Document:

Exhibit 10.13

 

 

Casper Sleep Inc.

 

June 4, 2019

 

Emilie Arel

 

 

Dear Emilie,

 

We are pleased to offer you a position with Casper Sleep Inc. (the “Company”) as President and Chief Commercial Officer, reporting to Philip Krim, Chief Executive Officer.

 

Annual Base Salary.  If you decide to accept the Company’s offer of employment, you will receive an annual salary of $500,000, less applicable withholdings and deductions, which will be paid semi-monthly in accordance with the Company’s normal payroll procedures.  Assuming you remain employed by the Company, your salary will increase, subject to the approval of the Board of Directors, to an annual salary of $600,000 for the year 2020, effective at the same time as increases are effective for all employees in Q1 2020.

 

Annual Discretionary Bonus.  In addition to your base salary, you will be eligible to receive an annual discretionary bonus (the “Annual Bonus”) at the time that the Company makes decisions regarding discretionary bonuses for employees.  Any Annual Bonus paid will be at the discretion of the Board of Directors, which will utilize the same Company-wide metrics in determining your bonus as compared to other senior executives of the Company.  The Annual Bonus will be contingent on, among other things, the Company’s overall performance and your personal goals being met.  If you have given notice of resignation or your employment terminates for any reason before the payment date for an Annual Bonus, you will not receive any bonus.  The bonus payment date for an Annual Bonus is typically in the first quarter of the following calendar year.  Bonus compensation is not prorated for the period worked if your employment terminates prior to the payment date for a bonus.  Any award of an Annual Bonus in a prior year does not guarantee a future bonus.

 

Guaranteed Bonus Payments.  Provided your employment is not earlier terminated by the Company for Cause (as defined below) or by you without Good Reason (as defined below), for performance year 2019, your Annual Bonus will be no less than $500,000, less applicable withholdings and deductions, and will be payable in Q1 2020 (your “2019 Guaranteed Bonus”).  For performance year 2020, your Annual Bonus will be no less than $500,000, less applicable withholdings and deductions, and will be payable in Q1 2021 (your “2020 Guaranteed Bonus”).  If you leave the Company’s employ prior to the six (6) month anniversary of the payment date of

 

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the 2020 Guaranteed Bonus, you agree to repay to the Company the full amount the 2020 Guaranteed Bonus (net of taxes) within thirty (30) days of your final day of employment.  However, you shall not be required to repay your 2020 Guaranteed Bonus if your employment is terminated without Cause or for Good Reason.

 

Sign-on Bonus.  In addition to the Annual Bonus, you will be eligible to receive a sign on bonus in the amount of $300,000, less applicable withholdings and deductions, which will be paid in two (2) installments: the first will be $200,000 and the second will be $100,000.  The first installment is payable on the first regular paycheck after your initial date of employment with the Company and the second installment is payable on the date that annual bonuses for the year 2019 are paid by the Company in Q1 2020.  To be eligible to receive each installment, you must be actively employed on the dates that such installments are payable, provided however, that if the Company earlier terminates your employment without Cause or if you terminate your employment for Good Reason, the unpaid installment shall be paid to you in a lump-sum within fourteen (14) days of your final day of employment.  If your employment with the Company ends for any reason prior to the six (6) month anniversary of the first installment (other than due to termination by the Company without Cause or by you for Good Reason), you agree to repay the Company the full amount of the first installment (net of taxes) within thirty (30) days of your final day of employment.  If you leave the Company for any reason prior to the one (1) year anniversary of the second installment (other than due to termination by the Company without Cause or by you for Good Reason), you agree to repay the Company the full amount of the second installment (net of taxes) within thirty (30) days of your final day of employment.

 

Stock Options.  On the Payroll Date (defined below) the Company shall, pursuant to the terms of a Stock Option Agreement (the “Stock Option Agreement”) grant you an option to purchase 570,000 of the Company’s Common Stock at a price per share equal to the fair market value per share of the Common Stock on the date of grant, as determined by the Company’s Board of Directors (the “Option”). 142,500 of the shares subject to the Option shall vest twelve (12) months after the date of the grant (the “Initial Vesting Date”).  No shares shall vest before the Initial Vesting Date, and no rights to any vesting shall be earned or accrued prior to such date. 382,500 of the remaining 427,500 shares subject to the Option shall vest monthly over the 36 months after the Initial Vesting Date in equal monthly amounts, subject to all of the terms and conditions of the Stock Option Agreement and the Company’s Stock Option Plan in effect as of the date of the grant. 45,000 of the remaining 427,500 shares subject to the Option shall vest monthly beginning 36 months after the Initial Vesting Date in equal monthly amounts, subject to all of the terms and conditions of the Stock Option Agreement and the Company’s Stock Option Plan in effect as of the date of the grant.  If (A) the Option is specifically assumed by an acquirer in a Change in Control (as defined in the Stock Option Agreement) and (B) your employment with the Company ceases as a result of a termination by the Company without Cause (as defined in the Stock Option Agreement) or by you for Good Reason (as defined in the Stock Option Agreement), in each case, within twelve (12) months after the effective date of such Change in Control (as defined in the Stock Option Agreement), then fifty percent (50%) of the remaining unvested shares subject to the Option shall become immediately vested.

 

Post-IPO: Total Compensation.  After the Company completes an initial public offering of its capital stock, your total annual compensation targets (cash, annual bonus and annual equity awards) shall be determined based upon a good faith and reasonable comparison to similar

 

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positions among no less than twelve (12) peer companies selected by the Company’s compensation committee (to be established) in its sole discretion.

 

Benefits.  As an employee, you are also eligible to receive certain employee benefits including health, eye, and dental insurance.  You will be eligible to participate in such benefits and paid-time off policies on the terms and conditions as are no less favorable than for other senior executives, which the Company may modify from time to time in its sole discretion.

 

Monthly Allowance.  You will receive a monthly allowance to cover your work commute and in-town overnight meals and hospitality in the amount of $8,000.  This allowance is construed as income to you under IRS regulations and will be grossed up for tax purposes and paid through our payroll system in the first payroll cycle each month in arrears, beginning in August 2019 (assuming a Monday, July 15, 2019 start date).  If your employment with the Company terminates, for any reason or no reason, payment of this allowance will cease the month prior to your termination date.

 

Outside Activities.  You may serve as a member of the board of directors or as an advisor to a maximum of two (2) outside business, trade association, community or charitable organizations subject to the annual notice to the Company’s Board of Directors; provided that in each case such service shall not materially interfere with the performance of your duties to the Company or present any conflict of interest.

 

Severance.  If (i) you are terminated by the Company without Cause (as defined below) or if you terminate your employment for Good Reason (as defined below) and (ii) there has been no Change in Control (as defined below) and (iii) you sign a separation agreement and general waiver and release in favor of the Company and its affiliates, in substantially the form attached hereto (the “Separation Agreement”) within 60 days following your termination, then, in addition to any outstanding payments owed pursuant to this agreement, the Company will pay you a “Severance Payment” equal to (x) the gross amount of your then annualized base salary plus (y) the gross amount of your premium payments to continue benefits under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) (provided you timely elect to continue such benefits and you have not yet secured other employment that offers a qualifying health plan) plus (z) if the Company’s shares do not then trade on a public stock exchange, the amount of your target Annual Bonus.  The Severance Payment will be paid in equal monthly installments, less applicable withholdings and deductions, over a twelve (12) month period commencing on the Payment Date.  The Company will provide you with the Separation Agreement within seven (7) days of your termination.

 

Alternatively, if you meet the requirements above to receive the Severance Payment and there has been a Change in Control, the Company will pay you an amount equal to the sum of (x) the Severance Payment (as defined above) plus (y) the amount of your target Annual Bonus.  Such sum shall be payable in one lump-sum payment on the Payment Date (as defined below).

 

Definitions.  For purposes of this letter (except the section above regarding Stock Options):

 

“Cause” means: (i) your willful and continued failure to substantially perform your assigned duties; (ii) the commission of a criminal act by you, whether or not performed in the workplace, that subjects or, if generally known, would subject the Company to significant damage

 

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to its business opportunities or reputation (as determined by the Company’s in its sole discretion); (iii) the conviction or plea of guilty or nolo contendere to a felony or a misdemeanor involving dishonesty or breach of trust; (iv) material misconduct in connection with the Company’s business, including, but not limited to, fraud, unethical conduct or any violation of the Company’s policies, rules and standards; (v) your willful and improper disclosure of any confidential information or trade secrets; (vi) any material breach of the At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement or other agreement between you and the Company; or (vii) your failure to cooperate in good faith, in any material respect, with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested your cooperation.  No act or omission by you shall constitute “Cause” hereunder unless the Board of Directors has provided you written notice and a reasonable opportunity to cure such act or omission, to the extent such act or omission is subject to cure as determined by the Company in its sole discretion, acting reasonably.

 

“Change in Control” means the occurrence of any of the following events:

 

(i)                                     Change in Ownership of the Company.  A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company, except that any change in the ownership of the stock of the Company as a result of a private financing of the Company that is approved by the Board will not be considered a Change in Control; or

 

(ii)                                  Change in Effective Control of the Company.  If the Company has a class of securities registered pursuant to Section 12 of the Exchange Act, a change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any 12 month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election.  For purposes of this clause (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

 

(iii)                               Change in Ownership of a Substantial Portion of the Company’s Assets.  A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the 12 month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions.  For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

 

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For purposes of this definition of “Change in Control,” persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

 

Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Internal Revenue Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.

 

Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the jurisdiction of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

 

“Good Reason” means the occurrence of any of the following without your express written consent: (A) material diminution of your duties, authority, title or reporting relationship (i.e., if you no longer report to the Chief Executive Officer), (B) any breach in any material respect of the Company’s obligations in this letter or in any other written agreement with you, (C) required relocation of your principal place of employment by more than 25 miles; provided that in the case of (A) or (B), you provide the Company with adequate written notice of such diminution or breach within 90 days of the occurrence of such event, and, if such event is capable of cure, the Company fails to cure such failure within thirty (30) days of the notice.

 

“Payment Date” means the tenth day following the effective date of the Separation Agreement, provided however that if the period of time to consider the release spans two calendar years, then the Payment Date shall be the later of the first business day of such second calendar year or the tenth day following the execution of the Separation Agreement.

 

At-Will Employment.  The Company is excited about your joining and looks forward to a beneficial and fruitful relationship.  Nevertheless, you should be aware that your employment with the Company is for no specified period and constitutes at-will employment, subject to the terms of this agreement.  As a result, you are free to resign at any time, for any reason or for no reason.  Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause, and with or without notice.  We request that, in the event of resignation, you give the Company at least two (2) weeks’ notice.

 

Background Check and Employment Verification.  The Company has completed its background investigation and/or reference checks with respect to your potential employment.

 

For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States.  Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated.

 

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Competition.  We also ask that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed.  It is the Company’s understanding that any such agreements will not prevent you from performing the material duties of your position and you represent that such is the case.  Moreover, you agree that, during the term of your employment with the Company, you will not engage in any other employment, occupation, consulting, or other business activity directly related to the business in which the Company is now involved or becomes involved during the term of your employment, nor will you engage in any other activities that conflict with your obligations to the Company.  Similarly, you agree not to bring any third-party confidential information to the Company, including that of your former employer, and that you will not in any way utilize any such information in performing your duties for the Company.

 

Company Rules.  As a Company employee, you will be expected to abide by Company rules and standards as adopted by the Company in its sole discretion.  You will be specifically required to sign an acknowledgment that you have read and that you understand the Company’s rules of conduct, which are included in the Company Handbook.

 

Indemnification.  Company shall defend and indemnify you for acts committed in the course and scope of employment to the fullest extent provided by applicable law, provided you have not acted in bad faith in bad faith or in substantial disregard of any material Company policy in connection with the event triggering indemnification.  The Company agrees to advance your legal fees and expenses incurred that are covered by such indemnification (you agree to repay such amounts in the event it is ultimately determined that you are not entitled to be indemnified).  This paragraph will survive the termination of your employment.  The Company will include you as a beneficiary of an industry-standard directors and officers insurance policy.

 

At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement.  As a condition of your employment, you will also be required to sign and comply with an At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement, which requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company, and non-disclosure of proprietary information.

 

Choice of Law.  This offer letter shall be governed by and construed in accordance with the laws of the State of New York (without reference to the conflicts of laws provisions thereof).

 

Starting Date and Entire Agreement.  To indicate your acceptance of the Company’s offer, please sign and date this letter in the space provided below.  A duplicate original is enclosed for your records.  You must also sign and complete the attached general statement regarding overtime pay required by the State of New York.  If you accept our offer, your anticipated payroll date is June 30, 2019 (the “Payroll Date”) and your first day of active employment service in our offices is expected to be July 15, 2019 or such other date as is mutually agreed.  This letter, along with the At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement, and any agreements relating to proprietary rights between you and the Company, set forth the terms of your employment with the Company and supersede any prior representations or agreements including, but not limited to, any representations made during your interviews or

 

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relocation negotiations, whether written or oral.  This letter, may not be modified or amended except by a written agreement signed by the Company’s Chief Executive Officer and you.

 

Attorneys’ Fees.  You will be eligible for the reimbursement of reasonable and documented legal fees in connection with the review and finalization of this offer letter and At-Will Employment, Confidential Information, Invention Assignment and Arbitration Agreement.

 

We look forward to your favorable reply and to working with you at Casper Sleep Inc.

 

	
 
    	
Sincerely,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Chief   Executive Officer
    

 

I accept the Company’s offer of employment:

 

Signature:

 

Printed Name: Emilie Arel

 

Date:

 

Enclosures

Duplicate Original Letter

At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement

Employee Handbook

New York Wage Notice For Exempt Employees

 

7Exhibit 10.14

 

EXECUTIVE SEVERANCE AND
 CHANGE IN CONTROL AGREEMENT

 

This Executive Severance and Change in Control Agreement (this “Agreement”) is made by and between Casper Sleep Inc., a Delaware corporation (the “Company”) and                  (the “Executive”) dated as of [    ], 2020 (the “Effective Date”).  For purposes of this Agreement, “Company” shall mean the Company and its subsidiaries.

 

WHEREAS, the Executive is currently an employee of the Company;

 

WHEREAS, the Company considers it essential to the best interests of its shareholders to foster the continuous employment of key management personnel, including the Executive; and

 

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that the interests of the Company can be best satisfied by agreeing to make certain payments to the Executive if the Executive’s employment terminates in certain circumstances either before or following a Change in Control as set forth in and subject to the terms and conditions of this Agreement;

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

1.                                      Definitions.  As used in this Agreement, the following terms shall have the meanings set forth below:

 

(a)                                           “Cause” shall mean the occurrence of any one or more of the following events: (i) the Executive’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude; (ii) the Executive’s commission of or attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) the Executive’s material violation of any contract or agreement between the Company and the Executive or of any statutory duty owed to the Company; (iv) the Executive’s material failure to comply with the written polices or rules of the Company; (v) the Executive’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; (vi) the Executive’s material failure or neglect to perform assigned duties after receiving written notification of the failure; (vii) the Executive’s willful disregard of any material lawful written instruction from the Company; or (viii) the Executive’s willful misconduct or insubordination with respect to the Company or any affiliate of the Company; provided that, in the case of (iii), (iv), (v), (vi), (vii) and (viii) above, if such action or conduct is curable, (A) the Company has provided the Executive written notice within thirty (30) days following the occurrence (or Company’s first knowledge of the occurrence) of any such event; (B) the Executive fails to cure such event within thirty (30) days thereafter; and (C) the Company terminates the Executive’s employment for Cause within thirty (30) days following the end of such cure period.

 

(b)                                           “Change in Control” shall mean the occurrence of any of the following events:

 

(i)                                     Change in Ownership of the Company. A change in the ownership of the Company which occurs on the date that any one “person”, or more than one person acting

 

 

as a “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (“Person”), directly or indirectly acquires beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of the securities of the Company that, together with the stock held by such Person, constitutes more than 50% of the total combined voting power of the securities of the Company outstanding immediately after such acquisition, provided, however, that the following acquisitions shall not constitute a Change in Control: (A) any acquisition by the Company or any of its subsidiaries; (B) any acquisition by an employee benefit plan maintained by the Company or any of its subsidiaries; or (C) in respect of an Equity Award held by a particular Executive, any acquisition by the Executive or any group of persons including the Executive (or any entity controlled by the Executive or any group of persons including the Executive); or

 

(ii)                                  Change in Effective Control of the Company. If the Company has a class of securities registered pursuant to Section 12 of the Exchange Act, a change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any consecutive twelve (12)-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board still in office prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

 

(iii)                               Change in Ownership of All or a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12)-month period ending on the date of the most recent acquisition by such Person or Persons) all or substantially all of the assets from the Company in a transaction requiring shareholder approval.

 

(iv)                              Merger or Reorganization. A consummation of a merger, consolidation or reorganization with or into the Company other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) more than 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation, as the case may be, outstanding immediately after such merger or consolidation.

 

Notwithstanding the foregoing, if a Change in Control constitutes a payment or benefit event with respect to any payment or benefit hereunder that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, such transaction or event described in subsections (i), (ii) or (iii) with respect to such payment or benefit will not be deemed a Change in Control unless the transaction qualifies as a “change in control event” within the meaning of Section 409A.

 

Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (x) its sole purpose is to change the jurisdiction of the Company’s incorporation, or (y) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the Persons who held the Company’s securities immediately before such transaction.

 

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The Board shall have full and final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a “change in control event” as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.

 

(c)                                            “Change in Control Protection Period” shall mean the period beginning on the date of the consummation of the Change in Control and ending on the first anniversary of such Change in Control.

 

(d)                                           “Code” shall mean the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.

 

(e)                                            “Equity Awards” shall mean all stock options, restricted stock units and such other equity-based awards granted pursuant to the Company’s equity award plans or agreements.

 

(f)                                             “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(g)                                            “Good Reason” shall mean the occurrence of any of the following events or conditions without the Executive’s written consent: (i) a material diminution in the Executive’s authority, duties or responsibilities; provided that The Executive shall not have “Good Reason” by reason of any diminution in authority or responsibilities following a Change in Control that is attributable solely to any one or more of the following: (A) the Company is instead a subsidiary or other part of the acquiring corporation or surviving corporation of a Change in Control (“Acquiring Company”); (B) the Executive’s authority and responsibilities apply, after the Change in Control, only to the business and operations of the Company and do not extend to other parts of the business or operations of the Acquiring Company; (C) the number of employees reporting the Executive is materially reduced; or (D) immaterial portions of the Executive’s operational authority are, after the Change in Control, integrated with and managed by other parts of the business or operations of the Acquiring Company; (ii) a material diminution in the Executive’s annual base compensation opportunity (i.e., base salary and target bonus percentage); or (iii) relocation of the Executive’s principal workplace with the Company by greater than fifty (50) miles, provided that in the case of (i), (ii) and (iii) above, if such event or condition is curable, (A) the Executive has provided the Company written notice at least ninety (90) days following the initial occurrence of any such event or condition, (B) the Company fails to cure such event within thirty (30) days thereafter; and (C) the Executive terminates his or her employment for Good Reason within thirty (30) days following the end of such cure period.

 

(h)                                           “Section 409A” shall mean Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including, without limitation, any such regulations or other guidance that may be issued after the Effective Date.

 

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(i)                                               “Termination of Employment” shall mean and be interpreted in a manner consistent with the definition of “separation from service” within the meaning of Section 409A(a)(2)(A)(i) of the Code and Treasury Regulation Section 1.409A-1(h).

 

2.                                      Term of Agreement.  The term of this Agreement will commence as of the Effective Date and shall continue in effect until the earlier of (i) the third anniversary of the Effective Date; and (ii) the date on which all payments or benefits required to be made or provided hereunder have been made or provided in their entirety (the “Initial Term”).  Notwithstanding the foregoing, on the last day of the Initial Term and on each subsequent anniversary thereafter, this Agreement shall automatically renew and extend for a period of twelve (12) months (each such twelve (12)-month period being a “Renewal Term”) unless written notice of non-renewal is delivered from either party to the other not less than sixty (60) days prior to the expiration of the then-existing Initial Term or Renewal Term.  Notwithstanding the foregoing, upon the occurrence of a Change in Control during the term of this Agreement, this Agreement shall continue in effect for a period of two (2) years from the date of such Change in Control, unless sooner terminated as hereinafter provided.

 

3.                                      Company Obligations Upon a Termination of Employment.

 

(a)                                           In General.  Upon the Executive’s Termination of Employment for any reason, the Executive (or the Executive’s estate) shall be entitled to receive: (i) any portion of the Executive’s annual base salary through the date of the Termination of Employment (“Date of Termination”) not theretofore paid; (ii) any amounts owed to the Executive for reimbursement of expenses properly incurred by the Executive prior to the Date of Termination in accordance with the Company’s applicable expense reimbursement policy; and (iii) any amount arising from the Executive’s participation in, or benefits under, any employee benefit plans, programs or arrangements to which the Executive is entitled at the Date of Termination pursuant to the terms of such plans, programs or arrangements (collectively, the “Accrued Obligations”).  Except as otherwise set forth in this Agreement, the payments and benefits described in this Section 3(a) shall be the only payments and benefits payable in the event of the Executive’s Termination of Employment for any reason.

 

(b)                                           Severance Payment.

 

(i)                                     In the event the Executive’s Termination of Employment does not occur upon or within the Change in Control Protection Period and such Termination of Employment is (A) by the Company without Cause or (B) by the Executive’s resignation for Good Reason then, subject to Section 3(c), in addition to the payments and benefits described in Section 3(a) above:

 

(1)                                 The Company shall, during the period beginning on the Date of Termination and ending on the twelve (12)-month anniversary of the Date of Termination (the “Severance Period”), pay to the Executive an amount equal to twelve (12) months of the Executive’s annual base salary as in effect immediately prior to the Date of Termination (the “Non-CIC Severance Payment”), subject to Section 3(c);

 

(2)                                 During the Severance Period or, if earlier, the first day on

 

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which the Executive becomes eligible for coverage under any group health plan of another employer or otherwise (the “Continuation Period”), subject to the Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall, in its sole discretion, either (i) continue to provide to the Executive and the Executive’s dependents or (ii) reimburse the Executive and the Executive’s dependents for, coverage under its group health plan, in each case at the same or reasonably equivalent levels in effect on the Date of Termination and subject to the Executive paying the same cost for such coverage that would have applied had the Executive’s employment not terminated, based on the Executive’s elections in effect on the Date of Termination (the Company’s monthly payment for Executive’s health coverage pursuant to this sentence, the “Company Subsidy”); provided, however, that if (x) any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the Continuation Period to be, exempt from the application of Section 409A under Treasury Regulation Section 1.409A-1(a)(5), (y) the Company is otherwise unable to continue to cover Employee or Employee’s dependents under its group health plans, or (z) the Company cannot provide such benefit without violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then, in any such case, in lieu of such continued benefits or reimbursement, the Company shall instead pay to the Executive a cash amount equal to the Company Subsidy in substantially equal monthly installments over the remaining portion of the Continuation Period on the Company’s first regular payroll date of each calendar month.  For the avoidance of doubt, the COBRA continuation period under Section 4980B of the Code shall run concurrently with the period of continued group health plan coverage pursuant to this Section 3(b)(i)(2).  The continued benefits, reimbursement or cash payments provided for in this Section 3(b)(i)(2) are referred to herein as the “Continued Benefits”);

 

(3)                                 If, and only if, the Executive’s Termination of Employment occurs on or after October 1 of any calendar year, pay to the Executive an amount equal to the annual bonus that the Executive would have been entitled to receive, if any, with respect to the calendar year in which the Date of Termination occurs had the Executive remained employed through the end of such calendar year, prorated based on the number of days the Executive worked during such calendar year and calculated based on actual achievement of the applicable performance targets relating to such annual bonus (and assuming any individual, personal performance targets are achieved at target, as applicable) (the “Pro Rata Bonus”); and

 

(4)                                 Subject to the provisions of Section 12, (I) the Non-CIC Severance Payment shall be paid in equal installments during the Severance Period at the same time and in the same manner as the Executive’s annual base salary would have been paid had the Executive remained in active employment during the Severance Period in accordance with the Company’s normal payroll practices in effect on the Date of Termination, and (II) if and as applicable, the Pro Rata Bonus shall be paid when the Executive would have otherwise been paid the annual bonus with respect to the year in which the Date of Termination occurs had the Executive’s employment not terminated (which, for the avoidance of doubt, shall be on or prior to March 15 of the calendar year following the year in which the Date of Termination occurs).

 

(ii)                                  In the event the Executive’s Termination of Employment occurs upon or within the Change in Control Protection Period and such Termination of Employment is (A) by the Company without Cause or (B) by the Executive’s resignation for Good Reason, then, subject to Section 3(c), in addition to the payments and benefits described in Section 3(a) above:

 

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(1)                                 The Company shall pay to the Executive a cash lump sum payment within 60 days following such termination of employment an amount equal to the sum of (i) twelve (12) months of the Executive’s annual base salary as in effect immediately prior to the Date of Termination plus (ii) the Executive’s target annual bonus for the calendar year in which the Date of Termination occurs (the “CIC Severance Payment”), subject to Section 3(c);

 

(2)                                 During the Continuation Period, subject to the Executive’s valid election to continue healthcare coverage under Section 4980B of the Code and the regulations thereunder, the Company shall provide the Continued Benefits; and

 

(3)                                 Any outstanding Equity Awards shall automatically become fully vested and exercisable, as applicable, as of the Date of Termination; provided that any Equity Award which is subject to performance-based vesting shall vest based on the greater of: (a) the number of shares that would have vested (if any) if the performance period ended on the date of the Change in Control (based on the actual performance level achieved through such date), or (b) the target award amount; provided that payment or settlement of such Equity Awards may be delayed as provided in the grant documents to the extent required by Section 409A.

 

(c)                                  Notwithstanding anything herein to the contrary, the Executive’s receipt of any payments or benefits pursuant to Section 3(b)(i) or Section 3(b)(ii), as applicable (collectively, the “Severance Benefits”), shall be conditioned on the Executive’s timely execution and non-revocation a general waiver and release of claims agreement in the form substantially attached hereto as Exhibit A (a “Release”) subject to the terms set forth in Section 12(c).

 

(d)                                 The provisions of this Section 3 shall supersede in their entirety any severance payment provisions in any severance plan, policy, program or other arrangement maintained by the Company.

 

(e)                                  If the Executive is terminated for Cause during the term of this Agreement whether before or after any Change in Control, the Executive shall have no rights or benefits hereunder other than the payments described in Section 3(a) above.

 

4.                                      Mitigation.  The Executive shall not be required to mitigate the amount of any payment or benefit provided for in Section 3 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in Section 3 be reduced by any compensation earned by the Executive as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise; provided, however, that any loans, advances or other amounts owed by the Executive to the Company may be offset by the Company and its affiliates against amounts payable to the Executive under Section 3.

 

5.                                      Restrictive Covenants.  The Executive and the Company have executed the Company’s At-Will Employment, Confidential Information, Invention Assignment, and Arbitration Agreement a copy of which is attached to this Agreement as Exhibit B and incorporated herein by reference (the “Restrictive Covenant Agreement”). Nothing in this Agreement or in the Restrictive Covenant Agreement shall be deemed to restrict the Executive’s right to communicate directly with, cooperate with, provide information to, or report possible violations of federal law or regulation to, any governmental agency or entity in accordance with the provisions of and rules

 

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promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation, including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission or the U.S. Department of Justice.

 

6.                                      Section 280G.  If any payment or benefit the Executive would receive under this Agreement, when combined with any other payment or benefit the Executive receives pursuant to the Executive’s Termination of Employment (“Payment”), would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (b) but for this Section 6, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be either payable in full or in such lesser amount (with cash payments being reduced by stock option or other equity-based compensation) as would result in no portion of the Payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state and local employment taxes, income taxes, and the Excise Tax, results in the Executive’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. All determinations required to be made under this Section 6, including whether and to what extent the Payment shall be reduced and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized certified public accounting firm or consulting firm experience in matters regarding Section 280G of the Code as may be designated by the Company (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Executive and the Company at such time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Executive and the Company. For purposes of making the calculations required by this Section 6, the Accounting Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good-faith interpretations concerning the application of Sections 280G and 4999 of the Code.

 

7.                                      Severability. In the event any provision of this Agreement is found to be unenforceable by an arbitrator or court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to allow enforceability of the provision as so limited, it being intended that the parties shall receive the benefit contemplated herein to the fullest extent permitted by law. If a deemed modification is not satisfactory in the judgment of such arbitrator or court, the unenforceable provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected thereby.

 

8.                                      Successors; Binding Agreement.  The rights of the Company under this Agreement may, without the consent of the Executive, be assigned by the Company, in its sole and unfettered discretion, to any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly, acquires all or substantially all of the assets or business of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and to 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 succession had taken place; provided, however, that no such assumption shall relieve the Company of its obligations hereunder; provided, further, that the failure of any such successor to so assume this Agreement shall constitute a material breach of this Agreement. As used in this Agreement, the “Company”

 

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shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. The Executive shall not be entitled to assign any of the Executive’s rights or obligations under this Agreement. This Agreement 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. This Agreement 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 amount would still be payable hereunder if the Executive had continued to live, 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 is no such designee, to the Executive’s estate.

 

9.                                      Notices.  Any notice required or permitted by this Agreement shall be in writing and shall be delivered as follows with notice deemed given as indicated: (a) by personal delivery when delivered personally; (b) by overnight courier upon written verification of receipt; (c) by telecopy or facsimile transmission upon acknowledgment of receipt of electronic transmission; or (d) by certified or registered mail, return receipt requested, upon verification of receipt. Notice shall be sent to the Executive at the address set forth below and to the Company at its principal place of business, or such other address as either party may specify in writing.

 

10.                               Withholding Taxes.  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 any applicable law or regulation.

 

11.                               Claw-back Policy.  Notwithstanding any other provision of this Agreement, the Company shall be entitled to cease payment or provision of all benefits under this Agreement to the Executive and the Executive shall reimburse the Company for the full amount of any benefits he or she received under this Agreement in the event the Executive subsequently discloses any of the trade secrets of the Company and its subsidiaries or materially violates any written covenants between the Executive and the Company or any of its subsidiaries or the Company’s confidentiality policy (or a confidentiality agreement with the Company or any of its subsidiaries), including, without limitation, any provision of the Restrictive Covenant Agreement, or otherwise engages in conduct that may adversely affect the Company or any of its subsidiaries’ reputation or business relations.  In addition to the foregoing, Executive shall also forfeit any right to benefits under this Agreement which have not yet been paid. The Executive acknowledges that the Executive’s incentive compensation payments under this Agreement are and shall be subject to and, when and to the extent applicable, governed by the Company’s compensation claw-back policy, as adopted by the Board and in effect as of or prior to the Executive’s Date of Termination, and that the Company may offset any payments hereunder against amounts owing or recoupable under the claw-back policy, as determined by the Board.

 

12.                               Section 409A.

 

(a)                                           General.  The parties hereto acknowledge and agree that, to the extent applicable, this Agreement shall be interpreted in accordance with, and incorporate the terms and conditions required by, Section 409A.  Notwithstanding any provision of this Agreement to the contrary, in the event that the Company determines that any amounts

 

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payable hereunder will be immediately taxable to the Executive under Section 409A, the Company reserves the right to (without any obligation to do so or to indemnify the Executive for failure to do so) (i) adopt such amendments to this Agreement or adopt such other policies and procedures (including amendments, policies and procedures with retroactive effect) that it determines to be necessary or appropriate to preserve the intended tax treatment of the benefits provided by this Agreement, to preserve the economic benefits of this Agreement and to avoid less favorable accounting or tax consequences for the Company; and/or (ii) take such other actions it determines to be necessary or appropriate to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of penalty taxes thereunder.  Notwithstanding anything herein to the contrary, no provision of this Agreement shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from the Executive or any other individual to the Company or any of its Affiliates, employees or agents.

 

(b)                                           Separation from Service under Section 409A; Section 409A Compliance. Notwithstanding anything herein to the contrary: (i) no termination or other similar payments and benefits hereunder shall be payable unless the Executive’s Termination of Employment constitutes a “separation from service” within the meaning of Section 1.409A-1(h) of the Department of Treasury Regulations;  (ii) if the Executive is deemed at the time of the Executive’s separation from service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of any termination or other similar payments and benefits to which the Executive may be entitled hereunder (after taking into account all exclusions applicable to such payments or benefits under Section 409A) is required in order to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of such payments and benefits shall not be provided to the Executive prior to the earlier of (x) 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) and (y) the date of the Executive’s death; provided that upon the earlier of such dates, all payments and benefits deferred pursuant to this Section 12(b) shall be paid in a lump sum to the Executive, and any remaining payments and benefits due hereunder shall be provided as otherwise specified herein; (iii) the determination of whether the Executive is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code as of the time of the Executive’s separation from service shall be made by the Company in accordance with the terms of Section 409A (including, without limitation, Section 1.409A-1(i) of the Department of Treasury Regulations and any successor provision thereto); (iv) to the extent that any installment payments under this Agreement are deemed to constitute “nonqualified deferred compensation” within the meaning of Section 409A, for purposes of Section 409A (including, without limitation, for purposes of Section 1.409A-2(b)(2)(iii) of the Department of Treasury Regulations), each such payment that the Executive may be eligible to receive under this Agreement shall be treated as a separate and distinct payment; (v) to the extent that any reimbursements or corresponding in-kind benefits provided to the Executive under this Agreement are deemed to constitute “deferred compensation” under Section 409A, such reimbursements or benefits shall be provided reasonably promptly, but in no event later than December 31 of the year following the year in which the expense was incurred, and in any event in accordance with Section 1.409A-3(i)(1)(iv) of the Department

 

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of Treasury Regulations; and (vi) the amount of any such payments or expense reimbursements in one calendar year shall not affect the expenses or in-kind benefits eligible for payment or reimbursement in any other calendar year, other than an arrangement providing for the reimbursement of medical expenses referred to in Section 105(b) of the Code, and the Executive’s right to such payments or reimbursement of any such expenses shall not be subject to liquidation or exchange for any other benefit.

 

(c)                                            Release.  Notwithstanding anything to the contrary in this Agreement, to the extent that any payments of “nonqualified deferred compensation” (within the meaning of Section 409A) due under this Agreement as a result of the Executive’s termination of employment are subject to the Executive’s execution and delivery of a Release, (i) the Company shall deliver the Release to the Executive within seven (7) days following the Date of Termination, and the Company’s failure to deliver a Release prior to the expiration of such seven (7) day period shall constitute a waiver of any requirement to execute a Release, and (ii) if the Executive fails to execute the Release on or prior to the Release Expiration Date (as defined below) or timely revokes his acceptance of the Release thereafter, the Executive shall not be entitled to any payments or benefits otherwise conditioned on the Release.  For purposes of this Section 12(c), “Release Expiration Date” shall mean the date that is twenty-one (21) days following the date upon which the Company timely delivers the Release to the Executive, or, in the event that the Executive’s termination of employment is “in connection with an exit incentive or other employment termination program” (as such phrase is defined in the Age Discrimination in Employment Act of 1967), the date that is forty-five (45) days following such delivery date.  To the extent that any payments of nonqualified deferred compensation (within the meaning of Section 409A) due under this Agreement as a result of the Executive’s termination of employment are delayed pursuant to this Section 12(c), such amounts shall be paid in a lump sum on the first payroll date to occur on or following the sixtieth (60th) day following the Date of Termination.

 

13.                               Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer 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.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

 

14.                               Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws provisions thereof.

 

15.                               Validity.  If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

16.                               Counterparts.  This Agreement may be signed in several counterparts, each of

 

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which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

 

17.                               Arbitration.  The Executive hereby acknowledges and agrees that any dispute, claim or controversy arising from this Agreement or any benefit provided hereunder shall be governed by the terms of the arbitration provisions set forth in the Restrictive Covenant Agreement.

 

18.                               At-Will Employment Relationship. The Executive’s employment with the Company is at-will and not for any specified period and may be terminated at any time, with or without Cause or advance notice, by either the Executive or the Company. Any change to the at-will employment relationship must be by specific, written agreement signed by the Executive and an authorized representative of the Company. Nothing in this Agreement is intended to or should be construed to contradict, modify or alter this at-will relationship.

 

19.                               Entire Agreement.  This Agreement contains the entire understanding of the parties with respect to the subject matter herein and supersedes any prior agreements between the Company and the Executive regarding the subject matter hereof.  There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

 

	
 
    	
CASPER SLEEP INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
THE   EXECUTIVE
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[NAME]

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