Document:

Exhibit 10.6

 

FORM OF SMILEDIRECTCLUB, INC.

2019 EMPLOYEE STOCK PURCHASE PLAN

 

The following constitute the provisions of the 2019 Employee Stock Purchase Plan of SmileDirectClub, Inc.

 

1.                                      Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan, accordingly, shall be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. However, the Company may grant options pursuant to one or more offerings under the Plan that are not intended to meet the requirements of Code Section 423.

 

The Plan was adopted by the Board on [·], 2019, subject to stockholder approval at the 2019 Annual Stockholders Meeting. The Plan shall become effective with the Offering Period commencing on October 16, 2019.

 

2.                                      Definitions.

 

(a)                                 “Board” shall mean the Board of Directors of the Company.

 

(b)                                 “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(c)                                  “Common Stock” shall mean the Class A Common Stock of the Company.

 

(d)                                 “Company” shall mean SmileDirectClub, Inc., a Delaware corporation.

 

(e)                                  “Compensation” shall mean the (i) base salary payable to an Employee by the Company or one or more Designated Subsidiaries during such individual’s period of participation in one or more offerings under the Plan plus (ii) all overtime payments, bonuses, commissions, current profit-sharing distributions and other incentive-type payments received during such period. Such Compensation shall be calculated before deduction of (A) any income, employment or other tax withholdings or (B) any pre-tax contributions made by the Employee to any Code Section 401(k) salary deferral plan or any Code Section 125 cafeteria benefit program now or hereafter established by the Company or any Subsidiary. However, Compensation shall not include any contributions (other than Code Section 401(k) or Code Section 125 contributions deducted from such Compensation) made by the Company or any Subsidiary on the Employee’s behalf to any employee benefit or welfare plan now or hereafter established. The Plan Administrator may make modifications to the definition of Compensation for one or more offerings as deemed appropriate.

 

(f)                                   “Designated Subsidiaries” shall mean all Subsidiaries of the Company (unless otherwise specified by the Plan Administrator from time to time in its sole discretion).

 

(g)                                  “Employee” shall mean any individual who is a regular employee of the Company or a Designated Subsidiary, excluding those individuals who (i) have not been regular employees of the Company or a Designated Subsidiary for, at least, six (6) months prior to the Offering Period, (ii) are customarily employed twenty (20) hours or less per week, and (iii) are customarily employed not more than five (5) months in any calendar year. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of

 

 

absence approved by the Company. Unless otherwise determined by the Plan Administrator and set forth in the applicable offering, where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the 1st day following the expiration of such three (3)-month period.

 

(h)                                 “Enrollment Date” shall mean the first day of each Offering Period.

 

(i)                                     “Exercise Date” shall mean the last Trading Day in each Offering Period.

 

(j)                                    “Fair Market Value” shall mean, as of any date, the value of Common Stock determined as follows:

 

(i)                                     If the Common Stock is listed on any established stock exchange, its Fair Market Value shall be the closing sales price for such stock as reported by the National Association of Securities Dealers (if primarily traded on the NASDAQ Global Select Market) or as quoted in the composite tape of transactions on any other stock exchange (with the greatest volume of trading in Common Stock) at the end of regular hours trading on the day of such determination (or if no closing price was reported on that day, on the last preceding Trading Day such closing price was reported), as reported in the Wall Street Journal or such other source as the Plan Administrator deems reliable, or;

 

(ii)                                  If the Common Stock is quoted on the NASDAQ system (but not on the National Market System thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high and low asked prices for the Common Stock at the end of regular hours trading on the day of such determination (or if no such prices were reported on that day, on the last preceding Trading Day such prices were reported), as reported in the Wall Street Journal or such other source as the Plan Administrator deems reliable, or;

 

(iii)                               In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board.

 

(k)                                 “Offering Period” shall mean the period of approximately six (6) months as set forth in paragraph 5.

 

(l)                                     “Plan” shall mean this 2019 Employee Stock Purchase Plan.

 

(m)                             “Plan Administrator” shall mean the Board or a committee of the Board appointed by the Board to administer the Plan in accordance with paragraph 14.

 

(n)                                 “Purchase Price” shall mean an amount equal to 85% of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower; provided, however, the Plan Administrator may establish a higher price for one or more offerings under the Plan.

 

(o)                                 “Reserves” shall mean the number of shares of Common Stock covered by the options under the Plan which have not yet been exercised and the number of shares of Common Stock which have been authorized for issuance under the Plan but not yet placed under option.

 

(p)                                 “Subsidiary” shall mean a corporation, domestic or foreign, of which not less than 50% of the total combined voting power of all classes of stock are held by the Company or a

 

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Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.

 

(q)                                 “Trading Day” shall mean a day on which national stock exchanges and the National Association of Securities Dealers Automated Quotation (NASDAQ) System are open for trading.

 

3.                                      Eligibility.

 

(a)                                 Options may be granted only to Employees. Unless otherwise determined by the Plan Administrator for an offering, any Employee, as defined in paragraph 2, who has been continuously employed by the Company for at least six (6) months and who shall be employed by the Company on the Enrollment Date for an Offering Period shall be eligible to participate in the Plan for such Offering Period.

 

(b)                                 Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately after the grant, such Employee (and any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary of the Company, or (ii) which permits his or her rights to purchase stock under all employee stock purchase plans (within the meaning of Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the Fair Market Value of the shares at the time such option is granted) for each calendar year in which such option is outstanding at any time.

 

4.                                      Offerings. The Plan shall be implemented through one or more offerings. Offerings may be consecutive or overlapping. Each offering shall be in such form and shall contain such terms and conditions as the Plan Administrator shall deem appropriate. The terms of separate offerings need not be identical; provided, however, that each offering shall comply with the provisions of the Plan and the participants in each offering shall have equal rights and privileges under that offering in accordance with the requirements of Section 423(b)(5) of the Code and the applicable regulations thereunder.

 

5.                                      Offering Periods. Each offering shall be implemented by consecutive Offering Periods. Each Offering Period shall be for a period of approximately six (6) months and a new Offering Period shall commence on the first Trading Day of the six (6)-month period commencing on April 15 and October 16 of each year and end on the last Trading Day of such six (6)-month period, respectively. The first Offering Period shall commence on October 16, 2019 and end on April 15, 2020.

 

6.                                      Participation.

 

(a)                                 An eligible Employee may become a participant in the Plan by accessing the website designated by the Company and electronically enrolling in an Offering Period or by submitting an enrollment agreement (in such form as the Company may provide) authorizing payroll deductions at least one (1) day prior to the applicable Enrollment Date, unless an earlier or later time for enrolling is set by the Plan Administrator for all eligible Employees with respect to a given offering or Offering Period.

 

(b)                                 The Plan Administrator may permit Employees in one or more offerings to contribute to the Plan by means other than payroll deductions.

 

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7.                                      Payroll Deductions.

 

(a)                                 At the time a participant enrolls in an Offering Period, he or she shall elect to have payroll deductions made during the Offering Period pursuant to such procedures as the Plan Administrator may specify from time to time and in an amount between one (1%) and thirty percent (30%) of the Compensation which he or she receives during the Offering Period.

 

(b)                                 Payroll deductions for a participant shall commence on the first payroll period following the Enrollment Date and shall end on the last payroll period in the Offering Period, unless sooner terminated by the participant as provided in paragraph 11.

 

(c)                                  All payroll deductions made for a participant shall be credited to his or her account under the Plan and will be withheld in whole percentages only. A participant may not make any additional payments into such account unless specifically provided for in the offering.

 

(d)                                 A participant may discontinue his or her participation in the Plan as provided in paragraph 11, or may decrease the rate of his or her payroll deductions during the current Offering Period by accessing the website designated by the Company and electronically amending his or her enrollment agreement or by submitting a new enrollment agreement (in such form as the Company may provide) authorizing a decrease in payroll deduction rate. The decrease in rate shall be effective with the first full payroll period following ten (10) business days after the Company’s receipt of the amended enrollment or earlier to the extent administratively practicable. A participant may increase the rate of his or her payroll deductions for an upcoming Offering Period by accessing the website designated by the Company and electronically amending his or her enrollment agreement or by submitting a new enrollment agreement (in such form as the Company may provide) authorizing an increase in payroll deduction rate within ten (10) business days prior to commencement of the upcoming Offering Period. A participant’s enrollment agreement shall remain in effect for successive Offering Periods unless terminated as provided in paragraph 11. The Plan Administrator shall be authorized to limit the number of participation rate changes during any Offering Period.

 

(e)                                  Notwithstanding the foregoing, to the extent necessary to comply with the limitations of Section 423(b)(8) of the Code and paragraph 3(b)(ii) herein, a participant’s payroll deductions may be decreased to 0% during any Offering Period if such participant would, as a result of such limitations, be precluded from buying any additional Common Stock on the Exercise Date for that Offering Period. The suspension of such deductions shall not terminate the participant’s participation in the Plan. Payroll deductions shall recommence at the rate provided in such participant’s enrollment agreement at the beginning of the first Offering Period for which the participant is able to purchase shares in compliance with the limitations of Section 423(b)(8) of the Code and paragraph 3(b)(ii) herein, unless terminated by the participant as provided in paragraph 11.

 

8.                                      Grant of Option. On the Enrollment Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on the Exercise Date for such Offering Period (at the applicable Purchase Price) up to a number of shares of the Company’s Common Stock determined by dividing such Employee’s payroll deductions (and contributions) accumulated prior to such Exercise Date and retained in the participant’s account as of the Exercise Date by the applicable Purchase Price; provided that such purchase shall be subject to the limitations set forth in paragraphs 3(b) and 13 hereof. However, the maximum number of shares of Common Stock purchasable per participant on any Exercise Date shall not exceed twenty-five thousand U.S. dollars ($25,000) worth of shares, subject to periodic adjustments in the event of certain changes in the Company’s capitalization as provided in paragraph 19. Exercise of the option shall occur as provided in paragraph 9, unless the participant has withdrawn pursuant to paragraph 11.

 

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9.                                      Exercise of Option.

 

(a)                                 Unless a participant withdraws from the Plan as provided in paragraph 11 below, his or her option for the purchase of shares will be exercised automatically on each Exercise Date, and the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions (and contributions) in his or her account. No fractional shares will be purchased; any payroll deductions accumulated in a participant’s account which are not sufficient to purchase a full share shall be retained in the participant’s account for the subsequent Offering Period, subject to earlier withdrawal by the participant as provided in paragraph 11. Any other monies left over in a participant’s account after the Exercise Date shall be returned to the participant as soon as administratively practicable following the Exercise Date. During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by him or her.

 

(b)                                 At the time the option is exercised, in whole or in part, or at the time some or all of the Company’s Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company’s federal, state, local, foreign or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At any time, the Company may, but will not be obligated to, withhold from the participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefit attributable to sale or early disposition of Common Stock by the participant. The Plan Administrator may require the participant to notify the Company before the participant sells or otherwise disposes of any shares acquired under the Plan.

 

10.                               Delivery to Broker Account. As promptly as practicable after each Exercise Date on which a purchase of shares occurs, the Company shall deliver the shares purchased by the participant to a brokerage account established for the participant at a Company-designated brokerage firm. The account will be known as the ESPP Broker Account. The Company may require that, except as otherwise provided below, the deposited shares may not be transferred (either electronically or in certificate form) from the ESPP Broker Account until the later of the following two periods: (i) the end of the two (2)-year period measured from the Enrollment Date for the Offering Period in which the shares were purchased and (ii) the end of the one (1)-year measured from the Exercise Date for that Offering Period.

 

Such limitation shall apply both to transfers to different accounts with the same ESPP broker and to transfers to other brokerage firms. Any shares held for the required holding period may be transferred (either electronically or in certificate form) to other accounts or to other brokerage firms.

 

The foregoing procedures shall not in any way limit when the participant may sell his or her shares. Those procedures are designed solely to assure that any sale of shares prior to the satisfaction of the required holding period is made through the ESPP Broker Account. In addition, the participant may request a stock certificate or share transfer from his or her ESPP Broker Account prior to the satisfaction of the required holding period should the participant wish to make a gift of any shares held in that account. However, shares may not be transferred (either electronically or in certificate form) from the ESPP Broker Account for use as collateral for a loan, unless those shares have been held for the required holding period.

 

The foregoing procedures shall apply to all shares purchased by the participant under the Plan, whether or not the participant continues in Employee status.

 

11.                               Withdrawal; Termination of Employment.

 

(a)                                 A participant may withdraw all but not less than all the payroll deductions and other contributions, if any, credited to his or her account and not yet used to exercise his or her option

 

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under the Plan at any time by accessing the website designated by the Company and electronically withdrawing from the Offering Period or by giving written notice to the Company (in such form as the Company may provide). All of the participant’s payroll deductions credited to his or her account will be paid to such participant as soon as practicable after receipt of notice of withdrawal and such participant’s option for the Offering Period will be automatically terminated, and no further payroll deductions (or contributions) for the purchase of shares will be made during the Offering Period. If a participant withdraws from an Offering Period, payroll deductions (or contributions) will not resume at the beginning of the succeeding Offering Period unless the participant timely enrolls in that Offering Period.

 

(b)                                 Upon a participant’s ceasing to be an Employee for any reason or upon termination of a participant’s employment relationship (as described in paragraph 2(g)), the payroll deductions and other contributions, if any, credited to such participant’s account during the Offering Period but not yet used to exercise the option will be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under paragraph 15, and such participant’s option will be automatically terminated. A participant whose employment is deemed to have terminated under paragraph 2(g) may participate in any future Offering Period in which such individual is eligible to participate by timely enrollment in that Offering Period.

 

12.                               Interest. No interest shall accrue on the payroll deductions credited to a participant’s account under the Plan unless otherwise required by applicable law.

 

13.                               Stock.

 

(a)                                 The maximum number of shares of the Company’s Common Stock which shall be made available for sale under the Plan shall be [          ] shares. The share reserve shall be subject to adjustment upon changes in capitalization of the Company as provided in paragraph 19. If on a given Exercise Date the number of shares with respect to which options are to be exercised exceeds the number of shares then available under the Plan, the Company shall make a pro rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable.

 

(b)                                 In addition, the number of shares of the Company’s Common Stock available for issuance under the Plan will automatically increase on the first day of each fiscal year, for a period of not more than ten years from the date the Plan is approved by the holders of capital stock of the Company, commencing on January 1, 2020, and ending on (and including) January 1, 2029, in an amount equal to 1% of the total number of shares of the Company’s Common Stock outstanding on the last day of the calendar month prior to the date of such automatic increase. Notwithstanding the foregoing, the Board may act prior to the first day of a given fiscal year to provide that there will be no increase in the number of shares of Common Stock available for issuance under the Plan for such fiscal year or that the increase in the number of shares of Common Stock available for issuance under the Plan for such year will be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence.

 

(c)                                  The participant will have no interest or voting right in shares covered by his option until such option has been exercised and the participant has become a holder of record of the purchased shares.

 

14.                               Administration. The Plan shall be administered by the Board of the Company or a committee of members of the Board appointed by the Board. The Board or its committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision and determination made by the Board or its committee shall, to the full extent permitted by law, be final and

 

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binding upon all parties. Members of the Board who are eligible Employees are permitted to participate in the Plan, provided that:

 

(i)                                     Members of the Board who are eligible to participate in the Plan may not vote on any matter affecting the administration of the Plan or the grant of any option pursuant to the Plan.

 

(ii)                                  If a Committee is established to administer the Plan, no member of the Board who is eligible to participate in the Plan may be a member of the Committee.

 

15.                               Designation of Beneficiary.

 

(a)                                 A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.

 

(b)                                 Such designation of beneficiary may be changed by the participant (and his or her spouse, if any) at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

 

16.                               Transferability. Neither payroll deductions (or contributions) credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in paragraph 15 by the participant). Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with paragraph 11.

 

17.                               Use of Funds. All payroll deductions (and contributions) received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such monies unless otherwise required by applicable law.

 

18.                               Reports. Individual book accounts will be maintained for each participant in the Plan. Statements of account will be given to participating Employees at least annually, which statements will set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.

 

19.                               Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

 

(a)                                 Changes in Capitalization. Subject to any required action by the stockholders of the Company, the Reserves as well as the number of shares and price per share of Common Stock covered by each option under the Plan which has not yet been exercised and the maximum number of shares that may be purchased per participant on any Exercise Date, shall be equitably adjusted for any increase or

 

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decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration”. Such adjustment shall be made by the Plan Administrator, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option. The Plan Administrator may, if it so determines in the exercise of its sole discretion, make provision for adjusting the Reserves as well as the price per share of Common Stock covered by each outstanding option and the maximum number of shares that may be purchased per participant on any Exercise Date, in the event the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of its outstanding Common Stock.

 

(b)                                 Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Periods will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Plan Administrator.

 

(c)                                  Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each option under the Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Plan Administrator determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, to shorten the Offering Periods then in progress by setting a new Exercise Date (the “New Exercise Date”). If the Plan Administrator shortens the Offering Periods then in progress in lieu of assumption or substitution in the event of a merger or sale of assets, the Plan Administrator shall notify each participant in writing, at least ten (10) days prior to the New Exercise Date, that the Exercise Date for his option has been changed to the New Exercise Date and that his option will be exercised automatically on the New Exercise Date, unless prior to such date he has withdrawn from the Offering Period as provided in paragraph 11. For purposes of this paragraph, an option granted under the Plan shall be deemed to be assumed if, following the sale of assets or merger, the option confers the right to purchase, for each share of option stock subject to the option immediately prior to the sale of assets or merger, the consideration (whether stock, cash or other securities or property) received in the sale of assets or merger by holders of Common Stock for each share of Common Stock held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if such consideration received in the sale of assets or merger was not solely common stock of the successor corporation or its parent (as defined in Section 424(e) of the Code), the Plan Administrator may, with the consent of the successor corporation and the participant, provide for the consideration to be received upon exercise of the option to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock in the sale of assets or merger.

 

20.                               Amendment or Termination.

 

(a)                                 The Board may at any time and for any reason terminate or amend the Plan. Except as provided in paragraphs 19 and 20 or as necessary to comply with applicable laws or regulations, no such termination or amendment can adversely affect options previously granted without the consent of the affected participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision) or any other applicable law or regulation, the Company shall obtain stockholder approval in such a manner and to such a degree as required.

 

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(b)                                 Without stockholder consent and without regard to whether any participant rights may be considered to have been “adversely affected,” the Plan Administrator shall be entitled to change the Offering Periods, change the maximum number of shares of Common Stock purchasable per participant on any Exercise Date, limit the frequency and/or number of changes in the amount withheld during Offering Periods, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant’s Compensation or contributed by the participant, and establish such other limitations or procedures as Plan Administrator determines in its sole discretion advisable which are consistent with the Plan.

 

21.                               Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

 

22.                               Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. In addition, should the Plan not be registered on an Exercise Date of any Offering Period in any foreign jurisdiction in which such registration is required, then no options granted with respect to the Offering Period to employees in that foreign jurisdiction shall be exercised on such Exercise Date, and all contributions accumulated on behalf of such employees during the Offering Period ending with such Exercise Date shall be distributed to the participating employees in that foreign jurisdiction without interest unless the terms of the offering specifically provide otherwise or otherwise required by applicable law.

 

As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

 

23.                               Term of Plan. The Plan shall become effective on [·], 2019 subject to its approval by the stockholders of the Company at the 2010 Annual Stockholders Meeting. It shall continue in effect until [·], 2029 unless sooner terminated under paragraph 20.

 

9Exhibit 10.7

 

FORM OF SMILEDIRECTCLUB, INC.

CHANGE IN CONTROL SEVERANCE AGREEMENT

 

This CHANGE IN CONTROL SEVERANCE AGREEMENT (this “Agreement”) is entered into as of [·], 2019 (the “Effective Date”), by and between SmileDirectClub, Inc. (the “Company”), and [·] (the “Participant”).

 

RECITALS

 

WHEREAS, the Board of Directors of the Company believes it is in the best interests of the Company to enter into this Agreement with the Participant in order to assure continuity of senior management and to reinforce and encourage the Participant’s continued attention and dedication to the Participant’s duties and responsibilities without distraction in the event of the possibility of a Change in Control (as defined below); and

 

WHEREAS, the Company and the Participant desire to enter into this Agreement setting forth the terms and conditions for the payment of compensation to the Participant in the event of a qualifying termination of the Participant’s Continuous Service Status in connection with a Change in Control during the term of this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants and agreements hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows:

 

Section 1.                               Definitions.  For purpose of this Agreement, the following defined terms shall have the meanings set forth below:

 

(a)                                 “Applicable Laws” means all applicable laws, rules, regulations and requirements, including, but not limited to, all applicable U.S. federal, state or local laws, any stock exchange rules or regulations and the applicable laws, rules or regulations of any other country or jurisdiction where the Participant resides or provided services, as such laws, rules and regulations shall be in effect from time to time.

 

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

 

(c)                                  “Cause” for termination of the Participant’s Continuous Service Status will exist if the Participant’s Continuous Service Status is terminated for any of the following reasons: (i) Participant’s willful failure to perform his or her duties and responsibilities to the Company or Participant’s violation of any written Company policy; (ii) Participant’s commission of any act of fraud, embezzlement or dishonesty, or any other misconduct that has caused or is reasonably expected to result in injury to the Company (including, for the avoidance of doubt, reputational harm); (iii) Participant’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; (iv) Participant’s material breach of any of his or her obligations under any written agreement or covenant with the Company, including, without limitation, any noncompetition obligation; (v) Participant’s commission of a felony or other crime involving moral turpitude; or (vi) Participant’s gross negligence in connection with his or her performance of services. The determination as to

 

 

whether a Participant’s Continuous Service Status has been terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time.

 

(d)                                 “Change in Control” shall mean the occurrence of any of the events set forth in section 2(j) of the Plan.

 

(e)                                  “Change in Control Protection Period” means the period commencing three months prior to, and ending eighteen months following, the occurrence of a Change in Control.

 

(f)                                   “Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

(g)                                  “Company” shall have the meaning set forth in the preamble hereto and will be interpreted to include any subsidiary, parent, affiliate, or any successor thereto, if appropriate.

 

(h)                                 “Continuous Service Status” means the absence of any interruption or termination of service as a Participant, as determined by the Board in good faith and subject to Applicable Laws. Subject to Applicable Laws, the Board shall determine whether a leave of absence, or absence in military or government service, shall constitute an interruption of Continuous Service Status; provided, however, that, the Administrator shall not have any such discretion to the extent that the grant of such discretion would cause any tax to become due under Section 409A of the Code. Also, Continuous Service Status as a Participant shall not be considered interrupted or terminated in the case of a transfer between locations of the Company or between the Company, its parents, subsidiaries or affiliates, or their respective successors.

 

(i)                                     “Disability” shall mean a “permanent and total disability” within the meaning of Section 22(e)(3) of the Code.

 

(j)                                    “Effective Date” shall have the meaning set forth in the preamble hereto.

 

(k)                                 “Equity Award” means any award of an option, restricted stock, restricted stock unit or other award granted to the Participant under the Plan.

 

(l)                                     “Good Reason” means the occurrence, without the Participant’s written consent, of any one or more of the following events or circumstances: (i) the Participant’s duties or responsibilities are materially diminished in a manner which is inconsistent with the provisions of this Agreement; (ii) the Participant ceases to hold a position of like status to that under this Agreement; (iii) any fundamental term of this Agreement is breached other than by the Participant; (iv) the Participant’s annual base salary, annual target bonus or other Participant benefits are materially reduced, except where such reduction is expressly permitted under the terms of this Agreement or where a similar reduction is applied generally across the senior management team; or (v) the Participant is required to relocate the Participant’s principal place of employment more than 50 miles from the Participant’s normal place of work unless the Participant’s principal place of employment is brought within 50 miles (whether by distance or commuting time) of the Participant’s home residence by such relocation; provided, that (A) the Participant provides the Company with Notice stating clearly the event or circumstance that constitutes Good Reason in the Participant’s belief (acting in good faith) within 30 days of its

 

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occurrence, (B) the Company shall have a period of not less than 30 working days (the “Cure Period”) to cure the event or circumstance allegedly constituting Good Reason, and (C) the Participant must actually terminate Continuous Service Status no later than 10 days following the end of such Cure Period, if the Good Reason condition remains uncured.  For the avoidance of doubt, Good Reason shall not exist if the event or circumstance allegedly constituting Good Reason is cured by the Company or if the Participant fails to terminate the Participant’s Continuous Service Status hereunder within 10 days following the end of the Cure Period.

 

(m)                             “Group Company” means any member of the Company whether it be a parent, subsidiary or affiliate.

 

(n)                                 “Notice” shall have the meaning set forth in Section 8.

 

(o)                                 “Participant” shall have the meaning set forth in the preamble hereto.

 

(p)                                 “Plan” means the SmileDirectClub, Inc. 2019 Omnibus Incentive Plan, as may be amended or restated from time to time, or any successor thereto.

 

(q)                                 “Premium Payment” shall have the meaning set forth in Section 3(b)(ii).

 

(r)                                    “PSU” means a restricted share unit in respect of common of Company that vests in whole or in part on the basis of the achievement of performance targets.

 

(s)                                   “Release” means a release of claims against the Company, substantially in the form attached hereto as Exhibit A.

 

(t)                                    “RSU” means a restricted stock unit in respect of common stock of Company that vests solely on the basis of time.

 

(u)                                 “Term” shall have the meaning set forth in Section 2.

 

(v)                                 “Termination Date” means the date of termination of the Participant’s Continuous Service Status with the Company.

 

Section 2.                               Term of Agreement.  The term of this Agreement shall commence as of the Effective Date and shall continue until the earliest of (i) if the Participant is entitled to benefits pursuant to Section 3 and complies with the terms thereof, the date that the Company satisfies their respective obligations pursuant to such Section 3, (ii) the date of termination of the Participant’s Continuous Service Status for any reason outside of the Change in Control Protection Period, or (iii) the date of termination of the Participant’s Continuous Service Status either by the Company for Cause or by the Participant without Good Reason or as a result of the Participant’s death or Disability, in any case, at any time during the Change in Control Period (the “Term”).

 

Section 3.                               Change in Control Severance Benefits.  If at any time during the Change in Control Protection Period, the termination of the Participant’s Continuous Service Status by the Company without Cause (other than due to the Participant’s death or Disability) or by the

 

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Participant for Good Reason, in either case, then the Participant shall be entitled to receive the following payments and benefits under the terms of this Section 3.

 

(a)                                 Payment of Accrued Benefits.  The Participant shall be entitled to receive payment of the following accrued benefits:

 

(i)                                     Any earned but unpaid base salary through the Termination Date, payable within five days following the Termination Date or such earlier date required by applicable law;

 

(ii)                                  Any accrued but unused vacation pay through the Termination Date, payable within five days following the Termination Date or such earlier date required by applicable law;

 

(iii)                               Any unreimbursed expenses incurred by the Participant through the Termination Date, payable in accordance with the Company’s applicable expense reimbursement policies and procedures; and

 

(iv)                              Such fully vested and non-forfeitable employee benefits, if any, as to which the Participant may be entitled under the employee benefit plans of the Company.

 

(b)                                 Payment of Severance Benefits.  Subject to Sections 3(c), 3(d), and any applicable timing requirements of Section 4(b)(v) below, the Participant shall be entitled to receive the following severance payments and benefits:

 

(i)                                     Severance pay in an amount equal to (x) [24][12](1) months of the Participant’s annual then-current base salary and (y) 100% of the Participant’s annual target bonus, payable in a lump-sum cash payment on the first payroll date after the Release becomes irrevocable;

 

(ii)                                  If Participant then participates in the Company’s medical plan(s) and the Participant timely elects to continue to receive group health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), the Company shall either directly pay or reimburse the Participant for all monthly COBRA premiums, whether monthly or in a lump-sum cash payment, at the Company’s sole discretion, incurred by Participant on behalf of both the Participant and the Participant’s dependents for a period of [24][12](2) months (such monthly payments being the “COBRA Amount”), provided that in order to be reimbursed, the Participant must provide the Company with adequate documentation of payment of such monthly COBRA premiums. The COBRA

 

(1)  Only the CEO is eligible for 24 months’ worth of severance.  The remaining participants receive 12 months’ worth of severance.

 

(2)  Only the CEO is eligible for 24 months’ worth of COBRA reimbursements.  The remaining participants receive 12 months’ worth of COBRA reimbursements.

 

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Amount shall maintain the coverage the Participant and the Participant’s dependents (if applicable) had immediately prior to the date of termination of Participant’s Continuous Service Status with the Company (subject to any changes in coverage that effect employees generally). In the event the Participant does not elect COBRA coverage, the Participant subsequently becomes ineligible for continued COBRA coverage, the Participant fails to provide the Company with adequate documentation of  Participant’s payment of such COBRA premiums (if applicable), or the Participant does not execute the Release or subsequently revokes the Release, the Company shall no longer be obligated to pay the Participant any remaining portion of the COBRA Amount. At the Company’s sole discretion, it may provide an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Participant, after deduction of any Federal, state and local income and employment taxes upon the COBRA Amount and the Gross-Up Payment, shall be equal to the COBRA Amount;

 

(iii)                               With respect to any outstanding RSU or other Equity Award held by the Participant that (x) vests solely on the basis of time and (y) is not assumed, converted or replaced in the Change in Control transaction pursuant to the Plan, the vesting of such RSU or other Equity Award shall fully accelerate as of the Termination Date;

 

(iv)                              With respect to any outstanding PSU or other Equity Award held by the Participant that is not assumed, converted or replaced in the Change in Control transaction pursuant to the Plan and (x) was subject to performance-based vesting for which the achievement of the applicable performance goals under the Equity Award have previously been determined to be satisfied in whole or in part as of the Termination Date and (y) remains subject to time-based vesting, the vesting of such PSU or other Equity Award shall fully accelerate as of the Termination Date, unless otherwise provided in the applicable agreement evidencing such PSU or Equity Award; and

 

(v)                                 With respect to any outstanding PSU or other Equity Award held by the Participant that is not assumed, converted or replaced in the Change in Control transaction pursuant to the Plan and is subject to performance-based vesting for which the achievement of the applicable performance goals under the Equity Award has not been determined as of the Termination Date, the performance goals shall be deemed achieved at one-hundred percent (100%) of target levels, in addition to full vesting acceleration for any time-based vesting requirements, as applicable, unless otherwise provided in the applicable agreement evidencing such PSU or Equity Award.

 

(c)                                  Conditions to Severance Payments and Benefits.  Notwithstanding anything to the contrary in this Agreement, it shall be a condition to the Participant’s right to receive the payments and benefits provided for in Section 3(b), that the Participant execute and deliver to the Company and not revoke the Release, which Release shall be delivered to the Participant within five (5) days following the Termination Date.  The Release must be executed and delivered to

 

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the Company (and no longer subject to revocation, if applicable) within sixty (60) days following the Termination Date (the “Release Period”).

 

(d)                                 Participant’s Obligations Upon Termination.  The Participant hereby acknowledges and agrees that, on the Termination Date, the Participant will:

 

(i)                                     Immediately deliver to the Company all books, documents, papers, computer records, computer data, credit cards and any other property relating to the business of or belonging to the Company or any other Group Company which is in the Participant’s possession or under the Participant’s control. The Participant is not entitled to retain copies or reproductions of any documents, papers or computer records relating to the business of or belonging to the Company or any other Group Company;

 

(ii)                                  Immediately resign from any office the Participant holds with the Company or any other Group Company (and from any related trusteeships) without any compensation for loss of office. Should the Participant fail to do so, the Participant hereby irrevocably authorizes the Company to appoint some person in the Participant’s name and on the Participant’s behalf to sign any documents and do anything to give effect to the Participant’s resignation from office; and

 

(iii)                               Immediately pay to the Company or, as the case may be, any other Group Company all outstanding loans or other amounts due or owed to the Company or any Group Company; provided, that the Participant confirms that, should the Participant fail to do so, the Company is authorized to deduct from any amounts due or owed to the Participant by the Company (or any other Group Company) a sum equal to such amounts.

 

The Participant further acknowledges and agrees that the Participant will not at any time after the Termination Date represent the Participant as being in any way concerned with or interested in the business of, or employed by, the Company or any other Group Company.

 

(e)                                  Certain Payment Delays.  Notwithstanding anything to the contrary in this Agreement, the severance amounts described in Sections 3(b)(i) and (ii) shall be paid on the first regularly scheduled payroll date following the date on which the Release becomes irrevocable; provided, that to the extent required to comply with Section 409A, if the Release Period spans two (2) calendar years, such severance amounts shall be paid on the first regularly scheduled payroll date that occurs in the second calendar year.

 

(f)                                   Effect on All Equity Awards.  The Participant hereby acknowledges and agrees that, notwithstanding any terms to the contrary in an award agreement or other documentation evidencing any Equity Award held by the Participant as of the Effective Date or granted thereafter, the terms of Section 3(b)(iii) through (v), shall govern if there is any conflict between the terms of any such award agreement or other documentation and this Agreement.

 

(g)                                  Non-Duplication.  Notwithstanding any other agreement to the contrary, the Participant acknowledges and agrees that if at any time during the Change in Control Protection

 

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Period, the termination of the Participant’s Continuous Service Status by the Company without Cause (other than due to the Participant’s death or Disability) or by the Participant for Good Reason, then (i) the payments and benefits under this Agreement shall be the only severance or similar payments and benefits that are payable by the Company under any plan, program, policy or agreement, including but not limited to any offer letter, employment agreement or similar agreement between the Company and the Participant, and (ii) the payments under this Agreement are in full and complete satisfaction of all liabilities of the Company with respect to the Participant under all such other plans, programs and agreements.

 

(h)                                 Loss of Rights to Equity Awards.  The Participant hereby acknowledges and agrees that the Participant may, during the period of Participant’s employment with the Company, be granted rights upon the terms and subject to the conditions of the rules from time to time of the Plan or any other profit sharing, share incentive, share option, bonus or phantom option scheme operated by the Company or any Group Company with respect to shares in the Company or any Group Company.  If, on the Termination Date, whether lawfully or in breach of contract, the Participant loses any of the rights or benefits under the Plan or any such scheme (including rights or benefits which the Participant would not have lost had the termination of the Participant’s Continuous Service Status not occurred) the Participant shall not be entitled, by way of compensation for loss of office or otherwise howsoever to any compensation for the loss of any rights under the Plan or any such scheme.

 

Section 4.                               US Tax Issues.

 

(a)                                 Sections 280G and 4999 of the Code.  If the Participant becomes entitled to any payment or benefit under this Agreement (such benefits together with any other payments or benefits payable under any other agreement with, or plan or policy of, the Company or Group Company being the “Total Payments”) and all or any part of the Total Payments will, as determined by the Company, be subject to the tax imposed by Section 4999 of the Code (or any similar tax that may be hereafter imposed) (the “Excise Tax”), then such payment shall be either:

 

(i)                                     the full payment, subject to the payment of the Excise Tax by the Participant; or

 

(ii)                                  such lesser amount that would result in no portion of the payment being subject to Excise Tax,

 

whichever of the foregoing amounts, taking into account the applicable federal, state and local employment taxes, income taxes and the Excise Tax, as well as the phase out of itemized deductions and personal exemptions related to such payments, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of the payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code.  Any such reduction shall be made by the Company in compliance with all applicable legal authority, including Section 409A of the Code.  All determinations required to be made under this Section shall be made by the nationally recognized U.S. accounting firm selected by the Company (the “Accounting Firm”). The Company shall require the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and the Participant. Notice must be given to the Accounting Firm within 15 business days after an event entitling the Participant to a

 

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payment under this Section.  All fees and expenses of the Accounting Firm related to this determination shall be borne solely by the Company.  The Total Payments shall be reduced by the Company in the following order: first, any cash payment that is exempt from Section 409A of the Code, and second any other payments or benefits on a pro-rata basis.

 

(b)                                 Section 409A of the Code.

 

(i)                                     The compensation and benefits under this Agreement are intended to comply with or be exempt from the requirements of Section 409A of the Code, and this Agreement will be interpreted and administered in a manner consistent with that intent. The preceding provision, however, shall not be construed as a guarantee by the Company of any particular tax effect to the Participant under this Agreement and shall not constitute an indemnity from the Company to the Participant.

 

(ii)                                  References to “termination of employment” and similar terms used in this Agreement mean, to the extent necessary to comply with Section 409A of the Code, the date that the Participant first incurs a “separation from service” within the meaning of Section 409A of the Code. Each payment under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code.

 

(iii)                               To the extent any reimbursement provided under this Agreement is includable in the Participant’s income and could be characterized as nonqualified deferred compensation for purposes of Section 409A of the Code, such reimbursements shall be paid to the Participant at the time specified, but not later than December 31 of the year following the year in which the Participant incurs the expense, and shall not be subject to liquidation or exchange for another benefit, and the amount of reimbursable expenses provided in one year shall not increase or decrease the amount of reimbursable expenses to be provided in a subsequent year.

 

(iv)                              The payment of any “tax gross-up payment” (as defined in Section 409A of the Code), including the Gross-Up Payment, pursuant to this Agreement shall be paid to the Participant in any event no later than the end of the taxable year immediately following the taxable year in which the Participant remits the related taxes.

 

(v)                                 Notwithstanding anything in this Agreement to the contrary, if at the time of termination of the Participant’s Continuous Service Status with the Company, the Participant is a “specified employee” as defined in Section 409A of the Code, and any payment payable under this Agreement as a result of such separation from service is required to be delayed by six months pursuant to Section 409A of the Code, then the Company will make such payment on the date that is six months following the Participant’s separation from service with the Company. The amount of such payment will equal the sum of the payments that would have been paid to the Participant during the six-month period immediately

 

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following the Participant’s separation from service had the payment commenced as of such date and will not include interest.

 

Section 5.                               Reaffirmation of Restrictive Covenants.  The Participant hereby acknowledges and agrees that Participant is bound by certain restrictive covenants set forth in the Participant’s Employee Proprietary Information, Inventions Assignment and Non-Compete Agreement.  Notwithstanding any provision of this Agreement, the Participant hereby reaffirms such restrictive covenants, and acknowledges and agrees that such restrictive covenant agreement will survive the termination of the Participant’s Continuous Service Status with the Company pursuant to the terms and conditions thereof, and shall remain in full force and effect.

 

Section 6.                               At-Will Employment.  The Participant’s employment with the Company is “at-will” and is not for a specified period of time.  Subject to the Company’s obligations under Section 3, either the Participant or the Company may terminate the Participant’s Continuous Service Status at any time and for any reason whatsoever (or for no reason).  This at-will employment relationship cannot be changed except in a writing signed by the Participant and a duly authorized representative of the Company.

 

Section 7.                               No Third Party Beneficiaries.  Except as expressly provided in this Agreement, this Agreement is not intended, and shall not be deemed, to confer any rights or remedies upon any person other than the parties hereto and their respective successors and permitted assigns or to otherwise create any third-party beneficiary hereto.

 

Section 8.                               Notices.  All notices, requests, demands and other communications (each, a “Notice”) given pursuant to this Agreement shall be in writing, and shall be delivered by personal service, courier, overnight delivery service or electronic transmission (each of which must be confirmed) or by United States registered or certified mail, postage prepaid, return receipt requested, to the following addresses:

 

if to the Participant:

 

at the address last set forth in the records of the Company;

 

if to the Company:

 

SmileDirectClub, Inc.

Attention: General Counsel

414 Union Street

Nashville, Tennessee 37219

 

Any Notice, other than a Notice sent by registered or certified mail, shall be effective when received; a Notice sent by registered or certified mail, postage prepaid return receipt requested, shall be effective on the earlier of when received or the third day following deposit in the United States mails.  Any party may from time to time change its address for further Notices hereunder by giving notice to the other parties in the manner prescribed in this Section.

 

Section 9.                               Entire Agreement.  This Agreement, together with any other documents referred to in this Agreement, constitutes the entire agreement and understanding between the

 

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parties, and supersedes all other agreements both oral and in writing between the Company and the Participant with respect to the subject matter hereof. The Participant acknowledges that the Participant has not entered into this Agreement in reliance upon any representation, warranty or undertaking which is not set forth in this Agreement or expressly referred to herein as forming a part of this Agreement.

 

Section 10.                        Assignment.  No party may assign his, her or its rights or obligations under this Agreement, and any attempted or purported assignment or any delegation of any party’s duties or obligations arising under this Agreement to any third party or entity shall be deemed to be null and void, and shall constitute a material breach by such party of its duties and obligations under this Agreement.  Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and permitted assigns.

 

Section 11.                        Waiver and Amendment.  This Agreement may be amended only by a written agreement executed by all of the parties to this Agreement.  Any agreement on the part of a party hereto to any waiver of a provision herein shall be valid only if set forth in writing in an instrument signed by or on behalf of such party.  The waiver by any party hereto of a breach of this Agreement shall not operate or be construed as a waiver of any subsequent breach.

 

Section 12.                        Governing law.  Unless otherwise noted, references to laws in this Agreement are to the laws of the United States. Any reference in this Agreement to law shall be deemed to include any statutory modification or re-enactment thereof.  This Agreement is governed by, and shall be construed in accordance with, the laws of the State of Delaware. The courts of the State of Delaware and the federal courts located therein shall have exclusive jurisdiction in relation to all disputes arising out of or in connection with this Agreement.

 

Section 13.                        Severability.  Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be or become prohibited or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement.

 

Section 14.                        Captions.  The various captions of this Agreement are for reference only and shall not be considered or referred to in resolving questions of interpretation of this Agreement.

 

Section 15.                        Counterparts.  This Agreement may be executed in any number of counterparts, and by each party on separate counterparts. Each counterpart is an original, but all counterparts shall together constitute one and the same instrument. Delivery of an executed counterpart signature page of this Agreement by e-mail shall be as effective as delivery of a manually executed counterpart of this Agreement. In relation to each counterpart, upon confirmation by or on behalf of the signatory that the signatory authorizes the attachment of such counterpart signature page to the final text of this Agreement, such counterpart signature page shall take effect together with such final text as a complete authoritative counterpart.

 

[Signature page follows]

 

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

 

	
 
    	
SMILEDIRECTCLUB, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
[          ]
    
	
 
    	
 
    	
Title:
    	
[          ]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
PARTICIPANT
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
[          ]
    

 

 

EXHIBIT A

 

GENERAL RELEASE

 

I, [         ], in consideration for the obligations of the SmileDirectClub, Inc. ( the “Company”) under the Change in Control Severance Agreement by and between the Company and me, dated as of             , 20   (the “Agreement”), do hereby release and forever discharge as or the date hereof the Company and its affiliates, subsidiaries and direct or indirect parent entities and owners, and all present, former and future directors, officers, agents, representatives, employees, successors and assigns of the Company and their respective affiliates, subsidiaries and direct or indirect parent entities and owners (collectively, the “Released Parties”) to the extent provided below (this “General Release”). The Released Parties are intended to be express third-party beneficiaries of this General Release, and this General Release may be enforced by each of them in accordance with the terms hereof in respect of the rights granted to such Released Parties hereunder. Terms used herein but not otherwise defined shall have the meanings given to them in the Agreement.

 

1.                                      I understand that the severance benefits to be paid to me under Section 3(b) of the Agreement represent, in part, consideration for signing this General Release and is not salary, wages or benefits to which I was already entitled. I understand and agree that I will not receive the severance benefits specified in Section 3(b) of the Agreement unless I execute this General Release and do not revoke this General Release within the time period permitted hereafter. Such severance benefits will not be considered compensation for purposes of any employee benefit plan, program, policy or arrangement maintained or hereafter established by the Company or its affiliates.

 

2.                                      Except as provided in paragraphs 4 and 5 below and except for the provisions of the Agreement which expressly survive the termination of my employment with the Company, I knowingly and voluntarily (for myself, my spouse and my affiliates, and my and my spouse’s heirs, executors, administrators and assigns (collectively, the “Releasing Parties”)) release and forever discharge the Company and the other Released Parties from any and all claims, suits, controversies, actions. causes of action, cross-claims, counter-claims, demands, debts, damages (whether compensatory, punitive, direct, special, liquidated, exemplary or otherwise), claims for costs (including enforcement costs and expenses, and attorneys’ fees), or liabilities of any nature whatsoever in law and in equity, both past and present (through the date that this General Release becomes effective and enforceable), and whether known or unknown, suspected, or claimed against the Company or any of the Released Parties, which I and each other Releasing Party, may have, by reason of any matter, cause, or thing whatsoever, from the beginning of my initial dealings with the Company to the date of this General Release, and particularly, but without limitation of the foregoing general terms, any claims arising from or relating in any way to my employment relationship with the Company, the terms and conditions of that employment relationship, and the termination of that employment relationship (including, but not limited to, any allegation, claim or violation, arising under. Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (including the Older Workers

 

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Benefit Protection Act); the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker Adjustment Retraining and Notification Act; the Employee Retirement Income Security Act of 1974; any applicable Executive Order Programs; the Fair Labor Standards Act; or their state or local counterparts; the California Fair Employment and Housing Act, the California Business & Professions Code Section 17200 or any other unfair competition law, California Labor Code Section 2802 or under any other U.S. or non-U.S. federal, state or local civil or human rights law, or under any other local, state, or federal law, regulation or ordinance; or under any public policy, contract or tort, or under common law; or any other claim arising under any policies, practices or procedures of the Company; or any claim for wrongful discharge, breach of contract, infliction of emotional distress, defamation; or any claim for costs, fees, or other expenses or amounts, including attorneys’ fees incurred in these matters) (all of the foregoing collectively referred to herein as the “Claims”).

 

3.                                      I represent that I have made no (and I hereby covenant and agree that I will not make any) direct or indirect assignment or transfer of any Claim or other matter covered by paragraph 2 above.

 

4.                                      I agree that this General Release does not waive or release any rights or claims that I may have under the Age Discrimination in Employment Act of 1967 which may arise after the date I execute this General Release. I acknowledge and agree that my separation from employment with the Company in compliance with the terms of the Agreement shall not serve as the basis for any claim or action (including, without limitation, any claim under the Age Discrimination in Employment Act of 1967).

 

5.                                      I agree that this General Release does not waive or release any rights or claims for indemnification by any Group Company, claims under any director’s and officer’s Liability Insurance policy, claims to any vested benefits (subject always to the rules of any applicable benefit plan), nor any claims that cannot be waived under any applicable law.

 

6.                                      I hereby knowingly waive all rights to sue (including, without limitation, by joining any class action lawsuit) or obtain equitable, remedial or punitive relief from any or all Released Parties of any kind whatsoever in respect of any Claim, including, without limitation, reinstatement, future employment, back pay, front pay, and any form of injunctive relief. Notwithstanding the above, I further acknowledge that I am not waiving and am not being required to waive any right that cannot be waived under applicable law, including the right to file an administrative charge or participate in an administrative investigation or proceeding; provided, however, that I hereby disclaim and knowingly waive any right to share or participate in any monetary award resulting from the prosecution of such charge or investigation or proceeding. Additionally, I am not waiving my rights under Section 3(b) of the Agreement, or any claim relating to directors’ and officers’ liability insurance coverage or any right of indemnification under the Company’s organizational documents or otherwise.

 

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7.                                      California Civil Code Section 1542 Waiver. I expressly acknowledge and agree that all rights under Section 1542 of the California Civil Code are expressly waived. That section provides:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE. WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

I waive any right which I have or may have under Section 1542 to the full extent I may lawfully waive such rights pertaining to this General Release.

 

8.                                      In signing this General Release, I acknowledge and intend that it shall be effective as a bar to each and every one of the Claims hereinabove mentioned or implied. I expressly consent that this General Release shall be given full force and effect according to each and all of its express terms and provisions, including those relating to unknown end unsuspected Claims (notwithstanding any state or local statute that expressly limits the effectiveness of a general release of unknown, unsuspected and unanticipated Claims), if any, as well as those relating to any other Claims hereinabove mentioned or implied.

 

9.                                      I acknowledge and agree that this waiver is an essential and material term of this General Release and that without such waiver the Company would not have agreed to the terms of the Agreement.

 

10.                               I further agree that in the event I should bring a Claim seeking damages against the Company, or in the event I should seek to recover against the Company in any Claim brought by a governmental agency on my behalf, this General Release shall serve as a complete defense to such Claims to the maximum extent permitted by law.

 

11.                               I agree that neither this General Release, nor the furnishing of the consideration for this General Release, shall be deemed or construed at any time to be an admission by the Company, any Released Party or myself of any improper or unlawful conduct.

 

12.                               I agree that if I violate this General Release by suing the Company or the other Released Parties related to any Claims, I will pay all costs (including reasonable costs and expenses of defending against the suit, including reasonable attorneys’ fees) incurred by the Released Parties as a result.

 

13.                               I agree that this General Release and the Agreement are strictly confidential and agree not to disclose any information regarding the terms of this General Release or the Agreement to anyone, except pursuant to Section 7(b) of the Agreement, or to my immediate family and any tax, legal or other counsel that I have consulted regarding the meaning or effect hereof or as required by law, and I will instruct each of the foregoing not to disclose the same to anyone. Notwithstanding the foregoing, nothing herein will prevent me from reporting possible violations of federal law or regulation to any governmental agency or entity, including, but not limited to, the Department of Justice, the Securities and Exchange Commission, the Congress, and any agency Inspector General, or making other

 

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disclosures under the whistleblower provisions of federal law or regulation, for which I will not need the prior authorization of the Company to make any such reports or disclosures or be required to notify the Company of any such reports or disclosures.

 

14.                               I represent that I am not aware of any claim (whether actual, pending, threatened or otherwise) by me or any reasonable basis therefor as of the date of execution of this General Release other than the claims that are released by this General Release. I acknowledge that I may hereafter discover claims or facts in addition to or different than those which I now know or believe to exist with respect to the subject matter of the release set forth in paragraph 2 above and which, if known or suspected at the time of entering into this General Release, may have materially affected this General Release and my decision to enter into it.

 

15.                               Notwithstanding anything in this General Release to the contrary, this General Release shall not relinquish, diminish, or in any way affect any rights or claims arising out of any breach by the Company or by any Released Party of the Agreement to the extent arising after the date hereof.

 

16.                               Whenever possible, each provision of this General Release shall be interpreted in, such manner as to be effective and valid under applicable law, but if any provision of this General Release is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this General Release shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

A.                                    I HAVE READ IT CAREFULLY;

 

B.                                    I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

 

C.                                    I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

D.                                    I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION, I HAVE CHOSEN NOT TO DO SO OF MY OWN VOLITION;

 

E.                                     I HAVE HAD AT LEAST [21/45] DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASE TO CONSIDER IT, AND THE CHANGES MADE SINCE MY RECEIPT OF THIS RELEASE ARE NOT MATERIAL OR WERE MADE

 

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AT MY REQUEST AND WILL NOT RESTART THE REQUIRED [21/45]-DAY PERIOD;

 

F.                                      I UNDERSTAND THAT I HAVE SEVEN (7) DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKE IT BY PROVIDING WRITTEN NOTICE OF REVOCATION TO: SMILEDIRECTCLUB, INC., ATTENTION: CHIEF EXECUTIVE OFFICER, 414 UNION STREET, NASHVILLE, TENNESSEE 37219, AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

 

G.                                    I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

H.                                   I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

	
Signed:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    

 

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