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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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84-1370538
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(State or other jurisdiction of
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(I.R.S. employer
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incorporation or organization)
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Identification No.)
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8200 E. Maplewood Ave., Suite 100
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Greenwood Village, Colorado
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80111
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(Address of principal executive offices)
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(Zip code)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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PART I - FINANCIAL INFORMATION
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ITEM 1.
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FINANCIAL STATEMENTS
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Page
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Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2016 and 2015 (Unaudited)
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Consolidated Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015
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Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 (Unaudited)
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Notes to Consolidated Financial Statements (Unaudited)
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ITEM 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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ITEM 3.
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Quantitative and Qualitative Disclosures About Market Risk
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ITEM 4.
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Controls and Procedures
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PART II - OTHER INFORMATION
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ITEM 1A.
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Risk Factors
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ITEM 6.
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Exhibits
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SIGNATURES
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•
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certain statements, including possible or assumed future results of operations, in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;
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•
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any statements regarding the prospects for our business or any of our services;
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•
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any statements preceded by, followed by or that include the words “may,” “will,” “should,” “seeks,” “believes,” “expects,” “anticipates,” “intends,” “continue,” “estimate,” “plans,” “future,” “targets,” “predicts,” “budgeted,” “projections,” “outlooks,” “attempts,” “is scheduled,” or similar expressions; and
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•
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other statements regarding matters that are not historical facts.
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Three Months Ended March 31,
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||||||
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2016
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2015
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||||
Revenue
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$
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78,035
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$
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63,653
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Cost of services
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69,647
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|
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57,536
|
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||
Gross profit
|
8,388
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|
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6,117
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||
Selling, general and administrative expenses
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7,781
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8,061
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Restructuring charges
|
12
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|
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806
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Operating income (loss)
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595
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(2,750
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)
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Interest and other (expense) income, net
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(439
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)
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(238
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)
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Income (loss) before income taxes
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156
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(2,988
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)
|
||
Income tax expense
|
125
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|
|
187
|
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Net income (loss)
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$
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31
|
|
|
$
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(3,175
|
)
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Other comprehensive income (loss), net of tax:
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156
|
|
|
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|||
Foreign currency translation adjustments
|
21
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|
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(67
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)
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Change in fair value of derivative instruments
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258
|
|
|
8
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Comprehensive income (loss)
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$
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310
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$
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(3,234
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)
|
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||||
Net income (loss) per common share - basic
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$
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—
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$
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(0.21
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)
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Weighted average common shares outstanding - basic
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15,699
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15,417
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Net income (loss) per common share - diluted
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$
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—
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$
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(0.21
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)
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Weighted average common shares outstanding - diluted
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15,956
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15,417
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March 31,
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December 31,
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||||
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2016
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2015
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||||
ASSETS
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Current assets:
|
|
|
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Cash and cash equivalents
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$
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830
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$
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2,626
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Trade accounts receivable, net
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53,879
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57,940
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Prepaid expenses
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2,410
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2,019
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Other current assets
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1,488
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1,433
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Total current assets
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$
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58,607
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$
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64,018
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Property, plant and equipment, net
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27,751
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30,364
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Long-term deferred income tax assets
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378
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|
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479
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Intangible assets, net
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7,551
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7,847
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Goodwill
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9,077
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9,148
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Other long-term assets
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2,468
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2,948
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Total assets
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$
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105,832
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$
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114,804
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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|
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Accounts payable
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$
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8,897
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$
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9,470
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Accrued liabilities:
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|
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Accrued employee compensation and benefits
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9,530
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12,066
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Other accrued liabilities
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3,103
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3,103
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Line of credit
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26,855
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32,214
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Derivative liability
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113
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|
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524
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Other current debt
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3,604
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3,497
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Other current liabilities
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1,297
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1,560
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Total current liabilities
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53,399
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|
62,434
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Deferred rent
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1,569
|
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1,629
|
|
||
Deferred income tax liabilities
|
317
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|
|
393
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|
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Other debt
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7,548
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8,189
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Other liabilities
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235
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|
|
234
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|
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Total liabilities
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63,068
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72,879
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Commitments and contingencies
|
|
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Stockholders’ equity:
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Common stock, 32,000,000 non-convertible shares, $0.01 par value, authorized; 15,712,719 and 15,699,398 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively
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$
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157
|
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$
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157
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Additional paid-in capital
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78,967
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|
|
78,439
|
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Accumulated other comprehensive loss
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(71
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)
|
|
(351
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)
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Accumulated deficit
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(36,289
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)
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(36,320
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)
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Total stockholders’ equity
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$
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42,764
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$
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41,925
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Total liabilities and stockholders’ equity
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$
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105,832
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$
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114,804
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Three Months Ended March 31,
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||||||
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2016
|
|
2015
|
||||
Operating Activities
|
|
|
|
|
|
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Net income (loss)
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$
|
31
|
|
|
$
|
(3,175
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
|
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Depreciation and amortization
|
3,230
|
|
|
3,036
|
|
||
Share-based compensation expense
|
489
|
|
|
496
|
|
||
Amortization of deferred gain on sale leaseback transaction
|
—
|
|
|
(57
|
)
|
||
Deferred income taxes
|
51
|
|
|
26
|
|
||
Income tax benefit related to other comprehensive income
|
(166
|
)
|
|
—
|
|
||
Changes in operating assets and liabilities:
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|
|
|
|
|
||
Trade accounts receivable, net
|
4,078
|
|
|
270
|
|
||
Prepaid expenses and other assets
|
362
|
|
|
(1,561
|
)
|
||
Accounts payable
|
(268
|
)
|
|
1,441
|
|
||
Accrued and other liabilities
|
(2,943
|
)
|
|
46
|
|
||
Net cash provided by operating activities
|
4,864
|
|
|
522
|
|
||
|
|
|
|
||||
Investing Activities
|
|
|
|
|
|
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Purchases of property, plant and equipment
|
(411
|
)
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(3,509
|
)
|
||
Cash paid for acquisition of businesses
|
(217
|
)
|
|
(234
|
)
|
||
Net cash used in investing activities
|
(628
|
)
|
|
(3,743
|
)
|
||
|
|
|
|
||||
Financing Activities
|
|
|
|
|
|
||
Proceeds from the issuance of common stock
|
39
|
|
|
52
|
|
||
Proceeds from line of credit
|
76,400
|
|
|
66,082
|
|
||
Principal payments on line of credit
|
(81,759
|
)
|
|
(61,436
|
)
|
||
Principal payments on other debt
|
(700
|
)
|
|
(291
|
)
|
||
Net cash (used in) provided by financing activities
|
(6,020
|
)
|
|
4,407
|
|
||
Effect of exchange rate changes on cash
|
(12
|
)
|
|
(27
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
(1,796
|
)
|
|
1,159
|
|
||
Cash and cash equivalents at beginning of period
|
$
|
2,626
|
|
|
$
|
5,306
|
|
Cash and cash equivalents at end of period
|
$
|
830
|
|
|
$
|
6,465
|
|
|
Amount
|
||
Accounts receivable
|
$
|
9,441
|
|
Fixed assets
|
2,649
|
|
|
Prepaid expenses and other assets
|
201
|
|
|
Customer relationships
|
5,240
|
|
|
Trade name
|
850
|
|
|
Goodwill
|
4,941
|
|
|
Accounts payable
|
(5,503
|
)
|
|
Other accrued expenses and current liabilities
|
(327
|
)
|
|
Total preliminary purchase price allocation
|
$
|
17,492
|
|
|
|
Three Months Ended March 31,
|
||
|
|
2015
|
||
Revenues
|
|
$
|
79,216
|
|
Net loss
|
|
$
|
(5,120
|
)
|
Net loss per common share - basic and diluted
|
|
(0.33
|
)
|
|
Weighted average common shares outstanding - basic and diluted
|
|
15,417
|
|
|
|
Gross Intangibles
|
|
Accumulated Amortization
|
|
Net Intangibles
|
|
Weighted Average Amortization Period (years)
|
||||||
Developed technology
|
|
$
|
390
|
|
|
$
|
146
|
|
|
$
|
244
|
|
|
3.00
|
Customer relationships
|
|
7,550
|
|
|
1,112
|
|
|
6,438
|
|
|
4.02
|
|||
Trade names
|
|
1,050
|
|
|
181
|
|
|
869
|
|
|
3.07
|
|||
|
|
$
|
8,990
|
|
|
$
|
1,439
|
|
|
$
|
7,551
|
|
|
3.88
|
|
|
|
||
Year Ending December 31,
|
|
Amount
|
||
Remainder of 2016
|
|
$
|
855
|
|
2017
|
|
1,140
|
|
|
2018
|
|
1,139
|
|
|
2019
|
|
1,131
|
|
|
2020
|
|
1,128
|
|
|
Thereafter
|
|
2,158
|
|
|
Facility-Related and Employee-Related Costs
|
|||||||||||
|
|
Domestic
|
|
Nearshore
|
|
Total
|
||||||
Balance as of December 31, 2015
|
|
$
|
802
|
|
|
$
|
112
|
|
|
$
|
914
|
|
Expense (reversal)
|
|
(110
|
)
|
|
—
|
|
|
(110
|
)
|
|||
Payments
|
|
(376
|
)
|
|
(23
|
)
|
|
(399
|
)
|
|||
Balance as of March 31, 2016
|
|
$
|
316
|
|
|
$
|
89
|
|
|
$
|
405
|
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
|
2016
|
|
2015
|
||||||||||
|
|
Revenue
|
|
Percentage
|
|
Revenue
|
|
Percentage
|
||||||
T-Mobile USA, Inc.
|
|
$
|
16,017
|
|
|
20.5
|
%
|
|
$
|
18,089
|
|
|
28.4
|
%
|
Sprint / United Management Co.
|
|
$
|
10,871
|
|
|
13.9
|
%
|
|
$
|
—
|
|
|
—
|
%
|
AT&T Services, Inc. and AT&T Mobility, LLC
|
|
$
|
10,487
|
|
|
13.4
|
%
|
|
$
|
10,740
|
|
|
16.9
|
%
|
Comcast Cable Communications Management, LLC
|
|
$
|
7,216
|
|
|
9.2
|
%
|
|
$
|
8,878
|
|
|
13.9
|
%
|
|
Local Currency Notional Amount
|
|
U.S. Dollar Notional Amount
|
|||
Canadian Dollar
|
1,050
|
|
|
$
|
851
|
|
Philippine Peso
|
141,000
|
|
|
3,105
|
|
|
|
|
|
$
|
3,956
|
|
|
As of March 31, 2016
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
113
|
|
|
$
|
—
|
|
|
$
|
113
|
|
|
As of December 31, 2015
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Derivative liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
524
|
|
|
$
|
—
|
|
|
$
|
524
|
|
•
|
During fiscal year 2016, maintaining certain EBITDA thresholds if a reporting trigger period commences,
|
•
|
Beginning in 2017, maintaining a minimum consolidated fixed charge coverage ratio of
1.10
to 1.00 if a reporting trigger period commences, and
|
•
|
Limiting non-financed capital expenditures to
$5,000
for fiscal years 2016 and thereafter.
|
|
Foreign Currency Translation Adjustment
|
|
Derivatives Accounted for as Cash Flow Hedges
|
|
Total
|
||||||
Balance at December 31, 2015
|
$
|
1,533
|
|
|
$
|
(1,884
|
)
|
|
$
|
(351
|
)
|
Foreign currency translation
|
34
|
|
|
|
|
34
|
|
||||
Reclassification to operations
|
|
|
305
|
|
|
305
|
|
||||
Unrealized gains (losses)
|
|
|
107
|
|
|
107
|
|
||||
Tax provision (benefit)
|
(13
|
)
|
|
(153
|
)
|
|
(166
|
)
|
|||
Balance at March 31, 2016
|
$
|
1,554
|
|
|
$
|
(1,625
|
)
|
|
$
|
(71
|
)
|
Details about Accumulated Other Comprehensive Loss Components
|
|
Amount Reclassified from Accumulated Other Comprehensive Loss
|
|
Affected Line Item in the Consolidated Statements of Operations and Comprehensive Loss
|
||||||
|
|
Three Months Ended March 31,
|
|
|
||||||
|
|
2016
|
|
2015
|
|
|
||||
Losses on cash flow hedges
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
|
$
|
295
|
|
|
$
|
576
|
|
|
Cost of services
|
Foreign exchange contracts
|
|
10
|
|
|
46
|
|
|
Selling, general and administrative expenses
|
||
Total reclassifications for the period
|
|
$
|
305
|
|
|
$
|
622
|
|
|
|
|
For the Three Months Ended March 31,
|
||||||||||||
|
2016
|
|
2015
|
||||||||||
|
(in 000s)
|
|
(% of Total)
|
|
(in 000s)
|
|
(% of Total)
|
||||||
Domestic:
|
|
|
|
|
|
|
|
|
|
|
|
||
Revenue
|
$
|
49,145
|
|
|
63.0
|
%
|
|
$
|
35,624
|
|
|
56.0
|
%
|
Gross profit
|
$
|
4,824
|
|
|
57.5
|
%
|
|
$
|
2,406
|
|
|
39.3
|
%
|
Gross profit %
|
9.8
|
%
|
|
|
|
|
6.8
|
%
|
|
|
|
||
Offshore:
|
|
|
|
|
|
|
|
|
|
|
|
||
Revenue
|
$
|
17,581
|
|
|
22.5
|
%
|
|
$
|
20,331
|
|
|
31.9
|
%
|
Gross profit
|
$
|
2,286
|
|
|
27.3
|
%
|
|
$
|
2,523
|
|
|
41.2
|
%
|
Gross profit %
|
13.0
|
%
|
|
|
|
|
12.4
|
%
|
|
|
|
||
Nearshore:
|
|
|
|
|
|
|
|
|
|
|
|
||
Revenue
|
$
|
11,309
|
|
|
14.5
|
%
|
|
$
|
7,698
|
|
|
12.1
|
%
|
Gross profit
|
$
|
1,278
|
|
|
15.2
|
%
|
|
$
|
1,188
|
|
|
19.4
|
%
|
Gross profit %
|
11.3
|
%
|
|
|
|
|
15.4
|
%
|
|
|
|
||
Company Total:
|
|
|
|
|
|
|
|
|
|
|
|
||
Revenue
|
$
|
78,035
|
|
|
100.0
|
%
|
|
$
|
63,653
|
|
|
100.0
|
%
|
Gross profit
|
$
|
8,388
|
|
|
100.0
|
%
|
|
$
|
6,117
|
|
|
100.0
|
%
|
Gross profit %
|
10.7
|
%
|
|
|
|
|
9.6
|
%
|
|
|
|
Exhibit
|
|
|
|
Incorporated Herein by Reference
|
|||||
No.
|
|
Exhibit Description
|
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
2.1
|
|
|
Membership Interest Purchase Agreement, dated as of May 11, 2015, by and among StarTek, Inc. MDC Corporate (US) Inc. and MDC Acquisition Inc. (excluding schedules and exhibits, which StarTek, Inc. agrees to furnish supplementally to the Securities and Exchange Commission upon request).
|
|
8-K
|
|
2.1
|
|
5/12/2015
|
3.1
|
|
|
Restated Certificate of Incorporation of StarTek, Inc.
|
|
S-1
|
|
3.1
|
|
1/29/1997
|
3.2
|
|
|
Amended and Restated Bylaws of StarTek, Inc.
|
|
8-K
|
|
3.2
|
|
11/1/2011
|
3.3
|
|
|
Certificate of Amendment to the Certificate of Incorporation of StarTek, Inc. filed with the Delaware Secretary of State on May 21, 1999
|
|
10-K
|
|
3.3
|
|
3/8/2000
|
3.4
|
|
|
Certificate of Amendment to the Certificate of Incorporation of StarTek, Inc. filed with the Delaware Secretary of State on May 23, 2000
|
|
10-Q
|
|
3.4
|
|
8/14/2000
|
4.1
|
|
|
Specimen Common Stock certificate
|
|
10-Q
|
|
4.2
|
|
11/6/2007
|
10.1
|
|
|
Third Amendment to Credit Agreement, by and among BMO Harris Bank N.A. and StarTek, Inc.
|
|
8-K
|
|
10.1
|
|
1/26/2016
|
10.2*
|
|
|
Form of Performance-Based Restricted Stock Unit Award Agreement pursuant to 2008 Equity Incentive Plan
|
|
|
|
|
|
|
10.3*&
|
|
|
Master Services Agreement by and between Accent Marketing LLC and Sprint / United Management Company for certain call center services dated effective July 1, 2011
|
|
|
|
|
|
|
31.1*
|
|
|
Certification of Chad A. Carlson pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
31.2*
|
|
|
Certification of Don Norsworthy pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
32.1*
|
|
|
Written Statement of the Chief Executive Officer and Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
|
|
|
101*
|
|
|
The following materials are formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended March 31, 2016 and 2015 (Unaudited), (ii) Consolidated Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015, (iii) Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2016 and 2015 (Unaudited) and (iv) Notes to Consolidated Financial Statements (Unaudited)
|
|
|
|
|
|
|
*
|
|
Filed with this Form 10-Q.
|
&
|
|
Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the Securities and Exchange Commission.
|
STARTEK, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ CHAD A. CARLSON
|
Date: May 10, 2016
|
|
Chad A. Carlson
|
|
|
President and Chief Executive Officer
|
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
By:
|
/s/ DON NORSWORTHY
|
Date: May 10, 2016
|
|
Don Norsworthy
|
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
(principal financial and accounting officer)
|
|
Name of Grantee:
|
________________________
|
Number of Performance-Based Restricted Stock Units Granted:
|
____________
|
Grant Date:
|
____________, 20___
|
|
|
Performance Goal:
|
|
1.
|
Award of Performance-Based Restricted Stock Units
.
The Company hereby confirms the grant to you, as of the Grant Date and subject to the terms and conditions of this Agreement and the Plan, of an award of Performance-Based Restricted Stock Units consisting of the number of Units identified on the cover page of this Agreement. Each Unit that vests represents the right to receive one Share of the Company’s common stock. The Units granted to you will be credited to an account in your name maintained by the Company. This account shall be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.
|
2.
|
Restrictions Applicable to Units
.
Neither this Award nor the Units subject to this Award may be sold, assigned, transferred, exchanged or encumbered other than by will or the laws of descent and distribution. Any attempted transfer in violation of this Section 2 shall be void and ineffective. The Units and your right to receive Shares in settlement of any Units under this Agreement shall be subject to forfeiture except to the extent the Units become vested as provided in Sections 4 and 5.
|
3.
|
No Stockholder Rights
. The Units subject to this Award do not entitle you to any rights of a stockholder of the Company’s common stock. You will not have any of the rights of a stockholder of the Company in connection with any Units granted or earned pursuant to this Agreement unless and until Shares are issued to you in settlement of vested Units as provided in Section 7.
|
4.
|
Vesting of Units Upon Completion of Performance Period
. You will vest in the Units subject to this Award if the Committee determines, following the Performance Period, that the Performance Goal set forth on the cover page of this Agreement has been satisfied and (i) you remain employed through the Settlement Date (as defined below) or (ii) your Service is terminated involuntarily by the Company other than for Cause prior to the Settlement Date. If the Units are not vested, they will be forfeited.
|
5.
|
Vesting of Units Upon Change in Control
. In the event of a Change in Control, your Units will be deemed earned and will vest upon the Change in Control.
|
6.
|
Dividend Equivalents
. If the Company pays cash dividends on its common stock on or after the date of this Agreement, then the Company shall credit to your account, as of any dividend payment date, a number of additional Units. The number of additional Units so credited will be equal to the total number of Units previously credited to your account under this Award (including any Units previously credited pursuant to this Section 6) multiplied by the per Share dollar amount of the cash dividend paid on that date, divided by the Fair Market Value of a Share of Company common stock on that date. Any additional Units so credited shall be subject to the same terms and conditions as the Units to which such additional Units relate, and will be forfeited if the Units with respect to which such additional Units were credited are forfeited.
|
7.
|
Settlement of Earned Units
.
After any Units vest pursuant to Sections 4 or 5, the Company shall, on a date (the “Settlement Date”) as soon as practicable following the Committee’s certification of achievement of the Performance Goal, or, if the Units vest upon a Change in Control, as soon as practicable following such Change in Control, but in no event later than March 15 of the year following the earlier of the end of the year in which the Performance Period ends or the end of the year of the Change in Control, as applicable, cause to be issued and delivered to you, or to your designated beneficiary or estate in the event of your death, one Share in payment and settlement of each vested Unit. Delivery of the Shares shall be effected by the issuance of a stock certificate, by an appropriate entry in the stock register maintained by the Company’s transfer agent with a notice of issuance provided, or by the electronic delivery of the Shares to a designated brokerage account, shall be subject to satisfaction of withholding tax obligations as provided in Section 9 and compliance with all applicable legal requirements as provided in Section 22(c) of the Plan, and shall be in complete satisfaction and settlement of such vested Units.
|
8.
|
Termination of Service
.
Except as otherwise specified in Section 4, if your Service to the Company and its Affiliates ends prior to the Settlement Date for any reason, including death or Disability, you will immediately forfeit all such unvested Units.
|
9.
|
Withholding Taxes
.
As a condition precedent to the delivery of Shares in settlement of the Units, you are required to make arrangements acceptable to the Company for payment of any federal, state or local withholding taxes that may be due as a result of the issuance of Shares pursuant to the settlement of the Units (“Withholding Taxes”), in accordance with Section 16 of the Plan. Until such time as the Company provides notice to the contrary, it will collect the Withholding Taxes through an automatic Share withholding procedure (the “Share Withholding Method”), unless other arrangements acceptable to the Company have been made. Under such procedure, the Company or its agent will withhold, at the Settlement Date, a portion of the Shares with a Fair Market Value (measured as of the Settlement Date) sufficient to cover the amount of such taxes; provided, however, that the number of any Shares so withheld shall not exceed the number necessary to satisfy the Company’s required tax withholding obligations using the minimum statutory withholding rates for federal, state and local tax purposes that are applicable to supplemental taxable income.
|
10.
|
Governing Plan Document
. This Agreement is subject to all the provisions of the Plan, and to all interpretations, rules and regulations which may, from time to time, be adopted and promulgated by the Committee pursuant to the Plan. If there is any conflict between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.
|
11.
|
Compensation Recovery
.
Your award of Units under this Agreement, and the value of any compensation you receive in settlement of your award is subject to forfeiture, recovery by the Company, or other action pursuant to any compensation recovery policy that may be adopted by the Board or the Committee, including in response to the requirements of Section 10D of the Exchange Act and any implementing rules and regulations thereunder, or as otherwise required by law, and the Company may unilaterally amend this Agreement to comply with any such compensation recovery policy.
|
12.
|
Section 409A of the Code
. The award of Units as provided in this Agreement and any issuance of Shares or payment pursuant to this Agreement are intended to be exempt from Section 409A of the Code under the short-term deferral exception specified in Treas. Reg. § 1.409A-l(b)(4), and the administration and interpretation of this Agreement shall be consistent with such intent.
|
13.
|
Choice of Law
. This Agreement will be interpreted and enforced under the laws of the state of Delaware (without regard to its conflicts or choice of law principles).
|
14.
|
Binding Effect
. This Agreement will be binding in all respects on your heirs, representatives, successors and assigns, and on the successors and assigns of the Company.
|
15.
|
Other Agreements
.
You agree that in connection with this award of Units, you will execute such documents as may be necessary to become a party to any stockholder, voting or similar agreements as the Company may require.
|
TABLE OF CONTENTS
|
||
1.0
|
DEFINITIONS
|
|
2.0
|
SCOPE OF SERVICES AND DELIVERABLES
|
|
2.1.
|
Provision of Services and Deliverables
|
|
2.2.
|
Acceptance of Services and Deliverables
|
|
2.3.
|
Authorized Services
|
|
2.4.
|
No Volume Commitment
|
|
2.5.
|
Changes in Scope or Additional Services
|
|
2.6.
|
Reports
|
|
2.7.
|
Viruses; Disabling Devices
|
|
2.8.
|
Location of Services
|
|
2.9.
|
Sprint Services
|
|
3.0
|
COMPENSATION AND INVOICING
|
|
3.1.
|
Compensation
|
|
3.2.
|
Expenses
|
|
3.3.
|
Taxes
|
|
3.4.
|
Invoicing, Itemization, and Payment Procedures
|
|
3.5.
|
Milestone Invoicing; Holdbacks
|
|
3.6.
|
Set-Off
|
|
3.7.
|
Prompt Invoicing
|
|
3.8.
|
No Payment Upon Material Breach
|
|
4.0
|
AFFILIATE TRANSACTIONS
|
|
4.1.
|
Sprint Affiliates’ Purchase Rights
|
|
4.2.
|
Contractual Liability
|
|
4.3.
|
Divestitures
|
|
5.0
|
TERM AND TERMINATION
|
|
5.1.
|
Term
|
|
5.2.
|
Sprint Termination For Convenience
|
|
5.3.
|
Sprint Termination For Cause
|
|
5.4.
|
Sprint Termination For Supplier Change of Control
|
5.5.
|
Sprint Termination For Supplier Financial Instability
|
|
5.6.
|
Supplier Termination
|
|
5.7.
|
Sprint Scope of Termination
|
|
5.8.
|
Transition Services
|
|
5.9.
|
Effects of Termination
|
|
6.0
|
WARRANTIES AND REMEDIES
|
|
6.1.
|
General Warranties
|
|
6.2.
|
Disabling Device Warranty
|
|
6.3.
|
Malicious Technology
|
|
6.4.
|
Intellectual Property Warranty
|
|
6.5.
|
Documentation Warranty
|
|
6.6.
|
Title Warranty
|
|
6.7.
|
Compliance with Laws; Permits; Rules
|
|
6.8.
|
Certification of Legal Status
|
|
6.9.
|
Use of Subcontractors
|
|
6.10.
|
Breach of Warranty Remedies
|
|
7.0
|
MUTUAL REPRESENTATIONS AND WARRANTIES
|
|
7.1.
|
Formation; Authorization; Litigation
|
|
7.2.
|
No Violations; Approvals
|
|
7.3.
|
Disclaimer of Warranties
|
|
8.0
|
COMPETITIVE PRICING
|
|
8.1.
|
Audit
|
|
9.0
|
SUPPLIER PERSONNEL
|
|
9.1.
|
Required Compliance with Agreement
|
|
9.2.
|
Supplier Personnel
|
|
9.3.
|
Project Manager
|
|
9.4.
|
Contract Executive
|
|
9.5.
|
Safety
|
|
9.6.
|
Weapons Prohibition
|
|
9.7.
|
Background Checks
|
|
9.8.
|
Replacements
|
|
9.9.
|
Security Policies
|
9.10.
|
Investigations
|
|
10.0
|
CONFIDENTIAL INFORMATION
|
|
10.1.
|
Protection of Confidential Information
|
|
10.2.
|
Permitted Disclosure
|
|
10.3.
|
Third Party Information
|
|
10.4.
|
Return of Confidential Information
|
|
10.5.
|
No Publicity; Marks
|
|
10.6.
|
Notification
|
|
10.7.
|
Injunctive Relief
|
|
10.8.
|
Exception for Legal Process
|
|
11.0
|
PRIVACY
|
|
11.1.
|
Privacy Restricted Data
|
|
11.2.
|
Privacy Compliance
|
|
11.3.
|
Safeguards
|
|
11.4.
|
Location of Supplier Operations
|
|
11.5.
|
Training
|
|
11.6.
|
Termination
|
|
11.7.
|
Miscellaneous
|
|
12.0
|
DEVELOPED AND SPRINT-OWNED PROPERTY
|
|
12.1.
|
Developed Property
|
|
12.2.
|
Treatment of and Access to Sprint-Owned Property
|
|
12.3.
|
Property Return
|
|
12.4.
|
No Implied License
|
|
13.0
|
INDEMNIFICATION
|
|
13.1.
|
Supplier’s General Third Party Indemnity
|
|
13.2.
|
Supplier’s Intellectual Property Indemnity
|
|
13.3.
|
Indemnification Procedures
|
|
14.0
|
LIMITATION OF LIABILITY
|
|
15.0
|
INSURANCE
|
|
15.1.
|
Minimum Insurance Coverage
|
|
15.2.
|
Certificates of Insurance
|
|
15.3.
|
Subcontractor Insurance Requirements
|
16.0
|
AUDITS
|
|
16.1.
|
Records
|
|
16.2.
|
Fee Audit
|
|
16.3.
|
Operational Audit or Security Assessment
|
|
17.0
|
DISPUTE RESOLUTION
|
|
17.1.
|
Procedure
|
|
17.2.
|
Forum Selection
|
|
17.3.
|
Jury Trial Waiver
|
|
17.4.
|
Legal Fees
|
|
18.0
|
GENERAL
|
|
18.1
|
Notices
|
|
18.2.
|
Liens
|
|
18.3.
|
Business Continuity
|
|
18.4.
|
Assignment
|
|
18.5.
|
Independent Contractor
|
|
18.6.
|
Governing Law
|
|
18.7.
|
Expenses
|
|
18.8.
|
Waiver and Severability
|
|
18.9.
|
Survival
|
|
18.10.
|
Contract Interpretation
|
|
18.11.
|
Counterparts
|
|
18.12.
|
Time of Essence
|
|
18.13.
|
Ethical Business Practices
|
|
18.14.
|
Federal Acquisition Regulations; Executive Order 11246; Surveillance Compliance
|
|
18.15.
|
Diversity in Subcontracting
|
|
18.16.
|
Entire Agreement; Modifications; and Order of Precedence
|
|
EXHIBIT A RATES
|
||
EXHIBIT B ELECTRONIC COMMERCE TRANSACTIONS
|
||
EXHIBIT C DIVERSITY IN SUBCONTRACTING
|
2.1.
|
Provision of Services and Deliverables
|
2.2.
|
Acceptance of Services and Deliverables
|
2.3.
|
Authorized Services
|
2.4.
|
No Volume Commitment
|
2.5.
|
Changes in Scope or Additional Services
|
2.6.
|
Reports
|
2.7.
|
Viruses; Disabling Devices
|
2.8.
|
Location of Services
|
2.9.
|
Sprint Services
|
2.10.
|
Root Cause Analysis.
|
2.11.
|
Innovation.
|
2.12.
|
Sprint-Retained Authority.
|
3.1.
|
Compensation
|
3.2.
|
Expenses
|
3.3.
|
Taxes
|
3.4.
|
Invoicing, Itemization, and Payment Procedures
|
3.5.
|
Milestone Invoicing; Holdbacks
|
3.6.
|
Set-Off
|
3.7.
|
Prompt Invoicing
|
3.8.
|
No Payment Upon Material Breach
|
4.1.
|
Sprint Affiliates’ Purchase Rights
|
4.2.
|
Contractual Liability
|
4.3.
|
Divestitures
|
5.1.
|
Term
|
5.2.
|
Sprint Termination For Convenience
|
5.3.
|
Sprint Termination For Cause
|
5.4.
|
Sprint may terminate this Agreement or one or more Orders by written notice to Supplier if Supplier materially breaches this Agreement or an Order and does not cure the breach to the reasonable satisfaction of Sprint within 30 Business Days after Sprint delivers the written breach notice. Unless otherwise specified in the breach notice or unless Supplier has cured the breach, the termination is effective 31 Business Days after delivery by Sprint of the breach notice. For any breach incapable of cure during the notice period, Sprint may terminate this Agreement or one or more Orders immediately. If Sprint terminates this Agreement or an Order for cause, Supplier must reimburse Sprint for the direct Damages incurred by Sprint. Sprint Termination For Supplier Change of Control
|
5.5.
|
Sprint Termination For Supplier Financial Instability
|
5.6.
|
Supplier Termination
|
5.7.
|
Sprint Scope of Termination
|
5.8.
|
Transition Services
|
5.9.
|
Effects of Termination
|
6.1.
|
General Warranties
|
6.2.
|
Disabling Device Warranty
|
6.3.
|
Malicious Technology
|
6.4.
|
Intellectual Property Warranty
|
6.5.
|
Documentation Warranty
|
6.6.
|
Title Warranty
|
6.7.
|
Compliance with Laws; Permits; Rules
|
6.8.
|
Certification of Legal Status
|
6.9.
|
Use of Subcontractors
|
6.10.
|
Breach of Warranty Remedies
|
7.1.
|
Formation; Authorization; Litigation
|
7.2.
|
No Violations; Approvals
|
7.3.
|
Disclaimer of Warranties
|
8.1.
|
Audit
|
i.
|
Reissue all paid invoices originally issued to Sprint for Services and Deliverables, including any paid invoices issued during the 12 months preceding Supplier’s first offer of a lower Net Price to another customer. The reissued invoices must show the difference between the Net Price originally invoiced to Sprint and the reduced Net Price, and all applicable sales tax reductions resulting from the price reduction. Supplier will issue a credit or reimbursement, at the sole option of Sprint, for the difference.
|
ii.
|
Reissue any unpaid invoices affected by the Net Price reduction within 30 days after the parties determine that Sprint is entitled to receive a Competitive Pricing discount. The reissued invoices must show the difference between the Net Price originally invoiced to Sprint and the reduced Net Price, and all applicable sales tax reductions resulting from the price reduction.
|
iii.
|
Supplier will apply the lower Net Price to all subsequent Services and Deliverables for the remainder of the Term, subject to future reductions under this Agreement.
|
9.1.
|
Required Compliance with Agreement
|
9.2.
|
Supplier Personnel
|
9.3.
|
Project Manager
|
9.4.
|
Contract Executive
|
9.5.
|
Safety
|
9.6.
|
Weapons Prohibition
|
9.7.
|
Background Checks
|
9.8.
|
Replacements
|
9.9.
|
Security Policies
|
9.10.
|
Investigations
|
10.1.
|
Protection of Confidential Information
|
10.2.
|
Permitted Disclosure
|
10.3.
|
Third Party Information
|
10.4.
|
Return of Confidential Information
|
10.5.
|
No Publicity; Marks
|
10.6.
|
Notification
|
10.7.
|
Injunctive Relief
|
10.8.
|
Exception for Legal Process
|
11.1.
|
Privacy Restricted Data
|
11.2.
|
Privacy Compliance
|
11.3.
|
Safeguards
|
11.4.
|
Location of Supplier Operations
|
11.5.
|
Training
|
11.6.
|
Termination
|
11.7.
|
Miscellaneous
|
12.1.
|
Supplier-Owned Property. As between Sprint and Supplier, Supplier retains all rights, title, and interest in and to all Technology and Intellectual Property Rights therein
conceived, created, made, developed, or reduced to practice by or for Supplier or otherwise acquired by Supplier prior to the Effective Date of this Agreement or independent of this Agreement (“Supplier-Owned Property”). Subject to the terms and conditions of this Agreement, Supplier hereby grants to Sprint a non-exclusive, nontransferable, limited license to use Supplier-Owned Property embodied in any Deliverable provided by Supplier during the term of this Agreement.
|
12.2.
|
Sprint-Owned Property. As between Sprint and Supplier, Sprint retains all rights, title, and interest in and to all Technology and Intellectual Property Rights therein conceived, created, made, developed, or reduced to practice by or for Sprint or otherwise acquired by Sprint prior to the Effective Date of this Agreement or independent of this Agreement (“Sprint-Owned Property”). Subject to the terms and conditions of this Agreement, Sprint hereby grants to Supplier a limited, non-exclusive, non-transferable (except as permitted under Section 18.4), worldwide, fully-paid and royalty-free license to use, reproduce, and create
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12.3.
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Third-Party Works. Sprint will have the right to approve the introduction of any third party intellectual property prior to Supplier’s use of such third party intellectual property to provide or in connection with the Services or the Work Product. Prior to introducing any third party intellectual property in providing or in connection with the Services, Supplier will: (i) either (a) obtain the right to grant to, or (b) obtain from the third-party vendor on behalf of Sprint (and designees of Sprint for the sole purpose of providing the Services and other services to Sprint), without additional charge and upon the expiration or any whole or partial termination of this Agreement, a perpetual, irrevocable, fully paid-up, non-exclusive, fully transferable license to use, copy, maintain, modify, enhance and create derivative works of such third party intellectual property (including, with respect to Software, source code, programmer interfaces, available documentation, manuals and other materials necessary for the use thereof), and to sublicense such rights to other entities for the purpose of providing the Services and other services to Sprint; and (ii) ensure that Sprint has the right to purchase ongoing maintenance and support for such third party intellectual property on commercially reasonable terms. To the extent that Supplier is unable to fulfill such obligations, Supplier will promptly notify Sprint in writing of its inability to grant to or obtain for Sprint such a license and of the cost and viability of other third party intellectual property that can perform the requisite functions and with respect to which Supplier has the ability to grant such a license. This notice will contain the third-party vendor’s proposed terms and conditions, if any, for making the third party intellectual property available to Sprint after expiration or upon any partial or whole termination of this Agreement.
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12.4.
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Developed Property
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12.5.
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Treatment of and Access to Sprint-Owned Property
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12.6.
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Property Return
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12.7.
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No Implied License
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13.1.
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Supplier’s General Third Party Indemnity
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13.2.
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Supplier’s Intellectual Property Indemnity
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13.3.
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Indemnification Procedures
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15.1.
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Minimum Insurance Coverage
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15.2.
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Certificates of Insurance
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15.3.
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Subcontractor Insurance Requirements
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16.1.
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Records
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16.2.
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Fee Audit
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16.3.
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Operational Audit or Security Assessment
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17.1.
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Procedure
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17.2.
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Forum Selection
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17.3.
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Jury Trial Waiver
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17.4.
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Legal Fees
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18.1.
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Notices
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18.2.
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Liens
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18.3.
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Business Continuity
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18.4.
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Assignment
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18.5.
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Independent Contractor
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18.6.
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Governing Law
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18.7.
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Expenses
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18.8.
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Waiver and Severability
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18.9.
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Survival
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18.10.
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Contract Interpretation
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18.11.
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Counterparts
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18.12.
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Time of Essence
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18.13.
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Ethical Business Practices
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18.14.
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Federal Acquisition Regulations; Executive Order 11246; Surveillance Compliance
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18.15.
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Diversity in Subcontracting
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18.16.
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Entire Agreement; Modifications; and Order of Precedence
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SPRINT/UNITED MANAGEMENT COMPANY
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ACCENT MARKETING LLC
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Signature: /s/ Eugene Agee
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Signature: /s/ Christopher Dark
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Print Name: Eugene Agee
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Print Name: Christopher Dark
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Title: Vice President, Procurement & RE
|
Title: CFO
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Street Address: 6450 Sprint Parkway
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Street Address: 400 Missouri Ave, Ste 100
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City, State, Zip: Overland Park, KS 66251
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City, State, Zip: Jeffersonville, IN 47130
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Date: 6-30-2011
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Date: 6-30-2011
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Fax No.:
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Fax No.:
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|
|
Sprint Address for notices (including above):
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Supplier Address for notices (including above):
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cc: Sprint Law Department
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|
Attn: Director, Commercial Law Group
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|
KSOPHT0101-Z4100
|
|
6391 Sprint Parkway
|
|
Overland Park, KS 66251-4100
|
|
Fax No. (913) 523-9884
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|
Plg.group@sprint.com
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Transaction
|
Transmission Methods
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Orders, Order acknowledgements, Order changes
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either EDI (ANSI x12) or RosettaNet XML
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Invoices
|
Xign (3
rd
Party ASP)
|
Settlements
|
Xign (3
rd
Party ASP) ACH (Direct Deposit)
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2.1
|
Utilization Requirement.
Supplier must use good faith efforts to meet a minimum Utilization Requirement of [*]% for those Orders received by Sprint exceeding $[*] in value in any calendar year during the Term. Supplier will satisfy the Utilization Requirement through the use of Diverse Suppliers and may include its subcontractors who do not provide Services or Deliverables under this Agreement in meeting its Utilization Requirement. If Supplier does not meet the Utilization Requirement under this Agreement, Supplier will either (a) donate [*]% (not to exceed $[*]) of the entire annual amount (exceeding $[*]) earned from Sprint to a diverse non-profit organization as directed by Sprint, or (b) facilitate satisfaction of the [*]% Utilization
|
2.4
|
Good Faith Efforts.
Supplier must make good faith efforts to meet its Utilization Requirements. If Sprint reasonably determines that Supplier has not made good faith efforts to comply with any provision of this Exhibit, Sprint will provide written notice that Supplier is in breach of the Agreement.
|
2.5
|
Audits.
Supplier agrees to cooperate in any studies or surveys that may be conducted by Sprint representatives or federal or state agencies to determine the extent of Supplier’s compliance with this Exhibit.
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|
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Date: May 10, 2016
|
/s/ CHAD A. CARLSON
|
|
Chad A. Carlson
|
|
President and Chief Executive Officer
|
|
|
Date: May 10, 2016
|
/s/ DON NORSWORTHY
|
|
Don Norsworthy
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|
|
|
Date: May 10, 2016
|
/s/ CHAD A. CARLSON
|
|
Chad A. Carlson
|
|
President and Chief Executive Officer
|
|
|
Date: May 10, 2016
|
/s/ DON NORSWORTHY
|
|
Don Norsworthy
|
|
Senior Vice President, Chief Financial Officer and Treasurer
|