willful engaging by the Executive in gross misconduct relating to the Executive’s employment that is materially injurious to the Company, monetarily or otherwise (including, but not limited to, conduct that constitutes competitive activity, in violation of Section 9), or which subjects, or if generally known, would subject the Company to public ridicule or embarrassment.  For purposes of this paragraph, no act, or failure to act, on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause without:  (x) reasonable written notice to the Executive setting forth the reasons for the Company’s intention to terminate for Cause, (y) an opportunity for the Executive, together with his counsel, to be heard before the Board, and (z) delivery to the Executive of a Notice of Termination, as defined in Section 7(g) hereof, approved by the Board  finding that in the good faith opinion of the Board, the Executive was guilty of conduct set forth above in clauses (A), (B) or (C) hereof, and specifying the particulars thereof in detail.  In the event that the Board has so determined in good faith that Cause exists, the Board shall have no obligation to terminate the Executive’s employment if the Board determines in its sole discretion that such a decision not to terminate the Executive’s employment is in the best interest of the Company.  From and after any transition in accordance with Section 6, Cause shall be determined relative to the Executive’s duties pursuant to that Section.

(2)            “Good Reason” shall mean a termination of employment by the Executive within one year following the occurrence of:  (A) a material diminution in the Executive’s duties or authority (including, for the avoidance of doubt, authority as agreed between the Executive and the Board in accordance with Section 3(a)) or the assignment to the Executive of a title or duties inconsistent with his position as Executive Chairman of the Board and Chief Creative Officer of the Company or as otherwise specified in this Agreement, (B) a material reduction in the Executive’s Base Salary, or (C) a failure of the Company to comply with any material provision of this Agreement (including but not limited to, Section 4(b) and Section 4(c)); provided that (x) the events described in clauses (A), (B) and (C) above shall not constitute Good Reason unless (1) the Executive notifies the Company of the existence of such diminution, reduction or failure within ninety (90) days of its occurrence, and (2) unless such diminution, reduction or failure (as applicable) has not been cured within thirty (30) days after notice of such noncompliance has been given by the Executive to the Company; and (y) from and after any transition in accordance with Section 6, Good Reason shall be determined relative to the terms of that Section.

(3)            “Disability” shall mean that as a result of the Executive’s incapacity due to physical or mental illness that, according to a physician selected by the Executive and reasonably acceptable to the Company, is expected to result in death or continue for not less than twelve (12) months, the Executive shall have been absent from his duties hereunder on a full-time basis for the entire period of six (6) consecutive months, and within thirty (30) days after written Notice of Termination is given by the Company (which may occur before or after the end of such six (6) month period) the Executive shall not have returned to the performance of his duties hereunder on a full-

 

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time basis.  From and after any transition in accordance with Section 6, Disability shall be determined relative to the Executive’s duties pursuant to that Section.

Section 8.                 No Mitigation.  The Executive shall have no duty to mitigate the payments provided for hereunder by seeking other employment or otherwise, and such payment shall not be subject to reduction for any compensation received by the Executive from employment in any capacity following the termination of the Executive’s employment with the Company.

Section 9.                 Non-Solicitation/Non-Competition/Non-Disparagement.

(a)            The Executive agrees that for the duration of his employment and for a period of three (3) years from the date of termination thereof, he will not, on his own behalf or on behalf of any other person or entity, hire, solicit, or encourage to leave the employ of the Company or its subsidiaries, affiliates or licensees any person who is an employee of any of such companies; provided, however, the foregoing shall not prohibit general solicitations that are not specifically directed at employees of such companies.

(b)            The Executive agrees that for the duration of his employment and for a period of three (3) years from the date of termination thereof, the Executive will take no action which is intended, or would reasonably be expected, to harm or impugn the reputation (e.g., making public derogatory statements or misusing confidential Company information) of the Company or any of its subsidiaries, affiliates or licensees.  Notwithstanding the foregoing, the parties acknowledge and agree that the Executive’s employment with a competitor in and of itself shall, subject to his compliance with Section 9(c), not be deemed to be harmful to the Company or any of its subsidiaries, affiliates or licensees for purposes of this Section 9(b).  In addition, the Company agrees that, for the duration of the Executive’s employment and for a period of three (3) years from the date of termination thereof, the Company will not (and will use reasonable best efforts to cause its senior executives and Board members not to) take any action which is intended, or would reasonably be expected, to harm or impugn the reputation (e.g., making public derogatory statements or misusing confidential Company information) of the Executive.  Nothing herein shall prevent the Executive, on the one hand, or the Company or its officers and directors, on the other hand, from making or publishing statements when required by law or ordered by a court or government entity or in connection with an investigation, litigation or arbitration.

(c)            The Executive agrees that during the duration of his employment and for a period of two (2) years following the date of the Executive’s termination of employment for any reason other than death, the Executive shall not, directly or indirectly:  (1) engage in any “Competitive Business” (as defined below) for his own account, (2) enter into the employ of, or render any substantial services to, any person engaged in a Competitive Business, or (3) become interested in any entity engaged in a Competitive Business, directly or indirectly, as a partner, shareholder, officer, director, principal, agent, employee, trustee, consultant, or in any other economic relationship or capacity; provided that the Executive may own, solely as an investment, securities of any entity which are traded on a national securities exchange if the Executive is not a controlling person of, or a member of, a group that controls such entity and does not, directly or indirectly, own two percent (2%) or more of any class of securities of such entity.  For the avoidance of doubt, the continuation of non-commercial mentoring, teaching and

 

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engagement in speaking events in a manner that has been conducted by the Executive prior to the Effective Date (and the conduct of activities similar in nature, scope and purpose subsequent to the Effective Date) shall not be a violation of this Section 9(c).

For purposes of this Agreement, the term “Competitive Business” shall include the design, manufacture, sale, marketing or distribution of branded or designer apparel, home, accessories or fragrance products and other products in the categories of products sold by, or under license from, the Company or its affiliates or licensees.

(d)            The Executive will not at any time (whether during or after his employment with the Company) disclose or use for his own benefit or purposes or the benefit or purposes of any other person, entity or enterprise, other than the Company or any of its affiliates, any trade secrets, information, data, or other confidential information relating to customers, licensees, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, manufacturing processes, financing methods, plans or the business and affairs of the Company generally, or any affiliate of the Company; provided that the foregoing shall not apply to (1) information which is not unique to the Company or which is generally known to the industry or the public other than as a result of the Executive’s breach of this covenant or (2) the disclosure of information that is required by law or ordered by a court or government entity or in connection with an investigation, litigation or arbitration.

The Executive agrees that, upon termination of his employment with the Company for any reason, as soon as reasonably practicable thereafter, he will return to the Company any property of the Company in his possession including memoranda, books, papers, plans, letters, correspondence, sketches, artwork, photographs, information or other data (and all copies thereof or therefrom that contain trade secrets or confidential information relating to the business of the Company and its affiliates). Subject to his compliance with his nondisclosure obligations under this Section 9(d) (to the extent applicable), the Executive shall be permitted to retain a copy of all sketches, artwork or similar property he created, personal correspondence, photographs featuring him or designed by him, awards, the contents of his office (other than contents containing trade secrets or confidential information relating to the business of the Company and its affiliates) and his address book.  The Company shall pay all costs incurred in connection with the return or copying of material pursuant to this paragraph. During the Term, the Company and the Executive will work together in good faith to establish a process to determine, and to identify, whether property constitutes Company property or personal property of the Executive (for the avoidance of doubt, any property containing trade secrets or confidential information relating to the business of the Company and its affiliates will constitute property of the Company). Notwithstanding any provision of this Agreement to the contrary, nothing contained herein is intended to, or shall be interpreted in a manner that does, limit or restrict the Executive from exercising any legally protected whistleblower rights (including pursuant to Rule 21F under the Securities Exchange Act of 1934).  The Executive is hereby notified that the immunity provisions in Section 1833 of title 18 of the United States Code provide that an individual cannot be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that is made (1) in confidence to federal, state or local government officials, either directly or indirectly, or to an attorney, and is solely for the purpose of reporting or investigating a suspected violation of the law, (2) under seal in a complaint or other document filed in a lawsuit or other proceeding, or (3) to the Executive’s attorney in connection with a 

 

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lawsuit for retaliation for reporting a suspected violation of law (and the trade secret may be used in the court proceedings for such lawsuit) as long as any document containing the trade secret is filed under seal and the trade secret is not disclosed except pursuant to court order.

(e)            If the Executive or the Company breaches, or threatens to commit a breach of, any of the applicable provisions of this Section 9 (the “Restrictive Covenants”), in addition to any other damages the non-breaching party proves, the Company or the Executive, as applicable, shall have the right and remedy to have the Restrictive Covenants specifically enforced by, or to seek a restraining order or injunction to prevent any continuation of any violation of the provisions of Section 9 of this Agreement from, any court having competent jurisdiction, it being acknowledged and agreed that any such breach or threatened breach would cause irreparable injury to the Company or the Executive, as applicable, and that money damages might not provide an adequate remedy to the non-breaching party.  The Company and the Executive hereby consent that such restraining order or injunction may be granted without the necessity of the other party posting any bond.  The Company or the Executive, as applicable, shall provide the other party hereto with written notice of a suspected breach of the Restricted Covenants.  If requested by the Executive, the Company shall cooperate with the Executive in good faith in valuing the Restrictive Covenants such that payments under this Agreement or any other arrangement may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the final regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the final regulations under Section 280G of the Code in accordance with Q&A-5(a) of the final regulations under Section 280G of the Code.

(f)             In addition to rights and remedies contemplated by Section 9(e), in the event of an actual breach of the Restrictive Covenants which is not cured by Executive within ten (10) days of Executive’s receipt of written notice from the Company describing such breach, the Company shall have the right to discontinue the payment of any amounts owing to the Executive under this Agreement; provided that, if it is ultimately determined that a breach did not occur, the Company shall promptly provide to the Executive in a lump sum any amounts that were withheld and otherwise shall provide any compensation or benefits not yet due in accordance with the terms of this Agreement.

(g)            If any court determines that any of the Restrictive Covenants, or any part thereof, is invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected and shall be given full effect, without regard to the invalid portion.  In addition, if any court construes any of the Restrictive Covenants, or any part thereof, to be unenforceable because of the duration of such provision or the area covered thereby, such court shall have the power to reduce the duration or area of such provision and, in its reduced form, such provision shall then be enforceable and shall be enforced.

Section 10.              Successors; Binding Agreement.

(a)            The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner, and to the same extent, that the Company would be required to perform it if no such 

 

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succession had taken place.  As used in this Agreement, “Company” shall mean the Company as herein defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this Section 10 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

(b)            This Agreement and all rights of the Executive hereunder shall inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive should die while any amounts are payable to him hereunder, all such amounts unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive’s devisee, legatee, or other designee or, if there be no such designee, to the Executive’s estate.

Section 11.              Notice.  For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered with receipt acknowledged or five (5) business days after having been mailed by United States certified or registered mail, return receipt requested, postage prepaid, addressed as follows:

 If to the Executive:

 Mr. Ralph Lauren

 c/o Ralph Lauren Corporation

 650 Madison Avenue 

 New York, New York  10022

 If to the Company:

 Ralph Lauren Corporation

 625 Madison Avenue 

 New York, New York  10022

 Attention:  General Counsel

or to such other address as any party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

Section 12.              Miscellaneous.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and such officer or director of the Company as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York without regard to its conflicts of law principles, provided that rights to indemnification and related expense advancement shall be governed by the laws of the State of Delaware.

 

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Section 13.              Validity.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

Section 14.              Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument.

Section 15.              Arbitration.  Except with respect to claims for breach of Section 9 of this Agreement, any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in the City of New York in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that the Executive shall be entitled to seek specific performance of his right to be paid until the date of termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

Section 16.              Withholding.  The Company may withhold from any amounts payable under this Agreement such federal, state and local taxes as may be required to be withheld pursuant to applicable law or regulation.

Section 17.              Prior Agreements; Entire Agreement.  This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and, effective as of the Effective Date, shall supersede all prior agreements, amendments, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party hereto (including the 2012 Agreement and the 2008 Agreement), except that all equity-based and other awards made prior to the Effective Date pursuant to the 2012 Agreement and the 2008 Agreement (or pursuant to any earlier employment agreement between the Executive and the Company) shall remain outstanding in accordance with their respective terms.

Section 18.              Survivability.  The provisions of this Agreement that by their terms call for performance subsequent to the termination of either the Executive’s employment or this Agreement (including the terms of Sections 3(b), 5(f), 7 and 9) shall so survive such termination.

Section 19.              Section Headings; Construction. The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation hereof.  For purposes of this Agreement, the term “including” shall mean “including, without limitation.”

Section 20.              Section 409A of the Code.  The intent of the parties is that payments and benefits under this Agreement be exempt from or comply with Section 409A of the Code to the extent subject thereto, and accordingly, to the maximum possible extent this Agreement shall be interpreted and administered consistent with such intent.  Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, the Executive shall not be considered to have terminated employment with the company for purposes of this Agreement and no payments shall be due to the Executive under Section 7 until the Executive would be considered to have incurred 

 

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a “separation from service” from the Company within the meaning of Section 409A of the Code.  For purposes of this Agreement, each amount to be paid or benefit to be provided shall be construed as a separate identified payment for purposes of Section 409A of the Code, and any payments described herein that are due within the “short-term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless applicable law requires otherwise.  To the extent required to avoid an accelerated or additional tax under Section 409A of the Code, amounts reimbursable to the Executive under this Agreement shall be paid to the Executive on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to the Executive) during any one year may not affect amounts reimbursable or provided in any subsequent year, and the right to reimbursement (and in-kind benefits) may not be subject to liquidation or exchange for another benefit.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed and the Executive has hereunto set his hand, effective as of the Effective Date,

	 	RALPH LAUREN CORPORATION	 
	 	 	 	 
	 	 	 	 
	
 

	
By: 

	/s/ Joel L. Fleishman	 
	 	 	Joel L. Fleishman	 
	 	 	Chairperson of the Compensation	 
	 	 	Committee 	 
	 	 	 	 
	 	Date: 	3/31/2017	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	/s/ Ralph Lauren	 
	 	 	RALPH LAUREN 	 
	 	 	 	 
	 	Date: 	3/30/17	 
	 	 	 	 

 

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