The “Internet of Things” is rapidly expanding, and most households have at least one physical object which automatically collects and exchanges data wirelessly. Manufacturers of smart devices need to ensure that security vulnerabilities and privacy concerns are rapidly addressed in order to escape the scrutiny of the Federal Trade Commission. Law360 interviewed privacy experts, including our very own Mike Feldman, regarding ways for smart device makers to ensure that their information security and privacy practices meet industry standard practices. Mike recommended ensuring that employees have robust information security and privacy policies, are trained to identify risks, and are prepared to handle data breaches and other disasters. As Mike noted: Small companies used to believe that hackers wouldn’t be interested in their customers’ data but reality has shown that is no longer the case, Feldman said.“Now almost every industry has been hacked,” Feldman said. “The defense that ‘I thought it wouldn’t happen to me’ isn’t really a defense.” Read the whole article: 3 Ways Internet Of Things Makers Can Avoid The FTC’s Ire (subscription may be required)

On September 15, 2016, the New Jersey Senate unanimously approved a bill that restricts the collection and use of personal information by retailers for certain purposes. The bill is known as the “Personal Information and Privacy Protection Act.” [https://legiscan.com/NJ/text/S1913/id/1419389/New_Jersey-2016-S1913-Amended.html] The law provides that a retailer may only scan a person’s “identification card” (i.e., a driver’s license or similar identification) for the following purposes: To verify the authenticity of the identification or to verify the identity of the individual where payment is made by other than cash or a refund is sought; The verify the individual’s age in connection with the purchase of age-restricted goods (i.e., alcohol); To prevent fraud or criminal activity in connection with the return of goods and the business uses a fraud prevention service company or system; To establish or maintain a contractual relationship; To record, retain or transmit information required by law; To transmit information to a consumer reporting agency, financial institution or debt collector to be used as permitted by the federal Fair Credit Reporting Act, the Gramm-Leach-Bliley Act and the Fair Debt Collection Practices Act; To record, retain or transmit information by a covered entity governed by the medical privacy and security rules under HIPPA. Where such collection is permitted, the retailer may only collect the person’s name, address, date of birth, the State issuing the identification card and the identification card number. No retailer may retain information set forth in 1 and 2 above. Any information retained in 3-7 above shall be securely stored, and any breach promptly reported to the Division of State Police in the Department of Law and Public Safety and any affected person. No such information may be provided to a third party for any purpose (including marketing, etc.) not expressly provided in the law. Violation of the law subjects the retailer to criminal and civil liability. -- Michael J. Feldman

A phantom grant is a contract right to receive a percentage of the sale proceeds upon the sale of the company. It tracks the value of the equity of the company, but is not equity. It does give them the “full value” of the company, unless drafted in a manner to exclude it. The upside is that the recipient is not an equity holder (no voting rights, no right to share in the profit of the company, no visibility to the finances) but it subject to dilution on the same basis as the equity holders, the downside is that if the recipient is not employed at the time of the sale event, they get nothing. That makes it highly risky for the recipient. In short, it’s a sale bonus that tracks the value of the equity of the company. If the employee is not expecting to “be an owner” then it works great. If the employee wants to “feel like a partner”, then this will not give them that feeling. It’s a good solution if it fits the expectations of the employee and the goals of the company. -- Kurt Olender

Clients typically have a general understanding of what steps have to happen in what order in a deal. Sometimes, though, when that general understanding gets translated into specific words, things don’t always match up. Recently, the folks handling a $1.3 billion loan transaction for Chesapeake Energy ended up with words that didn’t match their expectations. When we plan for things like advance notice or deadlines, pulling out the calendar seems like overkill. But clarity is important to avoid confusion. Many of the provisions I draft use a single trigger date from which to measure the following obligations as a way to avoid mismatched definitions in the first place. – Rick Colosimo

In September 2016, the Oxford English Dictionary (“OED”) added the word “fuhgeddaboudit”, among others, as part of its quarterly update. The term is defined as: “In representations of regional speech (associated especially with New York and New Jersey): ‘forget about it’, used to indicate that a suggested scenario is unlikely or undesirable.” However, anyone who has seen the movie Donnie Brasco starring Johnny Depp (“Depp”), knows that the OED definition does not account for all uses of the term. Depp played an undercover FBI agent who infiltrated a New York mafia family. When Depp’s character was asked by his FBI colleagues what “fuhgeddaboudit” meant, he gave them several responses. He said the term could be used to: (i) agree with someone, (ii) disagree with someone, (ii) say something’s the greatest in the world, (iv) tell someone to go to hell, or lastly, (v) forget about it. When entering into an agreement, often times parties will reference a term but do not formally define it. Why? Each party thinks they know what it means. As illustrated by the various uses and interpretations of fuhgeddaboudit above, it is best to clearly define terms in an agreement to ensure it reflects the parties’ understanding. Otherwise, one could find themselves in a situation. Capisce? Fuhgeddaboudit!!! -- Donna H. Hartman

Effective March 1, 2017, all banks and entities providing insurance in New York State will be required to meet new, minimum cyber-security standards, and certify compliance each February 15 after internal risk assessments are performed. While some larger entities may already meet these standards, many will not. Entities which also engage in business in other states, such as California, or overseas in areas such as the EU, are expected to adopt best-industry security practices to assure compliance across all applicable jurisdictions, rather than employ different practices in different jurisdictions. – Michael J. Feldman

The Delaware Online Privacy and Protection Act (“DOPPA”) became effective on January 1, 2016. This new law requires compliance in three major areas: (1) conspicuous posting of a compliant privacy policy; (2) advertising and marketing to children; and (3) enhancing the privacy protections of users of digital books (“e-books”). Why should a business be concerned with a Delaware law if it is not based in Delaware? DOPPA is applicable to all websites and mobile applications (“applications”) that are accessible to Delaware consumers. Because of the nature of the Internet, all domestic and international websites and applications can potentially (and many likely do) reach Delaware consumers. Who is covered by DOPPA? DOPPA apples to every “operator” of an “Internet service,” which means the owner of “any service, system, website, application or program, or portion thereof, which accesses the Internet or provides a user with access to the Internet.” Accordingly, DOPPA is applicable to all website owners and application owners, among others. What are the relevant definitions under DOPPA? Under DOPPA, “personally identifiable information” (“PII”) is defined as “any information about an individual that, individually or in combination with other information, can be used to distinguish or trace the identity of the individual.” PII includes an individual’s name, signature, physical characteristics or description (including a photograph), street address, phone number, social security number, school or education history, passport number, and other similar information. DOPPA defines “marketing or advertising” as “making a communication or arranging for a communication to be made, in exchange for compensation, about a product or service the primary purpose of which is to encourage recipients of the communication to purchase or use the product or service.” Thus, if a website or application is selling goods or marketing the goods of others, including through any form of paid advertising on the website or application, it would meet this definition. What are the new privacy policy requirements? DOPPA requires a website or application’s privacy policy to be conspicuously available. The new law specifies that a privacy policy is “conspicuously available” when it satisfies one of the following criteria: (1) it is the home page or the first significant page after entering the website; (2) it is accessible via a distinguishable icon that hyperlinks to the web page on which the privacy policy is posted, so long as the icon is located on the home page or the first significant page after entering the website, and if the icon contains the word “privacy”; (3) it is accessible via a text link that hyperlinks to a web page on which the actual privacy policy is posted, if the text link is located on the home page or first significant page after entering the website, and if the text link includes the word “privacy,” and has other characteristics that that call attention to the link; (4) it is accessible via any other functional hyperlink that is displayed such that a reasonable individual would notice it; or (5) with respect to an Internet service that is not a website, it is otherwise reasonably accessible and visible to users of such Internet service. The privacy policy must: (1) identify the categories of PII that it collects and the types of third parties with which the PII will be shared, (2) describe how the website or application operator notifies its users of any changes to the privacy policy, (3) identify the effective date of the current policy, and (4) disclose how the operator responds to “do not track” signals from web browsers, including whether third parties can track a user's activities over time and across different websites and/or applications when the user visits the websites and/or applications covered by the policy. In addition, if the website or application operator has a process by which its users can review and request changes to their PII, the privacy policy must describe that process. What are the New Marketing and Advertising Requirements With Respect to Children? DOPPA prohibits websites and applications that are directed to children from advertising or marketing certain products and services, including alcohol, tobacco, firearms, dietary supplements and sexually-oriented material. Unlike the current restrictions in the federal Children's Online Privacy Protection Act that regulate online content directed to those under the age of 13, DOPPA defines children as anyone under the age of 18, thereby casting a significantly wider net. Additionally, to ensure that children are not exposed to inappropriate advertising content, even websites and applications that are not directed to children, but which have “actual knowledge” that children access the website or application, must refrain from engaging in targeted advertising of any of the prohibited products or services if the marketing or advertisement is based on the child's PII. Furthermore, the operator of such a website or application must not disclose or compile a child's PII if the operator knows that the child's PII will be used to market or advertise any of the prohibited products or services. What are the New Digital Book Service Information Disclosure Requirements? DOPPA also imposes numerous restrictions on the disclosure of PII and other personal information by providers of e-books and other digital book services. These restrictions prohibit the disclosure of personal information regarding the users of digital book services to law enforcement entities, governmental entities and other third parties, except in certain limited circumstances. Disclosure of a user’s personal information to law enforcement agencies is permitted if it is pursuant to any lawful method by which the agency is permitted to obtain such information, including in instances where there is imminent danger of death or serious injury. However, disclosure to government agencies and other third parties generally require the digital book service provider to give the user whose information will be disclosed an opportunity to contest the disclosure. In addition, absent certain limited exemptions, DOPPA requires digital book service providers to post online an annual report that sets forth information about the provider's disclosures of its users' personal information. What are the consequences for failing to comply with these new requirements? If a company fails to comply with DOPPA, the Attorney General of the Department of Justice has specific statutory authority to prosecute violations, successful prosecution of which will result in the imposition of civil and criminal penalties, including fines. - Angelina Bruno-Metzger

As business lawyers, we frequently get questions from our clients about types of equity incentives and valuing equity: Can an employee have options granted at $0.01? Can we give “free” stock to a new executive? The short answer is that yes, a company can do either of those things. However, because of often-overlooked tax consequences, your new executive or employee is going to end up unhappy and will probably blame you, which is a less than ideal way to (literally and figuratively) invest in human capital.Companies often mean well but get the wrong advice. While trying to give an employee an extra incentive by lowering the cost of new stock (by granting it outright rather than having the employee buy it) or by reducing the strike price, you will instead end up giving the employee a tax bill from the IRS. In our line of work, we call that a major dis-incentive. To illustrate what happens, let’s compare equity compensation to cash. If you give an employee a $20 bonus, that’s income. Now, let’s imagine you grant the employee a share of stock worth $20, even if it’s subject to vesting. The IRS sees these two scenarios as equals and sees “here’s something worth $20” as the equivalent of “here’s $20” and taxes it accordingly. So granting (giving) equity is taxed the same as giving cash. (To avoid this issue, in most scenarios we recommend the use of options instead of equity grants. In fact, this “pay taxes in cash today on non-cash ‘paper income’” problem is why option grants exist.) Similarly, if you sell property to an employee at less than its value, the IRS sees also income, which shows us the path out of this employee tax mess. For example, if you sell the employee a $20 bill for $10, the IRS sees $10 of income and will levy tax. But what if you just give the employee the right to buy a $20 bill for $10? That $10 “discount” on the $20 value is treated as by the IRS as $10 of current income recognized at the time of the grant of the right. The same analysis applies to a share of stock (or unit of an LLC). If you give the employee the right to buy for $5 a share that is “worth” $20, the IRS sees $15 of taxable income at the time of the original grant. That is THE major reason why granting options below FMV is virtually never done: it creates very unpleasant tax consequences. To illustrate – as a company, you want to entice a new CFO to come on board and to do so, you grant her 100,000 options at $0.01 when the FMV is $1.00. On paper this seems extremely generous but quickly leads to a tax catastrophe. Without any regard to vesting, without regard for the fact that the option hasn’t been exercised, without regard for the fact that the option securities haven’t been sold, and without regard for the possibility that the FMV might go down in the future, the IRS will see $99,000 of taxable income at that time and require your employee to write them a check for about $30,000 - $40,000 of real money to pay taxes on the paper profits. Let us give you a #protip here: employees really hate that. To avoid this issue, we regularly advise people to issue options at fair market value. At grant, if the price of the option is the same as the FMV of the stock (you have a 5 year right to buy that $20 bill for $20), the IRS sees no gain (for the typical small company; large public companies end up different because of complicated Nobel Prize math – we’re going to skip that topic). The IRS evaluates the present right at $0 and an employee can typically avoid taxes until the option grant is exercised. For more information, contact Rick Colosimo or Christian Jensen.

Question Presented: What should LLCs do in preparation of the new IRS partnership tax audit and assessment rules? Short Answer As of December 31, 2017, the IRS will require all entities taxed as partnerships to pay for imputed taxes on partners for prior tax years at the partnership level. Most LLCs elect to be treated as partnerships for tax purposes. These LLCs and other partnerships should: ensure their operating agreement provides that former members are required to indemnify the company for assessed taxes paid by the company in connection with imputed underpayments of taxes by members; and consult with legal counsel and accountants for advice on their ability to opt out of the new rule and whether an opt-out is appropriate; 3) prepare to comply with the new rule and select a Partnership Representative. New Partnership Audit Rules Beginning December 31, 2017, the IRS will administer new laws (26 USC §6221) governing audits and assessments of entities taxed as partnerships. A partnership, for federal tax purposes, is any company that elects to be taxed as a partnership, has more than one partner or member and is not a corporation. The new law applies to all entities taxed as partnerships, which includes most LLCs. It states: “[a]ny adjustment to items of income, gain, loss, deduction, or credit of a partnership … (and any partner’s distributive share thereof) shall be determined, any tax attributable thereto shall be assessed and collected, and the applicability of any penalty … [that] relates to an adjustment to any such item or share shall be determined, at the partnership level….” This means that adjustments pertaining to an LLC’s tax items in connection with the company will be applied and collected at the company level. Historically, adjustments were imposed at the member level, and unaffected members were generally not exposed to loss because of any such adjustment. The new law will expose current members to increased, adjustment-related tax losses at the time the adjustment is due, without regard for whether or not the members were involved with the company during the period to which the adjustment relates. In other words, the new law imposes tax liability on the company, and thus indirectly on all current members, even if the current members did not hold equity in the company during the period in which an imputed tax underpayment occurred. Partnership Representative The new law replaces the traditional member or partner designee to address such adjustments with the IRS (the “Tax Matters Partner”) with a new position (the “Partnership Representative”). The Partnership Representative (which, unlike the Tax Matters Partner, does not have to be a partner of the company) has the sole authority and responsibility to administer the company’s tax matters. Even if not a partner, a Partnership Representative must have a “substantial presence in the United States.” Opt-Out LLCs or partnerships required to submit 100 or fewer K-1s during the tax year may elect to opt-out of the rule changes on an annual basis, in accordance with 26 USC §6221(b). The opt-out provision, however, only applies if all members or partners are individuals, estates of a deceased partner, or certain S or C corporations. Accordingly, not all LLCs will be eligible to opt-out. Suggested Response We recommend implementing language in every operating agreement that ensures the partnership is, and individual partners are, protected to the greatest extent practicable. An operating agreement should include language that will permit the company to deduct adjusted tax liability, when applicable, from future distributions to the responsible member. The agreement should also allow the company to seek indemnification from any former members to whom any imputed underpayments may be properly attributed. Opting out, if permitted, will likely be advantageous. An LLC or partnership that cannot opt out should discuss plans for compliance with the new audit regime with its attorneys and accountants, and begin to identify a designee to name as Partnership Representative. The new law will apply to all partnerships and all entities taxed as partnerships, which includes most LLCs. Even though this memo focuses on LLCs because they are more common, partnerships are equally affected and will have to consider the same issues as LLCs.

The UBER developments highlight an absolutely critical aspect of leadership inmanagement. If you don't clean your own house, someone can very well do it foryou and you may not like the results. Let's face facts people. NO ONE cares more about your business or your careerthan you. Once it gets to the point that someone else weighs in on your judgmentor critical thinking on the workplace environment, you may very well lose controlof your own business or of your place within the business. This is why being proactive and putting the right systems in place from DAY ONE isso essential. Take care of your human capital! Develop policies and protections forthe growth of the workforce. Make integration (onboarding, mentorship and HRresource-driven techniques) a mantra. Be a great employer. Not an "uber" one. - Howard Matalon

Legislative Status: The California Senate passed SB 790 and it is now before the California Assembly Committee on Health (next hearing is June 27, 2017), having been amended by the Assembly on June 13, 2017. If adopted by the Assembly with amendments from the version passed by the Senate, the Senate will then have to “concur” on such a version before it is passed by the legislature and sent to the Governor for final adoption and incorporation into the California Health and Safety Code. Summary: This bill prohibits a manufacturer of a prescribed product (or its agent) from offering or giving a gift to a health care provider. A gift is anything of value provided for free and includes any payment, food, entertainment, travel, subscription, advance, service, or anything else of value, UNLESS it falls under the allowable expenditure exception (see below Key Provisions) or the cost of such gift is paid back by the health care provider at fair market value (since advances are prohibited, fair market value may include interest). The bill also prohibits a manufacturer of a prescribed product, or an entity on its behalf, from providing a fee, payment, subsidy, or other economic benefit to a health care provider in connection with the provider’s participation in clinical trials or research projects, except as provided under paragraph (a)(3) (see below Key Provisions) relating to the allowable expenditure conditions applicable to clinical trials and research projects. Other exceptions to the above prohibitions are as follows: Samples for free distribution to patients of a prescribed product or reasonable quantities of an OTC drug, medical food, or infant formula. Provision, distribution, or receipt of peer-reviewed academic, scientific, or clinical articles and other items serving a genuine educational function for the benefit of patients. Scholarship or other support for medical students, residents, and fellows to attend a Conference (defined below) of a national, regional or specialty medical or other professional association if such recipient is selected by the association. Rebates and discounts for prescribed products provided in the ordinary course of business. FDA approved labels for prescribed products. Provision to a free clinic of financial donations or free prescription drugs, OTC drugs, biological products, combination products, medical food, or infant formula. Free or discounted prescribed products pursuant to a manufacturer sponsored or funded patient assistance program. Fellowship salary support provided through grants for manufacturers if (i) grants are applied for by an academic institution or hospital; (ii) the institution or hospital selects the recipient fellows; (iii) the manufacturer imposes no further demands or limits on the institution’s, hospital’s, or fellow’s use of the funds; AND (iv) fellowships are not named for a manufacturer and no individual recipient’s fellowship is attributed to a particular manufacturer of prescribed products. Key Provisions: As amended, SB 790, if passed and approved by the Governor in its current form, would codify the following into law. SB 790 provides two key provisions, each of which has important exceptions: “A manufacturer of a prescribed product or an agent thereof, shall not offer or give a gift to a health care provider.” Emphasis added. “Except as described in paragraph (3) of subdivision (a) … a manufacturer or an entity on behalf of a manufacturer shall not provide a fee, payment, subsidy, or other economic benefit to a health care provider in connection with the provider’s participation in research.” Emphasis added. Exceptions to Key Provisions: The term “gift” is defined broadly, but does include key exceptions. A “gift” means either (i) “[a]nything of value provided for free to a health care provider” or (ii) “[a] payment, food, entertainment, travel, subscription, advance, services, or anything else of value provided to a health care provider, unless it is an allowable expenditure as defined in subdivision (a) or the health care provider reimburses the cost at fair market value.” Emphasis added. An “allowable expenditure” (exceptions to prohibited gifts in key provision #1) means any of the following: Payment by a manufacturer[1] of a prescribed product to the sponsor of a significant educational, medical, scientific, or policymaking conference or seminar (“Conference”) if ALL of the following conditions are met: The payment is not made directly to a health care professional or pharmacist. Funding is used solely for bona fide educational purposes except the sponsor may, in its discretion, apply some or all of the funding to provide meals and food for all conference participants. All program content is objective, free from industry control, and does not promote specific products. Honoraria and payment of expenses of a health care professional who serves on the faculty at a Conference if ALL of the following conditions are met: The honoraria or payment is governed by an explicit contract with specific deliverables that are restricted to medical issues, not marketing activities.[2] Consistent with federal law, the content of the presentation is determined by the health care professional. For (1) a bona fide clinical trial or, alternatively, (2) a research project that constitutes a systematic investigation, is designed to develop or contribute to general knowledge, and reasonably can be considered to be of significant interest or value to scientists or health care professionals working in the particular field of inquiry, all of the following must be met[3]” (emphasized above as “paragraph (3)”): “Compensation for services provided by investigators, health care professionals, or health care entities in connection with the bona fide clinical trial or research project. Expenses paid on behalf of investigator, health care professionals, or health care entities in connection with the bona fide clinical trial or research project. Expenses paid by the investigators, health care professional, or health care entities in connection with the bona fide clinical trial or research project. Materials and supplies used in connection with the bona fide clinical trial or research project.” “Royalties and licensing fees paid to health care providers in return for contractual rights to use or purchase a patented or otherwise legally recognized discovery for which the health care provider holds an ownership right.” Payment of reasonable expenses of an individual related to an interview of such individual by a manufacturer in connection with a bona fide employment opportunity or for health care services on behalf of the manufacturer. Meals for a health care provider that do not exceed $250 per person, per year. The pertinent exception that applies to key provision #2 is as follows: For (1) a bona fide clinical trial or, alternatively, (2) a research project that constitutes a systematic investigation, is designed to develop or contribute to general knowledge, and reasonably can be considered to be of significant interest or value to scientists or health care professionals working in the particular field of inquiry, all of the following must be met” (see above and footnote 3): “Compensation for services provided by investigators, health care professional, or health care entities in connection with the bona fide clinical trial or research project. Expenses paid on behalf of investigator, health care professionals, or health care entities in connection with the bona fide clinical trial or research project. Expenses paid by the investigators, health care professional, or health care entities in connection with the bona fide clinical trial or research project. Materials and supplies used in connection with the bona fide clinical trial or research project.” ________________________________________________________________ [1] Under the law, a manufacturer “means a pharmaceutical manufacturer, biological product manufacturer, or any other person engaged in the production, preparation, propagation, compounding, processing, marketing, packaging repacking, distributing, or labeling of prescribed products.” Emphasis added. Manufacturer does not include a wholesale distributor of biological products, retailers, or pharmacists. [2] “’Marketing’ means promoting, detailing, or any activity that is intended to be used or is used to influence sales or market share or to evaluate the effectiveness of a professional force.” As drafted, the language creates ambiguity between “medical issues” and “marketing activities” because often times deliverables from a provider’s services at a Conference may be focused on medical issues for marketing activities. Any administrative regulations promulgated pursuant to this statute will likely make a distinction to help guide interested parties. In the meantime, if passed, manufacturers (as defined by SB 790) should not influence the content of Conference presentations and any agreement for such deliverables should restrict such presentations to medical issues, which should focus on data results, treatment, and clinical analyses with no opinionated or emotional commentary as to the greatness of particular products at issue. [3] Actual language as drafted: “For a bona fide clinical trial or a research project that constitutes a systematic investigation, is designed to develop or contribute to general knowledge, and reasonably can be considered to be of significant interest or value to scientists or health care professionals working in the particular field of inquiry, all of the following…” The language here is unclear on its face as to whether the language following “research project” also applies to clinical trials. However, the law goes on to define “Bona fide clinical trial” as an “FDA-reviewed clinical trial that constitutes research…that can be reasonably considered to be of interest to scientists or health care professionals in the particular field of inquiry.” Thus, the clinical trial exception is not qualified by the language following “research project” (e.g., “develop or contribute to general knowledge”). Craig Bronsnick

Prevalence of executive employment agreements – the competition for attracting talent in rapidly growing IT/SaaS companies is fierce and retention is a key issue for companies in the industry. For C-Suite and key executives (I.e. VP/Exec Manager level) the incidence of employment agreement is very high: +/- 90% have employment agreements with protective provisions in favor of the employee: definition of “cause”, often definition of “good reason” (for the employee to terminate due to the company changing the terms of employment, and retain severance), and severance. The quid-pro is that the company obtains IP assignment, non-compete, non-disclosure and non-solicitation provisions and an employment release upon termination of the executive. Typical provisions in executive employment agreements – two basic categories are covered in an employment agreement: protective provisions for the company and protective provisions for the executive: Protective provisions for the company: Non-compete – the typical duration for C-Suite ranges from a low of 12 months and a high of 24 months. The non-compete is limited to: (i) direct competitors if the SaaS company is in a narrow space, and/or (ii) diverting customers if the SaaS company is in a broad space [and without the restriction on working for competitors]. The typical duration for key executives is 12 months, with certain positions justifying 18 months (I.e. Technology related most often) Non-solicitation/hire – restriction on hiring or soliciting employees of the company. 12-18 months is the typical duration. Employment Claims Release – requirement that the employee sign an employment release upon termination in exchange for severance. Protective provisions for the executive: Definition of cause – by providing a definition for cause, the circumstances under which an executive can be terminated are limited. Typical definition limits cause to malfeasance, illegal acts, injuring the company, failure to perform duties not cured within 30 days. Definition of good reason – this is not as prevalent and is typically limited to the C-Suite. Good reason is the circumstances under which the executive can terminate their employment and still receive severance. Typical definition is reduction in role, title, compensation and relocation, without the consent of the C-Suite executive. Severance – severance is typically paid out over time in accordance with payroll policy: C-Suite – severance is typically between 6 months and 12 months, with most highly sought executives receiving between 8-12 months. Executives – severance is typically between 3 months and 6 months. Severance typically terminates if the employee obtains a new position. Kurt D. Olender