Document:

Document

April 29, 2021

Jane Morreau
8108 Limehouse Lane
Louisville KY, 40220

Dear Jane:

Thank you for your many years of service with Brown-Forman. As discussed, you will transition your duties as Chief Financial Officer effective July 1, 2021, which will be your final day of employment.  This updated letter outlines the ways in which the company is offering to support you during this transition which were first communicated to you in Lawson’s letter of April 13, 2021. 

Attached are three sections that cover your existing benefits, the additional benefits being offered by Brown-Forman, and the subsequent agreement that must be executed to obtain these additional benefits. The items in Section 1 of this letter will be provided to you even if you choose not to sign the attached Release and Agreement in Section 3. If you decide to sign the Release and Agreement, please know you are agreeing to everything in Section 1 and Section 2 as outlined below. 

Please note that your  attention is required concerning the continuation of your  insurance coverages after your termination date under COBRA.  To avoid any interruption in your medical coverage we encourage you to act promptly on the below information regarding your medical coverage.

Section 1 – General Information

This section describes your status and rights in various matters and explains steps you may need to take.  You do not have to sign the Release and Agreement to receive any of the benefits listed in this Section 1.

Vacation
As you are participating in the Flex Vacation policy, there will not be any payout for unused vacation.

Holiday Bonus
You will receive a pro-rata portion of the current year holiday bonus for your period of employment from December 1st through your termination date.  If possible, this amount will be added to your final paycheck; otherwise, it will be paid in the next payroll cycle following termination. 

Employee Stock Purchase Plan
If you participate in the Employee Stock Purchase Plan, you can either (a) keep your account or (b) close your account and receive payment of your balance in cash or shares 

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of stock.  You will receive further information and election forms from Stockholder Relations, or you may contact them at 1-800-777-1636 ext. 7690.

Credit Union
You should contact the Brown-Forman Employees Credit Union at 1-800-777-1636 ext. 7636 regarding payment of your credit union account balance or any outstanding loans you may be holding.

Unemployment
You should contact your local Unemployment Compensation Office immediately following termination to start any unemployment benefits to which you may be entitled.  Kirsten Hawley, Chief HR & Corporate Communications Officer, can provide you with specific information on how to collect unemployment.   

Corporate Credit Card and Other Amounts Owed to the Company
You are responsible for completing any outstanding expense reports and making arrangements to reimburse any amounts owed the Company.  You must take these actions whether or not you sign the Release and Agreement.
 
Employee Benefits
Following is a brief explanation of what happens to your Company benefits upon termination.  You will receive additional information directly from the B-F Benefits Service Center.  Please contact the B-F Benefits Service Center by calling 1-833-543-1905 with questions regarding any of these items, or to change an address on file.

Medical, Vision and Dental Coverage Continuation. If you were enrolled in medical, dental, and/or vision coverages, those coverages end at the end of the month in which your employment terminates. If you so elect, your coverage can be continued for up to 18 months for you and any covered dependents, at your expense, under a law known as COBRA (or under Brown-Forman's COBRA Equivalent Policy for Partners).  Within 14 days of your separation, you will receive at your home address as prescribed by the COBRA law, an "Election and Enrollment" form which you must complete, sign, and return as directed in that letter. 

PLEASE NOTE: COBRA information will come from Businessolver, our partner for administering COBRA.  If you do not receive a COBRA packet within 14 days of your coverage end date, please contact the B-F Benefits Service Center at (833) 543-1905. You will have at least 60 days from the date of your COBRA package to enroll in COBRA benefits.  The current COVID Pandemic has expanded the length of time in which you have to enroll or elect COBRA benefits.  Through September 30, 2021, you are not responsible for COBRA premiums.  Following that date, your premium bill will be forwarded to you by Businessolver.  Even though no premium is due during this period, you must elect COBRA coverage to become enrolled and avoid a lapse in coverage. Reinstatement of coverage can take up to three weeks from the time Businessolver receives your COBRA election. Once coverage is reinstated, it will be retroactive to your coverage end date so that no lapse in coverage will occur. If you have claims denied during this period, please request that your provider re-file once reinstatement has occurred. Once premiums are due, failure to pay the premium will result in your coverage not being continued. 

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COBRA/Medicare Note: If you become eligible for Medicare while on COBRA, your COBRA coverage(s) will end in accordance with the federal guidelines. For more information, go to www.Medicare.gov.  

Retiree Medical.  If you are eligible for retiree medical, you must elect Retiree Medical within 31 days of losing your active coverage (last day of the month in which you terminate employment). If you do not elect Retiree Medical within 31 days of losing your active coverage, you will not be allowed to elect retiree medical in the future.  If you drop retiree medical at any time, you are not allowed to re-elect coverage.

Flexible Spending Accounts (FSAs)

Health Care FSA – You may elect COBRA for your Health Care FSA if you have a      positive balance in your account at the time of your separation (after deducting submitted expenses from contributions thus far from payroll). If you elect to continue the Health Care FSA benefit under COBRA, please note that the Discovery Benefits debit card will no longer be active after your separation date. Reimbursement is requested for eligible FSA expenses by completing claim forms which can be requested by contacting Discovery Benefits at (833) 543-1905 or online at brownformanbenefits.com.  If you elect not to continue the Health Care FSA under COBRA, you have 60 days from your coverage end date to submit claims for reimbursement for eligible services incurred through your coverage end date. 

If you elect COBRA for your Health Care FSA and continue that coverage through the end of the plan year, you have until March 1 following the end of the year to file claims for reimbursement for eligible services and items received or purchased up to December 31 of the plan year. Should you drop your COBRA coverage at any point prior to the end of the plan year, you have 60 days from the coverage term date to file for reimbursement for eligible services and items received or purchased prior to the date of the COBRA termination.  

Dependent Care FSA – Dependent Care FSA cannot be continued under COBRA.      If you were participating in this program, you have 60 days from your coverage term date to submit claims for reimbursement for services received through the coverage termination date.

IMPORTANT REMINDER FOR FSA REIMBURSEMENTS: Keep copies of all receipts for services and/or items for which you receive reimbursement from either a Health Care or Dependent Care FSA with your tax records for as long as you retain those tax records (recommended seven years). Discovery Benefits, as required by the IRS, may request verification of expenses well after the end of the plan year.

For questions regarding your FSA account(s), contact Discovery Benefits at (833) 543-1905.

B-F Live Well.  Employees and their enrolled spouses/partners have 30 days from the separation/retirement date to redeem any PulseCash that was earned prior to 

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the separation/retirement. Additional PulseCash may not be earned following the date of the separation/retirement.

Group Life Insurance.  
All life insurance benefits end on your termination date. These include Company paid life insurance plus any additional life insurance coverage for yourself, your spouse/partner or dependent child(ren) that you have elected on a voluntary basis.  In most cases, you are allowed to continue life coverage under an individual conversion policy, which is a whole life policy, with Lincoln Financial Group. You are also allowed, in most cases, the opportunity to “port” all or a portion of your coverage under a group term life policy with Lincoln. To apply for conversion or portability coverage, you must apply within 31 days from your termination date by calling Lincoln at 1-888-408-7300. Please reference company code “brownforman”.

Retiree Life Insurance.  If you are eligible for Retiree Life Insurance, the amount of coverage provided at no cost to you will be provided to you in your Retiree Medical Communication from the B-F Benefits Service Center shortly after your separation of service.  To designate a beneficiary, please contact the B-F Benefits Service Center at 1-833-543-1905 or go online at www.brownformanbenefits.com.

Short-Term and Long-Term Disability. Coverage for any future disability ends upon your separation of service and cannot be converted to a private policy.  If you are on a long-term disability leave at the time of your separation, information about your current disability benefits will be provided separately.

401(k) Savings Plan.   If you participated in the 401(k) savings plan, you are entitled to a rollover or distribution of your vested account balance under the plan. Generally, all outstanding contributions are credited to your account within a few weeks of your separation date.  Empower Retirement will provide you with distribution information soon after your separation date. You can provide distribution direction to Empower Retirement by logging on to your account at bfsavingsplan.com or contacting Empower Retirement at 1-844-923-4015. 

If your account balance is less than $5,000, it will be automatically rolled over into an Individual Retirement Account through Empower Retirement within 90 days of your separation, unless you provide direction for your distribution prior to the rollover being made.  

PLEASE NOTE: Empower Retirement IS REQUIRED BY LAW TO WITHHOLD 20% OF ANY CASH DISTRIBUTION.  To avoid this 20% withholding, you will need to instruct Empower Retirement to roll the funds directly into some form of Individual Retirement Account or another employer's plan.  If you have an outstanding loan at the time of separation, you are responsible for making the monthly payments directly to Empower Retirement. Empower Retirement will send you instructions on how to submit payments.  If you do not receive this within 30 days of your separation date, contact Empower Retirement at 1-844-923-4015. 

Executive Savings Plan (Nonqualified Deferred Compensation Plan).  If you are a participant in this executive savings plan, you will be contacted within four weeks of your separation date with specific information concerning the payment of this 

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benefit.  If you do not receive information within four weeks of your separation, please contact Newport Group at 1-844-749-9981.  Please note, if you enrolled in the Plan for the current calendar year and made an election for a portion of your STIP or LTIP to be deferred, by law, this deferral must still be made into the Plan even if your employment terminated prior to the actual payment of these bonuses.

Pension.  If you are a vested participant in a pension plan, the Brown-Forman Pension Center will send you detailed pension information approximately six weeks after your separation date.  That detailed information will also provide you with the lump sum benefit available to you from the Plan.  You have a 120-day window from your separation of service to elect the lump sum benefit.  If you do not request a lump sum within that window, your only option for form of payment will be monthly installment payments.  If you have questions regarding your pension information, please contact the Brown-Forman Pension Center at 1-877-775-1477.

Health Savings Account (HSA).  If you participated in an HSA medical plan and have an HSA with HealthEquity (HE), you are entitled to your HSA and any Employer and Employee contributions deposited into your account up to your separation date. Your account will remain with HE and you can contact HE at 1-866-346-5800 for additional information regarding your account. 

SERP (Supplemental Executive Retirement Plan).  If you are a participant in this executive benefit plan, you will be contacted approximately eight weeks after your separation date with specific information concerning the payment of this benefit.  Also, please note that notification regarding your pension benefit information will also follow the eight-week period.  If you do not receive pension/SERP information eight weeks after your separation, please contact the Brown-Forman Pension Center at 1-877-775-1477.

Employee Assistance Program (EAP).  Should you or your dependents want professional counseling to help adjust to this termination, the Company encourages you to contact the Employee Assistance Program.  These completely confidential services are provided by the Company through Optum for 30 days after your termination.  Continuation of this benefit is also available under COBRA for 18 months at a minimal cost; however, you must elect it on the COBRA continuation form to be entitled to the benefit. Optum may be reached at 1-866-374-6061.

Commuter Benefits.   You will have 60 days from your separation date to file parking or vanpooling claims online at brownformanbenefits.com.

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Section 2 – Additional Benefits 
(Additional compensation, benefits, and services)

This section lists the additional services and financial assistance that the Company is offering you in return for your signing and fully complying with the Release and Agreement in Section 3 of this letter.

Transition Payments
After the effective date of your termination, the Company offers 12 months of transition payments. These payments, less required withholdings, will be automatically deposited to your bank account through the normal semi-monthly payroll process.  In arriving at the amount of your transition pay we took the following into account:

												
		Cash Compensation	Annualized	Monthly
		Salary	$618,000.00	$51,500.00
		Holiday Bonus	$25,771.00	$ 2,147.58
		Medical Premium Subsidy	$9,600.00	$800.00
		Monthly Compensation		$54,447.58
		Months of Transition Pay		12
		Total Transition Pay		$653,371.00

Your monthly transition payments will total $54,447.58, less taxes, per month, and the total of all of your transition payments will equal $653,371.00.  If you currently view your paystubs via Workday, Payroll will print and mail transition paystubs to your home address.

Outplacement Services
Outplacement services are being offered to help you as you plan the next steps in your career. Kirsten Hawley will provide you with detailed information about this service, and we encourage you to begin using this resource at the earliest possible date to make your transition as smooth as possible. As discussed, you may begin working with the outplacement service provider any time in FY22

Medical Premium Subsidy
As noted under the Employee Benefits heading in Section 1, you may elect to continue medical, dental, and vision coverage(s) for you and your family for up to 18 months under COBRA or if eligible, you may elect to continue medical coverage under the Retiree Medical program.  To assist you with the premiums required for COBRA and/or Retiree Medical, the company will provide a monthly premium subsidy amount through the end of the transition payment period. 

Short-Term Incentive
Your short-term incentive (“STI”) will be prorated by the number of calendar days you were eligible for the award during the fiscal year.  It will be adjusted for performance and paid in the same manner as other participants after the end of the fiscal year. Your STI calculation will follow the 70/20/10 formula as approved by the Board of Directors for the Executive Leadership Team: 70% of the payout will be based on BFC’s actual performance, 20% of 

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the payout will be your Individual Performance Objective, which will be “at target,” and 10% of the payout will reflect the progress made against the company’s D&I ambitions. The pro-rated STI will be paid in the summer of 2022 per Brown-Forman’s regular cycle/process. 

Long-Term Incentives
The following summarizes the treatment of long-term incentives. Please note for the purpose of this separation, all long-term incentives will be treated as outlined under the “Retirement” section of their applicable award agreement and/or administrative guidelines. These agreements, of which you have already accepted, require the acceptance of all terms and conditions noted below in “Section 3” in order to qualify for the treatment outlined below. Depending on your individual annual elections, not all long-term incentives described may be applicable.

Long-Term Cash
Your long-term cash incentive for the current FY performance period will be prorated based on the number of full months eligible for the award during the year divided by 12 and will be adjusted for actual company performance and be paid at the same time and in the same manner as active participants. Your outstanding long-term cash incentives for prior FY performance periods will not be prorated and will be adjusted for actual company performance and be paid at the same time and in the same manner as active participants.
 
Stock-Settled Appreciation Rights (SSARs)
Awards will be treated as outlined in the “Retirement” section of their applicable grant agreement. Any outstanding stock appreciation rights will vest as indicated in the award agreement under Retirement and continue in force until the earlier of (a) the Expiration Date; or (b) the end of seven years following the date of retirement.  Any award that was granted within this fiscal year will be prorated based on the number of whole months worked, with the remaining portion cancelled and forfeited.
 
Performance-Based Restricted Stock or Stock Units
Awards will be treated as outlined in the “Retirement” section of their applicable grant agreement. Any outstanding awards in the first fiscal year performance period will be prorated based on the number of full months eligible for the award and will be adjusted for actual company performance. All awards will be payable on the date indicated in the applicable award agreement(s). Any outstanding restricted stock or stock unit awards in the second or third fiscal year of their performance period will vest without pro-ration and will become payable on the date indicated in the applicable award agreements.

Your long-term award summary is detailed separately to The Agreement.

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Questions
If you have any questions about this letter or the Release and Agreement, please contact Kirsten Hawley, Chief Human Resources & Corporate Communications Officer, at (502) 774-7212.  

If you choose to sign the Release and Agreement, please return one complete copy of the letter with the Release and Agreement to Kirsten Hawley, Chief Human Resources & Corporate Communications Officer, at 850 Dixie Highway, Louisville, KY 40210.

    
    With respect,

                    /s/ Kirsten M. Hawley

                    Kirsten Hawley
                    Chief HR & Corporate Communications Officer

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Section 3 – Release and Agreement

1.    GENERAL

(a)    PURPOSE    I understand that I am entitled to the compensation and benefits described in Section 1 above (General Information), even if I do not sign this Section 3 Release and Agreement.  I further understand that the Additional Benefits described in Section 2 above are being offered by the Company to me as consideration for my signing and fully complying with this Release and Agreement, and that I am not otherwise eligible for these Additional Benefits.

(b)    ENCOURAGEMENT TO CONSULT WITH ATTORNEY    I acknowledge that this Release and Agreement is a binding legal document and that the Company advises me to consult with an attorney of my choosing before signing this Release and Agreement.

(c)    REVIEW AND CONSIDERATION PERIOD   I acknowledge that I hereby am given at least 21 days to review and consider this Release and Agreement and have had the opportunity to use as much of that time as I wish before signing it.

I wish to accept the Additional Benefits described in Section 2 of this letter and in exchange agree as follows:

2.    RELEASE AND COVENANT NOT TO SUE    . I hereby release Brown-Forman Corporation and all of its divisions, subsidiaries, affiliates, employees, officers, directors, successors and assigns (hereinafter collectively “the Company’) from all claims, liabilities, demands, causes of action, and claims for attorney’s fees which I may have or claim to have against the Company arising from my employment or the termination of my employment or from any other occurrence prior to the date I sign this Release and Agreement, except as noted in (d) below.

(a)    This release includes but is not limited to all claims that I may have for discrimination on the basis of religion, national origin, race, sex, disability, age (including all claims under the Age Discrimination in Employment Act of 1967 as amended (ADEA), and all other protected classifications under any other federal, state or local laws or regulations, except as noted in (d) below.  I also release any and all common law and statutory claims, including but not limited to, contract, tort or wrongful discharge claims. 

(b)    Apart from (a) above, I agree never to file any lawsuit, complaint, proceeding, grievance or action of any sort arising from my employment or the termination of my employment with the Company or from any other occurrence prior to the date I sign the Release and Agreement, except as noted in (d) below.  If I violate this promise by suing the Company, then I agree that I will pay the Company either (i) its reasonable attorney fees and other costs incurred in defending such suit or at the Company’s option, (ii) my Total Transition Pay amount less $500. 

(c)    This Release and Covenant Not to Sue covers both known and unknown claims. If I live or work in California, I agree to waive all rights under Section 1542 of the California Civil Code which provides as follows: “A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.”  

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(d)    This Release and Covenant Not to Sue does NOT cover:

(i)    any rights or claims arising after the date I sign this Release and Agreement; or

(ii)    the right to file a charge with, or participate in an investigation conducted by, the Equal Employment Opportunity Commission or any similar state or local agency.

(iii)    my rights to enforce this Release and Agreement or to file a suit challenging its validity under the ADEA.
    
(e)    Notwithstanding (d) above, I am waiving all rights to recover money or individual relief related to any claim covered by this Release and Covenant Not to Sue.

3.    AGREEMENT    .    I further agree that:

(a)    NON-DISPARAGEMENT.    I will never in any way -- directly or indirectly, individually or with others do or communicate anything that reflects negatively on, undermines or disparages the Company, or its directors, officers, employees, products, business practices or reputation.

(b)    CONFIDENTIALITY.    I acknowledge my ongoing obligation not to divulge the Company’s proprietary or confidential financial, technical or business information and agree not to use or disclose any Confidential Information, as described below, to any person or entity other than the Company, without the Company’s prior written consent. Confidential information means information not generally known by the public about the Company’s processes, systems, products, or finances, including proposed products, pricing, sales or other business or financial information about the Company.

4.    OTHER MATTERS
(a)    RIGHT TO REVOKE.         I understand that I may revoke this Release and Agreement within seven (7) days after I sign it by delivering or sending a written notice of revocation to Kirsten Hawley, Chief Human Resources & Corporate Communications Officer, at 850 Dixie Highway, Louisville, KY 40210, by no later than the close of business on the seventh day after I sign this Release and Agreement.  I understand that if I revoke this Release and Agreement, it shall not be effective or enforceable, and I will not receive the Additional Benefits described in Section 2 of this letter.  I also understand that if I sign this Release and Agreement, Additional Benefits cannot be paid until this revocation period expires.

(b)    ENTIRE AGREEMENT.    I agree that this is the entire agreement between me and the Company, that the Company has not made any promises to me other than in this letter, and that no changes may be made to this agreement unless in writing and signed by me and the Company.  I agree that if any part of this Release and Agreement is found to be illegal or unenforceable, the rest of the Release and Agreement will nevertheless be enforceable.

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I ACKNOWLEDGE AND AFFIRM THAT I HAVE CAREFULLY READ THIS RELEASE AND AGREEMENT.  I UNDERSTAND IT AND HAVE NO QUESTIONS ABOUT WHAT IT MEANS.  I HAVE NOT BEEN FORCED OR INTIMIDATED IN ANY WAY TO SIGN IT, AND I AM KNOWINGLY AND VOLUNTARILY ENTERING INTO IT.  

    /s/ Jane C. Morreau                             
    Signed

    5/4/2021                                               
    Datedreal-ex101_87.htm

Exhibit 10.1

 

Form of Severance and Change in Control Agreement approved by the Company’s board of directors on May 5, 2021

 

SEVERANCE AND 

CHANGE-IN-CONTROL AGREEMENT

 

THIS SEVERANCE AND CHANGE-IN-CONTROL AGREEMENT (this “Agreement”), dated as of [_] (the “Effective Date”), is made by and between The RealReal, Inc., a corporation organized under the laws of the State of Delaware (the “Company”) and [_] (“Executive”).

WHEREAS, the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the Company and its stockholders to assure that the Company will have the continued dedication and objectivity of Executive, notwithstanding the possibility, threat or occurrence of a termination of employment or the occurrence of a Change in Control (as defined below) of the Company; 

WHEREAS, the Board believes that it is in the best interests of the Company and its stockholders to provide Executive with an incentive to continue Executive’s employment and to motivate Executive to maximize the value of the Company for the benefit of its stockholders; and

WHEREAS, the Board further believes that it is imperative to provide Executive with certain severance benefits upon termination of Executive’s employment, and with certain additional benefits upon a termination of employment in connection with a Change in Control of the Company, to provide Executive with enhanced financial security and incentive to remain with the Company.

NOW, THEREFORE, in consideration of the promises, agreements and conditions contained in this Agreement, the Company and Executive agree as follows:  

SECTION I
DEFINITIONS

For the purposes of this Agreement the following definitions shall apply:

1.1“Accrued Obligations” means (a) any unpaid base salary through the Date of Termination, payable within 30 days following the Date of Termination, or on such earlier date as may be required by applicable law; (b) any Annual Bonus for a prior year earned but unpaid, payable at the time such bonuses would have been paid if Executive was still employed with the Company; (c) reimbursement for any unreimbursed business expenses incurred through the Date of Termination, payable in accordance with the Company’s policy; and (d) all vested benefits under the Company’s retirement, health and welfare and equity-based employee benefit plans to which Executive is entitled, payable in accordance with the terms of such plan or program.

1.2“Affiliate” means any entity controlled by, controlling, or under common control with, the Company.

 

 

1.3“Annual Bonus” means Executive’s annual bonus under the Company’s or an Affiliate’s annual executive bonus program, as in effect from time to time, under which Executive is covered.  

1.4 “Annual Salary” means Executive’s annual base salary, exclusive of any bonus pay, commissions or other additional compensation, in effect on the Date of Termination.

1.5“Cause” means the occurrence of any one or more of the following events: 

(a)Executive’s act, or failure to act, that was performed in bad faith and to the material detriment of the Company or any of its Affiliates; 

(b)Executive’s material violation of any law or regulation applicable to the business of the Company or any of its Affiliates; 

(c)Executive’s material violation of a material Company policy; 

(d)Executive’s material breach of any confidentiality agreement or invention assignment agreement between Executive and the Company (or any Affiliate of the Company); or 

(e)Executive’s admission or conviction of, or entering a plea of guilty or nolo contendere to, a felony or Executive’s commission of any act of moral turpitude. 

1.6“Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events: 

(a)An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) by any “Person” (having the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act, and as used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d)) immediately after which such Person has beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) (“Beneficial Ownership” and/or “Beneficially Owned”) of 50% or more of the combined voting power of the Company’s then outstanding Voting Securities; provided, that in determining whether a Change in Control has occurred, Voting Securities which are acquired in a Non-Control Acquisition shall not constitute an acquisition which would cause a Change in Control. For purposes of this Agreement, the term “Non-Control Acquisition” shall mean an acquisition by (i) the Company or any Subsidiary; (ii) an employee benefit plan (or a trust forming a part thereof) maintained by the Company or any Subsidiary; or (iii) any Person in connection with a Non-Control Transaction (as hereinafter defined); 

(b)The individuals who, as of the Effective Date, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, that if the election, or nomination for election by the Company’s stockholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall, for purposes of this clause (b), be considered a member of the Incumbent Board; and provided, further, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened election contest (as described in former Rule 14a-11 promulgated under the Exchange Act) (“Election Contest”) or other actual or threatened 

 

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solicitation of proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”), including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest;

(c)Consummation of a merger, consolidation or reorganization involving the Company, unless such transaction is a Non-Control Transaction. For purposes of this Agreement, the term “Non-Control Transaction” shall mean a merger, consolidation or reorganization of the Company in which: (i) the stockholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least 50% of the combined voting power of the voting securities of the corporation or entity resulting from such merger, consolidation or reorganization (the “Surviving Company”) over which any Person has Beneficial Ownership in substantially the same proportion as their Beneficial Ownership of the Voting Securities immediately before such merger, consolidation or reorganization; (ii) the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least a majority of the members of the board of directors or equivalent body of the Surviving Company; and (iii) no Person (other than the Company, any Subsidiary, any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Company or any Person who, immediately prior to such merger, consolidation or reorganization, had Beneficial Ownership of 50% or more of the then outstanding Voting Securities) has Beneficial Ownership of 50% or more of the combined voting power of the Surviving Company’s then outstanding voting securities; or

(d)The sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities outstanding, increases the proportional number of shares Beneficially Owned by the Subject Person; provided, that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of Voting Securities by the Company, and after such share acquisition by the Company, the Subject Person becomes the Beneficial Owner of any additional Voting Securities which increases the percentage of the then outstanding Voting Securities Beneficially Owned by the Subject Person, then a Change in Control shall occur. Furthermore, to the extent necessary to ensure compliance with Section 409A, a Change in Control will only be deemed to occur for purposes of this Agreement to the extent it is also a change in control event as defined in Treasury Regulation Section 1.409A-3(i)(5)(i).

1.7“Change in Control Protection Period” means the period commencing three (3) months prior to a Change in Control and ending twelve (12) months after a Change in Control.

1.8“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

 

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1.9“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations issued thereunder.

1.10“Date of Termination” means the effective date of Executive’s termination of employment and service with the Company and its Affiliates.

1.11“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the regulations issued thereunder.

1.12“Good Reason” means any of the following:

(a)A requirement by the Company or an Affiliate of the Company that Executive relocate or commute to a location more than 50 miles away from Executive’s work location as of the Effective Date, unless Executive has consented in writing to such requirement; 

(b)A material reduction by the Company in Executive’s base salary (other than a reduction in connection with substantially proportionate reductions to the base salary of substantially all other executives of the Company), unless Executive has consented in writing to such reduction; or 

(c)A material diminution in Executive’s authority, duties or responsibilities inconsistent with Executive’s authority, duties or responsibilities immediately prior to such material diminution (including any material diminution in Executive’s authority, duties or responsibilities occurring as a result of a corporate transaction, measured in the context of the combined organization resulting from such transaction), unless Executive has consented in writing to such diminution.

Good Reason shall not exist unless Executive gives the Company notice of the event giving rise to Good Reason within sixty (60) days of the date Executive has knowledge of such event. Such notice shall specifically delineate such claimed breach and shall inform the Company that it is required to cure such breach within ninety (90) days (the “Cure Period”) after such notice is given.  If such breach is not so cured, Executive may resign for Good Reason within three (3) months following the end of the Cure Period.  If such breach is cured within the Cure Period or if such breach is not cured but Executive does not resign for Good Reason within three (3) months following the end of the Cure Period, Good Reason shall not exist hereunder.  

1.13“Section 409A” means Section 409A of the Code and any regulations or other formal guidance promulgated thereunder. 

1.14“Section 280G” means Section 280G of the Code and any regulations or other formal guidance promulgated thereunder. 

1.15“Subsidiary” means any corporation, limited liability company, partnership, joint venture, or similar entity in which the Company owns, directly or indirectly, an equity interest possessing more than 50% of the combined voting power of the total outstanding equity interests of such entity.

 

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1.16“Target Bonus” means Executive’s target Annual Bonus under the Company’s or Affiliate’s annual bonus program, as in effect from time to time, under which Executive is covered. 

SECTION II
SEVERANCE PAYMENTS AND BENEFITS

2.1Change in Control Protection Period.  If, during a Change in Control Protection Period, the Company terminates Executive’s employment without Cause or Executive terminates his employment for Good Reason, then the Company shall pay or provide the following amounts and benefits to Executive, in addition to the Accrued Obligations, subject to the occurrence of the Change in Control:

(a)Severance Payment.  Executive will be paid an amount equal to [eighteen (18) months][twelve (12) months] Executive’s Annual Salary plus Executive’s Target Bonus in effect immediately prior to the Date of Termination, in a lump sum within sixty (60) days following the Date of Termination.  

(b)Bonus for Year of Termination.  Executive will be paid a pro-rata portion of the Target Bonus in effect on the Date of Termination, determined by multiplying the amount of the Target Bonus by a fraction, the numerator of which is the number of days from January 1 of the year during which the Date of Termination occurs to the Date of Termination and the denominator of which is three hundred and sixty-five (365).  The pro-rated bonus shall be paid in a lump sum within sixty (60) days following the Date of Termination.

(c)COBRA Equivalent.  Whether or not Executive elects coverage under COBRA under any group health plan of the Company or an Affiliate, the Company will pay Executive a taxable lump sum equal to the portion of the monthly cost of Executive’s group health plan coverage, as in effect on the Date of Termination, that is subsidized by the Company for similarly situated active employees as of the Date of Termination multiplied by [eighteen (18)][twelve (12)].   The COBRA equivalent payment shall be made in a lump sum within sixty (60) days following the Date of Termination.  

(d)Equity Awards.  Notwithstanding anything to the contrary in any equity plan of the Company or its Affiliates or Executive’s award agreement thereunder, any and all outstanding equity awards granted to Executive under any equity plan of the Company or its Affiliates will be treated as follows: (i) all time-based vesting conditions applicable to such awards will be treated as satisfied in full and shall lapse on the Date of Termination; and (ii) any performance-based vesting conditions applicable to such awards shall be deemed to have been satisfied at target through the Date of Termination.   Such awards will be settled in accordance with, and otherwise be subject to, the terms of the equity plan of the Company or its Affiliates and Executive’s award agreement thereunder; provided, however, that any vested restricted stock units that are not subject to Section 409A shall be settled upon Executive within sixty (60) days following the Date of Termination.  

2.2Outside of Change in Control Protection Period.  If the Company terminates Executive’s employment without Cause, or Executive terminates employment for Good Reason, in 

 

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either case other than during a Change in Control Protection Period, then the Company shall pay or provide the following amounts and benefits to Executive, in addition to the Accrued Obligations:

(a)Severance.  Executive will be paid an amount equal to [twelve (12) months][six (6) months] Executive’s Annual Salary in effect immediately prior to the Date of Termination in a lump sum within sixty (60) days following the Date of Termination.

(b)COBRA Equivalent.  Whether or not Executive elects coverage under COBRA under any group health plan of the Company or an Affiliate, the Company will pay Executive a taxable lump sum equal to the portion of the monthly cost of Executive’s group health plan coverage, as in effect on the Date of Termination, that is subsidized by the Company for similarly situated active employees as of the Date of Termination multiplied by [twelve (12)][six (6)].   The COBRA equivalent payment shall be made in a lump sum within sixty (60) days following the Date of Termination.  

(c)Equity Awards.  All outstanding equity awards granted to Executive under any equity plan of the Company or its Affiliates shall vest, be forfeited or settled in accordance with the terms of the equity plan of the Company or its Affiliates and the applicable award agreements.  

2.3Termination for Any Other Reason.  If Executive’s employment and service with the Company and its Affiliates is terminated for any reason other than by the Company without Cause or by Executive for Good Reason, including due to Executive’s retirement, death or disability, no amounts or benefits will be payable or provided under this Agreement, except the Accrued Amounts.

2.4Release.  Notwithstanding anything contained in this Agreement to the contrary, the Company shall not be obligated to provide any payments or benefits to Executive under Section 2.1 or Section 2.2 hereof other than the Accrued Obligations unless Executive executes and delivers to the Company a general release of claims in favor of the Company and its Affiliates and their respective employees, officers and directors in such form as is reasonably requested by the Company, and such release becomes irrevocable by its terms, no later than sixty (60) days after the Date of Termination.  

2.5No Duplication.  In no event shall payments and benefits provided in accordance with this Agreement be made in respect of more than one of Section 2.1 or 2.2.

2.6Offset.  Notwithstanding the provisions of this Section II, the Company’s obligation to make the severance payments and benefits described herein shall be reduced by any amounts owed by Executive to the Company and its Affiliates; provided, however, that offsets of amounts owed by Executive that are nonqualified deferred compensation (within the meaning of Section 409A) shall only be made in accordance with Section 409A.

SECTION III
TAX INFORMATION

3.1Tax Withholding.  The Company shall deduct from payments to be paid to Executive or any beneficiary all federal, state and local withholding and other taxes and charges required to be deducted under applicable law.

 

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3.2Section 409A.

(a)The intent of the parties is that payments and benefits under this Agreement shall comply with or be exempt from Section 409A, and this Agreement shall be interpreted in accordance with such intentions.  Notwithstanding the foregoing, neither the Company or its Affiliates nor their respective directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive (or any other individual claiming a benefit through Executive) as a result of this Agreement.

(b)A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Section 409A upon or following a termination of employment unless such termination is also a “separation from service,” within the meaning of Section 409A, from the Company, and references to the “Date of Termination,” a “termination,” “termination of employment” or like terms shall mean “separation from service,” within the meaning of Section 409A, from the Company.

(c)Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.  In the event the payment period under this Agreement commences in one calendar year and ends in a second calendar year, the payment shall not be paid until the second calendar year.  For purposes of Section 409A, Executive’s right to receive installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.

(d)If Executive is deemed on the Date of Termination to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then with regard to any payment or benefit subject to Section 409A that is payable on account of a “separation from service,” such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separation from service” of Executive; and (ii) the date of Executive’s death (the “Delay Period”).  Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to Executive in a lump sum without interest, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

3.3Section 280G.  

(a)Anything in this Agreement to the contrary notwithstanding, in the event that the amount of any compensation, payment or distribution by the Company to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent with Section 280G (the “Aggregate Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, then the Aggregate Payments shall be reduced (but not below zero) so that the sum of all of the Aggregate Payments shall be $1.00 less than the amount at which Executive becomes subject to the excise tax imposed by Section 4999 of the Code; provided that such reduction shall only occur if it would result in Executive receiving a higher After-Tax Amount (as defined below) than Executive would receive if 

 

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the Aggregate Payments were not subject to such reduction.  In such event, the Aggregate Payments shall be reduced in the following order, in each case, in reverse chronological order beginning with the Aggregate Payments that are to be paid the furthest in time from consummation of the transaction that is subject to Section 280G:  (i) cash payments not subject to Section 409A of the Code; (ii) cash payments subject to Section 409A of the Code; (iii) equity-based payments and acceleration; and (iv) non-cash forms of benefits; provided that in the case of all the foregoing Aggregate Payments all amounts or payments that are not subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c) shall be reduced before any amounts that are subject to calculation under Treas. Reg. §1.280G-1, Q&A-24(b) or (c).

(b)For purposes of this Section 3.3, the “After-Tax Amount” means the amount of the Aggregate Payments less all federal, state, and local income, excise and employment taxes imposed on Executive as a result of Executive’s receipt of the Aggregate Payments.  For purposes of determining the After-Tax Amount, Executive shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendar year in which the determination is to be made, and state and local income taxes at the highest marginal rates of individual taxation in the state and locality applicable to Executive on the Date of Termination, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes. 

(c)The determination as to whether a reduction in the Aggregate Payments shall be made pursuant to this Section 3.3 shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and Executive within 15 business days of the Date of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or Executive.  Any determination by the Accounting Firm shall be binding upon the Company and Executive.

SECTION IV
RESTRICTIVE COVENANTS

4.1Confidential Information.

(a)Executive acknowledges that the Company and its Affiliates continually develop Confidential Information (as defined below), that Executive may develop Confidential Information for the Company or its Affiliates and that Executive may learn of Confidential Information during the course of Executive’s employment.  Executive will comply with the policies and procedures of the Company and its Affiliates for protecting Confidential Information and shall not disclose to any person or use, other than as required by applicable law or for the proper performance of Executive’s duties and responsibilities to the Company and its Affiliates, any Confidential Information obtained by Executive incident to Executive’s employment or other association with the Company or any of its Affiliates.  Executive understands that this restriction shall continue to apply after Executive’s employment terminates, regardless of the reason for such termination. The confidentiality obligation under this Section 4.1 shall not apply to information which is generally known or readily available to the public at the time of disclosure or becomes generally known through no wrongful act on the part of Executive or any other person having an obligation of confidentiality to the Company or any of its Affiliates or is required to be disclosed in order to enforce this Agreement.

 

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(b)All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company or its Affiliates and any copies, in whole or in part, thereof (the “Documents”), whether or not prepared by Executive, shall be the sole and exclusive property of the Company and its Affiliates. Executive shall safeguard all Documents and shall surrender to the Company at the time Executive’s employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in Executive’s possession or control.

(c)“Confidential Information” means any and all information of the Company and its Affiliates that is not generally known by those with whom the Company or any of its Affiliates competes or does business, or with whom the Company or any of its Affiliates plans to compete or do business and any and all information, publicly known in whole or in part or not, which, if disclosed by the Company or any of its Affiliates would assist in competition against them. Confidential Information includes without limitation such information relating to (i) the development, research, testing, manufacturing, marketing and financial activities of the Company and its Affiliates; (ii) the products and services of the Company and its Affiliates; (iii) the costs, sources of supply, financial performance and strategic plans of the Company and its Affiliates; (iv) the identity and special needs of the customers of the Company and its Affiliates; and (v) the people and organizations with whom the Company and its Affiliates have business relationships and the nature and substance of those relationships. Confidential Information also includes any  information that the Company or any of its Affiliates has received, or may receive hereafter, belonging to customers or others with any understanding, express or implied, that the information would not be disclosed.

4.2Non-Competition and Non-Solicitation.

(a)Executive agrees and acknowledges that the business (the “Business”) of the Company is any business activity engaged in, or actively contemplated by the Company (or any Subsidiary) to be engaged in, by the Company (or any Subsidiary) and with which Executive or was involved on or prior to the Date of Termination.

(b)Executive agrees that, except as the Company expressly agrees in writing, during the Restricted Period (defined below), Executive shall not within the Territory (defined below), directly or indirectly, as an owner, partner, affiliate, stockholder, joint venturer, director, employee, consultant, contractor, principal, trustee or licensor, or in any other similar capacity whatsoever of or for any person or entity (other than for the Company):

(i)engage in, own, manage, operate, sell, finance, control, advise or participate in the ownership, management, operation, sales, finance or control of, be employed or employed by, or be connected in any manner with, any business that competes with the Business (each, a “Competitor”).  Notwithstanding this Section 4.2(b)(i), Executive may accept employment with a Competitor whose business is diversified, provided that (A) such employment is with a portion of the Competitor’s business that does not provide products or services that are the same as, are similar to, or compete with the Company’s products or services (“Competing Products or Services”); and (B) prior to Executive’s acceptance of such employment with Competitor, the Company receives separate written assurances satisfactory to the Company from such Competitor and from Executive that Executive will not provide any Competing Products or Services;

 

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(ii)approach, solicit, divert, interfere with, or take away, the business or patronage of any of the actual or prospective members, customers, or clients of the Company, with whom Executive had material Business-related contact and/or about which Executive had access to and/or knowledge of Confidential Information, for a purpose that is competitive with the Business; or

(iii)solicit (whether as an employee, consultant, agent, independent contractor, or otherwise) any person who is, or who at any time during the six (6)-month period prior to the Date of Termination had been, employed or engaged by the Company, or induce or take any action which is intended to induce any such person to terminate his or her employment or relationship, or otherwise cease his or her relationship, with the Company, or interfere in any manner with the contractual or employment relationship between the Company and any employee of or any other person engaged by the Company.

“Restricted Period” shall mean the period of time beginning on the Effective Date and ending on the date that is twelve (12) months following the Date of Termination.

“Territory” shall mean all of the states of the United States of America and any other country or territory with respect to which Executive has been materially engaged in Business-related activities on behalf of the Company and/or about which Executive has had access to and/or knowledge of Confidential Information.

(c)Notwithstanding anything to the contrary in Section 4.2(b) of this Agreement, Executive is permitted to own, individually, as a passive investor (with no director designation rights, voting rights or veto rights or other special governance or voting rights), up to a one percent (1%) interest in any publicly traded entity that is a Competitor.

4.3Executive shall disclose in writing all of Executive’s relationships as a director, employee, consultant, contractor, principal, trustee, licensor, agent, or otherwise, with a Competitor or any other business entity, to the Company until the end of the Restricted Period. Executive shall not disparage the Company or any of its officers, directors, or employees; provided, however, that this Section 4.3 shall not prohibit or constrain truthful testimony by Executive compelled by any valid legal process or valid legal dispute resolution process. Notwithstanding anything herein to the contrary, nothing in this Section IV shall prevent either party hereto from enforcing such party’s rights or remedies hereunder or that such party may otherwise be entitled to enforce or assert under any other agreement or applicable law, or shall limit such rights or remedies in any way.

4.4During the Restricted Period, Executive shall notify in writing any prospective new employer or entity otherwise seeking to engage Executive that the provisions of this Section IV exist prior to accepting employment or such other engagement.

4.5The terms of this Section IV are reasonable and necessary in light of Executive’s position with the Company and responsibility and knowledge of the operations of the Company and its Subsidiaries and are not more restrictive than necessary to protect the legitimate interests of the parties hereto.  In addition, any breach of the covenants contained in this Section IV would cause irreparable harm to the Company, its Subsidiaries and Affiliates and there would be no adequate remedy at law or in damages to compensate the Company, its Subsidiaries and Affiliates for any such 

 

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breach.  In the event of a breach or threatened breach by Executive of any of the provisions of this Agreement, Executive hereby consents and agrees that money damages would not afford an adequate remedy and that the Company shall be entitled to seek a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages, and without the necessity of posting any bond or other security, where permissible under applicable law.  Any equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages, or other available relief.  Notwithstanding the foregoing, this Agreement is not intended to, and shall be interpreted in a manner that does not, limit or restrict Executive from exercising any legally protected whistleblower rights (including pursuant to Rule 21F under the Exchange Act).

4.6Survival of Restrictive Covenants. Upon termination of Executive’s employment for any reason whatsoever, the obligations of Executive pursuant to this Section IV shall survive and remain in effect for the periods described herein.

4.7No Waiver of Legal Remedies. The restrictions in this Agreement are in addition to and not in lieu of any other obligation of Executive to protect confidential information and trade secrets and any rights and remedies which the Company may have at law or in equity.  Nothing in this Agreement is intended to or should be interpreted as diminishing any rights and remedies the Company has.  Enforcement of rights and remedies pursuant to this Agreement by the Company and/or any other entity shall not be construed as a waiver of any other rights or remedies at law or equity.

4.8Protected Rights.  Notwithstanding any other provision of this Agreement, nothing contained in this Agreement limits Executive’s ability to file a charge or complaint with the Securities and Exchange Commission or any other federal, state or local government agency or commission (collectively, “Government Agencies”), or prevents Executive from providing truthful testimony in response to a lawfully-issued subpoena or court order.  Further, this Agreement does not limit Executive’s ability to communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing non-privileged documents or other information, without notice to the Company.

4.9Defend Trade Secrets Act.  Executive is hereby notified that under the Defend Trade Secrets Act: (a) no individual will be held criminally or civilly liable under federal or state trade secret law for disclosure of a trade secret (as defined in the Economic Espionage Act) that is: (i) made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and made solely for the purpose of reporting or investigating a suspected violation of law; or (ii) made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal; and (b) an individual who pursues a lawsuit for retaliation by an employer for reporting a suspected violation of the law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except as permitted by court order.

 

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SECTION V
RESOLUTION OF DISPUTES

5.1Jurisdiction and Venue. Executive and the Company irrevocably submit to the exclusive jurisdiction of (i) the United States District Court for the District of Delaware; and (ii) the courts of the State of Delaware for the purposes of any suit, action or other proceeding arising out of this Agreement.  Executive and the Company agree to commence any such action, suit or proceeding either in the United States District Court for the District of Delaware or, if such suit, action or other proceeding may not be brought in such court for jurisdictional reasons, in the courts of the State of Delaware with jurisdiction over New Castle County.  Executive and the Company further agree that service of any process, summons, notice or document by U.S. registered mail to the other party’s address set forth below shall be effective service of process for any action, suit or proceeding in Delaware with respect to any matters to which Executive has submitted to jurisdiction in this Section 5.1.  Executive and the Company irrevocably and unconditionally waive any objection to the laying of venue of any action, suit or proceeding arising out of this Agreement in (A) the United States District Court for the District of Delaware; or (B) the courts of the State of Delaware, and hereby and thereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit or proceeding brought in any such court has been brought in an inconvenient forum.  

5.2Waiver of Jury Trial.  Executive and the Company hereby waive, to the fullest extent permitted by applicable law, any right either of them may have to a trial by jury in respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement.

5.3Confidentiality. Executive hereby agrees to keep confidential the existence of, and any information concerning, a dispute described in this Section V, except that Executive may disclose information concerning such dispute to the court that is considering such dispute or to Executive’s legal counsel (provided that such counsel agrees not to disclose any such information other than as necessary to the prosecution or defense of the dispute).

5.4Payment of Expenses.  In the event that Executive institutes any legal action, arbitration or proceeding against the Company to enforce any part of this Agreement and substantially obtains the relief sought, whether by compromise, settlement, judgment or the abandonment by the Company of its claim or defense, the Company shall pay or reimburse Executive for the reasonable attorneys’ fees and necessary costs Executive incurs in connection with such action, arbitration or proceeding.  Such reimbursement shall be made to Executive following such final compromise, settlement, unappealable judgment or abandonment, and shall be made within ten (10) days following presentation to the Company of appropriate invoices or other documentation of the amount of such fees and expenses.

SECTION VI
SUCCESSORS

6.1In addition to any obligations imposed by law upon any successor to the Company, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent 

 

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that the Company would be required to perform it if no such succession had taken place.  The provisions of this Section VI shall continue to apply to each subsequent employer of Executive bound by this Agreement in the event of any merger, consolidation or transfer of all or substantially all of the business or assets of that subsequent employer.  This Agreement shall inure to the benefit of the Company, such successors and any assigns.  The term “the Company” as used herein shall include such successors, and any assigns. 

6.2This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  

SECTION VII
NOTICES

7.1For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing (including email, provided, that such email states that it is a notice delivered pursuant to this Section 7.1) and shall be given at the address or email address set forth below (or to such other address or email address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address or email address shall be effective only upon actual receipt).  All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. on a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed to have been received on the next succeeding business day in the place of receipt.

To the Company:

The RealReal, Inc.

55 Francisco Street, Suite 600

San Francisco, CA 94133

Attention: General Counsel

Email: [_]

 

To Executive: At Executive’s most recent mailing address in the records of the Company, or at Executive’s employee email address (during employment).

SECTION VIII
MISCELLANEOUS

8.1Any compensation paid or payable to Executive pursuant to this Agreement which is subject to recovery under any law, government regulation, order or stock exchange listing requirement, or under any policy of the Company adopted from time to time, will be subject to such deductions and clawback (recovery) as may be required to be made pursuant to such law, government regulation, order, stock exchange listing requirement or policy of the Company.  Executive specifically authorizes the Company to withhold from future salary or wages any amounts that may become due under this provision.  

8.2This Agreement embodies the entire agreement of the Company and Executive relating to separation or severance pay and, except as specifically provided herein, no provisions of 

 

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any employee manual, personnel policies, corporate directives or other agreement or document shall be deemed to modify the terms of this Agreement.  No amendment or modification of this Agreement shall be valid or binding upon Executive or the Company unless made in writing and signed by the Company and Executive.  This Agreement supersedes all prior understandings and agreements addressing severance or separation pay to which Executive and the Company or an Affiliate are or were parties, including any previous change in control agreement, severance plan, offer letter provisions, or other employment agreements.

8.3No 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.

8.4No 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.

8.5This Agreement shall not modify the “at will” nature of Executive’s employment, nor shall it confer upon Executive any right to continue employment or service with the Company or its affiliates, nor shall this Agreement interfere in any way with the right of the Company or its affiliates to terminate Executive’s employment or service at any time. 

8.6The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.  If a judicial determination is made that any provision of this Agreement constitutes an unreasonable or otherwise unenforceable restriction against Executive, such provision shall be rendered void only to the extent that such judicial determination finds the provision to be unreasonable or otherwise unenforceable with respect to Executive.  In this regard, Executive hereby agrees that any judicial authority construing this Agreement shall be empowered to reform any portion of this Agreement, including without limitation the scope of the Business, the Territory, and the Restricted Period, in order to make the covenants herein binding and enforceable with respect to Executive, and to apply the provisions of this Agreement and to enforce against Executive the remaining portion of such provisions as the judicial authority determines to be reasonable and enforceable.  All of the covenants contained in this Agreement shall be construed as an agreement independent of any other provisions in this Agreement, and the existence of any claim or cause of action Executive may have against the Company and/or its affiliates (other than in connection with a material breach of this Agreement by the Company) shall not constitute a defense to the enforcement by the Company and/or its affiliates of such covenants.

8.7The Agreement shall be construed, administered and governed in all respects under and by the applicable laws of the State of Delaware.

 

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8.8This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Agreement by “.pdf” format or scanned pages shall be effective as delivery of a manually executed counterpart to this Agreement.

[Remainder of page left intentionally blank.]

 

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IN WITNESS WHEREOF, the parties have signed this Agreement to be effective as of the Effective Date.

 

 

	
 
	
The RealReal, Inc.

	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
 

	
 
	
 
	
 
	
Name: 

	
 
	
 
	
 
	
Title: 

 

	
 
	
 
	
Executive

	
 
	
 
	
 

	
 
	
 
	
 

	
 
	
 
	
 

 

 

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