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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION |
WASHINGTON, D.C. 20549FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 11, 2024
Latch, Inc.
(Exact name of registrant as specified in its charter)
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Delaware | 001-39688 | 85-3087759 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1220 N Price Road, Suite 2, Olivette, MO 63132
(Address of principal executive offices, Including Zip Code)
(314) 200-5218
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act: None.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Certain Officers; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On August 11, 2024 (the “Effective Date”), the Board of Directors (the “Board”) of Latch, Inc. (the “Company”) approved an extension of its temporary cash-based leadership compensation program that was established in 2023 to provide certain cash compensation to the Company’s officers and key employees during the course of the Company’s efforts to restate certain of its financial statements (the “Restatement”). The leadership compensation program is described in more detail below.
In addition, on the Effective Date, the Board approved a performance-based equity incentive program (the “Performance Equity Program”) pursuant to which awards of performance-vesting stock options (“Performance Options”) and performance-vesting restricted stock units (“PSUs”) will be granted to Company officers and service providers, and the Company granted Performance Options to certain officers and key service providers. The Performance Equity Program is described in more detail below.
On the Effective Date, the Board also appointed Jason Mitura as the Company’s Chief Product Officer beginning August 16, 2024. On August 12, 2024, the Company entered into an employment agreement with Mr. Mitura in connection with his appointment.
Mr. Mitura, age 39, was the Chief Product Officer at Ring from July 2017 to December 2023, where, leading a team of over 2,000, he oversaw all aspects of the company’s hardware and software development and design. Mr. Mitura has served as a consultant to the Company since January 2024. Prior to joining Ring in September 2016, Mr. Mitura served as co-founder and CEO of Kitov Systems, an automated visual inspection and robotics systems company, and as CEO of Viewdle, a computer vision company acquired by Google in 2012. Mr. Mitura earned his Bachelor of Arts degree from the University of Southern California.
Leadership Compensation Program
Under the Company’s cash-based leadership compensation program, Company officers and other participants receive an additional amount of cash compensation, payable in semi-monthly installments alongside their regular base salary, and are not eligible for any other cash incentive compensation or annual bonuses while the leadership compensation program is in place. On the Effective Date, the Board extended this program, originally scheduled to expire on July 31, 2024, until the earlier of (i) the listing of the Company on a national securities exchange or (ii) the date the Board determines in its discretion to terminate it. The annualized amounts payable under the program to Jamie Siminoff, the Company’s Chief Strategy Officer, David Lillis, Senior Vice President of Finance, and Mr. Mitura are $1,550,000, $475,000 and $650,000, respectively.
Performance Equity Program and Performance Option Grants
The Performance Equity Program provides for the Company to grant awards under the Latch, Inc. 2021 Incentive Award Plan (the “2021 Plan”) that will become eligible to vest based on the Company’s common stock reaching specified market trading prices (based on a trailing 60-day daily volume weighted average trading price) within seven years after the Effective Date. The Company expects that substantially all of its eligible employees will participate in the Performance Equity Program. Awards under the Performance Equity Program will generally be granted 50% in the form of PSUs that will become eligible to vest, or “earned,” in three equally-sized tranches upon attaining a $1, $2 and $3 stock price hurdle, and 50% in the form of Performance Options that will become earned in three equally-sized tranches upon attaining a $4, $5 and $6 stock price hurdle. Upon attainment of a stock price hurdle, 25% of the earned tranche of PSUs and Performance Options will vest, with the remaining 75% of such earned tranche vesting in three equal annual installments over the next three years, subject to the applicable participant’s continued service through the vesting date.
On the Effective Date, the Board granted Performance Options under the Performance Equity Program and the 2021 Plan to certain officers and key service providers, including to Messrs. Siminoff, Mitura and Lillis covering the following numbers of shares: Mr. Siminoff: 8,000,000 shares; Mr. Mitura: 7,500,000 shares; and Mr. Lillis: 3,000,000 shares.
As described above, the Performance Options are eligible to be earned in three tranches based on the Company’s common stock reaching market trading prices (based on a trailing 60-day daily volume weighted average trading price) before the seventh anniversary of the Effective Date, as set forth in the following table:
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Earned Tranche | Shares Subject to the Performance Option | Share Price Hurdle |
1 | 33.33% of award | $4.00 |
2 | 33.33% of award | $5.00 |
3 | 33.34% of award | $6.00 |
Upon attainment of a stock price hurdle, 25% of each earned tranche of Performance Options will vest, with the remaining 75% of such earned tranche vesting in three equal annual installments over the next three years, subject to the applicable participant’s continued service through the vesting date. The Performance Options have an exercise price of $0.41 and a ten year term; however, any portion of the Performance Option corresponding to a tranche that has not become earned based on the achievement of a share price hurdle within seven years after the Effective Date will be cancelled and forfeited.
In addition to the performance-based and service-based vesting requirements described above, (i) the first tranche of the Performance Option will, to the extent vested, only become exercisable in four equal installments on the second, third, fourth and fifth anniversaries of the Effective Date, (ii) the second tranche of the Performance Option will, to the extent vested, only become exercisable in four equal installments on the third, fourth, fifth and sixth anniversaries of the Effective Date, and (iii) the third tranche of the Performance Option will, to the extent vested, only become exercisable in four equal installments on the fourth, fifth, sixth and seventh anniversaries of the Effective Date.
In the event that the applicable participant’s service with the Company terminates for any reason (other than a termination by the Company for cause), any portion of the Performance Option that is vested as of the date of such termination will remain outstanding until the nine-month anniversary (or, if such termination is due to such participant’s death or disability, the 12-month anniversary) of the later of (i) the termination date or (ii) the date on which the Performance Option or portion thereof became exercisable in accordance with the schedule described above. If the participant’s service is terminated by the Company for cause, then the entire unexercised portion of the Performance Option will be immediately forfeited without consideration.
If a change in control of the Company occurs, the Performance Option will be earned based on the price paid or implied in the change in control transaction, pro-rated to reflect a price per share that falls between $3.00 and $4.00 or between any two share price hurdles applicable to the Performance Option, as set forth above. Any earned portion of the Performance Option, including any portion earned in connection with a change in control, will be subject to a “double trigger” vesting provision under which such earned portion will vest if the applicable participant’s service is terminated without cause or if such participant resigns for good reason, within three months prior to or 24 months following the date of such change in control transaction.
The foregoing description of the Performance Options and anticipated terms of PSUs to be granted under the Performance Equity Program is qualified in its entirety by reference to the full text of the forms of Performance-Based Option Agreement and Performance-Based Restricted Stock Unit Agreement, respectively, which are filed as Exhibits 10.1 and 10.2 to this Current Report on Form 8-K (this “Report”) and incorporated by reference herein.
Employment Agreement
On the Effective Date, the Board approved an employment agreement with Mr. Mitura, which provides for an initial annual base salary of $350,000 and for participation in the Performance Equity Program. The Company and Mr. Mitura entered into the employment agreement on August 12, 2024, and Mr. Mitura’s employment commences August 16, 2024.
In the event that Mr. Mitura’s employment is terminated by the Company without cause or by Mr. Mitura for good reason, in each case, as defined in the employment agreement, then in addition to payment of any accrued amounts and subject to his timely execution of a release of claims and continuing to comply with his restrictive covenant obligations, Mr. Mitura will be entitled to receive 12 months of salary continuation payments at his then-current base salary rate, as well as continued coverage under the Company’s group health insurance under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, for up to 12 months.
Pursuant to the restrictive covenant agreement attached to his employment agreement, Mr. Mitura is subject to non-competition and non-solicitation restrictions that last during his employment with the Company and for 12 months following the termination thereof.
The foregoing description of Mr. Mitura’s employment agreement is a summary only and does not describe all applicable terms and conditions. The description is subject to and qualified in its entirety by the terms of the employment agreement, a copy of which is filed as Exhibit 10.3 to this Report and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
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Exhibit
Number | | Description |
|
| 10.1 | | |
| 10.2 | | |
| 10.3 | | |
| 104 | | Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | Latch, Inc. |
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| Date: | August 13, 2024 | By: | /s/ Priyen Patel |
| | | Name: | Priyen Patel |
| | | Title: | Senior Vice President and General Counsel |
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LATCH, INC.
2021 INCENTIVE AWARD PLAN |
PERFORMANCE-BASED STOCK OPTION GRANT NOTICE
Capitalized terms not specifically defined in this Performance-Based Stock Option Grant Notice (the “Grant Notice”) have the meanings given to them in the 2021 Incentive Award Plan (as may be amended from time to time, the “Plan”) of Latch, Inc. (the “Company”).
The Company has granted to the participant listed below (“Participant”) the performance-based stock option described in this Grant Notice (the “Option”), subject to the terms and conditions of the Plan and the Performance-Based Stock Option Agreement attached as Exhibit A and the Vesting and Exercisability Schedule attached as Appendix I (Exhibit A and Appendix I, the “Agreement”), all of which are incorporated into this Grant Notice by reference.
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| Participant: | [_____] |
| Grant Date: | See equity administration platform |
| Exercise Price per Share: | See equity administration platform |
| Shares Subject to the Option: | See equity administration platform |
| Final Expiration Date: | See equity administration platform1 |
| Vesting and Exercisability Schedule: | See Appendix I to the Agreement |
| Type of Option | Non-Qualified Stock Option |
By accepting (whether in writing, electronically or otherwise) the Option, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.
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| LATCH, INC. | | PARTICIPANT |
| By: | | | |
| Name: | | | Name: |
| Title: | | | | |
1 To be 10 year anniversary of the Grant Date.
PERFORMANCE-BASED STOCK OPTION AGREEMENT
Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.
ARTICLE I.
GENERAL
1.1 Grant of Option. The Company has granted to Participant the Option effective as of the grant date set forth in the Grant Notice (the “Grant Date”).
1.2 Incorporation of Terms of Plan. The Option is subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of this Agreement will control.
ARTICLE II.
PERIOD OF EXERCISABILITY
2.1 Commencement of Exercisability. Subject to Section 4.1 below, the Option will become Vested and Exercisable (as each such term is defined in Appendix I hereto) in accordance with Appendix I hereto (the “Vesting and Exercisability Schedule”) except that any fraction of a Share as to which the Option would be Vested or Exercisable will be accumulated and will vest and become Exercisable only when a whole Share has accumulated. Notwithstanding anything in the Grant Notice, the Plan or this Agreement to the contrary, but subject to the express terms set forth in Appendix I, the Option will, unless the Administrator otherwise determines, immediately expire and be forfeited as to any portion that is not Vested as of Participant’s Termination of Service for any reason. For the avoidance of doubt, (i) any portion of the Option, even if Vested, shall not be Exercisable until the Maturation Requirement for such portion of the Option has been satisfied as set forth on Appendix I, and (ii) upon the Participant’s Termination of Service (other than a Termination of Service for Cause), any portion of the Option that has Vested but has not yet become Exercisable will not be forfeited until it expires as set forth in Section 2.3 below or as otherwise set forth in the Plan.
2.2 Duration of Exercisability. The Vesting and Exercisability Schedule is cumulative. Any portion of the Option that becomes Vested and Exercisable will remain Vested and Exercisable until the Option expires. The Option will be forfeited immediately upon its expiration.
2.3 Expiration of Option. The Option may not be exercised to any extent by anyone after, and will expire on, the first of the following to occur:
(a) The final expiration date in the Grant Notice;
(b) Except as the Administrator may otherwise approve, the expiration of nine (9) months from the later of (i) the date of Participant’s Termination of Service and (ii) the date on which the Option or portion thereof became Exercisable in accordance with Appendix I, unless Participant’s Termination of Service is for Cause or by reason of Participant’s death or disability;
(c) Except as the Administrator may otherwise approve, the expiration of one (1) year from the later of (i) the date of Participant’s Termination of Service by reason of Participant’s death or disability and (ii) the date on which the Option or portion thereof became Exercisable in accordance with Appendix I; and
(d) Except as the Administrator may otherwise approve, Participant’s Termination of Service for Cause (as defined in Appendix I). For the avoidance of doubt, upon Participant’s Termination of Service for Cause (as defined in Appendix I), the Option shall, unless otherwise determined by the Administrator, be forfeited in its entirety, whether or not then Vested and whether or not the applicable Maturation Requirement has been satisfied.
2.4 Leaves of Absence. If Participant goes on a leave of absence, then the Company may adjust the Vesting and Exercisability Schedule in accordance with the Company’s leave of absence policy or the terms of such leave. Except as provided in the preceding sentence, the Participant shall be deemed to continue to be a Service Provider for any purpose under this Agreement while Participant is on a bona fide leave of absence, if (i) such leave was approved by the Company in writing and (ii) continued crediting of service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company). A Termination of Service shall be deemed to occur when such leave ends, unless the Participant immediately returns to active work.
ARTICLE III.
EXERCISE OF OPTION
3.1 Person Eligible to Exercise. During Participant’s lifetime, only Participant may exercise the Option. After Participant’s death, any Exercisable portion of the Option may, prior to the time the Option expires, be exercised by Participant’s Designated Beneficiary as provided in the Plan.
3.2 Partial Exercise. Any Exercisable portion of the Option or the entire Option, if then wholly Exercisable, may be exercised, in whole or in part, according to the procedures in the Plan at any time prior to the time the Option or portion thereof expires, except that the Option may only be exercised for whole Shares.
3.3 Tax Withholding.
(a) The Company has the right and option, but not the obligation, to treat Participant’s failure to provide timely payment in accordance with the Plan of any withholding tax arising in connection with the Option as Participant’s election to satisfy all or any portion of the withholding tax by requesting the Company retain Shares otherwise issuable under the Option.
(b) Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the Option, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the Option. Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or exercise of the Option or the subsequent sale of Shares. The Company and the Subsidiaries do not commit and are under no obligation to structure the Option to reduce or eliminate Participant’s tax liability.
ARTICLE IV.
OTHER PROVISIONS
4.1 Limitations. The issuance of Shares upon exercise of this Option is subject to compliance with the terms of, and availability of Shares under, the Plan. Though the Company has designed the vesting and maturation schedule of the Option with the expectation that underlying Shares will be available under the Plan as of the time of exercise of any portion of the Option, Participant hereby acknowledges that the Company has no obligation to, and does not intend to, increase the number of
Shares available for issuance under the Plan. In addition, Participant understands and acknowledges that the Company may suspend the exercisability of the Option or any portion thereof at any time and from time to time, as may be necessary to ensure compliance with the terms of the Plan. Without limiting the foregoing, notwithstanding any other provision of this Agreement to the contrary, if, upon exercise of the Option or any portion thereof, the Administrator determines that there are insufficient Shares available under the Plan to satisfy such exercise, the Administrator may in its sole discretion determine to treat the Option as if it were a cash-settled Stock Appreciation Right and, as such, in lieu of issuing the Shares, the Company may return to Participant any exercise price amount paid by the Participant in connection with such exercise and pay to the participant a cash amount equal to the excess of the Fair Market Value of one Share as of the date of exercise over the exercise price of the Option, multiplied by the number of Shares for which the Option is then being exercised. In the event that the Company settles the Option in cash at a time when the Company’s Common Stock not listed or quoted on a securities exchange or other trading market (including, for the avoidance of doubt, the OTC Bulletin Board or trading market, including the OTC Expert Market), the amount of cash paid with respect to such Option will be determined based on an independent third-party appraisal of the Shares from a firm selected by the Company, with such appraisal being as of a date that is no more than six months prior to the date of such cash settlement.
4.2 Adjustments. Participant acknowledges that the Option and the Share Price Hurdles (as such term is defined in Appendix I hereto) are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan. For clarity, in connection with an Equity Restructuring, the Share Price Hurdles shall be subject to Section 8.1 of the Plan.
4.3 Forfeiture and Claw-Back. Participant acknowledges and agrees that the Option (including any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt or exercise of the Option or upon the receipt or resale of any Shares underlying the Option) shall be subject to the Latch, Inc. Policy for Recovery of Erroneously Awarded Compensation, as it may be amended from time to time, or any successor policy.
4.4 Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the Designated Beneficiary) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.
4.5 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
4.6 Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.
4.7 Successors and Assigns. The Company may assign any of its rights under this Agreement to a single assignee or multiple assignees, and this Agreement will inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
4.8 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is a Section 16 Person, the Plan, the Grant Notice, this Agreement and the Option will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.
4.9 Entire Agreement; Amendment. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator; provided, however, that except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall materially and adversely affect the Option without the prior written consent of Participant.
4.10 Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.
4.11 Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Option, and rights no greater than the right to receive the Shares as a general unsecured creditor with respect to the Option, as and when exercised pursuant to the terms hereof.
4.12 Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.
4.13 Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature or acceptance, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.
4.14 Restrictions. In the event the Shares are not registered with the United States Securities and Exchange Commission (as determined by the Administrator) or the Administrator determines in its sole discretion that such restrictions are necessary or advisable for the purpose of seeking to maintain an orderly, efficient and functioning secondary trading market for the Shares, then any Shares acquired in respect of the Option may be subject to such terms and conditions as the Administrator shall determine,
including, without limitation, restrictions on the transferability, repurchase rights, the right of the Company to require that Shares be transferred in the event of certain transactions, rights of first refusal, tag-along rights, bring-along rights, redemption and co-sale rights and voting requirements. Such terms and conditions may be additional to those contained in the Plan and may, as determined by the Administrator, be contained in an exercise notice, securityholders’ agreement or in such other agreement as the Administrator shall determine, in each case in a form determined by the Administrator. The Administrator may condition the issuance of such Shares on the Participant’s consent to such terms and conditions and the Participant’s entering into such agreement or agreements.
* * * * *
APPENDIX I
Vesting and Exercisability of Option2
1. Definitions.
(a) “Average Daily VWAP” shall mean, as of any date, the average daily VWAP over the prior 60 trading days.
(b) “Continuous Service Status” shall mean Participant continues to provide services as an employee, consultant or director of the Company, the successor company or any of their respective Parents and Subsidiaries.
(c) “Date of Termination” shall mean the date of termination of Participant’s Continuous Service Status.
(d) “Earned Tranche” shall mean an Option Tranche (as defined below) for which the relevant Share Price Hurdle has been attained.
(e) [“Good Reason” shall have the meaning set forth in the Participant’s employment agreement with the Company. If Participant does not have an employment agreement with the Company, for the sole purpose of determining if any Earned Tranches and the Partial Earned Tranche become Vested and Exercisable pursuant to Section 4(a) of this Appendix I, Participant’s resignation will be with “Good Reason” if Participant resigns within one hundred twenty (120) days after any of the following events, unless Participant expressly consents in writing to the applicable event: (i) a reduction in Participant’s annual base salary, other than a reduction of less than 10% (aggregating all prior reductions) that is implemented in connection with a contemporaneous reduction in annual base salaries affecting other senior personnel of the Company, (ii) a material decrease in Participant’s authority or areas of responsibility as are commensurate with Participant’s title or position with the Company or a diminution in Participant’s reporting line, title or position or (iii) the relocation of Participant’s primary work location by more than thirty (30) miles. Notwithstanding the foregoing, no Good Reason will have occurred unless and until: (a) Participant has provided the Company, within sixty (60) days of Participant’s knowledge of the occurrence of the facts and circumstances underlying the Good Reason event, written notice stating with specificity the applicable facts and circumstances underlying such finding of Good Reason; (b) the Company has had an opportunity to cure the same within thirty (30) days after the receipt of such notice; and (c) the Company shall have failed to so cure within such period.]3
(f) “Performance Expiration Date” shall mean the seven-year anniversary of the Grant Date.
(g) “VWAP” shall mean, for any date, the daily volume weighted average trading price of a Share for such date or the nearest preceding date (or, if the daily volume weighted average trading price of a Share is not reported or reasonably determinable, the closing or last reported trading price of a Share)
2 Note to Draft: In the case of future awards to new or existing Participants, vesting terms may be adjusted to address an Option Tranche for which the Share Price Hurdle is attained prior to the date of grant and/or the Options that would be allocated to such Option Tranche may be reduced or re-allocated to other award tranches; provided, that such adjusted vesting terms shall not provide for vesting of any portion of such Option Tranche prior to the original vesting date under this Agreement.
3 Note to Draft: Only applies to leaders and other key personnel.
on the applicable national securities exchange or other trading market on which the Shares are then listed, quoted or traded.
2. Vesting. In order for any applicable portion of the Option to become vested (“Vested”), both a “Share Price Hurdle” and a “time vesting” requirement must be satisfied as set forth herein.
(a) Share Price Hurdles. A number of Shares subject to the Option (each, an “Option Tranche”) will be considered earned, subject to the time vesting and other terms and conditions herein, at such time as the Average Daily VWAP equals or exceeds the Share Price Hurdle set forth opposite such Option Tranche in the table below, provided that the applicable Share Price Hurdle is attained prior to the Performance Expiration Date:
| | | | | | | | |
| Option Tranche | Number of Option Shares | Share Price Hurdle |
| 1 | 33.33% | $4.00 |
| 2 | 33.33% | $5.00 |
| 3 | 33.34% | $6.00 |
For the avoidance of doubt, a Share Price Hurdle shall be considered “attained” for purposes of this Appendix I at such time as the Average Daily VWAP equals or exceeds such Share Price Hurdle.
(b) Time-Vesting. Twenty-five percent (25%) of each Option Tranche shall be Vested upon the attainment of the Share Price Hurdle, and the remaining 75% of the Option Tranche will vest in three equal installments on each of the first, second and third anniversaries of such date.
3. Exercisability. In order for any applicable portion of the Option to be exercisable (“Exercisable”), such portion of the Option must become Vested and the applicable maturation requirement set forth herein (the “Maturation Requirement”) must be satisfied with respect to such portion of the Option as set forth below:
(a) The Maturation Requirement for Option Tranche 1 will be satisfied in four equal installments on the following dates: the second, third, fourth and fifth anniversaries of the Date of Grant.
(b) The Maturation Requirement for Option Tranche 2 will be satisfied in four equal installments on the following dates: the third, fourth, fifth and sixth anniversaries of the Date of Grant.
(c) The Maturation Requirement for Option Tranche 3 will be satisfied in four equal annual installments on the following dates: the fourth, fifth, sixth and seventh anniversaries of the Date of Grant.
(d) The Administrator may, at any time (including, in its discretion, in connection with a Change in Control) accelerate the date on which the Maturation Requirement is satisfied for any Option Tranche (or portion thereof) in its sole discretion.
4. Change in Control.
(a) Notwithstanding the foregoing, in the event of a Change in Control, (i) upon the closing of such transaction, the Average Daily VWAP shall be deemed to be the price per share to be received by securityholders in connection with the Change in Control transaction, as determined reasonably and in
good faith by the Board (the “CIC Price”), (ii) subject to Section 4(b) below, any Option Tranches for which the Share Price Hurdle has not been attained (i.e., Option Tranches that are not then Earned Tranches) shall thereupon be forfeited, and (iii) any Earned Tranches and the Partial Earned Tranche (as defined below), if any, shall remain eligible to become Vested and Exercisable in accordance with the terms set forth above, subject to Participant’s Continuous Service Status. In addition, if a Change in Control occurs and Participant’s Continuous Service Status is terminated by the Company (or its successor) without Cause[ or Participant resigns his Continuous Service Status with Good Reason, in either case,] within 3 months prior to and 24 months following the date of the Change in Control, any Earned Tranches and Partial Earned Tranches shall become Vested and Exercisable in full upon the Date of Termination.
(b) In addition, notwithstanding the foregoing, (i) in the event a Change in Control occurs and the CIC Price is between $3.00 and $4.00, then a portion of Option Tranche 1 shall be considered earned, which such portion shall be determined using straight line interpolation between $3.00 and $4.00 and (ii) in the event a Change in Control occurs and the CIC Price falls between two Share Price Hurdles, then a portion of the Option Tranche (the “Straddle Tranche”) corresponding to the higher of such Share Price Hurdles shall be considered earned, which portion shall be determined using straight line interpolation between the corresponding Share Price Hurdles (such earned portion of Option Tranche 1 or the Straddle Tranche, as applicable the “Partial Earned Tranche”). The Partial Earned Tranche shall remain eligible to become Vested and Exercisable in accordance with the terms set forth above, subject to Participant’s Continuous Service Status, and the portion of the applicable Option Tranche that is not the Partial Earned Tranche will be forfeited. For the avoidance of doubt, in the event a Change in Control occurs and there is not an Assumption of the Option with respect to the Earned Tranches and any Partial Earned Tranche or any Option Tranche whose Share Price Hurdle was attained prior to the date of the Change in Control (a “Previously Earned Tranche”), then any vested portion of the Option (which, for Participants who remain in Continuous Service Status through the Change in Control date or who incur a qualifying termination within 3 months prior to the Change in Control date as described in paragraph 4(a) above shall include the Earned Tranches, Previously Earned Tranches and any Partial Earned Tranche) shall be fully payable to the Participant in such Change in Control transaction, in an amount per share equal to the excess of the CIC Price over the per share exercise price of the Option, in each case in accordance with Section 8.3 of the Plan (which payment, may be in cash or in kind as provided in Section 8.3 of the Plan, subject to any applicable legal regulatory or other requirements, as determined by the Administrator) but without regard to whether the Participant has incurred a Termination of Service prior to the Change in Control date and without regard to whether the Maturation Requirement has been satisfied with respect to such vested portion of the Option.
5. Forfeiture. Except as set forth in Section 4 above, upon the Date of Termination, Participant shall forfeit for no consideration any portion of the Option that has not become Vested upon or prior to the Date of Termination. In addition, any Option Tranche for which the Share Price Hurdle has not yet been attained will be forfeited for no consideration on the Performance Expiration Date. For the avoidance of doubt, to the extent that any portion of the Option is Vested as of the Date of Termination but not yet Exercisable, such Vested portion of the Option will not be forfeited on the Date of Termination, as provided in Section 2.1 of the Agreement.
| | |
LATCH, INC.
2021 INCENTIVE AWARD PLAN |
PERFORMANCE-BASED RESTRICTED STOCK UNIT GRANT NOTICE
Capitalized terms not specifically defined in this Performance-Based Restricted Stock Unit Grant Notice (the “Grant Notice”) have the meanings given to them in the 2021 Incentive Award Plan (as may be amended from time to time, the “Plan”) of Latch, Inc. (the “Company”).
The Company has granted to the participant listed below (“Participant”) the performance-based Restricted Stock Units (the “PSUs”) described in this Grant Notice, subject to the terms and conditions of the Plan and the Performance-Based Restricted Stock Unit Agreement attached as Exhibit A, and the Vesting Schedule attached as Appendix I (Exhibit A and Appendix I, the “Agreement”), all of which are incorporated into this Grant Notice by reference.
| | | | | |
Participant: | [_____] |
| Grant Date: | See equity administration platform |
| Number of PSUs: | See equity administration platform |
| Vesting Schedule: | See Appendix I to the Agreement |
By accepting (whether in writing, electronically or otherwise) the PSUs, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.
| | | | | | | | | | | | | | |
| LATCH, INC. | | PARTICIPANT |
| By: | | | |
| Name: | | | Name: |
| Title: | | | | |
PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT
Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.
ARTICLE I.
GENERAL
1.1 Award of PSUs. The Company has granted the PSUs (the “Award”) to Participant effective as of the grant date set forth in the Grant Notice (the “Grant Date”). Each PSU represents the right to receive one Share or, at the option of the Company, an amount of cash, in either case, as set forth in this Agreement. Participant will have no right to the distribution of any Shares or payment of any cash until the time (if ever) the PSUs have vested.
1.2 Incorporation of Terms of Plan. The PSUs are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of this Agreement will control.
1.3 Unsecured Promise. The PSUs will at all times prior to settlement represent an unsecured Company obligation payable only from the Company’s general assets.
ARTICLE II.
VESTING; FORFEITURE AND SETTLEMENT
2.1 Vesting; Forfeiture. The PSUs will be earned and vest in accordance with Appendix I hereto, except that any fraction of a PSU that would otherwise be vested will be accumulated and will vest only when a whole PSU has accumulated. In the event of Participant’s Termination of Service for any reason, all unvested PSUs will immediately and automatically be cancelled and forfeited, except as otherwise determined by the Administrator or provided herein or in a binding written agreement between Participant and the Company.
2.2 Leaves of Absence. If the Participant goes on a leave of absence, then the Company may adjust the vesting schedule set forth in Appendix I hereto in accordance with the Company’s leave of absence policy or the terms of such leave. Except as provided in the preceding sentence, the Participant shall be deemed to continue to be a Service Provider for any purpose under this Agreement while Participant is on a bona fide leave of absence, if (i) such leave was approved by the Company in writing and (ii) continued crediting of service for such purpose is expressly required by the terms of such leave or by applicable law (as determined by the Company). A Termination of Service shall be deemed to occur when such leave ends, unless the Participant immediately returns to active work.
2.3 Settlement.
(a) PSUs will be paid in Shares or cash at the Company’s option upon or after the vesting of the applicable PSU at such time(s) as may be determined by the Administrator, but in no event later than March 15 of the calendar year following the calendar year in which the vesting date occurs. Notwithstanding the foregoing, the Company may delay any payment under this Agreement that the Company reasonably determines would violate Applicable Law until the earliest date the Company reasonably determines the making of the payment will not cause such a violation (in accordance with Treasury Regulation Section 1.409A-2(b)(7)(ii)), provided the Company reasonably believes the delay will not result in the imposition of excise taxes under Section 409A.
(b) If a PSU is paid in cash, the amount of cash paid with respect to the PSU will equal the Fair Market Value of a Share on the day immediately preceding the payment date. In the event that the Company settles the PSUs in cash at a time when the Company’s Common Stock is not listed or quoted on a securities exchange or other trading market (including, for the avoidance of doubt, the OTC Bulletin Board or trading market, including the OTC Expert Market), the amount of cash paid with respect to such PSUs will be determined based on an independent third-party appraisal of the Shares from a firm selected by the Company, with such appraisal being as of a date that is no more than six months prior to the date of such cash settlement.
ARTICLE III.
TAXATION AND TAX WITHHOLDING
3.1 Representation. Participant represents to the Company that Participant has reviewed with Participant’s own tax advisors the tax consequences of this Award and the transactions contemplated by the Grant Notice and this Agreement. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.
3.2 Tax Withholding.
(a) By accepting this award of PSUs, Participant understands and agrees that as a condition of the grant of the PSUs hereunder, Participant is required to, and hereby affirmatively elects (the “Sell to Cover Election”) to, (i) sell that number of Shares determined in accordance with this Section 3.2 as may be necessary to satisfy the applicable statutory withholding obligations with respect to any taxable event arising in connection with the PSUs and (ii) to allow a transfer agent or broker (together with any other party the Company determines necessary to execute the Sell to Cover Election, the “Agent”) to remit the cash proceeds of such sale(s) to the Company. Participant hereby appoints the Agent as Participant’s agent and authorizes the Agent to (x) sell on the open market at the then prevailing market price(s), on Participant’s behalf, as soon as practicable on or after the date Shares are issued upon the vesting of the PSUs, that number (rounded up to the next whole number) of the Shares so issued necessary to generate proceeds to cover (A) any tax withholding obligations incurred with respect to such vesting or issuance, based on applicable withholding rates, and (B) all applicable fees and commissions due to, or required to be collected by, the Agent with respect thereto and (y) remit any remaining funds to Participant. Participant hereby authorizes the Company and the Agent to cooperate and communicate with one another to determine the number of Shares that must be sold pursuant to this Section 3.2. Participant understands that the Agent may effect sales as provided in this Section 3.2 in one or more sales and that the average price for executions resulting from bunched orders will be assigned to Participant’s account. In addition, Participant acknowledges that it may not be possible to sell Shares as provided by this Section 3.2, including due to (A) a legal or contractual restriction applicable to the Company, Participant or the Agent, (B) a market disruption, or (C) rules governing order execution priority on the national exchange where the Shares may be traded. Participant further agrees and acknowledges that in the event the sale of Shares would result in material adverse harm to the Company, as determined by the Company in its sole discretion, the Company may instruct the Agent not to sell Shares as provided by this Section 3.2. Participant acknowledges that regardless of any other term or condition of this Section 3.2, the Agent will not be liable to Participant for (I) special, indirect, punitive, exemplary, or consequential damages, or incidental losses or damages of any kind, or (II) any failure to perform or for any delay in performance that results from a cause or circumstance that is beyond its reasonable control. Participant hereby agrees to execute and deliver to the Agent any other agreements or documents as the Agent reasonably deems necessary or appropriate to carry out the purposes and intent of this Section 3.2. The Agent is a third-party beneficiary of this Section 3.2. This Section 3.2 shall
terminate not later than the date on which all tax withholding obligations arising in connection with the Award have been satisfied. Participant has carefully reviewed this Section 3.2 and Participant hereby represents and warrants that on the date hereof he or she is not aware of any material, nonpublic information with respect to the Company or any securities of the Company, is not subject to any legal, regulatory or contractual restriction that would prevent the Agent from conducting sales, does not have, and will not attempt to exercise, authority, influence or control over any sales of Shares effected by the Agent pursuant to the Agreement, and is entering into the Agreement and this election to “sell to cover” in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 (regarding trading of the Company’s securities on the basis of material nonpublic information) under the Exchange Act.
(b) Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the PSUs, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the PSUs. Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the PSUs or the subsequent sale of Shares. The Company and its Subsidiaries do not commit and are under no obligation to structure the PSUs to reduce or eliminate Participant’s tax liability.
ARTICLE IV.
OTHER PROVISIONS
4.1 Adjustments. Participant acknowledges that the PSUs, the Shares subject to the PSUs and the Share Price Hurdles (as such term is defined in Appendix I hereto) are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan. For clarity, in connection with an Equity Restructuring, the Share Price Hurdles shall be subject to Section 8.1 of the Plan.
4.2 Forfeiture and Claw-Back. Participant acknowledges and agrees that the PSUs (including any proceeds, gains or other economic benefit actually or constructively received by Participant upon any receipt PSUs) shall be subject to the Latch, Inc. Policy for Recovery of Erroneously Awarded Compensation, as it may be amended from time to time, or any successor policy.
4.3 Notices. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company’s Secretary at the Company’s principal office or the Secretary’s then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the Designated Beneficiary) at Participant’s last known mailing address, email address or facsimile number in the Company’s personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.
4.4 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.
4.5 Conformity to Securities Laws. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.
4.6 Successors and Assigns. The Company may assign any of its rights under this Agreement to a single assignee or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.
4.7 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement, if Participant is a Section 16 Person, the Plan, the Grant Notice, this Agreement and the PSUs will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.
4.8 Entire Agreement; Amendment. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator; provided, however, that except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall materially and adversely affect the PSUs without the prior written consent of Participant.
4.9 Agreement Severable. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.
4.10 Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the PSUs, and rights no greater than the right to receive cash or the Shares as a general unsecured creditor with respect to the PSUs, as and when settled pursuant to the terms of this Agreement.
4.11 Not a Contract of Employment. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.
4.12 Counterparts. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature or acceptance, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.
4.13 Restrictions. In the event the Shares are not registered with the United States Securities and Exchange Commission (as determined by the Administrator) or the Administrator determines in its sole discretion that such restrictions are necessary or advisable for the purpose of seeking to maintain an orderly, efficient and functioning secondary trading market for the Shares, then any Shares acquired in respect of the PSUs may be subject to such terms and conditions as the Administrator shall determine, including, without limitation, restrictions on the transferability, repurchase rights, the right of the Company to require that Shares be transferred in the event of certain transactions, rights of first refusal, tag-along rights, bring-along rights, redemption and co-sale rights and voting requirements. Such terms and conditions may be additional to those contained in the Plan and may, as determined by the Administrator, be contained in an exercise notice, securityholders’ agreement or in such other agreement as the Administrator shall determine, in each case in a form determined by the Administrator. The Administrator may condition the issuance of such Shares on the Participant’s consent to such terms and conditions and the Participant’s entering into such agreement or agreements.
* * * * *
APPENDIX I
Earned PSUs; Vesting1
1. Definitions.
(a) “Average Daily VWAP” shall mean, as of any date, the average daily VWAP over the prior 60 trading days.
(b) “Continuous Service Status” shall mean Participant continues to provide services as an employee, consultant or director of the Company, the successor company or any of their respective Parents and Subsidiaries.
(c) “Date of Termination” shall mean the date of termination of Participant’s Continuous Service Status.
(d) “Earned Tranche” shall mean a Vesting Tranche (as defined below) for which the relevant Share Price Hurdle has been attained.
(e) [“Good Reason” shall have the meaning set forth in the Participant’s employment agreement with the Company. If Participant does not have an employment agreement with the Company, for the sole purpose of determining if any Earned Tranches and the Partial Earned Tranche become Vested pursuant to Section 3(a) of determining this Appendix I, Participant’s resignation will be with “Good Reason” if Participant resigns within one hundred twenty (120) days after any of the following events, unless Participant expressly consents in writing to the applicable event: (i) a reduction in Participant’s annual base salary or annual target bonus, other than a reduction of less than 10% (aggregating all prior reductions) that is implemented in connection with a contemporaneous reduction in annual base salaries affecting other executives of the Company, (ii) a material decrease in Participant’s authority or areas of responsibility as are commensurate with Participant’s title or position with the Company or a diminution in Participant’s reporting line, title or position or (iii) the relocation of Participant’s primary work location by more than thirty (30) miles. Notwithstanding the foregoing, no Good Reason will have occurred unless and until: (a) Participant has provided the Company, within sixty (60) days of Participant’s knowledge of the occurrence of the facts and circumstances underlying the Good Reason event, written notice stating with specificity the applicable facts and circumstances underlying such finding of Good Reason; (b) the Company has had an opportunity to cure the same within thirty (30) days after the receipt of such notice; and (c) the Company shall have failed to so cure within such period.]2
(f) “Performance Expiration Date” shall mean the seven year anniversary of the Grant Date.
1 Note to Draft: In the case of future awards to new or existing Participants, vesting terms may be adjusted to address a Vesting Tranche for which the Share Price Hurdle is attained prior to the date of grant and/or the PSUs that would be allocated to such Vesting Tranche may be reduced or re-allocated to other award tranches; provided, that such adjusted vesting terms shall not provide for vesting of any portion of such Vesting Tranche prior to the original vesting date under this Agreement.
2 Note to Draft: Only applies to leaders and other key personnel.
(g) “VWAP” shall mean, for any date, the daily volume weighted average trading price of a Share for such date or the nearest preceding date (or, if the daily volume weighted average trading price of a Share is not reported or reasonably determinable, the closing or last reported trading price of a Share) on the applicable national securities exchange or other trading market on which the Shares are then listed, quoted or traded.
2. Vesting. In order for any PSUs to become vested (“Vested”), both a “Share Price Hurdle” and a “time vesting” requirement must be satisfied as set forth herein.
(a) Share Price Hurdles. A number of PSUs subject to the Award (each, a “Vesting Tranche”) will be considered earned, subject to the time vesting and other terms and conditions herein, at such time as the Average Daily VWAP equals or exceeds the Share Price Hurdle set forth opposite such Vesting Tranche in the table below, provided that the applicable Share Price Hurdle is attained prior to the Performance Expiration Date:
| | | | | | | | |
| Vesting Tranche | Number of PSUs | Share Price Hurdle |
| 1 | 33.33% | $1.00 |
| 2 | 33.33% | $2.00 |
| 3 | 33.34% | $3.00 |
For the avoidance of doubt, a Share Price Hurdle shall be considered “attained” for purposes of this Appendix I at such time as the Average Daily VWAP equals or exceeds such Share Price Hurdle.
(b) Time-Vesting. Twenty-five percent (25%) of each Vesting Tranche shall be Vested upon the attainment of the Share Price Hurdle, and the remaining 75% of the Vesting Tranche will vest in three equal installments on each of the first, second and third anniversaries of such date.
3. Change in Control.
(a) Notwithstanding the foregoing, in the event of a Change in Control, (i) upon the closing of such transaction, the Average Daily VWAP shall be deemed to be the price per share to be received by securityholders in connection with the Change in Control transaction, as determined reasonably and in good faith by the Board (the “CIC Price”), (ii) subject to Section 4(b) below, any Vesting Tranches for which the Share Price Hurdle has not been attained (i.e., Vesting Tranches that are not then Earned Tranches) shall thereupon be forfeited, and (iii) any Earned Tranches and the Partial Earned Tranche (as defined below), if any, shall remain eligible to become Vested in accordance with the terms set forth above, subject to Participant’s Continuous Service Status. In addition, if a Change in Control occurs and Participant’s Continuous Service Status is terminated by the Company (or its successor) without Cause[ or Participant resigns his Continuous Service Status with Good Reason, in either case,] within 3 months prior to and 24 months following the date of the Change in Control, any Earned Tranches and Partial Earned Tranches shall become Vested in full upon the Date of Termination.
(b) In addition, notwithstanding the foregoing, (i) in the event a Change in Control occurs and the CIC Price is between $0.50 and $1.00, then a portion of Vesting Tranche 1 shall be considered earned, which such portion shall be determined using straight line interpolation between $1.00 and $2.00 and (ii) in the event a Change in Control occurs and the CIC Price falls between two Share Price Hurdles, then a portion of the Vesting Tranche (the “Straddle Tranche”) corresponding to the higher of such Share
Price Hurdles shall be considered earned, which portion shall be determined using straight line interpolation between the corresponding Share Price Hurdles (such earned portion Vesting Tranche 1 or the Straddle Tranche, as applicable the “Partial Earned Tranche”). The Partial Earned Tranche shall remain eligible to become Vested in accordance with the terms set forth above, subject to Participant’s Continuous Service Status, and the portion of the applicable Vesting Tranche that is not the Partial Earned Tranche will be forfeited.
4. Forfeiture. Except as set forth in Section 3 above, upon the Date of Termination, Participant shall forfeit for no consideration any PSUs that have not become Vested upon or prior to the Date of Termination. In addition, any Vesting Tranche for which the Share Price Hurdle has not yet been attained will be forfeited for no consideration on the Performance Expiration Date.
Employment Agreement
This Employment Agreement (this “Agreement”), dated as of August 16, 2024, (the “Effective Date”), is made by and between Latch, Inc. (“Latch”) and Jason Mitura (“Executive”) (collectively referred to herein as the “Parties” or individually referred to as a “Party”), and will become effective on the Effective Date.
RECITALS
WHEREAS, Latch wishes to employ Executive initially as its Chief Product Officer; and
WHEREAS, the Parties desire to enter into an agreement setting forth the terms of such employment as of the Effective Date, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below, the Parties hereto agree as follows:
AGREEMENT
1.Employment.
(a)General. Effective on the Effective Date, the Company shall employ Executive, and Executive shall be employed by the Company, for the period and in the positions set forth in this Section 1, and subject to the other terms and conditions herein provided. As a condition of Executive’s employment with the Company, Executive will be required to sign this Agreement and Exhibit B (Covenant Agreement), which is incorporated herein by reference. Additionally, the Company’s offer of employment to Executive is contingent upon Executive’s successful completion of all facets of the Company’s pre-employment screening process, which includes confirmation that Executive is legally able to work for the Company in the United States in the position offered to Executive, and a background investigation which will include a credit check because the position Executive has been offered is a non-clerical position having regular access to trade secrets, intelligence information, or national security information. The Parties agree that the consulting agreement by and between the Company and Executive’s affiliated entity, dated January 1, 2024, as amended, will automatically terminate on the day immediately preceding the Effective Date.
(b)At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and shall continue to be at-will, as defined under applicable law, and that Executive’s employment with the Company may be terminated by either Party at any time for any or no reason (subject to the notice requirements of Section 3(b)). This “at-will” nature of Executive’s employment shall remain unchanged during Executive’s tenure as an employee and may not be changed, except in an express writing signed by Executive and a duly authorized officer of the Company. If Executive’s employment terminates for any reason, Executive shall not be entitled to any severance payments, benefits, award or compensation other than as provided in this Agreement or otherwise agreed to in writing by the Company (including pursuant to the terms of any equity award agreement) or as provided by applicable law. The term of this Agreement (the “Term”) shall commence on the Effective Date and end on the date this Agreement is terminated under Section 3.
(c)Positions and Duties. During the Term, Executive shall serve as Chief Product Officer of the Company with such responsibilities, duties and authority normally associated with such position
and as may from time to time be reasonably assigned to Executive by the Chief Executive Officer of the Company (“CEO”). Executive shall report solely and directly to the CEO. Executive shall devote substantially all of Executive’s working time and efforts to the business and affairs of the Company (which shall include service to its affiliates, if applicable) and shall not engage in outside business activities (including serving on outside boards or committees) without the consent of the CEO, provided that Executive shall be permitted to (i) manage Executive’s personal, financial and legal affairs, (ii) participate in trade associations, and (iii) serve on the board of directors of not-for-profit or tax-exempt charitable organizations or, with the consent of the CEO (not to be unreasonably withheld), the board of directors of non-competitive for-profit businesses, in each case, subject to compliance with this Agreement and provided that such activities do not materially interfere with Executive’s performance of Executive’s duties and responsibilities hereunder. Executive agrees to observe and comply with the reasonable rules and policies of the Company as adopted by the Company from time to time (to the extent they do not conflict with the terms of this Agreement), in each case, as amended from time to time, and as delivered or made available to Executive (each, a “Policy”).
2.Compensation and Related Matters.
(a)Annual Base Salary. During the Term, Executive shall receive a base salary at a rate initially of $350,000 per annum, which shall be paid in accordance with the customary payroll practices of the Company and shall be pro-rated for partial years of employment. Such annual base salary shall be reviewed (and may be adjusted for increase, but not decrease) from time to time (such annual base salary, as it may be adjusted from time to time, the “Annual Base Salary”) by the Company’s Board of Directors (the “Board”) or its compensation committee (“Compensation Committee”).
(b)Long-Term Incentive Awards. Subject to the approval of the Board or the Compensation Committee, as applicable, and contingent upon the Company’s reasonable determination of its ability to grant equity awards under applicable securities laws, the Company will grant to Executive one-time equity awards under the Company’s 2021 Incentive Award Plan (as may be amended from time to time, the “Plan”) consisting of a performance-based option to purchase 7,500,000 shares of the Company’s common stock (the “Performance Option”) and an award of performance-based restricted stock units covering 7,500,000 shares (together with the Performance Option, the “Awards”). The Awards will be eligible to vest upon the satisfaction of both a performance-based vesting requirement and a service-based vesting requirement, as further described in the award agreements. The performance-based vesting requirement will be satisfied based on the achievement of average daily volume-weighted average share price hurdles. In addition, any vested portion of the Performance Option will become exercisable over a seven-year schedule following the applicable date of grant. Notwithstanding the generality of the foregoing, the Awards will be governed in all respects (including, for the avoidance of doubt, in respect of their treatment in connection with a Change in Control (as defined in the Plan)) by the terms and conditions of the Plan and the award agreements evidencing the Awards.
(c)Benefits. During the Term, Executive shall be eligible to participate in employee benefit plans, programs and arrangements of the Company, subject to the terms and eligibility requirements thereof and as such plans, programs and arrangements may be amended or in effect from time to time. In no event shall Executive be eligible to participate in any severance plan or program of the Company, except as set forth in Section 4 of this Agreement.
(d)Vacation. During the Term, Executive shall be entitled to paid personal leave in accordance with the Company’s Policies. Any vacation shall be taken in the reasonable convenience of Executive.
(e)Business Expenses. During the Term, the Company shall reimburse Executive for all reasonable travel and other business expenses incurred by Executive in the performance of Executive’s duties to the Company in accordance with the Company’s expense reimbursement Policy.
(f)Key Person Insurance. At any time during the Term, the Company shall have the right (but not the obligation) to insure the life of Executive for the Company’s sole benefit. The Company shall have the right to determine the amount of insurance and the type of policy. Executive shall reasonably cooperate with the Company in obtaining such insurance by submitting to physical examinations, by supplying all information reasonably required by any insurance carrier, and by executing all necessary documents reasonably required by any insurance carrier, provided that any information provided to an insurance company or broker shall not be provided to the Company without the prior written authorization of Executive. Executive shall incur no financial obligation by executing any required document, and shall have no interest in any such policy.
(g)Indemnification and D&O Insurance. The Company shall indemnify (and advance expenses to) Executive to the greatest extent permitted by applicable state law and shall provide Executive with coverage under a directors’ and officers’ liability insurance policy to the same extent provided to other senior executives and directors of the Company.
3.Termination of Employment.
Executive’s employment hereunder and the Term may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances and the Term will end on the Date of Termination:
(a)Circumstances.
(i)Death. Executive’s employment hereunder shall terminate upon Executive’s death.
(ii)Disability. If Executive has incurred a Disability, as defined below, the Company may terminate Executive’s employment.
(iii)Termination for Cause. The Company may terminate Executive’s employment for Cause, as defined below.
(iv)Termination without Cause. The Company may terminate Executive’s employment without Cause.
(v)Resignation from the Company with Good Reason. Executive may resign Executive’s employment with the Company with Good Reason, as defined below.
(vi)Resignation from the Company without Good Reason. Executive may resign Executive’s employment with the Company for any reason other than Good Reason or for no reason.
(b)Notice of Termination. Any termination of Executive’s employment by the Company or by Executive under this Section 3 (other than termination pursuant to Section 3(a)(i)) shall be communicated by a written notice to the other Party hereto (i) indicating the specific termination provision in this Agreement relied upon, (ii) setting forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, if applicable, and (iii) specifying a Date of Termination which, if submitted by Executive, shall be at least sixty (60) days following the date of such notice (a “Notice of Termination”); provided, however, that in the event that Executive delivers a Notice of Termination to the Company, the Company may, in its sole discretion, change the Date of Termination to any date that occurs following the date of the Company’s receipt of such Notice of Termination and is prior to the date specified in such Notice of Termination, but the termination will still be considered a resignation by Executive; provided, however, that the Company shall in such event pay Executive all wages (including base salary and incentive compensation) Executive would have earned during the 60-day period following the date of such notice. A Notice of Termination submitted by the Company may provide for a Date of Termination on the date Executive receives the Notice of Termination, or any date thereafter elected by the Company. The failure by either Party to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Party hereunder or preclude the Party from asserting such fact or circumstance in enforcing the Party’s rights hereunder.
(c)Company Obligations upon Termination. Upon termination of Executive’s employment pursuant to any of the circumstances listed in this Section 3, Executive (or Executive’s estate, if applicable) shall be entitled to receive the sum of: (i) the portion of Executive’s Annual Base Salary earned through the Date of Termination, but not yet paid to Executive (payable on the Company’s next payroll date); (ii) any expense reimbursements owed to Executive pursuant to Section 2(e), payable pursuant to the applicable Policy; and (iii) any amount accrued and arising from Executive’s participation in, or benefits accrued under any employee benefit plans, programs or arrangements, which amounts shall be payable in accordance with the terms and conditions of such employee benefit plans, programs or arrangements (collectively, the “Company Arrangements”). Except as otherwise expressly required by law (e.g., COBRA) or applicable plan, program, or arrangement or as specifically provided herein, all of Executive’s rights to salary, severance, benefits, bonuses and other compensatory amounts hereunder (if any) shall cease upon the termination of Executive’s employment hereunder. In the event that Executive’s employment is terminated by the Company for any reason, Executive’s sole and exclusive remedy for severance benefits shall be to receive the payments and benefits described in this Section 3(c) or Section 4, as applicable.
(d)Deemed Resignation. Upon termination of Executive’s employment for any reason, Executive shall be deemed to have resigned from all offices and directorships, if any, then held with the Company or any of its subsidiaries.
4.Severance Payments.
(a)Termination for Cause, or Termination Upon Death, Disability or Resignation from the Company Without Good Reason. If Executive’s employment shall terminate as a result of Executive’s death pursuant to Section 3(a)(i) or Disability pursuant to Section 3(a)(ii), pursuant to Section 3(a)(iii) for Cause, or pursuant to Section 3(a)(vi) for Executive’s resignation from the Company without Good
Reason, then Executive shall not be entitled to any severance payments or benefits, except as provided in Section 3(c).
(b)Termination without Cause or Resignation from the Company with Good Reason. If Executive’s employment terminates without Cause pursuant to Section 3(a)(iv), or pursuant to Section 3(a)(v) due to Executive’s resignation with Good Reason, then subject to Executive signing on or before the 60th day following Executive’s Separation from Service (as defined below), and not revoking, a release of claims substantially in the form attached as Exhibit A to this Agreement (the “Release”) and Executive’s continued compliance in all material respects with Section 5 (provided, that the Company shall provide Executive with written notice of any such noncompliance and not less than thirty (30) days to cure the noncompliance if capable of cure), the Company shall pay Executive in addition to payments and benefits set forth in Section 3(c), the following:
(i)An amount in cash equal to twelve months’ Annual Base Salary payable in the form of salary continuation in regular installments over the twelve-month period following the date of Executive’s Separation from Service (the “Severance Period”) (provided that such payments will not begin until the Release is executed and not revoked) in accordance with the Company’s normal payroll practices; and
(ii)if Executive timely elects to receive continued medical, dental or vision coverage under one or more of the Company’s group medical, dental or vision plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), then the Company shall directly pay, or reimburse Executive for, the COBRA premiums for Executive and Executive’s covered dependents under such plans, less the amount Executive would have had to pay to receive such coverage as an active employee based on the cost sharing levels in effect on the Date of Termination, during the period commencing on Executive’s Separation from Service and ending upon the earliest of (A) the last day of the Severance Period, (B) the date that Executive and/or Executive’s covered dependents become no longer eligible for COBRA or (C) the date Executive becomes eligible to receive medical, dental or vision coverage, as applicable, from a subsequent employer (and Executive agrees to promptly notify the Company of such eligibility) (the “COBRA Continuation Period”). Notwithstanding the foregoing, if the Company determines it cannot provide the foregoing benefit without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act) or incurring an excise tax, the Company shall in lieu thereof provide to Executive a taxable monthly payment in an amount equal to the monthly COBRA premium that Executive would be required to pay to continue Executive’s and Executive’s covered dependents’ group health coverage in effect on the Date of Termination (which amount shall be based on the premium for the first month of COBRA coverage), less the amount Executive would have had to pay to receive group health coverage as an active employee for Executive and his or her covered dependents based on the cost sharing levels in effect on the Date of Termination, which payments shall continue for the remainder of the COBRA Continuation Period.
(c)Survival. Notwithstanding anything to the contrary in this Agreement, the provisions of Sections 2(f) and 5 through 9 will survive the termination of Executive’s employment and the termination of the Term.
5.Covenants. The provisions of Exhibit B (the “Covenant Agreement”) are expressly incorporated into this Agreement and Executive agrees to abide by the terms set forth therein. Executive acknowledges that the provisions of the Covenant Agreement will survive the termination of Executive’s employment and the termination of the Term to the extent such provisions are intended to extend beyond Executive’s period of employment with the Company.
6.Assignment and Successors.
The Company may assign its rights and obligations under this Agreement to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise). This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personal and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or operation of law. Notwithstanding the foregoing, Executive shall be entitled, to the extent permitted under applicable law and applicable Company Arrangements, to select and change a beneficiary or beneficiaries to receive compensation hereunder following Executive’s death by giving written notice thereof to the Company.
7.Certain Definitions.
(a)Cause. The Company shall have “Cause” to terminate Executive’s employment hereunder upon:
(i)Executive’s conviction of, or admission of guilt or plea of nolo contendere to, (A) any felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud;
(ii)any act by Executive involving fraud, embezzlement, theft or willful misconduct in connection with Executive’s duties or in the course of Executive’s employment with the Company;
(iii)any conduct by or at the direction of Executive constituting a breach of Executive’s duty of loyalty or other fiduciary duty owing to the Company;
(iv)Executive’s violation of Company policies that has a detrimental effect on the Company;
(v)Executive’s willful refusal (other than due to physical or mental incapacity) to substantially perform his duties; or
(vi)Executive’s willful refusal to carry out the reasonable and lawful instructions of the Board.
(b)For purposes of this definition, an action or inaction is only “willful” if it is done or omitted by Executive without a good faith belief that such action or inaction is in the best interests of the Company. No action or inaction based upon direction or approval of the Board or advice of counsel to the Company shall constitute Cause. Poor performance shall not, in and of itself, constitute Cause.
(c)Code. “Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder.
(d)Date of Termination. “Date of Termination” shall mean (i) if Executive’s employment is terminated by Executive’s death, the date of Executive’s death; or (ii) if Executive’s employment is terminated pursuant to Section 3(a)(ii)-(vi) either the date indicated in the Notice of Termination or the date specified by the Company pursuant to Section 3(b), whichever is earlier.
(e)Disability. “Disability” shall mean, at any time the Company sponsors a long-term disability plan for the Company’s employees, “disability” as defined in such long-term disability plan for the purpose of determining a participant’s eligibility for benefits, provided, however, if the long-term disability plan contains multiple definitions of disability, “Disability” shall refer to that definition of disability which, if Executive qualified for such disability benefits, would provide coverage for the longest period of time. The determination of whether Executive has a Disability shall be made by the person or persons required to make disability determinations under the long-term disability plan. At any time the Company does not sponsor a long-term disability plan for its employees, “Disability” shall mean Executive’s inability to perform, with reasonable accommodation, the essential functions of Executive’s positions hereunder for a total of 180 days within a 12 month period as a result of incapacity due to mental or physical illness as determined by a physician selected by the Company or its insurers and acceptable to Executive or Executive’s legal representative, with such agreement as to acceptability not to be unreasonably withheld or delayed. Any refusal by Executive to submit to a medical examination for the purpose of determining Disability shall be deemed to constitute conclusive evidence of Executive’s Disability.
(f)Good Reason. For the sole purpose of determining Executive’s right to severance payments and benefits as described above, Executive’s resignation will be with “Good Reason” if Executive has resigned following the occurrence of any of the following events other than with Executive’s consent or at his direction: (i) a diminution in Executive’s Annual Base Salary; (ii) a diminution in duties, responsibilities or authority or an adverse change in title; (iii) a change in Executive’s status as a remote worker; or (iv) a material breach by the Company of any material term of this Agreement. Notwithstanding the foregoing, no Good Reason will have occurred unless and until: (a) Executive has provided the Company, within sixty (60) days of Executive’s knowledge of the occurrence of the facts and circumstances underlying the Good Reason event, written notice stating with specificity the applicable facts and circumstances underlying such finding of Good Reason; (b) the Company has had an opportunity to cure the same within thirty (30) days after the receipt of such notice; and (c) the Company shall have failed to so cure within such period.
8.Parachute Payments.
(a)Notwithstanding any other provisions of this Agreement or any Company equity plan or agreement, in the event that any payment or benefit by the Company or otherwise to or for the benefit of Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (all such payments and benefits, including the payments and benefits under Section 4 hereof, being hereinafter referred to as the “Total Payments”), would be subject (in whole or in part) to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced (in the order provided in Section 8(b)) to the minimum extent necessary to avoid the imposition of the Excise Tax on the Total Payments, but only if (i) the net amount of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and local income and employment taxes on such
reduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such reduced Total Payments), is greater than or equal to (ii) the net amount of such Total Payments without such reduction (but after subtracting the net amount of federal, state and local income and employment taxes on such Total Payments and the amount of the Excise Tax to which Executive would be subject in respect of such unreduced Total Payments and after taking into account the phase out of itemized deductions and personal exemptions attributable to such unreduced Total Payments).
(b)The Total Payments shall be reduced in the following order: (i) reduction on a pro rata basis of any cash severance payments that are exempt from Section 409A of the Code (“Section 409A”), (ii) reduction on a pro rata basis of any non-cash severance payments or benefits that are exempt from Section 409A, (iii) reduction on a pro rata basis of any other payments or benefits that are exempt from Section 409A, and (iv) reduction of any payments or benefits otherwise payable to Executive on a pro rata basis or such other manner that complies with Section 409A; provided, in case of clauses (ii), (iii) and (iv), that reduction of any payments attributable to the acceleration of vesting of Company equity awards shall be first applied to Company equity awards that would otherwise vest last in time.
(c)All determinations regarding the application of this Section 8 shall be made by an accounting firm or consulting group with experience in performing calculations regarding the applicability of Section 280G of the Code and the Excise Tax selected by the Company and reasonably acceptable to Executive (the “Independent Advisors”). For purposes of determinations, no portion of the Total Payments shall be taken into account which, in the opinion of the Independent Advisors, (i) does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code (including by reason of Section 280G(b)(4)(A) of the Code) or (ii) constitutes reasonable compensation for services actually rendered, within the meaning of Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in Section 280G(b)(3) of the Code) allocable to such reasonable compensation. The costs of obtaining such determination and all related fees and expenses (including related fees and expenses incurred in any later audit) shall be borne by the Company.
(d)In the event it is later determined that a greater reduction in the Total Payments should have been made to implement the objective and intent of this Section 8, the excess amount shall be returned promptly by Executive to the Company.
9.Miscellaneous Provisions.
(a)Governing Law. This Agreement shall be governed, construed, interpreted and enforced in accordance with its express terms, and otherwise in accordance with the substantive laws of the State of Wyoming without reference to the principles of conflicts of law of the State of Wyoming or any other jurisdiction that would result in the application of the laws of a jurisdiction other than the State of Wyoming, and where applicable, the laws of the United States.
(b)Validity. The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.
(c)Notices. Any notice, request, claim, demand, document and other communication hereunder to any Party shall be effective upon receipt (or refusal of receipt) and shall be in writing and delivered personally or sent by facsimile, email or certified or registered mail, postage prepaid, as follows:
(i)If to the Company, to the General Counsel of the Company at the Company’s headquarters,
(ii)If to Executive, to the last address that the Company has in its personnel records for Executive, or
(iii)At any other address as any Party shall have specified by notice in writing to the other Party.
(d)Counterparts. This 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 Agreement. Signatures delivered by facsimile or PDF shall be deemed effective for all purposes.
(e)Entire Agreement. The terms of this Agreement, and the Covenant Agreement incorporated herein by reference as set forth in Section 5, are intended by the Parties to be the final expression of their agreement with respect to the subject matter hereof and supersede all prior understandings and agreements, whether written or oral, including any prior employment offer letter or employment agreement between Executive and the Company. The Parties further intend that this Agreement shall constitute the complete and exclusive statement of their terms and that no extrinsic evidence whatsoever may be introduced in any judicial, administrative, or other legal proceeding to vary the terms of this Agreement.
(f)Amendments; Waivers. This Agreement may not be modified, amended, or terminated except by an instrument in writing, signed by Executive and a duly authorized officer of Company. By an instrument in writing similarly executed, Executive or a duly authorized officer of the Company may waive compliance by the other Party with any specifically identified provision of this Agreement that such other Party was or is obligated to comply with or perform; provided, however, that such waiver shall not operate as a waiver of, or estoppel with respect to, any other or subsequent failure. No failure to exercise and no delay in exercising any right, remedy, or power hereunder will preclude any other or further exercise of any other right, remedy, or power provided herein or by law or in equity.
(g)Construction. This Agreement shall be deemed drafted equally by both the Parties. Its language shall be construed as a whole and according to its fair meaning. Any presumption or principle that the language is to be construed against any Party shall not apply. The headings in this Agreement are only for convenience and are not intended to affect construction or interpretation. Any references to paragraphs, subparagraphs, sections or subsections are to those parts of this Agreement, unless the context clearly indicates to the contrary. Also, unless the context clearly indicates to the contrary, (i) the plural includes the singular and the singular includes the plural; (ii) “and” and “or” are each used both conjunctively and disjunctively; (iii) “any,” “all,” “each,” or “every” means “any and all,” and “each and every”; (iv) “includes” and “including” are each “without limitation”; (v) “herein,” “hereof,” “hereunder” and other similar compounds of the word “here” refer to the entire Agreement and not to any particular paragraph, subparagraph, section or subsection; and (vi) all pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural as the identity of the entities or persons referred to may require.
(h)Arbitration. Any controversy, claim or dispute arising out of or relating to this Agreement, shall be settled solely and exclusively by a binding arbitration process administered by JAMS in New York, NY. Such arbitration shall be conducted in accordance with the then-existing JAMS Employment Arbitration Rules and Procedures, which are available at http://www.jamsadr.com/rules-
employment-arbitration/, with the following exceptions if in conflict: (i) one arbitrator who is a retired judge shall be chosen by the parties; and (ii) Company shall pay the expenses and fees of the arbitrator, together with other expenses of the arbitration incurred or approved by the arbitrator. Each Party shall bear its own attorney’s fees and expenses; provided, that if Executive is the prevailing party in any proceeding (including in any court action referenced below), the Company shall, unless the arbitrator or judge, as applicable, determines that it is not reasonable under the circumstances, promptly reimburse Executive for any reasonable attorney fees and costs incurred in connection with such proceeding. The Parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this subsection shall be construed as precluding the bringing of an action for injunctive relief or specific performance as provided in this Agreement or the Covenant Agreement. This dispute resolution process and any arbitration hereunder shall be confidential and neither any Party nor the neutral arbitrator shall disclose the existence, contents or results of such process without the prior written consent of all Parties, except where necessary or compelled in a court to enforce this arbitration provision or an award from such arbitration or otherwise in a legal proceeding. If JAMS no longer exists or is otherwise unavailable, the Parties agree that the American Arbitration Association (“AAA”) shall administer the arbitration in accordance with its then-existing employment arbitration rules as modified by this subsection. In such event, all references herein to JAMS shall mean AAA. Notwithstanding the foregoing, Executive and the Company each have the right to resolve any issue or dispute over intellectual property rights by court action instead of arbitration.
(i)Enforcement. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the Term, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a portion of this Agreement; and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore, in lieu of such illegal, invalid or unenforceable provision there shall be added automatically as part of this Agreement a provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.
(j)Withholding. The Company shall be entitled to withhold from any amounts payable under this Agreement any federal, state, local or foreign withholding or other taxes or charges which the Company is required to withhold. The Company shall be entitled to rely on the advice of counsel if any questions as to the amount or requirement of withholding shall arise.
(k)Section 409A.
(i)General. The intent of the Parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If the Company and Executive agree in good faith that the payments and benefits under this Agreement would not comply with Section 409A, the parties hereto shall reasonably and in good faith attempt to modify this Agreement to comply with Section 409A while endeavoring to maintain the intended economic benefits hereunder.
(ii)Separation from Service. Notwithstanding anything in this Agreement to the contrary, any compensation or benefits payable under this Agreement that is designated under this Agreement as payable upon Executive’s termination of employment shall be payable only upon Executive’s “separation from service” with the Company within the meaning of Section 409A (a “Separation from Service”) and, except as provided below, if Executive would otherwise have the ability to control the calendar year in which such payment or benefits would be made or provided, any such compensation or benefits described in Section 5 shall not be paid, or, in the case of installments, shall not commence payment, until the thirtieth (30th) day following Executive’s Separation from Service (the “First Payment Date”). Any installment payments that would have been made to Executive during the thirty (30) day period immediately following Executive’s Separation from Service but for the preceding sentence shall be paid to Executive on the First Payment Date and the remaining payments shall be made as provided in this Agreement. (iii)Specified Employee. Notwithstanding anything in this Agreement to the contrary, if Executive is deemed by the Company at the time of Executive’s Separation from Service to be a “specified employee” for purposes of Section 409A, to the extent delayed commencement of any portion of the benefits to which Executive is entitled under this Agreement is required in order to avoid a prohibited distribution under Section 409A, such portion of Executive’s benefits shall not be provided to Executive prior to the earlier of (i) the expiration of the six-month period measured from the date of Executive’s Separation from Service with the Company or (ii) the date of Executive’s death. Upon the first business day following the expiration of the applicable Section 409A period, all payments deferred pursuant to the preceding sentence shall be paid in a lump sum to Executive (or Executive’s estate or beneficiaries), and any remaining payments due to Executive under this Agreement shall be paid as otherwise provided herein.
(iv)Expense Reimbursements. To the extent that any reimbursements under this Agreement are subject to Section 409A, (i) any such reimbursements payable to Executive shall be paid to Executive no later than December 31 of the year following the year in which the expense was incurred, (ii) Executive shall submit Executive’s reimbursement request promptly following the date the expense is incurred, (iii) the amount of expenses reimbursed in one year shall not affect the amount eligible for reimbursement in any subsequent year, other than medical expenses referred to in Section 105(b) of the Code, and (iv) Executive’s right to reimbursement under this Agreement will not be subject to liquidation or exchange for another benefit.
(v)Installments. Executive’s right to receive any installment payments under this Agreement, including without limitation any continuation salary payments that are payable on Company payroll dates, shall be treated as a right to receive a series of separate payments and, accordingly, each such installment payment shall at all times be considered a separate and distinct payment as permitted under Section 409A. Except as otherwise permitted under Section 409A, no payment hereunder shall be accelerated or deferred unless such acceleration or deferral would not result in additional tax or interest pursuant to Section 409A.
10.Executive Acknowledgement.
Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company
other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
| | | | | | | | |
| | COMPANY |
| | |
| By: | /s/ Priyen Patel |
| | Name: Priyen Patel |
| | Title: General Counsel and Secretary |
| | |
| | |
| | EXECUTIVE |
| | |
| | /s/ Jason Mitura |
| | Jason Mitura |
[Signature Page to Employment Agreement]
EXHIBIT A
Separation Agreement and Release
This Separation Agreement and Release (“Agreement”) is made by and between ________________ (“Executive”) and Latch, Inc. and its affiliates (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”). Capitalized terms used but not defined in this Agreement shall have the meanings set forth in the Employment Agreement (as defined below).
WHEREAS, the Parties have previously entered into that certain Employment Agreement, dated as of _____, 2024 (the “Employment Agreement”) and that certain Covenant Agreement (as defined in the Employment Agreement); and
WHEREAS, in connection with Executive’s termination of employment with the Company or a subsidiary or affiliate of the Company effective ________, 20__, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that Executive may have against the Company and any of the Releases as defined below, including, but not limited to, any and all claims arising out of or in any way related to Executive’s employment with or separation from the Company or its subsidiaries or affiliates.
NOW, THEREFORE, in consideration of the severance payments and benefits described in Section 4 of the Employment Agreement, which, pursuant to the Employment Agreement, are conditioned on Executive’s execution and non-revocation of this Agreement, and in consideration of the mutual promises made herein, the Company and Executive hereby agree as follows:
1.Severance Payments and Benefits; Salary and Benefits. The Company agrees to provide Executive with the severance payments and benefits described in Section 4(b) of the Employment Agreement, payable at the times set forth in, and subject to the terms and conditions of, the Employment Agreement. In addition, to the extent not already paid, and subject to the terms and conditions of the Employment Agreement, the Company shall pay or provide to Executive all other payments or benefits described in Section 3(c) of the Employment Agreement, subject to and in accordance with the terms thereof.
2.Release of Claims and Covenant not to Sue. Executive agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Executive by the Company, any of its direct or indirect subsidiaries or affiliates, and any of its or their current and former officers, directors, equityholders, managers, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, divisions, and subsidiaries and predecessor and successor corporations and assigns (collectively, the “Releasees”) related to Executive’s employment with the Company or its subsidiaries or termination therefrom. Executive, on Executive’s own behalf and on behalf of any of Executive’s affiliated companies or entities and any of their respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Executive may possess against any of the Releasees arising from any omissions, acts, facts, or damages that have occurred up until and including the date Executive signs this Agreement relating to Executive’s employment with the Company or its subsidiaries or termination therefrom, including, without limitation:
(a) any and all claims relating to or arising from Executive’s employment or service relationship with the Company or any of its direct or indirect subsidiaries and the termination of that relationship;
(b) any and all claims relating to, or arising from, Executive’s right to purchase, or actual purchase of any shares of stock or other equity interests of the Company or any of its affiliates, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state law, and securities fraud under any state or federal law;
(c) any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;
(d) any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of 2002; and the Wyoming Fair Employment Practices Act;
(e) any and all claims for violation of the federal or any state constitution;
(f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;
(g) any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Executive as a result of this Agreement;
(h) any and all claims arising out of the wage and hour and wage payments laws and regulations of the state or states in which Executive has provided service to the Company or any of its affiliates; and
(i) any and all claims for attorneys’ fees and costs.
Executive agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. Executive hereby acknowledges that Executive is aware of the principle that a general release does not extend to claims that the releasor does not know or suspect to exist in his or her favor at the time of executing the release, which, if known by him or her, must have materially affected his or her settlement with the releasee. With knowledge of this principle, Executive hereby agrees to expressly waive any rights Executive may have to that effect. This release does not release claims that cannot be released as a matter of law, including, but not limited to,
Executive’s right to report possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules 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 and any right to receive an award for information provided thereunder, Executive’s right to file a charge with or participate in a charge by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company for discrimination (with the understanding that Executive’s release of claims herein bars Executive from recovering such monetary relief from the Company or any Releasee for any alleged discriminatory treatment), claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law, claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA, claims to any benefit entitlements vested as the date of separation of Executive’s employment, pursuant to written terms of any employee benefit plan of the Company or its affiliates and Executive’s right under applicable law. This release further does not release claims for breach of Section 3(c) or Section 4 of the Employment Agreement.
3.Known and Unknown Claims. The claims described in Section 2 above includes all known and unknown claims that Executive may have. You acknowledge that you have been advised of and are familiar with the provisions of applicable laws that may prohibit the release of unknown claims. You hereby state that it is your intention in executing this Agreement that it shall be effective as a bar to each and every claim, demand, cause of action, obligation, damage, liability, charge, attorneys’ fees and costs hereinabove released.
4.Acknowledgment of Waiver of Claims under ADEA. Executive understands and acknowledges that Executive is waiving and releasing any rights Executive may have under the Age Discrimination in Employment Act of 1967 (“ADEA”), and that this waiver and release is knowing and voluntary. Executive understands and agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the date Executive signs this Agreement. Executive understands and acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Executive was already entitled. Executive further understands and acknowledges that Executive has been advised by this writing that: (a) Executive should consult with an attorney prior to executing this Agreement; (b) Executive has [21] days within which to consider this Agreement, and the Parties agree that such time period to review this Agreement shall not be extended upon any material or immaterial changes to this Agreement; (c) Executive has seven business days following Executive’s execution of this Agreement to revoke this Agreement pursuant to written notice to the General Counsel of the Company; (d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law. In the event Executive signs this Agreement and returns it to the Company in less than the [21] day period identified above, Executive hereby acknowledges that Executive has freely and voluntarily chosen to waive the time period allotted for considering this Agreement.
5.Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction
or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.
6.No Oral Modification. This Agreement may only be amended in a writing signed by Executive and a duly authorized officer of the Company.
7.Governing Law; Dispute Resolution. This Agreement shall be subject to the provisions of Sections 9(a), 9(c), and 9(h) of the Employment Agreement.
8.Effective Date. Executive has seven business days after Executive signs this Agreement to revoke it and this Agreement will become effective on the day immediately following the seventh business day after Executive signed this Agreement (the “Effective Date”).
9.Voluntary Execution of Agreement. Executive understands and agrees that Executive executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of Executive’s claims against the Company and any of the other Releasees. Executive acknowledges that: (a) Executive has read this Agreement; (b) Executive has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement; (c) Executive has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of Executive’s own choice or has elected not to retain legal counsel; (d) Executive understands the terms and consequences of this Agreement and of the releases it contains; and (e) Executive is fully aware of the legal and binding effect of this Agreement.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.
| | | | | |
| EXECUTIVE |
| Dated:_____________ | |
| [_____________] |
| COMPANY |
Dated:_____________ | |
| By: | |
| Name: Title: |
EXHIBIT B
Covenant Agreement
In consideration of, and as a condition of Executive’s employment, Executive and the Company hereby agree as follows (capitalized terms not otherwise defined below have the meanings set forth in the Employment Agreement to which this Covenant Agreement is attached as an exhibit). For the purposes of this Covenant Agreement, “Company” means Latch, Inc. and its current and future affiliates, as applicable.
1.Company Property.
a.All correspondence, records, documents, software, promotional materials and other Company property (including, without limitation, Confidential Information and Company Inventions (each as defined below)) and all copies thereof, which come into Executive’s possession by, through or in the course of Executive’s employment, regardless of the source and whether created by Executive or not, are the sole and exclusive property of the Company, and immediately upon the termination of Executive’s employment for any reason, or any time at the Company’s request, Executive shall return to the Company all such property of the Company, as well as Third Party Information (as defined below), and certify in writing that Executive has fully complied with the foregoing obligation.
b.Upon the earlier of (i) any request of the Company and (ii) five (5) days after the date of Executive’s termination of employment for any reason, Executive shall deliver promptly to the Company all customer lists, sales and service manuals and data, equipment, computers, printers, facsimile machines, office equipment, cellular telephones, records, manuals, books, blank forms, documents, databases, files, letters, memoranda, notes, notebooks, reports, data, tables, calculations or copies thereof, which are the property of the Company or which relate in any way to the business of the Company, and all of other property, trade secrets, Company Inventions or Confidential Information of the Company, as well as Third Party Information, which are in Executive’s possession, care or control.
c.Executive shall not copy, delete, or alter any information contained upon Executive’s Company computer or Company equipment before returning it to Company pursuant to sections 1(a)-(b) above. In addition, if Executive has used any personal computer, server, or e-mail system to receive, store, review, prepare or transmit any Company information, including but not limited to, Confidential Information, Executive agrees to permanently delete and expunge such Confidential Information from those systems. Executive further agrees that any property situated on Company’s premises and owned by Company is subject to inspection by Company’s personnel at any time with or without notice. Prior to the termination of employment or promptly after termination of employment, Executive shall cooperate with Company in attending an exit interview and certifying in writing that Executive has complied with the requirements of this Section 1.c.
Notwithstanding the foregoing, Executive shall be permitted to retain Executive’s contacts, calendars, personal correspondence, personal materials and files, and any documents or information reasonably needed for Executive’s preparation of Executive’s personal tax returns.
2.Non-Competition; Non-Solicitation; Non-Disparagement.
a.Executive agrees and acknowledges that, in connection with Executive’s employment with the Company, Executive will be provided with access to and become familiar with confidential and proprietary information and trade secrets belonging to the Company and its Affiliates, including, without limitation, “know how,” trade secrets, inventions, ideas, processes, computer source and object code, data, formulae, programs, other works of authorship, improvements, discoveries, developments, designs, techniques, customer lists, pricing policies, operational methods, and documents and information with respect to present and prospective plans for research and development, financial statements, budgets, contracts, goods, services, products, equipment, processes, clients, customers, agents, employees, contractors, suppliers, service providers, sales and marketing methods, and other business affairs, discussions, negotiations, or agreements of the Company and its Affiliates (collectively, “Confidential Information”). Confidential Information does not include: (1) information that was already known to Executive prior to the Effective Date without restriction on its use or disclosure; (2) information that was independently developed by Executive without reference to or use of any Confidential Information; or (3) information that is or becomes generally known or available to the public through no wrongful act of either Executive or any third party. Executive and the Company also recognize that an important part of Executive’s duties will be to develop and continue goodwill for the Company and its Affiliates through personal contact with the customers of the Company and its Affiliates. Accordingly, in consideration of Executive’s employment with the Company pursuant to that certain Employment Agreement, dated as of _____, 2024 (the “Employment Agreement”), and other good and valuable consideration, the sufficiency of which is hereby acknowledged, Executive agrees that, while Executive is in the employ of the Company and for a period of 12 months following Executive’s termination of employment, Executive shall not, either on Executive’s own behalf or on behalf of any third party, directly or indirectly:
i.except on behalf of the Company or its Affiliates, directly or indirectly, either as a proprietor, equity holder, partner, joint venturer, investor, lender, principal, agent, officer, director, employee or otherwise (other than as a holder of not more than one percent (1%) of the total outstanding stock of (x) a publicly held company or (y) on a passive basis, a non-publicly held company held either directly or through investments in mutual, hedge or private equity funds), and whether through Executive’s own efforts or through the efforts of, or in any way assisting or employing the assistance of, any other person or entity (including, without limitation, any consultant or any person employed by or associated with any entity with whom Executive is employed or associated) engage in any Competitive Business (as defined below);
ii.recruit, solicit, encourage, or attempt to cause (or in any way assist another in recruiting, soliciting, encouraging, or attempting to cause) any employee, consultant, or contractor of or for the Company or its subsidiaries to terminate his/her/its employment or other relationship with the Company or its subsidiaries; provided, however, that the restrictions in this Section 2.a.ii and Section 2.a.iii below shall not prevent Executive from posting a general solicitation for employment or from hiring an individual who responds to a general solicitation for employment as long as Executive is not otherwise violating this Section 2.a.ii or Section 2.a.iii below;
iii.hire, employ, or seek to employ, or cause, recommend, or assist any competing individual or entity to hire, employ, or seek to employ, any person or entity who or that is (or was at any time within the one (1) year period prior to the termination of Executive’s employment) employed or engaged by the Company or its subsidiaries, other than consultants or contractors who do not provide services primarily to the Company or its subsidiaries (provided that, with respect to periods after Executive’s engagement by the Company has ceased, Executive solicits any such person or entity for a position that would result in such person or entity being directly involved in a Competitive Business or otherwise would allow or require that person or entity to use Confidential Information); or
iv.solicit, aid or induce any customer, client, supplier, licensee, advertiser, vendor or any other business relation of the Company or its subsidiaries to cease doing business with the Company or its subsidiaries or reduce the amount of business conducted with the Company or its subsidiaries, or directly interfere with the relationship between the Company or its subsidiaries and any customer, client, supplier, licensee, advertiser, vendor or any other business relation of the Company or its subsidiaries.
b.During and after employment, Executive agrees not to disparage the Company, or issue any communication, written or otherwise, that reflects adversely on or encourages any adverse action against the Company, except: (i) if testifying truthfully under oath pursuant to any lawful court order, deposition notice, or subpoena, (ii) otherwise responding to or providing disclosures required by law, (iii) as otherwise allowed by applicable law in the course of performing his duties for the Company, or (iv) in any litigation between Executive and Company. This includes any statement to or response to an inquiry by any member of the press or media, whether written, verbal, electronic or otherwise. In addition, Executive agrees that, while Executive is in the employ of the Company, Executive shall not, either on Executive’s own behalf or on behalf of any third party, directly or indirectly, participate in any expert network calls or similar discussions or meetings regarding the Company. Executive further agrees that, while employed by or after termination of Executive’s employment with the Company, Executive shall not, either on Executive’s own behalf or on behalf of any third party, directly or indirectly: (x) disclose, use, lecture upon, publish, or divulge to any third party, any of Company’s Confidential Information or information relating to or regarding any Company Inventions, except as may be required in connection with Executive’s work for Company, or as expressly authorized by the Chief Executive Officer or Board of Directors of the Company; or (y) use or allow to be used any trade or business name, or other words, symbol, logo, or means of identification which is similar to one used by the Company or any of its Affiliates. However, nothing in this Agreement limits Executive’s ability to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection, discussing terms and conditions of employment, or otherwise engaging in activity protected by Section 7 of the National Labor Relations Act (“NLRA”), to the extent the protections of the NLRA applies to Executive. Further, nothing in this Agreement prevents Executive from discussing or disclosing information about unlawful acts in the workplace, such as sexual assault, harassment, discrimination, retaliation or any other conduct that Executive has reason to believe is unlawful.
c.As used herein, “Competitive Business” means any business involved in developing, marketing or selling (i) access control and monitoring hardware related products that allow an organization and/or individual to control and monitor access to a workspace, living area, or any owned, leased, or rented property (or other material product lines adopted by the Company from time to time).
d.The parties agree that the relevant public policy aspects of covenants not to compete have been discussed, and that every effort has been made to limit the restrictions placed upon Executive to those that are reasonable and necessary to protect the Company’s legitimate interests. Executive acknowledges that, based upon Executive’s education, experience, and training, the restrictions herein will not prevent Executive from earning a livelihood and supporting Executive and Executive’s family at any time.
e.If any restriction set forth in this Section 2 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or geographic area, it shall be interpreted to extend over the maximum period of time, range of activities or geographic areas as to which it may be enforceable.
f.The restrictions contained in this Section 2 are necessary for the protection of the business and goodwill of the Company and/or its Affiliates and are considered by Executive to be reasonable for such purposes. Executive agrees that any material breach of this Section 2 will cause the Company and/or its Affiliates substantial and irrevocable damage and, therefore, in the event of any such breach, in addition to such other remedies which may be available, the Company shall have the right to seek specific performance, injunctive and other equitable relief.
3.Third Party Information. Executive acknowledges that Company has received and, in the future, will receive from third parties confidential or proprietary information (collectively, “Third Party Information”) subject to a duty on Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. During and after the term of employment, Executive shall hold Third Party Information in strict confidence and shall not disclose to anyone (other than Company personnel who need to know such information in connection with their work for Company) or use, Third Party Information, except in connection with Executive’s work for Company or unless expressly authorized by an officer of Company in writing.
4.Protection of Confidential Information; Recognition of Company’s Rights. Executive shall not, either during the Term or at any time after the termination of Executive’s employment with the Company for any reason, use, reproduce or disclose any Confidential Information to any person or entity for any reason, except as may be necessary in discharging Executive’s assigned duties as an employee of the Company, or as expressly authorized by the Chief Executive Officer or Board of Directors of the Company. Executive agrees that Executive shall use the utmost care to protect the secrecy and confidentiality of Confidential Information and take steps to ensure that unauthorized persons do not have or gain access to Confidential Information. Executive also agrees to obtain written approval by the Chief Executive Officer or Board of Directors of the Company before publishing or submitting for publication any material (written, oral, or otherwise) that incorporates any Confidential Information. Executive hereby assigns to Company any rights Executive may have or acquire in any and
all Confidential Information and recognizes that all Confidential Information shall be the sole and exclusive property of Company and its assigns.
5.No Improper Use of Information of Prior Employers and Others. Executive represents and warrants to the Company that Executive’s employment by Company does not and will not breach any agreement with any former employer, including any noncompete agreement or any agreement to keep in confidence or refrain from using information acquired by Executive prior to employment by Company. Executive further represents that Executive has not entered into, and shall not enter into, any agreement, either written or oral, in conflict with Executive’s obligations under this Agreement. Executive agrees to indemnify and hold harmless the Company for any liability the Company may incur as the result of the existence of any such agreements. During Executive’s employment by Company, Executive shall not improperly make use of, or disclose, any information or trade secrets of any of Executive’s former employers or other third party, nor shall Executive bring onto the premises of Company or use any unpublished documents or any property belonging to any former employer or other third party, in violation of any lawful agreements with that former employer or third party. Executive shall use in the performance of Executive’s duties only information that is generally known and used by persons with training and experience comparable to that of Executive, is common knowledge in the industry or otherwise legally in the public domain or is otherwise provided or developed by Company.
6.Inventions.
a.As used herein, the term “Invention” means any ideas, concepts, information, materials, processes, data, programs, know-how, improvements, discoveries, developments, designs, artwork, formulae, other copyrightable works, and techniques and all Intellectual Property Rights in any of the items listed above. The above notwithstanding, the Company shall not have any copyright or Intellectual Property Right to Executive’s personal photos, videos, any Inventions that are not a Company Invention (as defined below), or other works that are not used for commercial or business purposes related to the Company’s business. The term “Intellectual Property Rights” means all trade secrets, copyrights, trademarks, mask work rights, patents and other intellectual property rights recognized by the laws of any jurisdiction or country.
b.Executive has previously disclosed to Company a complete list of all Inventions that (a) Executive has, or has caused to be, alone or jointly with others, conceived, developed, or reduced to practice prior to the commencement of Executive’s employment by Company; (b) in which Executive has an ownership interest or which Executive has a license to use; and (c) that Executive wishes to have excluded from the scope of this Covenant Agreement (collectively referred to as “Prior Inventions”). If no Prior Inventions are listed in Schedule I, Executive warrants that there are no Prior Inventions. Executive agrees not to incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions (defined below) without Company’s prior written consent. If, in the course of employment with Company, Executive incorporates a Prior Invention into a Company process, machine or other work, Executive hereby grants Company a non-exclusive, perpetual, fully-paid and royalty-free, irrevocable and worldwide license, with rights to sublicense through multiple levels of sublicensees, to reproduce, make derivative works of, distribute, publicly perform, and publicly display in any form or medium,
whether now known or later developed, make, have made, use, sell, import, offer for sale, and exercise any and all present or future rights in, such Prior Invention.
c.Subject to subclause (e) below and except for Inventions that Executive has set forth in Schedule I, Executive hereby assigns and agrees to assign in the future (when any such Inventions or Intellectual Property Rights are first reduced to practice or first fixed in a tangible medium, as applicable) to Company all of Executive’s right, title, and interest in and to any and all Inventions (and all Intellectual Property Rights with respect thereto) made, conceived, or reduced to practice either alone or with others, in connection with Executive’s employment with the Company (“Company Inventions”).
d.During the period of Executive’s employment, Executive shall promptly and fully disclose to Company in writing (a) all Inventions authored, conceived, or reduced to practice by Executive, either alone or with others and (b) all patent applications filed by Executive or in which Executive is named as an inventor or co-inventor, in each case, with respect to those Inventions made, conceived, reduced to practice, or learned by Executive, either alone or with others, in connection with Executive’s employment with the Company.
e.Executive agrees that, as directed by the Company, Executive shall assign to a third party, including without limitation the United States, all of Executive’s right, title, and interest in and to any particular Company Invention.
f.During and after the period of Executive’s employment, Executive shall assist Company in every reasonable and proper way to obtain and enforce United States and foreign Intellectual Property Rights relating to Company Inventions in all countries. If the Company is unable to secure Executive’s signature on any document needed in connection with such purposes, Executive hereby irrevocably designates and appoints Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, which appointment is coupled with an interest, to act on Executive’s behalf to execute and file any such documents and to do all other lawfully permitted acts to further such purposes with the same legal force and effect as if executed by Executive.
g.Executive agrees that Executive will, in connection with his employment with the Company, comply with the Company’s Open Source Software Policy, as in effect from time to time.
h.Executive shall maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that is required by the Company) of all Company Inventions which records shall be available to, and remain the sole property of, the Company at all times.
7.Notification of New Employer. If Executive leaves the employ of Company, Executive shall notify Executive’s new employer of Executive’s rights and obligations under this Agreement, by providing a copy of this Agreement or otherwise, and the Company consents to Executive notifying any such new employer.
8.Export. Executive agrees not to export, directly or indirectly, any U.S. technical data acquired from Company or any products utilizing such data, to countries outside the United States, because such export could be in violation of the United States export laws or regulations. Product development and manufacturing work with international partners carried out on behalf of the Company in the course of performing Executive’s duties and not in violation of written Company Policies shall not be considered a violation of this Section 8.
9.Name and Likeness Rights. Executive hereby authorizes the Company to reasonably use, reuse, and to grant others the right to reasonably use and reuse Executive’s name, photograph, likeness (including caricature), voice, and biographical information, and any reproduction or simulation thereof, in any media now known or hereafter developed (including but not limited to film, video, and digital, or other electronic media), both during and after Executive’s employment, for reasonable purposes that are reasonably related to Executive’s services or prior services to the Company, including reasonable use related to promoting the Company’s business or the products to which Executive’s services or prior services relate.
10.Exceptions. Notwithstanding anything herein to the contrary, Executive shall be permitted to disclose Confidential Information (a) to Executive’s legal and financial advisors, (b) as required by applicable law, a court order or subpoena, or a governmental or regulatory investigation or (c) as reasonably appropriate in connection with any litigation between Executive and the Company or any of its subsidiaries or affiliates. Notwithstanding any other provision of this Agreement, Executive has been provided with notice of immunity rights under the Defend Trade Secrets Act, which provides: (i) an individual shall not be held criminally or civilly liable under any federal or state trade secret law for disclosure of a trade secret that (A) is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and (2) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal, and (ii) an individual who files 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 (A) files any document containing the trade secret under seal and (B) does not disclose the trade secret, except pursuant to court order. Confidential Information shall not include information that is generally known to the public or within the Company’s industry, other than as a result of Executive’s breach of this Agreement or any other agreement with the Company.
11.Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.
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