LOGITECH INTERNATIONAL SA (Form: 10-Q, Received: 01/22/2016 16:29:47)

Three Months Ended
December 31, 2015
Change in Sales

Nine Months Ended
December 31, 2015
Change in Sales

Asia Pacific

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2015

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to

Commission File Number: 0-29174

LOGITECH INTERNATIONAL S.A.

(Exact name of registrant as specified in its charter)



Canton of Vaud, Switzerland (State or other jurisdiction of incorporation or organization)		None (I.R.S. Employer Identification No.)

Logitech International S.A.

Apples, Switzerland

c/o Logitech Inc.

7700 Gateway Boulevard

Newark, California 94560

(Address of principal executive offices and zip code)

(510) 795-8500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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Large accelerated filer ý		Accelerated filer o

Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o

No ý

As of January 11, 2016, there were 162,983,760 shares of the Registrant’s share capital outstanding.

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		Page

Part I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2015 and 2014	4
	Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended December 31, 2015 and 2014	5
	Condensed Consolidated Balance Sheets as of December 31, 2015 and March 31, 2015	6
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2015 and 2014	7
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Nine Months Ended December 31, 2015 and 2014	9
	Notes to the Condensed Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	49
Part II	OTHER INFORMATION
Item 1.	Legal Proceedings	50
Item 1A.	Risk Factors	50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3.	Defaults Upon Senior Securities	65
Item 4.	Mine Safety Disclosures	65
Item 5.	Other Information	65
Item 6.	Exhibit Index	65
Signatures

Exhibits

In this document, unless otherwise indicated, references to the “Company” or “Logitech” are to Logitech International S.A., its consolidated subsidiaries and predecessor entities. Unless otherwise specified, all references to U.S. Dollar, Dollar or $ are to the United States Dollar, the legal currency of the United States of America. All references to CHF are to the Swiss Franc, the legal currency of Switzerland.

Logitech, the Logitech logo, and the Logitech products referred to herein are either the trademarks or the registered trademarks of Logitech. All other trademarks are the property of their respective owners.

The Company’s fiscal year ends on March 31. Interim quarters end on the last Friday of each quarter. The third quarter of fiscal year 2016 ended on December 25, 2015 and the same quarter in the prior fiscal year ended on December 26, 2014. For purposes of presentation, the Company has indicated its quarterly periods as ending on the last day of the calendar quarter.

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

LOGITECH INTERNATIONAL S.A.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(unaudited)



	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Net sales	$	621,079		$	604,322		$	1,587,259		$	1,562,625
Cost of goods sold	412,582			391,715			1,048,312			998,842
Gross profit	208,497			212,607			538,947			563,783
Operating expenses:
Marketing and selling	87,295			87,486			241,924			246,103
Research and development	29,273			27,397			86,336			80,009
General and administrative	24,080			28,172			77,966			96,762
Restructuring charges (credits), net	(666		)	—			14,018			(35		)
Total operating expenses	139,982			143,055			420,244			422,839
Operating income	68,515			69,552			118,703			140,944
Interest income, net	105			224			549			824
Other income (expense), net	862			(2,688		)	(894		)	(3,702		)
Income from continuing operations before income taxes	69,482			67,088			118,358			138,066
Provision for income taxes	1,442			670			7,006			8,455
Net income from continuing operations	68,040			66,418			111,352			129,611
Loss from discontinued operations, net of taxes	(2,954		)	(3,634		)	(20,732		)	(11,061		)
Net income	$	65,086		$	62,784		$	90,620		$	118,550

Net income (loss) per share - basic:
Continuing operations	$	0.42		$	0.41		$	0.68		$	0.79
Discontinued operations	$	(0.02	)	$	(0.03	)	$	(0.13	)	$	(0.06	)
Net income per share - basic	$	0.40		$	0.38		$	0.55		$	0.73

Net income (loss) per share - diluted:
Continuing operations	$	0.41		$	0.40		$	0.67		$	0.78
Discontinued operations	$	(0.02	)	$	(0.02	)	$	(0.12	)	$	(0.07	)
Net income per share - diluted	$	0.39		$	0.38		$	0.55		$	0.71

Weighted average shares used to compute net income (loss) per share:
Basic	162,669			163,533			163,521			163,261
Diluted	165,168			166,321			165,951			166,076

Cash dividends per share	$	—		$	0.27		$	0.53		$	0.27

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LOGITECH INTERNATIONAL S.A.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(unaudited)



	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Net income	$	65,086		$	62,784		$	90,620		$	118,550
Other comprehensive income (loss):
Currency translation loss, net of taxes	(3,098		)	(4,400		)	(488		)	(8,051		)
Defined benefit pension plans:
Net gain and prior service costs, net of taxes	283			529			475			1,476
Amortization included in operating expenses	400			101			1,233			323
Hedging gain (loss):
Deferred hedging gain (loss), net of taxes	(62		)	1,286			(1,236		)	5,038
Reclassification of hedging loss (gain) included in cost of goods sold	45			(2,025		)	(2,443		)	(1,840		)
Other comprehensive loss:	(2,432		)	(4,509		)	(2,459		)	(3,054		)
Total comprehensive income	$	62,654		$	58,275		$	88,161		$	115,496

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LOGITECH INTERNATIONAL S.A.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(unaudited)



	December 31, 2015			March 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	505,082		$	533,380
Accounts receivable, net	284,089			167,196
Inventories	239,962			255,980
Other current assets	71,661			63,362
Current assets held for sale	28,969			32,102
Total current assets	1,129,763			1,052,020
Non-current assets:
Property, plant and equipment, net	99,145			86,478
Goodwill	218,198			218,213
Other assets	57,271			62,333
Long-term assets held for sale	5,506			7,636
Total assets	$	1,509,883		$	1,426,680
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	363,781		$	292,797
Accrued and other current liabilities	211,219			163,344
Current liabilities held for sale	34,642			38,766
Total current liabilities	609,642			494,907
Non-current liabilities:
Income taxes payable	67,885			72,107
Other non-current liabilities	85,347			91,195
Long-term liabilities held for sale	10,063			10,337
Total liabilities	772,937			668,546
Commitments and contingencies (Note 10)
Shareholders’ equity:
Registered shares, CHF 0.25 par value:	30,148			30,148
Issued and authorized shares —173,106 at December 31 and March 31, 2015
Conditionally authorized shares — 50,000 at December 31 and March 31, 2015
Additional paid-in capital	2,352			—
Less shares in treasury, at cost — 10,178 at December 31, 2015 and 8,625 at March 31, 2015	(114,737		)	(88,951		)
Retained earnings	934,879			930,174
Accumulated other comprehensive loss	(115,696		)	(113,237		)
Total shareholders’ equity	736,946			758,134
Total liabilities and shareholders’ equity	$	1,509,883		$	1,426,680

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LOGITECH INTERNATIONAL S.A.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(unaudited)



	Nine Months Ended December 31,
	2015			2014
Operating activities:
Net income	$	90,620		$	118,550
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	36,884			29,559
Amortization of other intangible assets	1,536			7,624
Share-based compensation expense	19,875			20,046
Impairment of investments	176			2,259
Gain on disposal of property, plant and equipment	—			(44		)
Excess tax benefits from share-based compensation	(2,089		)	(2,533		)
Deferred income taxes	2,914			(3,151		)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable, net	(115,814		)	(131,026		)
Inventories	18,066			(30,171		)
Other assets	(9,329		)	(6,592		)
Accounts payable	68,763			111,310
Accrued and other liabilities	39,244			21,227
Net cash provided by operating activities	150,846			137,058
Investing activities:
Purchases of property, plant and equipment	(50,443		)	(34,777		)
Investment in privately held companies	(2,099		)	(2,550		)
Purchase of trading investments	(4,395		)	(3,463		)
Proceeds from sales of trading investments	4,668			3,856
Net cash used in investing activities	(52,269		)	(36,934		)
Financing activities:
Payment of cash dividends	(85,915		)	(43,767		)
Contingent consideration related to prior acquisition	—			(100		)
Repurchases of ESPP awards	—			(1,078		)
Purchases of treasury shares	(48,802		)	—
Proceeds from sales of shares upon exercise of options and purchase rights	12,562			2,466
Tax withholdings related to net share settlements of restricted stock units	(5,357		)	(7,456		)
Excess tax benefits from share-based compensation	2,089			2,533
Net cash used in financing activities	(125,423		)	(47,402		)
Effect of exchange rate changes on cash and cash equivalents	(1,205		)	(5,521		)
Net increase (decrease) in cash and cash equivalents	(28,051		)	47,201
Cash and cash equivalents, beginning of the period	537,038			469,412
Cash and cash equivalents, end of the period	$	508,987		$	516,613

Supplementary Cash Flow Disclosures:
Non-cash investing activities:
Property, plant and equipment purchased during the period and included in period end liability accounts	$	3,417		$	2,990

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The following amounts reflected in the statements of cash flows are included in discontinued operations:
Depreciation	$	2,207	$	1,930
Amortization of other intangible assets	$	1,089	$	7,027
Purchases of property, plant and equipment	$	1,431	$	1,601
Cash and cash equivalents, beginning of the period	$	3,659	$	1,894
Cash and cash equivalents, end of the period	$	3,905	$	8,128

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LOGITECH INTERNATIONAL S.A.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands)

(unaudited)



				Additional											Accumulated Other			Total
	Registered Shares			Paid-in			Treasury Shares					Retained			Comprehensive			Shareholders’
	Shares	Amount		Capital			Shares		Amount			Earnings			Income (Loss)			Equity
March 31, 2014	173,106	$	30,148	$	—		10,206		$	(116,510	)	$	976,292		$	(85,802	)	$	804,128
Total comprehensive income (loss)	—	—		—			—		—			118,550			(3,054		)	115,496
Tax effects from share-based awards	—	—		842			—		—			—			—			842
Sales of shares upon exercise of options and purchase rights	—	—		(1,609		)	(238	)	4,075			—			—			2,466
Issuance of shares upon vesting of restricted stock units	—	—		(18,438		)	(1,059	)	18,764			(7,782		)	—			(7,456		)
Share-based compensation expense	—	—		20,283			—		—			—			—			20,283
Repurchase of ESPP awards	—	—		(1,078		)	—		—			—			—			(1,078		)
Cash dividends	—	—		—			—		—			(43,767		)	—			(43,767		)
December 31, 2014	173,106	$	30,148	$	—		8,909		$	(93,671	)	$	1,043,293		$	(88,856	)	$	890,914



				Additional											Accumulated Other			Total
	Registered Shares			Paid-in			Treasury Shares					Retained			Comprehensive			Shareholders’
	Shares	Amount		Capital			Shares		Amount			Earnings			Income (Loss)			Equity
March 31, 2015	173,106	$	30,148	$	—		8,625		$	(88,951	)	$	930,174		$	(113,237	)	$	758,134
Total comprehensive income (loss)	—	—		—			—		—			90,620			(2,459		)	88,161
Tax effects from share-based awards	—	—		(1,749		)	—		—			—			—			(1,749		)
Sales of shares upon exercise of options and purchase rights	—	—		(2,327		)	(1,147	)	14,889			—			—			12,562
Issuance of shares upon vesting of restricted stock units	—	—		(13,484		)	(802	)	8,127			—			—			(5,357		)
Share-based compensation expense	—	—		19,912			—		—			—			—			19,912
Purchases of treasury shares	—	—		—			3,502		(48,802		)	—			—			(48,802		)
Cash dividends	—	—		—			—		—			(85,915		)	—			(85,915		)
December 31, 2015	173,106	$	30,148	$	2,352		10,178		$	(114,737	)	$	934,879		$	(115,696	)	$	736,946

The accompanying notes are an integral part of these condensed consolidated financial statements.

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LOGITECH INTERNATIONAL S.A.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1 — The Company and Summary of Significant Accounting Policies and Estimates

The Company

Logitech is a world leader in products that connect people to the digital experiences they care about. Spanning multiple computing, communication and entertainment platforms, the Company develops and markets innovative hardware and software products that enable or enhance digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet and home-entertainment control.

Basis of Presentation

The condensed consolidated interim financial statements include the accounts of Logitech and its subsidiaries. All intercompany balances and transactions have been eliminated. The condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and therefore do not include all the information required by GAAP for complete financial statements. They should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2015, included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on June 5, 2015.

In the opinion of management, these condensed consolidated financial statements include all adjustments, consisting of only normal and recurring adjustments, necessary and in all material aspects, for a fair statement of the results of operations, financial position, comprehensive income, cash flows and changes in shareholders' equity for the periods presented. Operating results for the three and nine months ended December 31 , 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2016, or any future periods.

During the third quarter of fiscal year 2016, the Company's Board of Directors approved a plan to divest the Lifesize video conferencing business, and the Company met all other criteria to classify this business as held for sale. As a result, the Company has classified the results of Lifesize video conferencing business as discontinued operations in its condensed consolidated statements of operations for all periods presented. Additionally, the related assets and liabilities associated with the discontinued operations are classified as held for sale on its condensed consolidated balance sheets. On December 28, 2015, the Company and Lifesize, Inc., a wholly owned subsidiary of the Company (“Lifesize”) which holds the assets of the Company’s Lifesize video conferencing business, entered into a stock purchase agreement (the “Stock Purchase Agreement”) with three venture capital firms. Immediately following the December 28, 2015 closing of the transactions contemplated by the Stock Purchase Agreement, the venture capital firms held 62.5% of the outstanding shares of Lifesize, which resulted in a divestiture of the Lifesize video conferencing business by the Company. The disposition of the Lifesize video conferencing business represents a strategic shift that will have a major effect on the Company's operations and financial results.

Unless indicated otherwise, the information in the Notes to the condensed consolidated financial statements relates to our continuing operations and does not include results of Lifesize video conferencing business, which is classified as discontinued operations. See "Note 2 - Discontinued Operations" for more information.

Segments

ASC 280, Segment Reporting , establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The guidance defines reportable segments as operating segments that meet certain quantitative thresholds. As a result of the events of December 28, 2015 described above and the decision to divest the Company's video conferencing segment, the composition of the Company's previously reported segments changed significantly, such that the remaining peripheral segment is the only segment reported in continuing operations.

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Fiscal Year

The Company's fiscal year ends on March 31. Interim quarters end on the last Friday of each quarter. For purposes of presentation, the Company has indicated its quarterly periods as ending on the last day of the calendar quarter.

Changes in Significant Accounting Policies

There have been no substantial changes in the Company’s significant accounting policies during the nine months ended December 31, 2015 compared with the significant accounting policies described in its Annual Report on Form 10-K for the fiscal year ended March 31, 2015.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements. Management bases its estimates on historical experience and various other assumptions believed to be reasonable. Examples of significant estimates and assumptions made by management involve the fair value of goodwill, warranty liabilities, accruals for discretionary customer programs, sales return reserves, allowance for doubtful accounts, inventory valuation, restructuring charges, contingent liabilities, uncertain tax positions, and valuation allowances for deferred tax assets. Although these estimates are based on management’s best knowledge of current events and actions that may impact the Company in the future, actual results could differ materially from those estimates.

Recent Accounting Pronouncements

In April 2014, the FASB issued ASU No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" . This new standard raises the threshold for a disposal to qualify as a discontinued operation and requires new disclosures of both discontinued operations and certain other disposals that do not meet the definition of a discontinued operation. The standard is effective prospectively for years beginning on or after December 15, 2014, with early application permitted. The Company adopted ASU No. 2014-08 on April 1, 2015 on a prospective basis and applied the guidance to its disposal of the Lifesize video conferencing business.

In May 2014, the FASB issued Accounting Standards Update No. 2014-9, "Revenue from Contracts with Customers (Topic 606)," ("ASU 2014-9"). ASU 2014-9 outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. Under the new model, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the new standard requires that reporting companies disclose the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. ASU 2014-09 was originally to be effective for the Company on April 1, 2017. In July 2015, the FASB affirmed a one-year deferral of the effective date of the new revenue standard. The new standard will become effective for the Company on April 1, 2018. Early application is permitted but not before the original effective date of annual periods beginning after December 15, 2016. The new standard is required to be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet selected a transition method nor has it determined the impact of the new standard on its condensed consolidated financial statements.

In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2015-11, "Simplifying the Measurement of Inventory (Topic 330)", ("ASU 2015-11"). Topic 330, Inventory, currently requires an entity to measure inventory at the lower of cost or market, with market value represented by replacement cost, net realizable value or net realizable value less a normal profit margin. The amendments in ASU 2015-11 require an entity to measure inventory at the lower of cost or net realizable value. ASU 2015-11 is effective in the first quarter of fiscal year 2018 for the Company, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its condensed consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, “Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes.” This guidance eliminates the current requirement for an entity to separate deferred income tax

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liabilities and assets into current and non-current amounts in a classified balance sheet. Instead, this guidance requires deferred tax liabilities, deferred tax assets and valuation allowances be classified as non-current in a classified balance sheet. This ASU is effective for annual reporting periods beginning after December 15, 2016 and interim periods within those annual periods. Early adoption is permitted. Additionally, this guidance may be applied either prospectively or retrospectively to all periods presented. The Company is still evaluating whether to early adopt this guidance as the Company expects adoption will cause significant balance sheet reclassifications. See Note 6, “Balance Sheet Components” for details of the current and non-current deferred income taxes balances.

In January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-01 “Financial Instruments- Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825-10).” The amendments require all equity investments to be measured at fair value with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). The amendments also require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments. In addition, the amendments eliminate the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities and the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet for public business entities. This guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company does not expect to early adopt this guidance and does not believe that the adoption of this guidance will have a material impact on its condensed consolidated financial statements.

Note 2 — Discontinued operations

During the third quarter of fiscal year 2016, the Company's Board of Directors approved a plan to divest the Lifesize video conferencing business. Subsequently, on December 28, 2015 in the fourth quarter of fiscal year 2016, the Company and Lifesize, Inc.(“Lifesize”), a wholly owned subsidiary of the Company which holds the assets of the Company’s video conferencing reportable segment, entered into a stock purchase agreement (the “Stock Purchase Agreement”) with entities affiliated with three venture capital firms - Redpoint Ventures, Sutter Hill Ventures and Meritech Capital Partners (the "Venture Investors"). Pursuant to the terms of the Stock Purchase Agreement, the Company sold 2,500,000 shares of Series B Preferred Stock of Lifesize to the Venture Investors for cash proceeds of $2,500,000 and retained 12,000,000 non-voting shares of Series A Preferred Stock of Lifesize. The shares of Series A Preferred Stock of Lifesize retained by the Company represent 37.5% of the total shares outstanding immediately after the closing of the transactions (the "Closing"). Lifesize also issued 17,500,000 shares of Series B Preferred Stock to the Venture Investors for cash proceeds of $17,500,000 . The shares of Series B Preferred Stock held by the Venture Investors represent 62.5% of the total shares outstanding immediately after the Closing. In addition, Lifesize reserved 8,000,000 shares of common stock for issuance pursuant to a stock plan to be adopted by Lifesize following the Closing (the “Employee Pool”), none of which are issued or outstanding at the Closing. The divestiture of the Lifesize video conferencing business is effective on December 28, 2015. The Stock Purchase Agreement contains representations, warranties and covenants of the parties and includes certain indemnification obligations of the Company to the Venture Investors. See “Note 10 - Commitments and Contingencies” for more information. The Stock Purchase Agreement also contains certain post-closing working capital adjustments. Post closing continuing involvement with the discontinued operations includes certain customary services and support which are expected to be provided to Lifesize during the transition period from December 28, 2015 until approximately the end of the third quarter of fiscal year 2017.

The disposition of the Lifesize video conferencing business represents a strategic shift as contemplated by ASC 205-20, Presentation of Financial statement - Discontinued Operations , ("ASC 205-20") that will have a major effect on the Company's operations and financial results. As such, the Company has classified the results of its Lifesize video conferencing business as discontinued operations in its condensed consolidated statement of operations for all periods presented. Additionally, the related assets and liabilities associated with the discontinued operations are classified as held for sale on its condensed consolidated balance sheets for all periods presented. Evaluating whether the disposal of the business represents a strategic shift requires the Company's judgment. Also, evaluating whether the strategic shift will have a "major effect" on the Company's operations and financial results requires assessing not only quantitative factors but also the magnitude of qualitative factors.

The retained Series A Preferred Stock gives the Company no voting rights or other influence over the disposed Lifesize video conferencing business, and therefore is expected to be accounted for as a cost-method investment

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which is expected to be recognized at fair value. The Company expects to recognize a disposal gain of $15 million to $ 20 million as a result of the divestiture, which will be reported in discontinued operations included in the results of the fourth quarter of fiscal year 2016.

Discontinued operations include results of the Lifesize video conferencing business. Discontinued operations also includes other costs incurred by Logitech to effect the divestiture of the Lifesize video conferencing business. These costs include transaction charges, advisory and consulting fees and restructuring cost related to the Lifesize video conferencing business.

The following table presents financial results of the video conferencing segment classified as discontinued operations (in thousands):



	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Net sales	$	21,553		$	29,882		$	65,554		$	84,093
Cost of goods sold	8,240			11,206			24,951			30,062
Gross profit	13,313			18,676			40,603			54,031
Operating expenses:
Marketing and selling	8,877			15,822			31,550			44,112
Research and development	4,924			6,218			16,592			17,248
General and administrative	1,836			1,636			5,308			4,195
Restructuring charges (credits), net	1,064			(146		)	8,070			(111		)
Total operating expenses	16,701			23,530			61,520			65,444
Operating loss from discontinued operations	(3,388		)	(4,854		)	(20,917		)	(11,413		)
Interest expense and other expense, net	(47		)	(328		)	(180		)	(385		)
Loss from discontinued operations before income taxes	(3,435		)	(5,182		)	(21,097		)	(11,798		)
Benefit from income taxes	(481		)	(1,548		)	(365		)	(737		)
Net loss from discontinued operations	$	(2,954	)	$	(3,634	)	$	(20,732	)	$	(11,061	)

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The following table presents the aggregate carrying amounts of the classes of held for sale assets and liabilities (in thousands):



	December 31, 2015		March 31, 2015
Carrying amounts of assets included as part of discontinued operations:
Cash and cash equivalents	$	3,905	$	3,659
Accounts receivable, net	10,360		12,627
Inventories	12,708		14,749
Other current assets	1,996		1,067
Total current assets	28,969		32,102
Property, plant and equipment, net	3,965		5,115
Other assets	1,541		2,521
Total non-current assets	5,506		7,636
Total assets classified as held for sale on the condensed consolidated balance sheets	$	34,475	$	39,738

Carrying amounts of liabilities included as part of discontinued operations:
Accounts payable	2,434		7,198
Accrued and other current liabilities	32,208		31,568
Total current liabilities	34,642		38,766
Non-current liabilities	10,063		10,337
Total liabilities classified as held for sale on the condensed consolidated balance sheets	$	44,705	$	49,103

The following table presents the components of certain balance sheet asset amounts as of December 31 and March 31, 2015 from discontinued operations (in thousands):



	December 31, 2015			March 31, 2015
Accounts receivable, net:
Accounts receivable	$	13,397		$	16,082
Allowance for accounts receivable	(3,037		)	(3,455		)
	$	10,360		$	12,627
Inventories:
Raw materials	$	574		$	332
Finished goods	12,134			14,417
	$	12,708		$	14,749

Property, plant and equipment, net:
Property, plant and equipment	16,019			16,672
Less: accumulated depreciation and amortization	(12,054		)	(11,557		)
	$	3,965		$	5,115

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The following table presents the components of certain balance sheet liability amounts as of December 31 and March 31, 2015 from discontinued operations (in thousands):



	December 31, 2015		March 31, 2015
Accrued and other current liabilities:
Accrued personnel expenses	$	4,201	$	3,992
Deferred revenue	24,499		24,423
Other current liabilities	3,508		3,153
	$	32,208	$	31,568
Non-current liabilities:
Long term deferred revenue	9,359		9,109
Other non-current liabilities	704		1,228
	$	10,063	$	10,337

Note 3 — Net Income per Share

The computations of basic and diluted net income per share for the Company were as follows (in thousands, except per share amounts):



	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Net Income (loss):
Continuing operations	68,040			66,418			111,352			129,611
Discontinued operations	(2,954		)	(3,634		)	(20,732		)	(11,061		)
Net income	$	65,086		$	62,784		$	90,620		$	118,550

Shares used in net income (loss) per share computation:
Weighted average shares outstanding - basic	162,669			163,533			163,521			163,261
Effect of potentially dilutive equivalent shares	2,499			2,788			2,430			2,815
Weighted average shares outstanding - diluted	165,168			166,321			165,951			166,076

Net income (loss) per share - basic:
Continuing operations	$	0.42		$	0.41		$	0.68		$	0.79
Discontinued operations	$	(0.02	)	$	(0.03	)	$	(0.13	)	$	(0.06	)
Net income per share - basic	$	0.40		$	0.38		$	0.55		$	0.73

Net income (loss) per share - diluted:
Continuing operations	$	0.41		$	0.40		$	0.67		$	0.78
Discontinued operations	$	(0.02	)	$	(0.02	)	$	(0.12	)	$	(0.07	)
Net income per share - diluted	$	0.39		$	0.38		$	0.55		$	0.71

Share equivalents attributable to outstanding stock options and restricted stock units ("RSUs") of 6.3 million and 8.1 million for the three months ended December 31 , 2015 and 2014 , respectively, and 6.6 million and 8.1 million for the nine months ended December 31 , 2015 and 2014 , were anti-dilutive and excluded from the calculation of diluted net income per share.

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Note 4 — Employee Benefit Plans

Employee Share Purchase Plans and Stock Incentive Plans

As of December 31 , 2015 , the Company offers the 2006 ESPP (2006 Employee Share Purchase Plan (Non-U.S.)), the 1996 ESPP (1996 Employee Share Purchase Plan (U.S.)), the 2006 Plan (2006 Stock Incentive Plan) and the 2012 Plan (2012 Stock Inducement Equity Plan).

The following table summarizes the share-based compensation expense and related tax benefit recognized for the three and nine months ended December 31 , 2015 and 2014 , excluding balances classified as discontinued operations (in thousands):



	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Cost of goods sold	$	464		$	560		$	1,648		$	1,725
Marketing and selling	2,484			2,552			6,545			6,659
Research and development	846			765			2,174			1,780
General and administrative	2,668			2,520			8,917			8,565
Restructuring	—			—			7			—
Total share-based compensation expense	6,462			6,397			19,291			18,729
Income tax benefit	(1,446		)	(1,391		)	(2,479		)	(4,285		)
Total share-based compensation expense, net of income tax	$	5,016		$	5,006		$	16,812		$	14,444

As of December 31 , 2015 and March 31, 2015 , the Company capitalized $0.5 million and $0.5 million of stock-based compensation expenses as inventory, respectively.

Defined Benefit Plans

Certain of the Company’s subsidiaries sponsor defined benefit pension plans or non-retirement post-employment benefits covering substantially all of their employees. Benefits are provided based on employees’ years of service and earnings, or in accordance with applicable employee benefit regulations. The Company’s practice is to fund amounts sufficient to meet the requirements set forth in the applicable employee benefit and tax regulations. The cost recorded of $2.8 million and $1.8 million for the three months ended December 31 , 2015 and 2014 , respectively, and $8.6 million and $5.7 million for the nine months ended December 31 , 2015 and 2014 , respectively, was primarily related to service costs.

Note 5 — Income Taxes

The Company is incorporated in Switzerland but operates in various countries with differing tax laws and rates. Further, a portion of the Company’s income before taxes and the provision for (benefit from) income taxes are generated outside of Switzerland.

The income tax provision for the three months ended December 31 , 2015 was $1.4 million based on an effective income tax rate of 2.1% of pre-tax income, compared to an income tax provision of $0.7 million based on an effective income tax rate of 1.0% of pre-tax income for the three months ended December 31 , 2014 . The income tax provision for the nine months ended December 31 , 2015 was $7.0 million based on an effective income tax rate of 5.9% of pre-tax income, compared to an income tax provision of $8.5 million based on an effective income tax rate of 6.1% of pre-tax income for the nine months ended December 31 , 2014 .

The change in the effective income tax rate for the three and nine months ended December 31 , 2015 , compared to the three and nine months ended December 31 , 2014 , is due to the mix of income and losses in the various tax jurisdictions in which the Company operates. In the three months ended December 31 , 2015 and December 31 , 2014 , there was a discrete tax benefit of $8.4 million and $8.0 million , respectively, from the reversal of uncertain tax positions from the expiration of statutes of limitations. In the nine months ended December 31 , 2015 and December 31 , 2014 , there was an additional discrete tax benefit of $2.2 million and $0.8 million , respectively, from the preferential income tax rate reduction pursuant to the High and New Technology Enterprise Program in China.

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On December 18, 2015, the enactment of the Protecting Americans from Tax Hikes Act of 2015 in the U.S. extended the federal research and development tax credit permanently which had previously expired on December 31, 2014. The income tax provision in the three and nine months ended December 31 , 2015 reflected a $1.2 million tax benefit, respectively, as a result of the extension of the tax credit.

As of December 31 and March 31, 2015 , the total amount of unrecognized tax benefits due to uncertain tax positions was $75.9 million and $79.0 million , respectively, all of which would affect the effective income tax rate if recognized.

The Company had $67.9 million in non-current income taxes payable and $0.1 million in current income taxes payable, including interest and penalties, related to our income tax liability for uncertain tax positions as of December 31 , 2015 , compared to $72.1 million in non-current income taxes payable and $0.1 million in current income taxes payable as of March 31, 2015 .

The Company recognizes interest and penalties related to unrecognized tax positions in income tax expense. As of December 31 and March 31, 2015 , the Company had $4.3 million and $4.9 million of accrued interest and penalties related to uncertain tax positions, respectively.

Although the Company has adequately provided for uncertain tax positions, the provisions on these positions may change as revised estimates are made or the underlying matters are settled or otherwise resolved. During fiscal year 2016, the Company will continue to review its tax positions and provide for or reverse unrecognized tax benefits as issues arise. During the next 12 months, it is reasonably possible that the amount of unrecognized tax benefits could increase or decrease significantly due to changes in tax law in various jurisdictions, new tax audits and changes in the U.S. dollar as compared to other currencies. Excluding these factors, uncertain tax positions may decrease by as much as $17.1 million from the lapse of the statutes of limitations in various jurisdictions during the next 12 months.

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Note 6— Balance Sheet Components

The following table presents the components of certain balance sheet asset amounts as of December 31 and March 31, 2015 , excluding balances classified as held for sale (in thousands):



	December 31, 2015			March 31, 2015
Accounts receivable, net:
Accounts receivable	$	521,772		$	328,373
Allowance for doubtful accounts	(666		)	(707		)
Allowance for sales returns	(19,838		)	(17,236		)
Allowance for cooperative marketing arrangements*	(46,036		)	(24,919		)
Allowance for customer incentive programs*	(74,692		)	(47,364		)
Allowance for pricing programs*	(96,451		)	(70,951		)
	$	284,089		$	167,196
Inventories:
Raw materials	$	53,929		$	36,044
Finished goods	186,033			219,936
	$	239,962		$	255,980
Other current assets:
Income tax and value-added tax receivables	$	25,278		$	19,318
Deferred tax assets	27,798			27,790
Prepaid expenses and other assets	18,585			16,254
	$	71,661		$	63,362
Property, plant and equipment, net:
Property, plant and equipment	368,969			332,562
Less: accumulated depreciation and amortization	(269,824		)	(246,084		)
	$	99,145		$	86,478
Other assets:
Deferred tax assets	$	33,672		$	39,310
Trading investments for deferred compensation plan	15,265			17,237
Other assets	8,334			5,786
	$	57,271		$	62,333

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The following table presents the components of certain balance sheet liability amounts as of December 31 and March 31, 2015 , excluding balances classified as held for sale (in thousands):



	December 31, 2015		March 31, 2015
Accrued and other current liabilities:
Accrued personnel expenses	$	52,956	$	46,022
Indirect customer incentive programs *	32,080		19,730
Warranty accrual	12,099		12,630
Employee benefit plan obligation	1,969		1,219
Income taxes payable	3,732		5,759
Other current liabilities	108,383		77,984
	$	211,219	$	163,344
Non-current liabilities:
Warranty accrual	$	7,407	$	9,080
Obligation for deferred compensation plan	15,265		17,237
Employee benefit plan obligation	49,705		51,081
Deferred tax liability	1,761		1,936
Other non-current liabilities	11,209		11,861
	$	85,347	$	91,195

*The increase in the allowances for cooperative marketing arrangements, customer incentive programs, pricing programs and indirect customer incentive programs as of December 31, 2015 compared with March 31, 2015 was primarily the result of seasonality in the Company's business and changes in product mix, and increases in these marketing activities offset by price increases.

Note 7— Fair Value Measurements

Fair Value Measurements

The Company considers fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The Company utilizes the following three-level fair value hierarchy to establish the priorities of the inputs used to measure fair value:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted market prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

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The following table presents the Company’s financial assets and liabilities, that were accounted for at fair value, excluding assets related to the Company’s defined benefit pension plans, classified by the level within the fair value hierarchy (in thousands):



	December 31, 2015				March 31, 2015
	Level 1		Level 2		Level 1		Level 2
Cash equivalents:
Cash equivalents	$	80,000	$	—	$	264,597	$	—
	$	80,000	$	—	$	264,597	$	—
Trading investments for deferred compensation plan:
Money market funds	$	2,898	$	—	$	2,936	$	—
Mutual funds	12,367		—		14,301		—
	$	15,265	$	—	$	17,237	$	—
Foreign exchange derivative assets	$	—	$	22	$	—	$	2,080
Foreign exchange derivative liabilities	$	—	$	1,108	$	—	$	75

There were no material Level 3 financial assets as of December 31 or March 31, 2015 .

Investment Securities

The marketable securities for the Company's deferred compensation plan are recorded at a fair value of $15.3 million and $17.2 million as of December 31 , 2015 and March 31, 2015 , respectively, based on quoted market prices. Quoted market prices are observable inputs that are classified as Level 1 within the fair value hierarchy. Unrealized trading gains / (losses) related to trading securities for the three or nine months ended December 31 , 2015 and 2014 were not significant and are included in other income (expense), net .

Derivative Financial Instruments

Under certain agreements with the respective counterparties to the Company’s derivative contracts, subject to applicable requirements, the Company is allowed to net settle transactions of the same type with a single net amount payable by one party to the other. However, the Company presents its derivative assets and derivative liabilities on a gross basis on the Condensed Consolidated Balance Sheets as of December 31 , 2015 and March 31, 2015 .

The fair values of the Company’s derivative instruments not designated as hedging instruments were not material as of December 31 , 2015 or March 31, 2015 . The following table presents the fair values of the Company’s derivative instruments designated as hedging instruments and their accounting line presentation on its Condensed Consolidated Balance Sheets as of December 31 , 2015 and March 31, 2015 (in thousands):



	Derivatives
	Asset				Liability
	December 31, 2015		March 31, 2015		December 31, 2015		March 31, 2015
Cash flow hedges	$	17	$	2,080	$	1,032	$	—

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The amount of gain (loss) recognized on derivatives not designated as hedging instruments were not material in all periods presented herein. The following table presents the amounts of gains (losses) on the Company’s derivative instruments designated as hedging instruments and their locations on its condensed consolidated statements of operations and condensed consolidated statements of comprehensive income for the three and nine months ended December 31 , 2015 and 2014 (in thousands):



	Three Months Ended December 31,
	Amount of Gain (Loss) Deferred as  a Component of  Accumulated Other  Comprehensive Loss After Reclassification to Costs of Goods Sold						Amount of Loss (Gain) Reclassified from Accumulated Other Comprehensive Loss to Costs of Goods Sold					Amount of Gain (Loss) Immediately Recognized in Other Expense, Net
	2015			2014			2015		2014			2015		2014
Cash flow hedges	$	(17	)	$	(739	)	$	45	$	(2,025	)	$	64	$	36



	Nine Months Ended December 31,
	Amount of Gain (Loss) Deferred as  a Component of  Accumulated Other  Comprehensive Loss After Reclassification to Costs of Goods Sold					Amount of Loss (Gain) Reclassified from Accumulated Other Comprehensive Loss to Costs of Goods Sold						Amount of Gain (Loss) Immediately Recognized in Other Expense, Net
	2015			2014		2015			2014			2015		2014
Cash flow hedges	$	(3,679	)	$	3,198	$	(2,443	)	$	(1,840	)	$	207	$	(20	)

Cash Flow Hedges

The Company enters into currency exchange forward contracts to hedge against exposure to changes in currency exchange rates related to its subsidiaries’ forecasted inventory purchases. The Company has one entity with a euro functional currency that purchases inventory in U.S. Dollars. The primary risk managed by using derivative instruments is the currency exchange rate risk. However, there can be no assurance the hedges will offset more than a portion of the financial impact resulting from movements in currency exchange rates. The Company has designated these derivatives as cash flow hedges. These hedging contracts mature within four months , and are denominated in the same currency as the underlying transactions. Gains and losses in the fair value of the effective portion of the hedges are deferred as a component of accumulated other comprehensive loss until the hedged inventory purchases are sold, at which time the gains or losses are reclassified to cost of goods sold. The Company assesses the effectiveness of the hedges by comparing changes in the spot rate of the currency underlying the forward contract with changes in the spot rate of the currency in which the forecasted transaction will be consummated. If the underlying transaction being hedged fails to occur or if a portion of the hedge does not generate offsetting changes in the currency exposure of forecasted inventory purchases, the Company immediately recognizes the gain or loss on the associated financial instrument in other income (expense), net . Such gains and losses were not material during the three or nine months ended December 31 , 2015 and 2014 . Cash flows from such hedges are classified as operating activities in the condensed consolidated statements of cash flows. The notional amounts of currency exchange forward contracts outstanding related to forecasted inventory purchases were $48.4 million and $43.5 million at December 31 , 2015 and March 31, 2015 , respectively. The Company estimates that $0.3 million of net gains related to its cash flow hedges included in accumulated other comprehensive loss as of December 31, 2015 will be reclassified into earnings within the next 12 months.

Other Derivatives

The Company also enters into currency exchange forward and swap contracts to reduce the short-term effects of currency exchange rate fluctuations on certain foreign currency receivables or payables. These contracts generally mature within one month. The primary risk managed by using forward and swap contracts is the currency exchange rate risk. The gains or losses on currency exchange contracts are recognized in other income (expense), net based on the changes in fair value.

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The notional amounts of currency exchange forward and swap contracts outstanding as of December 31 and March 31, 2015 relating to foreign currency receivables or payables were $81.8 million and $61.7 million , respectively. Open forward and swap contracts outstanding at December 31 , 2015 and March 31, 2015 consisted of contracts in Mexican Pesos, Japanese Yen, British Pounds, Taiwanese Dollars and Australian Dollars to be settled at future dates at pre-determined exchange rates.

The fair value of all currency exchange forward and swap contracts is determined based on observable market transactions of spot currency rates and forward rates. Cash flows from these contracts are classified as operating activities in the Condensed Consolidated Statements of Cash Flows.

Note 8 — Goodwill and Other Intangible Assets

In accordance with ASC Topic 350-10 (“ASC 350-10”), the Company conducts a goodwill impairment analysis annually at December 31 or more frequently if indicators of impairment exist or if a decision is made to sell or exit a business. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill.

In reviewing goodwill for impairment, an entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (greater than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If an entity elects to perform a qualitative assessment and determines that an impairment is more likely than not, the entity is then required to perform the two-step quantitative impairment test, otherwise no further analysis is required. An entity also may elect not to perform the qualitative assessment and, instead, proceed directly to the two-step quantitative impairment test. The ultimate outcome of the goodwill impairment review for a reporting unit should be the same whether an entity chooses to perform the qualitative assessment or proceeds directly to the two-step quantitative impairment test. As of December 31, 2015 and March 31, 2015, all of the Company's goodwill is related to the peripherals reporting unit.

The Company performed its annual impairment analysis of the goodwill for its peripherals reporting unit at December 31, 2015 by performing a qualitative assessment and concluded that it was more likely than not that the fair value of its peripherals reporting unit exceeded its carrying amount. In assessing the qualitative factors, the Company considered the impact of these key factors: change in industry and competitive environment, growth in market capitalization to $2.5 billion as of December 31, 2015 from $2.3 billion a year ago, and budgeted-to-actual revenue performance from prior year.

The following table summarizes the activity in the Company’s goodwill balance during the nine months ended December 31 , 2015 (in thousands):



As of March 31, 2015	$	218,213
Currency impact	(15		)
As of December 31, 2015	$	218,198

Other Intangible Assets

Amortization expense for other intangible assets was $0.1 million and $0.2 million for the three months ended December 31 , 2015 and 2014 , respectively, and $0.4 million and $0.6 million for the nine months ended December 31 , 2015 and 2014 , respectively.

Note 9— Financing Arrangements

The Company had several uncommitted, unsecured bank lines of credit aggregating $45.5 million as of December 31 , 2015 . There are no financial covenants under these lines of credit with which the Company must comply. As of December 31 , 2015 , the Company had outstanding bank guarantees of $21.8 million under these

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lines of credit. There was no borrowing outstanding under these lines of credit as of December 31, 2015 or March 31, 2015 .

Note 10 — Commitments and Contingencies

Product Warranties

All of the Company’s peripherals products sold are covered by warranty to be free from defects in material and workmanship. Except for the products sold prior to April 1, 2014, the standard warranty period up to five years , starting from April 1, 2014, which had the standard warranty for all new products launched was changed to two years from date of purchase for European Countries and generally one year from date of purchase for all other countries. At the time of sale, the Company accrues a warranty liability for estimated costs to provide products, parts or services to repair or replace products in satisfaction of the warranty obligation. The Company’s estimate of costs to fulfill its warranty obligations is based on historical experience and expectations of future conditions. When the Company experiences changes in warranty claim activity or costs associated with fulfilling those claims, the warranty liability is adjusted accordingly.

Changes in the Company’s warranty liability for the three and nine months ended December 31 , 2015 and 2014 were as follows (in thousands):



	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Beginning of the period	$	20,399		$	22,204		$	21,710		$	24,380
Provision	1,870			2,381			5,804			6,607
Settlements	(2,763		)	(2,493		)	(8,008		)	(8,895		)
End of the period	$	19,506		$	22,092		$	19,506		$	22,092

Other Contingencies

The Company is subject to an ongoing formal investigation by the Enforcement Division of the U.S. Securities and Exchange Commission ("SEC"), relating to certain issues including the accounting for Revue inventory valuation reserves that resulted in the restatement described in the Fiscal 2014 Form 10-K, revision to the Company’s consolidated financial statements concerning warranty accruals and amortization of intangible assets presented in the Company’s Amended Annual Report on Form10-K/A, filed on August 7, 2013, and the Company’s transactions with a distributor for Fiscal Year 2007 through Fiscal Year 2009. The Company has entered into an agreement with the Enforcement Staff to extend the statute of limitations. The Company is cooperating with the investigation and, after discussions with the Enforcement Staff, the Company made an offer of settlement to resolve the matter, which is subject to approval by the SEC. The proposed settlement would be entered into by the Company without admitting or denying the SEC’s findings and would resolve alleged violations of certain provisions of the Securities Exchange Act of 1934 and related rules, including the anti-fraud provisions. Under the terms of the proposed settlement, the Company would pay $7.5 million in a civil penalty and agree not to commit or cause any violations of certain provisions of the Securities Exchange Act of 1934 and related rules. There is no assurance that the proposal will be approved by the SEC. In accordance with U.S. GAAP, the Company has made a corresponding accrual in its financial statements.

Guarantees

Logitech Europe S.A. guaranteed payments of certain third-party contract manufacturers’ purchase obligations. As of December 31 , 2015 , the maximum amount of this guarantee was $3.8 million , of which $1.3 million of guaranteed purchase obligations were outstanding.

Indemnifications

The Company indemnifies certain of its suppliers and customers for losses arising from matters such as intellectual property disputes and product safety defects, subject to certain restrictions. The scope of these indemnities varies, but in some instances, includes indemnification for damages and expenses, including reasonable attorneys’ fees. As of December 31 , 2015 , no amounts have been accrued for these indemnification

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provisions. The Company does not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under its indemnification arrangements.

The Company also indemnifies its current and former directors and certain of its current and former officers. Certain costs incurred for providing such indemnification may be recoverable under various insurance policies. The Company is unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not limited, the obligations are conditional in nature and the facts and circumstances involved in any situation that might arise are variable.

The Stock Purchase Agreement in connection with the investment by three venture capital firms in Lifesize, Inc. contains representations, warranties and covenants of Logitech and Lifesize, Inc. to the Investors. Logitech has agreed, subject to certain limitations, to indemnify the Investors and certain persons related to the Investors for certain losses resulting from breaches of or inaccuracies in such representations, warranties and covenants as well as certain other obligations, including third-party expenses, restructuring costs and pre-closing tax obligations of Lifesize.

Legal Proceedings

From time to time the Company is involved in claims and legal proceedings that arise in the ordinary course of its business. The Company is currently subject to several such claims and a small number of legal proceedings. The Company believes that these matters lack merit and intends to vigorously defend against them. Based on currently available information, the Company does not believe that resolution of pending matters will have a material adverse effect on its financial condition, cash flows or results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that the Company’s defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on the Company’s business, financial condition, cash flows or results of operations in a particular period. Any claims or proceedings against the Company, whether meritorious or not, can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors. Any failure to obtain necessary license or other rights, or litigation arising out of intellectual property claims, could adversely affect the Company’s business.

Note 11— Shareholders’ Equity

Share Repurchase Program

In March 2014, the Company’s Board of Directors approved the 2014 share buyback program, which authorizes the Company to use up to $250.0 million to purchase its own shares. The Company’s share buyback program is expected to remain in effect for a period of three years . Shares may be repurchased from time to time on the open market with consideration given to Logitech’s stock price, market conditions and other factors. During the nine months ended December 31 , 2015 , 3.5 million shares were repurchased for $48.8 million . There were no share repurchases during the three months ended December 31 , 2015 , or the three and nine months ended December 31 , 2014 .

Cash Dividends on Shares of Common Stock

In September 2015, the Company declared and paid cash dividends of CHF 0.51 (USD equivalent of $0.53 ) per common share, totaling $85.9 million , on the Company’s outstanding common stock.

Any future dividends will be subject to the approval of the Company's shareholders.

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Accumulated Other Comprehensive Income (Loss)

On total company basis, the components of accumulated other comprehensive income (loss) was as follows (in thousands):



	Accumulated Other Comprehensive Income (Loss)
	Cumulative Translation Adjustment (1)			Defined Benefit Plan (1)			Deferred Hedging Gains (Losses)			Total
March 31, 2015	$	(90,224	)	$	(26,964	)	$	3,951		$	(113,237	)
Other comprehensive income (loss)	(488		)	1,708			(3,679		)	(2,459		)
December 31, 2015	$	(90,712	)	$	(25,256	)	$	272		$	(115,696	)

(1) Tax effect was not significant as of December 31 or March 31, 2015.

Note 12 — Segment Information

As discussed in "Note 1 — The Company and Summary of Significant Accounting Policies and Estimates", the Company's Peripherals segment remains as the sole reporting segment reported in continuing operations.

The Company's Peripherals segment continues to encompass the design, manufacturing and marketing of peripherals for PCs, tablets and other digital platforms. Operating performance measures for Peripherals reports directly to the Company's Chief Executive Officer (“CEO”), who is considered to be the Company’s Chief Operating Decision Maker (“CODM”). The CEO periodically reviews information such as net sales and operating income (loss) to make business decisions. These operating performance measures do not include restructuring charges, net, share-based compensation expense and amortization of intangible assets.

Net sales by product categories and sales channels, excluding intercompany transactions, for the three and nine months ended December 31 , 2015 and 2014 were as follows (in thousands):



	Three Months Ended December 31,				Nine Months Ended December 31,
	2015		2014		2015		2014

Mobile Speakers	$	85,081	$	62,264	$	206,175	$	139,631
Gaming	77,706		70,188		189,000		164,570
Video Collaboration	26,216		16,935		67,460		45,968
Tablet & Other Accessories	35,873		55,100		73,222		114,974
Growth	224,876		204,487		535,857		465,143
Pointing Devices	139,711		141,789		381,364		382,524
Keyboards & Combos	116,531		114,051		324,458		325,217
Audio-PC & Wearables	57,300		56,741		149,341		162,480
PC Webcams	29,648		31,709		74,689		77,454
Home Control	25,684		25,116		48,548		56,224
Profit Maximization	368,874		369,406		978,400		1,003,899
Retail Strategic Sales	593,750		573,893		1,514,257		1,469,042
Non-Strategic	817		132		1,961		2,259
Retail	594,567		574,025		1,516,218		1,471,301
OEM	26,512		30,297		71,041		91,324
	$	621,079	$	604,322	$	1,587,259	$	1,562,625

Certain products within the retail product categories presented in prior periods have been reclassified to conform to the current periods' presentation.

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Net sales to unaffiliated customers by geographic region (based on the customers’ location) for the three and nine months ended December 31 , 2015 and 2014 were as follows (in thousands):



	Three Months Ended December 31,				Nine Months Ended December 31,
	2015		2014		2015		2014
Americas	$	279,286	$	266,499	$	719,735	$	678,343
EMEA	205,827		209,949		494,592		533,401
Asia Pacific	135,966		127,874		372,932		350,881
Total net sales	$	621,079	$	604,322	$	1,587,259	$	1,562,625

Sales are attributed to countries on the basis of the customers’ locations. The United States represented 40% and 35% of the Company’s total consolidated net sales from continuing operations for the three months ended December 31 , 2015 and 2014 , respectively. No other single country represented more than 10% of the Company's total consolidated net sales during those periods. One customer group of the Company represented 13% and 14% of total consolidated net sales from continuing operations for the three months ended December 31 , 2015 and 2014 , respectively. Another customer group of the Company represented 13% of sales for the three months ended December 31 , 2015 .

The United States represented 40% and 36% of the Company’s total consolidated net sales from continuing operations for the nine months ended December 31 , 2015 and 2014 , respectively. No other single country represented more than 10% of the Company’s total consolidated net sales from continuing operations during those periods. One customer group of the Company represented 14% and 15% of the Company’s total consolidated net sales from continuing operations for the nine months ended December 31 , 2015 and 2014 , respectively. Another customer group of the Company represented 10% of total consolidated net sales from continuing operations for the nine months ended December 31 , 2015 .

Revenues from sales to customers in Switzerland, the Company’s home domicile, represented 2% of the Company’s total consolidated net sales from continuing operations for all the periods presented herein.

Long-lived assets by geographic region were as follows (in thousands):



	December 31, 2015		March 31, 2015
Americas	$	41,170	$	44,263
EMEA	3,294		3,473
Asia Pacific	54,681		38,742
	$	99,145	$	86,478

Long-lived assets in the United States and China were $40.9 million and $50.3 million as of December 31 , 2015 , respectively, and $44.3 million and $33.4 million at March 31, 2015 , respectively. No other countries represented more than 10% of the Company’s total consolidated long-lived assets as of December 31 or March 31, 2015 . Long-lived assets in Switzerland, the Company’s home domicile, were $1.6 million and $1.5 million at December 31 and March 31, 2015 , respectively.

Note 13 — Restructuring

Restructuring Charges

During the first quarter of fiscal year 2016, the Company implemented a restructuring plan to exit the OEM business, reorganize Lifesize to sharpen its focus on its cloud-based offering, and streamline the Company's overall cost structure through product, overhead and infrastructure cost reductions with a targeted resource realignment. Restructuring charges incurred during the nine months ended December 31 , 2015 under this plan primarily consisted of severance and other ongoing and one-time termination benefits. Charges and other costs related to the workforce reduction and structure realignment are presented as restructuring charges in the Condensed Consolidated Statements of Operations. On a total company basis, including the Lifesize video conferencing business as reported in discontinued operations, the Company expects to incur approximately $22 million to $25

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million under this restructuring plan, including approximately $20.3 million to $23.3 million for cash severance and other personnel costs. Of these total amounts as of December 31, 2015, the Company has already paid $16.7 million . The Company expects to substantially complete this restructuring within the next 3 months.

The following tables summarize restructuring related activities during the nine months ended December 31 , 2015 from continuing operations:



	Restructuring - Continuing Operations
	Termination Benefits			Lease Exit Costs			Other			Total
Accrual balance at March 31, 2015	$	—		$	954		$	—		$	954
Charges, net	11,469			—			69			11,538
Cash payments	(3,727		)	(796		)	(44		)	(4,567		)
Accrual balance at June 30, 2015	$	7,742		$	158		$	25		$	7,925
Charges, net	3,124			38			(16		)	3,146
Cash payments	(4,608		)	(115		)	(9		)	(4,732		)
Accrual balance at September 30, 2015	$	6,258		$	81		$	—		$	6,339
Credits, net	(1,049		)	299			84			(666		)
Cash payments	(1,716		)	(255		)	6			(1,965		)
Accrual balance at December 31, 2015	$	3,493		$	125		$	90		$	3,708

The following tables summarize restructuring related activities during the nine months ended December 31 , 2015 from discontinued operations:



	Restructuring - Discontinued Operations
	Termination Benefits			Lease Exit Costs			Other			Total
Accrual balance at March 31, 2015	$	—		$	85		$	—		$	85
Charges, net	1,325			—			132			1,457
Cash payments	(948		)	—			(107		)	(1,055		)
Accrual balance at June 30, 2015	$	377		$	85		$	25		$	487
Charges, net	5,442			—			107			5,549
Cash payments	(504		)	(7		)	(132		)	(643		)
Accrual balance at September 30, 2015	$	5,315		$	78		$	—		$	5,393
Charges, net	376			—			688			1,064
Cash payments	(3,688		)	(7		)	(13		)	(3,708		)
Accrual balance at December 31, 2015	$	2,003		$	71		$	675		$	2,749		*

* Includes $2.2 million in accrued and other current liabilities in continuing operations as it's expected to be paid by the continuing operations pursuant to the transaction occurred on December 28, 2015 (See Note 2) and thus does not meet the held for sale criteria pursuant to ASC 360.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the interim unaudited Condensed Consolidated Financial Statements and related notes.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include, among other things, statements regarding our business strategy, the impact of investment prioritization decisions, product offerings, sales and marketing initiatives, strategic investments, addressing execution challenges, trends in consumer demand affecting our products and markets, trends in the composition of our customer base, our current or future revenue and revenue mix by product, among our lower- and higher-margin products, our new product introductions and by geographic region, our expectations regarding the potential growth opportunities for our products in mature and emerging markets and the enterprise market, our expectations regarding economic conditions in international markets, including China, Russia and Ukraine, our expectations regarding trends in global economic conditions and consumer demand for PCs and mobile devices, tablets, gaming, audio, pointing devices, wearables, remotes and other accessories and computer devices and the interoperability of our products with such third party platforms, our expectations regarding the convergence of markets for computing devices and consumer electronics, our expectations regarding the growth of cloud-based services, our expected reduction in size of our product portfolio and dependence on new products, our competitive position and the effect of pricing, product, marketing and other initiatives by us and our competitors, the potential that our new products will overlap with our current products, our expectations regarding competition from well-established consumer electronics companies in existing and new markets, our expectations regarding the timing of our restructuring, its impact on our financial results and its composition, our expectations regarding the recoverability of our goodwill, goodwill impairment charge estimates and the potential for future impairment charges, the impact of our current and proposed product divestitures, changes in our planned divestitures, and the timing thereof, significant fluctuations in currency exchange rates and commodity prices, the impact of new product introductions and product innovation on future performance or anticipated costs and expenses and the timing thereof, cash flows, the sufficiency of our cash and cash equivalents, cash generated and available borrowings (including the availability of our uncommitted lines of credit) to fund future cash requirements, our expectations regarding future sales compared to actual sales, our expectations regarding share repurchases, dividend payments and share cancellations, our expectations regarding our future working capital requirements and our anticipated capital expenditures needed to support our product development and expanded operations, our expectations regarding our future tax benefits and the adequacy of our provisions for uncertain tax positions, our expectations regarding our potential indemnification obligations, and the outcome of pending or future legal proceedings and tax audits, our belief that our disclosure controls and procedures are effective at the reasonable assurance level, the results of any inquiry of the SEC and/or potential litigation related to the restatement of our consolidated financial statements and potential settlement thereof, our expectations regarding the impact of new accounting pronouncements on our operating results, and our ability to achieve and sustain renewed growth, profitability and future success. Forward-looking statements also include, among others, those statements including the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,”, "seek", “should,” “will,” and similar language. These forward-looking statements involve risks and uncertainties that could cause our actual performance to differ materially from that anticipated in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in Part II, Item 1A of this quarterly report on Form 10-Q. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Overview of Our Company

Logitech is a world leader in products that connect people to the digital experiences they care about. Spanning multiple computing, communication and entertainment platforms, we develop and market innovative hardware and software products that enable or enhance digital navigation, music and video entertainment, gaming, social networking, audio and video communication over the Internet and home-entertainment control.

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Agreement”) with entities affiliated with three venture capital firms - Redpoint Ventures, Sutter Hill Ventures and Meritech Capital Partners (the "Venture Investors"). Pursuant to the terms of the Stock Purchase Agreement, we sold 2,500,000 shares of Series B Preferred Stock of Lifesize to the Venture Investors for cash proceeds of $2,500,000 and retained 12,000,000 non-voting shares of Series A Preferred Stock of Lifesize. The shares of Series A Preferred Stock of Lifesize retained by the Company represent 37.5% of the total shares outstanding immediately after the closing of the transactions (the "Closing"). Lifesize also issued 17,500,000 shares of Series B Preferred Stock to the Venture Investors for cash proceeds of $17,500,000. The shares of Series B Preferred Stock held by the Venture Investors represent 62.5% of the total shares outstanding immediately after the Closing. In addition, Lifesize reserved 8,000,000 shares of common stock for issuance pursuant to a stock plan to be adopted by Lifesize following the Closing (the “Employee Pool”), none of which are issued or outstanding at the Closing. The divestiture of the Lifesize video conferencing business is effective on December 28, 2015. The Stock Purchase Agreement contains representations, warranties and covenants of the parties and includes certain indemnification obligations of the Company to the Ventures Investors. See “Note 10 - Commitments and Contingencies” for more information. The Stock Purchase Agreement also contains certain post-closing working capital adjustments. Post closing continuing involvement with the discontinued operations include certain customary services and support which are expected to be provided to Lifesize during the transition period from December 28, 2015 until approximately the end of the third quarter of fiscal year 2017.

The disposition of the Lifesize video conferencing business represents a strategic shift as contemplated by ASC 205-20, Presentation of Financial statement - Discontinued Operations , ("ASC 205-20") that will have a major effect on our operations and financial results. As such, we have classified the results of its Lifesize video conferencing business as discontinued operations in our condensed consolidated statement of operations for all periods presented. Additionally, the related assets and liabilities associated with the discontinued operations are classified as held for sale in its condensed consolidated balance sheet for all periods presented. See "Note 1 - The Company and Summary of Significant Accounting Policies" and "Note 2 - Discontinued Operations". We expect to recognize a disposal gain of $15 million to $20 million as a result of the divestiture, which will be reported in discontinued operations included in the results of fourth quarter of fiscal year 2016. Unless indicated otherwise, the information included in Item 2 relates to our continuing operations and historical financial segment information has been recast to conform to this new presentation within our financial statements.

As a result of the event discussed above, the composition of our previously reported segments changed significantly, such that the remaining peripheral segment is the only segment reported in continuing operations, which encompasses the design, manufacturing and marketing of peripherals for PCs, tablets and other digital platforms. We classify our retail product categories as growth, profit maximization, and non-strategic. Our growth product categories are: Mobile Speakers, Gaming, and Tablet & Other Accessories. Our profit maximization categories are: Pointing Devices, Keyboards & Combos, Audio-PC & Wearables, PC Webcams, and Home Control. See Note 12 to our unaudited condensed consolidated financial statements for information regarding our business and the geographies in which we operate.

Our brand, portfolio management, product development and engineering teams are responsible for product strategy, technological innovation, product design and development and to bring our products to market.

Our design organization is responsible for developing and building the Logitech brand, consumer insights and digital marketing. Our regional retail sales and marketing activities are organized into three geographic areas: Americas (North and South America), EMEA (Europe, Middle East and Africa) and Asia Pacific (including, among other countries, China, Taiwan, Japan and Australia).

We sell our products to a network of retailers including direct sales to retailers and indirect sales through distributors. Our worldwide retail network includes wholesale distributors, consumer electronics retailers, mass merchandisers, specialty electronics, computers and telecommunications stores, value-added resellers and online merchants. Sales of our retail peripherals were 96% and 94% of our net sales for the nine months ended December 31 , 2015 and 2014 , respectively. The large majority of our revenues have historically been derived from sales of our retail peripherals products for use by consumers. Sales to OEM customers were 4% and 6% of our net sales for the nine months ended December 31 , 2015 and 2014 , respectively. In April 2015, we announced our intent to exit the OEM business. The OEM business exit plan was completed in December 2015.

We seek to fulfill the increasing demand for interfaces between people and the expanding digital world across multiple platforms and user environments. The interface evolves as platforms, user models and our target markets evolve. As access to digital information has expanded, we have extended our focus to mobile devices, the digital

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home, and the enterprise as access points to the Internet and the digital world. All of these platforms require interfaces that are customized according to how the devices are used. We believe that continued investment in product research and development is critical to creating the innovation required to strengthen our competitive advantage and to drive future sales growth. We are committed to identifying and meeting current and future consumer trends with new and improved product technologies, as well as leveraging the value of the Logitech brand from a competitive, channel partner and consumer experience perspective.

We believe that innovation, design, and product quality are important to gaining market acceptance and maintaining market leadership.

From time to time, we may seek to partner with, or acquire when appropriate, companies that have products, personnel, and technologies that complement our strategic direction. We continually review our product offerings and our strategic direction in light of our profitability targets, competitive conditions, changing consumer trends and the evolving nature of the interface between the consumer and the digital world.

Adoption of New Accounting Pronouncements

We have adopted ASU No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" on a prospective basis and applied the guidance to our disposed Lifesize video conferencing business. See "Note 1 - The Company and Summary of Significant Accounting Policies and Estimates" to the condensed consolidated financial statements for more information.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S. GAAP (Generally Accepted Accounting Principles in the United States of America) requires us to make judgments, estimates and assumptions that affect reported amounts of assets, liabilities, net sales and expenses, and the disclosure of contingent assets and liabilities.

We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, actual results could materially differ from those estimates. Management has discussed the development, selection and disclosure of these critical accounting estimates with the Audit Committee of the Board of Directors.

We conduct a goodwill impairment analysis annually at December 31 or more frequently if indicators of impairment exist or if a decision is made to sell or exit a business. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill. As of December 31, 2015, all of the Company's goodwill is related to the peripherals reporting unit.

We performed our annual impairment analysis of the goodwill at December 31, 2015 by performing a qualitative assessment and concluded that it was more likely than not that the fair value of the peripheral reporting unit exceeded its carrying amount. Refer to the Note 8 to the consolidated financial statements included in this report of our Form 10-Q for the disclosures.

There have been no other new or material changes to the critical accounting policies and estimates discussed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2015 that are of significance, or potential significance to the Company.

Summary of Financial Results

Our total net sales for the three months ended December 31 , 2015 increased 2.8% compared to the three months ended December 31 , 2014 , due to stronger retail sales, partially offset by declines in OEM.

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Our total net sales for the nine months ended December 31 , 2015 increased 1.6% compared to the nine months ended December 31 , 2014 .

Total retail sales increased 4% and units sold increased 1% during the three months ended December 31 , 2015 , compared to the three months ended December 31 , 2014 . We experienced an increase in sales of 5% in the Americas region, an increase in sales of 9% in the Asia Pacific region, and a decrease in sales of 1% in the EMEA region.

Total retail sales increased 3% and units sold remained flat during the nine months ended December 31 , 2015 , compared to the nine months ended December 31 , 2014 . We experienced an increase in sales of 7% in the Americas region, an increase in sales of 11% in the Asia Pacific region, and a decrease in sales of 6% in the EMEA region.

OEM net sales decreased 12% and 22% , in the three and nine months ended months ended December 31 , 2015 , respectively, compared to the three and nine months ended December 31 , 2014 . The decline was expected as we announced, in April 2015, our plan to exit the OEM business which was completed in December 2015.

Our gross margin for the three months ended December 31 , 2015 decreased to 33.6% from 35.2% for the three months ended December 31 , 2014 . Our gross margin for the nine months ended December 31 , 2015 decreased to 34.0% from 36.1% for the nine months ended December 31 , 2014 . The decrease in gross margin is primarily driven by the unfavorable fluctuations in currency exchange rates, partially offset by sales price increase, savings from supply chain efficiency, and a one-time inventory reserve release following the successful depletion of our OEM inventory of approximately $5 million in the current quarter.

Operating expenses for the three months ended December 31 , 2015 were 22.5% of net sales, compared to 23.7% in the same period of the prior fiscal year. The decrease was primarily due to the savings from general and administration expenses, favorable currency impact, reduction related to the prior year's independent Audit committee investigation and related expenses, partially offset by the increase in research and development expense.

Operating expenses for the nine months ended December 31 , 2015 were 26.5% of net sales, compared to 27.1% in the same period of the prior fiscal year. The decrease was primarily due to the savings from general and administration expenses, favorable currency impact, reduction related to the prior year's independent Audit committee investigation and related expenses, partially offset by the increase in research and development expense and restructuring charges related to our restructuring plan announced in April 2015.

Net income from continuing operations for the three and nine months ended December 31 , 2015 was $68.0 million and $111.4 million , respectively, compared to net income from continuing operations of $66.4 million and $129.6 million in the three and nine months ended December 31 , 2014 , respectively.

Net loss from discontinued operations for the three and nine months ended December 31, 2015 were $3.0 million and $20.7 million , respectively, compared to net loss from discontinued operations of $3.6 million and $11.1 million in the three and nine months ended December 31, 2014 , respectively.

Given our global sales presence and the reporting of our financial results in U.S. Dollars, our financial results in fiscal year 2016 have been affected by significant shifts in currency exchange rates compared to fiscal year 2015. See “Results of Operations” for information on the effect of currency exchange results on our net sales. If the U.S. Dollar remains at its current strong levels in comparison to other currencies, this will affect our results of operations in future periods as well.

Trends in Our Business

Our sales of PC peripherals for use by consumers in the Americas and Europe have historically made up the large majority of our revenues. In the last several years, the PC market has changed dramatically and there continues to be significant weakness in the global market for new PCs. This weakness had a negative impact on our net sales in all of our PC-related categories with the exception of PC Gaming.

We believe our future growth will be determined by our ability to create innovative products in a timely manner across multiple digital platforms in our growth categories such as tablets and smartphones, gaming, digital music

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devices and video collaboration, to offset the decline in our PC peripherals categories. The following discussion represents key trends in our business.

Trends Specific to our business

Mobile Speakers : The mobile speaker market grew throughout fiscal year 2015 and the first nine months of fiscal year 2016 driven by growing consumption of music through mobile devices such as smartphones and tablets. This market growth, together with our investments in the UE brand, our introduction of new products and our ability to gain market share during fiscal year 2015 and the first half of fiscal year 2016, have driven our growth in Mobile Speakers.

Gaming : The PC Gaming platform continues to show strong growth as online and multi-platform gaming gain greater popularity and gaming content becomes increasingly more demanding. We believe Logitech is well positioned to benefit from the PC Gaming market growth.

PC Peripherals (Pointing Devices, Keyboards & Combos, PC Webcams and Audio - PC & Wearables): Although the installed base of PC users is large, consumer demand for new PCs has declined in recent years. As a consequence, consumer demand for PC peripherals is slowing, or in some cases declining. Our PC speakers sales are expected to decline as consumers migrate towards mobile speaker solutions such as UE Boom.

Enterprise Market: We are continuing our efforts to create and sell products and services to enterprises, with our Video Collaboration products. For example, we have introduced the Logitech ConferenceCam Connect and PTZ Pro camera video collaboration products. Growing our enterprise peripherals business will continue to require investment in selected business-specific products, targeted sales force, product marketing, and sales channel development.

Tablets and Other Accessories: Smaller mobile computing devices, such as tablets with touch interfaces, have created new markets and usage models for peripherals and accessories. We offer a variety of products for the Apple and Android platforms, including keyboard and folios that enhance the consumers mobile device experiences.We have seen the market decline starting in fiscal year 2015 with continued declines in the first nine months of fiscal year 2016 for the iPad platform, which has impacted the sales of our tablet peripherals.

OEM Business: Sales of our OEM mice and keyboards have historically made up the bulk of our OEM sales. In recent years, there has been a dramatic shift away from desktop PCs and there continues to be weakness in the global market for PCs, which has adversely affected our sales of OEM mice and keyboards, all of which are sold with name-brand desktop PCs. As a result, we announced in April 2015 to exit our OEM business and the exit of our OEM business was completed in December 2015.

Trends in Non-Strategic Peripherals Product Categories: We continue to evaluate our product offerings and exit those which no longer support our strategic direction.

Business Application Suite: In fiscal year 2016, we implemented the upgrade of our worldwide business application suite from Oracle version 11i to Oracle version R12. This upgrade created delays in our processing of customer claims related to cooperative marketing arrangements, direct and indirect customer incentive programs and pricing programs. While we are working on enhancing the operational efficiency of the claims processing module in our worldwide business application suite, this has resulted and it may continue to result in higher accruals and allowances for such programs.

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Non-GAAP Measures

We refer to our net sales excluding the impact of currency exchange rate fluctuations as "constant dollar" sales. Constant dollar sales is a non-GAAP financial measure, which is information derived from consolidated financial information but not presented in our financial statements prepared in accordance with U.S. GAAP. Our management uses these non-GAAP measures in its financial and operational decision-making, and believes these non-GAAP measures, when considered in conjunction with the corresponding GAAP measures, facilitate a better understanding of changes in net sales. Percentage of constant dollar sales growth is calculated by translating prior period sales in each local currency at the current period’s average exchange rate for that currency and comparing that to current period sales.

Results of Operations

Net Sales

Net sales by channel for the three and nine months ended December 31 , 2015 and 2014 were as follows (Dollars in thousands):



	Three Months Ended December 31,						Nine Months Ended December 31,
	2015		2014		Change		2015		2014		Change
Retail	$	594,567	$	574,025	4	%	$	1,516,218	$	1,471,301	3	%
OEM	26,512		30,297		(12	)	71,041		91,324		(22	)
Total net sales	$	621,079	$	604,322	3		$	1,587,259	$	1,562,625	2

Retail:

Our net retail sales in the three and nine months ended December 31 , 2015 increased 4% and 3% , respectively, compared to the same periods of the prior fiscal year. Sales increases in the Americas and Asia pacific regions, partially offset by a decrease in the EMEA region during the three and nine months ended December 31 , 2015 . If currency exchange rates had been constant in the three and nine months ended December 31 , 2015 and 2014 , our constant dollar retail sales would have increased by 9% and 10% , respectively.

OEM:

OEM net sales decreased 12% and 22% in the three and nine months ended December 31 , 2015 , respectively, compared to the same periods of the prior fiscal year. Given our heightened focus on our growing Retail Strategic business, the planned exit of our OEM business was completed in December 2015. If currency exchange rates had been constant in the three and six months ended December 31 , 2015 and 2014 , our constant dollar OEM net sales would have decreased by 12% and 22% , respectively.

Allowances and Accruals for Marketing and Pricing Items

As discussed in the Note 6 to our condensed consolidated financial statements, the increase in the allowances and accruals for cooperative marketing arrangements, customer incentive programs and pricing programs ("Marketing and Pricing Items") as of December 31, 2015 compared with March 31, 2015 was primarily the result of seasonality in the Company's business and changes in product mix, and increases in Marketing and Pricing Items offset by price increases.

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Retail Sales by Region

The following table presents the change in retail sales by region for the three and nine months ended December 31 , 2015 , compared to the three and nine months ended December 31 , 2014 :

Americas:

Retail sales in the Americas region increased 5% and 7% , respectively, during the three and nine months ended December 31 , 2015 , compared to the same periods of the prior fiscal year. If currency exchange rates had been constant in the three and nine months ended December 31 , 2015 and 2014 , our constant dollar retail sales would have increased 7% and 8% , respectively. This increase was led by growth in Video Collaboration and Mobile Speakers.

EMEA:

Retail sales in the EMEA region decreased 1% and 6% , respectively, during the three and nine months ended December 31 , 2015 , compared to the same periods of the prior fiscal year. If currency exchange rates had been constant in the three and nine months ended December 31 , 2015 and 2014 , our constant dollar retail sales would have increased 10% and 6% , respectively. Excluding the currency impact, this increase was led by growth in Gaming, Video Collaboration and Mobile Speakers.

Asia Pacific:

Retail sales in the Asia Pacific region increased 9% and 11% during the three and nine months ended December 31 , 2015 , compared to the same periods of the prior fiscal year. If currency exchange rates had been constant in the three and nine months ended December 31 , 2015 and 2014 , our constant dollar retail sales would have increased 15% and 17% , respectively. We achieved sales increases in Video Collaboration, Mobile Speakers, Gaming, Keyboards & Combos, and PC Webcams during the three and nine months ended December 31 , 2015 .

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Net Sales by Product Category

Net sales by product category for the three and nine months ended December 31 , 2015 and 2014 were as follows (Dollars in thousands):



	Three Months Ended December 31,						Nine Months Ended December 31,
	2015		2014		Change		2015		2014		Change
Mobile Speakers	$	85,081	$	62,264	37	%	$	206,175	$	139,631	48	%
Gaming	77,706		70,188		11		189,000		164,570		15
Video Collaboration	26,216		16,935		55		67,460		45,968		47
Tablet & Other Accessories	35,873		55,100		(35	)	73,222		114,974		(36	)
Growth	224,876		204,487		10		535,857		465,143		15
Pointing Devices	139,711		141,789		(1	)	381,364		382,524		—
Keyboards & Combos	116,531		114,051		2		324,458		325,217		—
Audio-PC & Wearables	57,300		56,741		1		149,341		162,480		(8	)
PC Webcams	29,648		31,709		(6	)	74,689		77,454		(4	)
Home Control	25,684		25,116		2		48,548		56,224		(14	)
Profit Maximization	368,874		369,406		—		978,400		1,003,899		(3	)
Retail Strategic Sales	593,750		573,893		3		1,514,257		1,469,042		3
Non-Strategic	817		132		519		1,961		2,259		(13	)
Retail	594,567		574,025		4		1,516,218		1,471,301		3
OEM	26,512		30,297		(12	)	71,041		91,324		(22	)
	621,079		604,322		3		1,587,259		1,562,625		2

Certain products within the retail product categories presented in prior periods have been reclassified to conform to the current period's presentation.

Retail Strategic Sales

During the three and nine months ended December 31 , 2015 , Retail Strategic sales increased 3% and 3% , respectively, compared to the same periods of prior fiscal year. If currency exchange rates had been constant for the three and nine months ended December 31 , 2015 and 2014, our constant dollar retail strategic sales would have increased 9% and 10% , respectively.

Retail Strategic - Growth Categories:

During the three and nine months ended December 31 , 2015 , Retail Strategic sales - Growth categories increased 10% and 15% , respectively, compared to the same periods of prior fiscal year. If currency exchange rates had been constant for the three and nine months ended December 31 , 2015 and 2014, our constant dollar Retail Strategic sales - Growth categories would have increased 17% and 23% , respectively.

Mobile Speakers

Our retail Mobile Speakers category is made up entirely of Bluetooth wireless speakers.

Retail sales and units sold of Mobile Speakers increased 37% and 34% , respectively, for the three month period ended December 31 , 2015 , compared to the same period of the prior fiscal year. Retail sales and units sold of Mobile Speakers increased 48% and 38% , respectively, for the nine month period ended December 31 , 2015 , compared to the same period of the prior fiscal year. Mobile Speaker sales increased significantly for both periods primarily due to the introduction of the UE Megaboom in the fourth quarter of fiscal year 2015 and the UE BOOM 2 in the second quarter of fiscal year 2016.

Gaming

Our retail Gaming category comprises Gaming mice, keyboards, headsets, gamepads and steering wheels.

Retail sales and units sold of Gaming increased 11% and 16% , respectively, for the three months ended December 31 , 2015 , compared to the same period of the prior fiscal year. Retail sales and units sold of Gaming

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increased 15% and 14% , respectively, for the nine months ended December 31 , 2015 , compared to the same period of the prior fiscal year. Gaming sales increased significantly for both periods primarily driven by increases in Gaming keyboards and Gaming headsets with the new product launch of G933 and G633 headsets.

Video Collaboration

Our retail Video Collaboration category primarily includes video products and certain headset products that can connect small and medium sized user groups.

Retail sales of Video Collaboration increased 55% and units sold increased 64% in the three months ended December 31 , 2015 , compared to the same period of the prior fiscal year. Retail sales of Video Collaboration increased 47% and units sold increased 51% in the nine months ended December 31 , 2015 , compared to the same period of the prior fiscal year. The increases in both periods were primarily due to growth in our conference cams.

Tablet & Other Accessories

Our retail Tablet & Other Accessories consists of keyboards for tablets and covers for tablets as well as other accessories for mobile devices.

Retail sales of Tablet & Other Accessories decreased 35% and units sold decreased 38% in the three months ended December 31 , 2015 , compared to the same period of the prior fiscal year. The reduction in sales reflects the combination of a declining market for iPad shipments, partially offset by the new product introduction of Create backlit tablet keyboard case for iPad Pro.

Retail sales of Tablet & Other Accessories decreased 36% and units sold decreased 27% in the nine months ended December 31 , 2015 , compared to the same period of the prior fiscal year.

Retail Strategic - Profit Maximization Categories:

During the three and nine months ended December 31 , 2015 , Retail Strategic sales - Profit Maximization categories remained flat and decreased 3% , respectively, compared to the same periods of the prior fiscal year. If currency exchange rates had been constant for the three and nine months ended December 31 , 2015 and 2014, our constant dollar Retail Strategic sales - Profit Maximization categories would have increased 5% and 3% , respectively.

Pointing Devices

Our retail Pointing Devices category comprises mice, touchpads and presenters.

Retail sales of Pointing Devices decreased 1% and units sold were flat in the three months ended December 31 , 2015 , compared to the same period of the prior fiscal year. Sales decreased in low-end and mid-range products, partially offset by an increase at the high end due to the new product introduction of the MX Master Wireless Mouse and MX Anywhere 2 Wireless Mouse.

Retail sales of Pointing Devices remained flat while retail units sold decreased 1% in the nine months ended December 31 , 2015 , compared to the same period of the prior fiscal year.

Keyboards and Combos

Our retail Keyboards & Combos category comprises PC keyboards and keyboard/mice combo products.

Retail sales of Keyboards & Combos increased 2% and units sold increased 4% in the three months ended December 31 , 2015 , compared to the same period of the prior fiscal year. Sales growth in the Americas region was partially offset by sales decline in the EMEA region. The sales increase was primarily driven by cordless products, partially offset by a decrease in living room keyboard products.

Retail sales of Keyboards & Combos remained flat and units sold increased 3% in the nine months ended December 31 , 2015 , compared to the same period of the prior fiscal year.

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Audio-PC & Wearables

Our retail Audio-PC & Wearables category comprises PC speakers, PC headsets and in-ear earphones.

Audio-PC & Wearables sales increased 1% and units sold decreased 7% in the three months ended December 31 , 2015 , compared to the same period of the prior fiscal year. The increase was driven by the new product introduction of the Z533 Speaker in the second quarter of fiscal year 2016.

Audio-PC & Wearables sales decreased 8% and units sold decreased 9% in the nine months ended December 31 , 2015 , compared to the same period of the prior fiscal year. The decrease was primarily due to decreases in PC speaker retail sales, reflecting a category in structural decline as music consumption migrates to mobile platforms.

PC Webcams

Our retail PC Webcams category comprises retail webcams for consumer applications.

Retail PC Webcams sales decreased 6% and units sold decreased 1% in the three months ended December 31 , 2015 , compared to the same period of the prior fiscal year. The decrease was primarily driven by the declines in the Americas and EMEA regions, partially offset by growth in the Asia Pacific region.

Retail PC Webcams sales decreased 4% and units sold decreased 5% in the nine months ended December 31 , 2015 , compared to the same period in the prior fiscal year.

Home Control

Our retail Home Control category comprises our Harmony branded products.

Home Control retail sales increased 2% and units sold were flat in the three months ended December 31 , 2015 , compared to the same period of the prior fiscal year. The increase was due to the new product introduction of the Harmony Elite.

Home Control retail sales decreased 14% and units sold decreased 5% in the nine months ended December 31 , 2015 , compared to the same period of the prior fiscal year.

Non-Strategic

This category comprises a variety of products out of which we currently intend to transition, or have already transitioned, because they are no longer strategic to our business. Product categories included in this category mainly consist of TV Camera, Digital Video Security, TV and home speakers, and Keyboard/ Desktop accessories.

OEM

OEM sales decreased 12% and units sold decreased 50% during the three months ended December 31 , 2015 , compared to the same period of the prior fiscal year. As announced in April 2015, the plan to exit the OEM business by the end of December 2015 was complete.

OEM sales decreased 22% and units sold decreased 29% during the nine months ended December 31 , 2015 , compared to the same period of the prior fiscal year.

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Gross Profit

Gross profit for three and nine months ended December 31 , 2015 and 2014 was as follows (Dollars in thousands):



	Three Months Ended December 31,								Nine Months Ended December 31,
	2015			2014			Change		2015			2014			Change
Net sales	$	621,079		$	604,322		3	%	$	1,587,259		$	1,562,625		2	%
Cost of goods sold	412,582			391,715			5		1,048,312			998,842			5
Gross profit	$	208,497		$	212,607		(2	)	$	538,947		$	563,783		(4	)
Gross margin	33.6		%	35.2		%			34.0		%	36.1		%

Gross profit consists of net sales, less cost of goods sold, which includes materials, direct labor and related overhead costs, costs of manufacturing facilities, royalties, costs of purchasing components from outside suppliers, distribution costs, warranty costs, customer support, outside processing costs, write-down of inventories and amortization of intangible assets.

Gross margin decreased for the three and nine months ended December 31 , 2015 compared to the same periods of the prior fiscal year. The decrease in gross margin is primarily driven by the unfavorable fluctuations in currency exchange rates, partially offset by sales price increase, savings from supply chain efficiency, and a one-time inventory reserve release following the successful depletion of our OEM inventory of approximately $5 million in the current quarter.

Operating Expenses

Operating expenses for the three and nine months ended December 31 , 2015 and 2014 were as follows (Dollars in thousands):



	Three Months Ended December 31,								Nine Months Ended December 31,
	2015			2014			Change		2015			2014			Change
Marketing and selling	$	87,295		$	87,486		—	%	$	241,924		$	246,103		(2	)%
% of net sales	14.1		%	14.5		%			15.2		%	15.7		%
Research and development	29,273			27,397			7		86,336			80,009			8
% of net sales	4.7		%	4.5		%			5.4		%	5.1		%
General and administrative	24,080			28,172			(15	)	77,966			96,762			(19	)
% of net sales	3.9		%	4.7		%			4.9		%	6.2		%
Restructuring charges (credits), net	(666		)	—			NM		14,018			(35		)	NM
% of net sales	(0.1		)%	—		%			0.9		%	—		%
Total operating expenses	$	139,982		$	143,055		(2	)	$	420,244		$	422,839		(1	)%
% of net sales	22.5		%	23.7		%			26.5		%	27.1		%

NM=Not Meaningful.

Marketing and Selling

Marketing and selling expenses consist of personnel and related overhead, corporate and product marketing, advertising, trade shows, customer and technical support and facilities costs.

During the three months ended December 31 , 2015 , marketing and selling expenses remained flat compared to the same period in the prior fiscal year.

During the nine months ended December 31 , 2015 , marketing and selling expenses decreased 2% compared to the same period in the prior fiscal year. The decrease was primarily due to savings from exiting the OEM business and currency impact offset by investments in growth product categories.

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Research and Development

Research and development expenses consist of personnel and related overhead, contractors and outside consultants, supplies and materials, equipment depreciation and facilities costs, all associated with the design and development of new products and enhancements of existing products.

During the three months ended December 31 , 2015 , research and development expenses increased 7% compared to the same period in the prior fiscal year. The increase was primarily due to a $0.6 million increase in our Digital Music products development as well as a $0.5 million investment increase in Seeds (new business opportunities) development.

During the nine months ended December 31 , 2015 , research and development expenses increased 8% compared to the same period in the prior fiscal year. The increase was primarily due to a $4.4 million investment increase in Seeds development as well as a $1.3 million investment in our Digital Music products.

General and Administrative

General and administrative expenses consist primarily of personnel and related overhead costs for the finance, information systems, executive, people & culture, legal and facilities functions.

During the three months ended December 31 , 2015 , general and administrative expenses decreased 15% compared to the same period in the prior fiscal year. The decrease was primarily due to a $2.8 million reduction related to the prior year's independent Audit committee investigation and related expenses and a $0.9 million facility cost savings from building consolidation.

During the nine months ended December 31 , 2015 , general and administrative expenses decreased 19% compared to the same period in the prior fiscal year. The decrease was primarily due to a $19.0 million reduction related to the prior year's independent Audit committee investigation and a $3.7 million facility cost savings from office building consolidation, partially offset by a $3.5 million additional accrual for our proposed settlement with the SEC (see Other Contingencies for more details).

Restructuring Charges

During the first quarter of fiscal year 2016, we implemented a restructuring plan to exit the OEM business, reorganize Lifesize to sharpen our focus on its cloud-based offering, and streamline our overall cost structure through product, overhead and infrastructure cost reductions with a targeted resource realignment. Restructuring charges incurred during the nine months ended December 31 , 2015 under this plan primarily consisted of severance and other ongoing and one-time termination benefits. Charges and other costs related to the workforce reduction and structure realignment are presented as restructuring charges in the Condensed Consolidated Statements of Operations. On a total company basis, including Lifesize business as reported in discontinued operations, we expect to incur approximately $22 million to $25 million under this restructuring plan, including approximately $20.3 million to $23.3 million for cash severance and other personnel costs, and expect to substantially complete this restructuring within the next 3 months. We have paid $16.7 million as of December 31, 2015, on a total company basis. We expect this restructuring will save personnel-related costs and other overhead costs, and we expect to use the savings from the restructuring to offset currency impacts and to invest in future growth.

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The following table summarizes restructuring related activities during the nine months ended December 31 , 2015 (in thousands).



	Restructuring - Continuing Operations
	Termination Benefits			Lease Exit Costs			Other			Total
Accrual balance at March 31, 2015	$	—		$	954		$	—		$	954
Charges, net	11,469			—			69			11,538
Cash payments	(3,727		)	(796		)	$	(44	)	(4,567		)
Accrual balance at June 30, 2015	7,742			158			25			7,925
Charges, net	3,124			38			(16		)	3,146
Cash payments	(4,608		)	(115		)	(9		)	(4,732		)
Accrual balance at September 30, 2015	$	6,258		$	81		$	—		$	6,339
Credits, net	(1,049		)	299			84			(666		)
Cash payments	(1,716		)	(255		)	6			(1,965		)
Accrual balance at December 31, 2015	$	3,493		$	125		$	90		$	3,708



	Restructuring - Discontinued Operations
	Termination Benefits			Lease Exit Costs			Other			Total
Accrual balance at March 31, 2015	$	—		$	85		$	—		$	85
Charges, net	1,325			—			132			1,457
Cash payments	(948		)				(107		)	(1,055		)
Accrual balance at June 30, 2015	$	377		$	85		$	25		$	487
Charges, net	5,442			—			107			5,549
Cash payments	(504		)	(7		)	(132		)	(643		)
Accrual balance at September 30, 2015	$	5,315		$	78		$	—		$	5,393
Charges, net	376			—			688			1,064
Cash payments	(3,688		)	(7		)	(13		)	(3,708		)
Accrual balance at December 31, 2015	$	2,003		$	71		$	675		$	2,749

Termination benefits were calculated based on regional benefit practices and local statutory requirements. Lease exit costs primarily relate to costs associated with the closure of existing facilities. Other charges primarily consist of legal, consulting and other costs related to employee terminations.

Other income (expense), net

Other income and expense for the three and nine months ended December 31 , 2015 and 2014 were as follows (in thousands):



	Three Months Ended December 31,					Nine Months Ended December 31,
	2015		2014			2015			2014
Investment income (loss) related to deferred compensation plan	$	348	$	66		$	(278	)	$	714
Currency exchange gains (losses)	442		(792		)	(690		)	(2,366		)
Investment impairment and others	72		(1,962		)	74			(2,050		)
	$	862	$	(2,688	)	$	(894	)	$	(3,702	)

We recognized a $0.4 million currency exchange gain and a $0.7 million currency exchange loss during the three and nine months ended December 31 , 2015 , respectively. Currency exchange gains (losses) relate to balances denominated in currencies other than the functional currency of our subsidiaries, to the sale of currencies, and to gains or losses recognized on currency exchange forward contracts.

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Investment impairment and others declined by $2.0 million primarily due to a $2.3 million investment impairment resulting from the write-down of an investment in a privately held company in prior periods.

Provision for Income Taxes

The provision for income taxes and effective tax rates for the three and nine months ended December 31 , 2015 and 2014 were as follows (in thousands):



	Three Months Ended December 31,						Nine Months Ended December 31,
	2015			2014			2015			2014
Provision for income taxes	$	1,442		$	670		$	7,006		$	8,455
Effective income tax rate	2.1		%	1.0		%	5.9		%	6.1		%

The change in the effective income tax rate for the three and nine months ended December 31, 2015, compared to the three and nine months ended December 31, 2014, is due to the mix of income and losses in the various tax jurisdictions in which we operate. In the three months ended December 31 , 2015 and December 31 , 2014 , there was a discrete tax benefit of $8.4 million and $8.0 million , respectively, from the reversal of uncertain tax positions from the expiration of statutes of limitations. In the nine months ended December 31 , 2015 and December 31 , 2014 , there was an additional discrete tax benefit of $2.2 million and $0.8 million , respectively, from the preferential income tax rate reduction pursuant to the High and New Technology Enterprise Program in China.

Liquidity and Capital Resources

Cash Balances, Available Borrowings, and Capital Resources

As of December 31 , 2015 , we had cash and cash equivalents of $505.1 million compared to $533.4 million at March 31, 2015 . Our cash and cash equivalents consist of bank demand deposits and short-term time deposits of which 69% is held by our subsidiaries in Switzerland, 18% is held by our subsidiaries in Hong Kong and China, 5% is held by our subsidiaries in the United States, and 8% is held by subsidiaries in various other countries. We do not expect to incur any material adverse tax impact except for what has been recognized or be significantly inhibited by any country in which we do business from the repatriation of funds to Switzerland, our home domicile.

As of December 31 , 2015 , our working capital was $520.1 million compared to working capital of $557.1 million at March 31, 2015 . The decrease was primarily due to lower cash and cash equivalents, primarily as a result of dividend payments and share repurchases, lower inventory balances due to seasonality and higher accounts payable and accrued liabilities, partially offset by higher accounts receivable, net.

On a total company basis, during the nine months ended December 31 , 2015 , we generated $150.8 million cash from operating activities. Our main cash outflows of operating cash resulted from increases in accounts receivable, partially offset by decreases in inventories and increases in accounts payable and accrued liabilities. Net cash used in investing activities was $52.3 million , primarily from $ 50.4 million of capital expenditure in computer hardware and software, tooling and equipment. Net cash used in financing activities was $125.4 million , primarily related to dividend payments of $85.9 million , share repurchases of $48.8 million and tax withholdings related to net share settlements of restricted stock units (RSUs) of $5.4 million , partially offset by $12.6 million of proceeds from sales of shares upon exercise of options and purchase rights.

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We had several uncommitted, unsecured bank lines of credit aggregating $45.5 million as of December 31 , 2015 . There are no financial covenants under these lines of credit with which we must comply. As of December 31 , 2015 , we had outstanding bank guarantees of $21.8 million under these lines of credit.

The following table summarizes our Condensed Consolidated Statements of Cash Flows (in thousands), on a total company basis:



	Nine Months Ended December 31,
	2015			2014
Net cash provided by operating activities	$	150,846		$	137,058
Net cash used in investing activities	(52,269		)	(36,934		)
Net cash used in financing activities	(125,423		)	(47,402		)
Effect of exchange rate changes on cash and cash equivalents	(1,205		)	(5,521		)
Net increase (decrease) in cash and cash equivalents	$	(28,051	)	$	47,201

Cash Flow from Operating Activities

The following table presents selected financial information and statistics as of December 31 , 2015 and 2014 (dollars in thousands):



	As of December 31
	2015		2014
Accounts receivable, net	$	284,089	$	291,142
Inventories	$	239,962	$	233,289
Working capital	$	520,121	$	559,371
Days sales in accounts receivable (“DSO”) (Days) (1)	41		43
Inventory turnover (“ITO”) (x) (2)	6.9		6.7

(1) DSO is determined using ending accounts receivable as of the most recent quarter-end and net sales for the most recent quarter.

(2) ITO is determined using ending inventories and annualized cost of goods sold (based on the most recent quarterly cost of goods sold).

On a total company basis, during the nine months ended December 31 , 2015 , we provided cash of $150.8 million from operating activities, compared to $137.1 million for the same period in the prior fiscal year. The primary drivers of the increase in net cash generated from operating cash flows include a reduction in inventory in the current year compared to an increase in the same period of prior year, an increase in accounts receivable in the current year compared to the same period of prior year, and a decrease in net income of $27.9 million , for the nine months ended December 31 , 2015 , compared to the nine months ended December 31 , 2014 .

Inventory turnover as of December 31 , 2015 remained consistent compared to that as of December 31 , 2014 . The increase in inventories compared with December 31, 2014 was primarily due to new products introductions, adjusting our inventory strategy to transition from ODM to in-house production and utilizing sea shipments more extensively than air delivery since the fourth quarter of fiscal year 2015. If we are not successful in launching and phasing in our new products launched during the current fiscal year, or we are not able to sell the new products at the prices planned, it could have a material impact on our revenue, gross profit margin, operating results including operating cash flow, and inventory turnover in the future.

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Cash Flow from Investing Activities

The following table presents information on our cash flows from investing activities during the nine months ended December 31 , 2015 and 2014 (in thousands), on a total company basis:



	Nine Months Ended December 31,
	2015			2014
Purchases of property, plant and equipment	$	(50,443	)	$	(34,777	)
Investment in privately held companies	(2,099		)	(2,550		)
Purchases of trading investments	(4,395		)	(3,463		)
Proceeds from sales of trading investments	4,668			3,856
Net cash used in investing activities	$	(52,269	)	$	(36,934	)

Our expenditures for property, plant and equipment during the nine months ended December 31 , 2015 and 2014 were primarily for computer hardware and software, tooling, equipment and leasehold improvements. The increase in purchases of property, plant and equipment during the nine months ended December 31 , 2015 is mainly arising from the building of production lines to accommodate the in-house manufacturing of certain products compared with purchase from third parties in the prior period to align with our goal of cost saving.

The purchases and sales of trading investments in the nine months ended December 31 , 2015 and 2014 represent mutual fund and money market fund activities directed by participants in a deferred compensation plan offered by one of our subsidiaries. The mutual funds and money market funds are held by a Rabbi trust.

Cash Flow from Financing Activities

The following table presents information on our cash flows from financing activities during the nine months ended December 31 , 2015 and 2014 (in thousands), on a total company basis:



	Nine Months Ended December 31,
	2015			2014
Payment of cash dividends	$	(85,915	)	$	(43,767	)
Contingent consideration related to prior acquisition	—			(100		)
Repurchases of ESPP awards	—			(1,078		)
Purchases of treasury shares	(48,802		)	—
Proceeds from sales of shares upon exercise of options and purchase rights	12,562			2,466
Tax withholdings related to net share settlements of restricted stock units	(5,357		)	(7,456		)
Excess tax benefits from share-based compensation	2,089			2,533
Net cash used in financing activities	$	(125,423	)	$	(47,402	)

During the nine months ended December 31 , 2015 , 3.5 million shares were repurchased for $48.8 million . There were no share repurchases during the nine months ended December 31 , 2014 .

During the nine months ended December 31 , 2015 , we declared and paid cash dividends of CHF0.51 (USD equivalent of $0.53 ) per common share, totaling $85.9 million in U.S. Dollars, out of retained earnings. Proceeds from the sale of shares upon exercise of options and purchase rights pursuant to our stock plans during the nine months ended December 31 , 2015 and 2014 were $12.6 million and $2.5 million , respectively. The payment of required tax withholdings related to net share settlements of RSUs during the nine months ended December 31 , 2015 and 2014 was $5.4 million and $7.5 million , respectively.

Cash Outlook

Our principal sources of liquidity are our cash and cash equivalents, cash flow generated from operations and, to a much lesser extent, capital markets and borrowings. Our future working capital requirements and capital expenditures may increase to support investment in product innovations and growth opportunities, or to acquire or invest in complementary businesses, products, services, and technologies.

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In March 2015, we announced a plan to pay $250 million in cumulative dividends for fiscal year 2015 through fiscal year 2017. During the second quarter of fiscal year 2016, we paid a cash dividend of CHF 83.1 million (U.S. Dollar amount of $85.9 million ) out of retained earnings. During fiscal year 2015, we paid a cash dividend of CHF 43.1 million (U.S. Dollar amount of $43.8 million) out of retained earnings.

In March 2014, our Board of Directors approved a new share buyback program, which authorizes us to purchase up to $250.0 million of our own shares. Our share buyback program provides us with the opportunity to make opportunistic repurchases during periods of favorable market conditions and is expected to remain in effect for a period of three years. Shares may be repurchased from time to time on the open market through block trades or otherwise. Purchases may be started or stopped at any time without prior notice depending on market conditions and other factors. During the nine months ended December 31 , 2015 , 3.5 million shares were repurchased for $48.8 million . There were no share repurchases during the three months ended December 31 , 2015 , or the three and nine months ended December 31 , 2014.

During the first quarter of fiscal year 2016, we announced that we were committing to pursue a restructuring, including exiting the OEM business, reorganizing Lifesize to sharpen our focus on its cloud-based offering, and streamlining our overall cost structure through product, overhead and infrastructure cost reductions with a targeted resource realignment. We expect to incur approximately $22 million to $25 million under this restructuring plan, and we have paid $16.7 million as of December 31, 2015, on a total company basis. We expect to substantially complete this restructuring within the next 3 months. We expect this restructuring will save personnel-related costs and other overhead costs, and we expect to use the savings from the restructuring to offset currency impact and to invest in future growth.

If we do not generate sufficient operating cash flows to support our operations and future planned cash requirements, our operations could be harmed and our access to credit could be restricted or eliminated. However, we believe that the trend of our historical cash flow generation, our projections of future operations and reduced expenses and our available cash balances will provide sufficient liquidity to fund our operations for at least the next 12 months.

Operating Leases

We lease facilities under operating leases, certain of which require us to pay property taxes, insurance and maintenance costs. Operating leases for facilities are generally renewable at our option and usually include escalation clauses linked to inflation. The remaining terms on our non-cancelable operating leases expire in various years through 2030. Our asset retirement obligations on these leases as of December 31 , 2015 were not material.

Purchase Commitments

As of December 31 , 2015 , we had fixed purchase commitments for inventory purchases made in the normal course of business to original design manufacturers, contract manufacturers and other suppliers, the majority of which are expected to be fulfilled within the next 12 months. Fixed purchase commitments for capital expenditures primarily relate to commitments for tooling for new and existing products, computer hardware, leasehold and improvements. We expect to continue making capital expenditures in the future to support product development activities and ongoing and expanded operations. Although open purchase commitments are considered enforceable and legally binding, the terms generally allow us to reschedule or adjust our requirements based on business needs prior to delivery of goods or performance of services.

Other Contractual Obligations and Commitments

For further detail about our contractual obligations and commitments, please refer to our Annual Report on Form 10-K for the fiscal year ended March 31, 2015.

Off-Balance Sheet Arrangemen ts

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligation under a variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to us.

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Other Contingencies

We are subject to an ongoing formal investigation by the Enforcement Division of the U.S. Securities and Exchange Commission (SEC), relating to certain issues including the accounting for Revue inventory valuation reserves that resulted in the restatement described in the fiscal year 2014 Annual Report on Form 10-K, revision to our consolidated financial statements concerning warranty accruals and amortization of intangible assets presented in our Amended Annual Report on Form 10-K/A, filed on August 7, 2013, and our transactions with a distributor for fiscal year 2007 through fiscal year 2009. We have entered into an agreement with the Enforcement Staff to extend the statute of limitations. We are cooperating with the investigation and, after discussions with the Enforcement Staff, we made an offer of settlement to resolve the matter, which is subject to approval by the SEC. The proposed settlement would be entered into by us without admitting or denying the SEC’s findings and would resolve alleged violations of certain provisions of the Securities Exchange Act of 1934 and related rules, including the anti-fraud provisions. Under the terms of the proposed settlement, we would pay $7.5 million in a civil penalty and agree not to commit or cause any violations of certain provisions of the Securities Exchange Act of 1934 and related rules. There is no assurance that the proposal will be approved by the SEC. In accordance with U.S. GAAP, we have made a corresponding accrual in our financial statements.

Guarantees

Logitech Europe S.A., one of our wholly owned subsidiaries, guaranteed payments of third-party contract manufacturers' purchase obligations. As of December 31 , 2015 , the maximum amount of this guarantee was $3.8 million , of which $1.3 million of guaranteed purchase obligations were outstanding.

Indemnifications

We indemnify certain of our suppliers and customers for losses arising from matters such as intellectual property disputes and product safety defects, subject to certain restrictions. The scope of these indemnities varies, but in some instances includes indemnification for damages and expenses, including reasonable attorneys’ fees. As of December 31 , 2015 , no amounts have been accrued for indemnification provisions. We do not believe, based on historical experience and information currently available, that it is probable that any material amounts will be required to be paid under our indemnification arrangements.

We also indemnify our current and former directors and certain of our current and former officers. Certain costs incurred for providing such indemnification may be recoverable under various insurance policies. We are unable to reasonably estimate the maximum amount that could be payable under these arrangements because these exposures are not capped, the obligations are conditional in nature, and the facts and circumstances involved in any situation that might arise are variable.

The Stock Purchase Agreement that we entered into in connection with the investment by three venture capital firms in Lifesize, Inc. contains representations, warranties and covenants of Logitech and Lifesize, Inc. to the Investors. Subject to certain limitations, we have agreed to indemnify the Investors and certain persons related to the Investors for certain losses resulting from breaches of or inaccuracies in such representations, warranties and covenants as well as certain other obligations, including third party expenses, restructuring costs and pre-closing tax obligations of Lifesize.

Legal Proceedings

From time to time we are involved in claims and legal proceedings that arise in the ordinary course of our business. We are currently subject to several such claims and a small number of legal proceedings. We believe that these matters lack merit and we intend to vigorously defend against them. Based on currently available information, we do not believe that resolution of pending matters will have a material adverse effect on our financial condition, cash flows or results of operations. However, litigation is subject to inherent uncertainties, and there can be no assurances that our defenses will be successful or that any such lawsuit or claim would not have a material adverse impact on our business, financial condition, cash flows and results of operations in a particular period. Any claims or proceedings against us, whether meritorious or not, can have an adverse impact because of defense costs, diversion of management and operational resources, negative publicity and other factors. Any failure to obtain necessary license or other rights, or litigation arising out of intellectual property claims, could adversely affect our business.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

Market risk represents the potential for loss due to adverse changes in the fair value of financial instruments. As a global concern, we face exposure to adverse movements in currency exchange rates and interest rates. These exposures may change over time as business practices evolve and could have a material adverse impact on our financial results.

Currency Exchange Rates

We report our results in U.S. Dollars. Changes in currency exchange rates compared to the U.S. Dollar can have a material impact on our results when the financial statements of our non-U.S. subsidiaries are translated into U.S. Dollars. The functional currency of our operations is primarily the U.S. Dollar. Certain operations use the Swiss Franc or the local currency of the country as their functional currencies. Accordingly, unrealized currency gains or losses resulting from the translation of net assets or liabilities denominated in other currencies to the U.S. Dollar are accumulated in the cumulative translation adjustment component of other comprehensive income (loss) in shareholders' equity.

We are exposed to currency exchange rate risk as we transact business in multiple currencies, including exposure related to anticipated sales, anticipated purchases and assets and liabilities denominated in currencies other than the U.S. Dollar. We transact business in over 30 currencies worldwide, of which the most significant to operations are the Euro, Chinese Renminbi, Australian Dollar, Taiwanese Dollar, British Pound, Canadian Dollar, Japanese Yen and Mexican Peso.

We report our results in U.S. Dollars. Changes in currency exchange rates compared to the U.S. Dollar can have a material impact on our results when the financial statements of our non-U.S. subsidiaries are translated into U.S. Dollars. For example, for the three months ended December 31 , 2015 , approximately 46% of our sales were in non-U.S. denominated currencies, with 26% of our sales denominated in Euro. The mix of our operating expenses by currency is significantly different from the mix of our sales, with a larger portion denominated in U.S. Dollar and less denominated in Euro and other currencies. A strengthening U.S. Dollar has more unfavorable impact on our sales than the favorable impact on our operating expense, resulting in an adverse impact on our operating results. The average exchange rate for the U.S. Dollar for the three months ended December 31 , 2015 has strengthened against most of the currencies for the same period in the prior fiscal year, which adversely impacted our actual results for the three months ended December 31 , 2015 , including our net sales, net income and cash flows from operations and our growth rates year over year.

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If the U.S. Dollar remains at its current strong levels in comparison to other currencies, this will affect our results of operations in future periods as well. The table below provides information about our underlying transactions that are sensitive to currency exchange rate changes, primarily assets and liabilities denominated in currencies other than the base currency, where the net exposure is greater than $0.5 million as of December 31 , 2015 . The table also presents the U.S. Dollar impact on earnings of a 10% appreciation and a 10% depreciation of the base currency as compared with the transaction currency (in thousands):



Base Currency	Transaction Currency	Net Exposed Long (Short) Currency Position			FX Gain (Loss) From 10% Appreciation of Base Currency			FX Gain (Loss) From 10% Depreciation of Base Currency
U.S. Dollar	Mexican Peso	$	19,163		$	(1,742	)	$	2,129
U.S. Dollar	Japanese Yen	18,051			(1,641		)	2,006
U.S. Dollar	Australian Dollar	16,074			(1,461		)	1,786
U.S. Dollar	Canadian Dollar	10,676			(971		)	1,186
U.S. Dollar	Indian Rupee	2,382			(217		)	265
U.S. Dollar	Korean Wan	(838		)	76			(93		)
U.S. Dollar	Swiss Franc	(2,377		)	216			(264		)
U.S. Dollar	Singapore Dollar	(6,688		)	608			(743		)
U.S. Dollar	Taiwanese Dollar	(14,636		)	1,331			(1,626		)
U.S. Dollar	Chinese Renminbi	(33,144		)	3,013			(3,683		)
Swiss Franc	British Pound	(1,115		)	101			(124		)
Euro	British Pound	11,512			(1,047		)	1,279
Euro	Turkish Lira	1,472			(134		)	164
Euro	U.S. Dollar	555			(50		)	62
Euro	Croatian Kuna	505			(46		)	56
Euro	Swedish Krona	(1,223		)	111			(136		)
		$	20,369		$	(1,853	)	$	2,264

Long currency positions represent net assets being held in the transaction currency while short currency positions represent net liabilities being held in the transaction currency.

Our principal manufacturing operations are located in China, with much of our component and raw material costs transacted in Chinese Renminbi ("CNY"). As of December 31 , 2015, net liabilities held in CNY totaled 33.1 million .

Derivatives

We enter into currency exchange forward contracts to hedge against exposure to changes in currency exchange rates related to our subsidiaries’ forecasted inventory purchases. The Company has one entity with a Euro functional currency that purchases inventory in U.S. Dollars. The primary risk managed by using derivative instruments is the currency exchange rate risk. We have designated these derivatives as cash flow hedges. These hedging contracts mature within four months, and are denominated in the same currency as the underlying transactions. Gains and losses in the fair value of the effective portion of the hedges are deferred as a component of accumulated other comprehensive loss until the hedged inventory purchases are sold, at which time the gains or losses are reclassified to cost of goods sold. We assess the effectiveness of the hedges by comparing changes in the spot rate of the currency underlying the forward contract with changes in the spot rate of the currency in which the forecasted transaction will be consummated. If the underlying transaction being hedged fails to occur or if a portion of the hedge does not generate offsetting changes in the currency exposure of forecasted inventory purchases, we immediately recognize the gain or loss on the associated financial instrument in other income (expense), net . Such gains and losses were not material during the three or nine months ended December 31 , 2015 or 2014 . Cash flows from such hedges are classified as operating activities in the Condensed Consolidated Statements of Cash Flows. As of December 31 , 2015 and March 31, 2015 , the notional amounts of currency exchange forward contracts outstanding related to forecasted inventory purchases were $48.4 million and $43.5 million , respectively. Deferred realized gains of $1.3 million were recorded in accumulated other comprehensive loss as of December 31 , 2015, and are expected to be reclassified to cost of goods sold when the related inventory

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is sold. Deferred unrealized losses of $1.0 million related to open cash flow hedges were recorded in accumulated other comprehensive income as of December 31 , 2015 , and these forward contracts will be revalued in future periods until the related inventory is sold, at which time the resulting gains or losses will be reclassified to cost of goods sold.

We also enter into currency exchange forward and swap contracts to reduce the short-term effects of currency exchange rate fluctuations on certain foreign currency receivables or payables. These contracts generally mature within one month. The primary risk managed by using forward and swap contracts is the currency exchange rate risk. The gains or losses on these currency exchange contracts are recognized in other income (expense), net based on the changes in fair value.

The notional amounts of currency exchange contracts outstanding as of December 31 , 2015 and March 31, 2015 relating to foreign currency receivables or payables were $81.8 million and $61.7 million , respectively. The contracts outstanding at December 31 , 2015 and March 31, 2015 consisted of contracts in Mexican Pesos, Japanese Yen, British Pounds, Taiwanese Dollars and Australian Dollars.

Interest Rates

Changes in interest rates could impact our future interest income on our cash equivalents and investment securities. We prepared sensitivity analyses of our interest rate exposures to assess the impact of hypothetical changes in interest rates. Based on the results of these analyses, a 100 basis point decrease or increase in interest rates from the December 31 , 2015 and December 31 , 2014 period end rates would not have a material effect on our results of operations or cash flows.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Logitech’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that, as of such date, our disclosure controls and procedures are effective at the reasonable assurance level.

Definition of Disclosure Controls

Disclosure Controls are controls and procedures designed to reasonably assure that information required to be disclosed in the Company’s reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. The Company’s Disclosure Controls include components of its internal control over financial reporting, which consists of control processes designed to provide reasonable assurance regarding the reliability of its financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. To the extent that components of the Company’s internal control over financial reporting are included within its Disclosure Controls, they are included in the scope of the Company’s annual controls evaluation.

Limitations on the Effectiveness of Controls

The Company’s management, including the Chief Executive Officer and the Chief Financial Officer, does not expect that the Company’s Disclosure Controls or internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is

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based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting during the fiscal quarter ended December 31, 2015 , that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

Our operating results are difficult to predict and fluctuations in results may cause volatility in the price of our shares.

Our revenues and profitability are difficult to predict due to the nature of the markets in which we compete, fluctuating user demand, the uncertainty of current and future global economic conditions, and for many other reasons, including the following:

• Our operating results are highly dependent on the volume and timing of orders received during the quarter, which are difficult to forecast. Customers generally order on an as-needed basis and we typically do not obtain firm, long-term purchase commitments from our customers. As a result, our revenues in any quarter depend primarily on orders booked and shipped in that quarter.

• A significant portion of our quarterly retail sales typically occurs in the last weeks of each quarter, further increasing the difficulty in predicting quarterly revenues and profitability.

• Our sales are impacted by consumer demand and current and future global economic conditions, and can therefore fluctuate abruptly and significantly during periods of uncertain economic conditions or geographic distress, as well as from shifts in distributor inventory practices and consumer buying patterns.

• We must incur a large portion of our costs in advance of sales orders, because we must plan research and production, order components, buy tooling equipment, and enter into development, sales and marketing, and other operating commitments prior to obtaining firm commitments from our customers. This makes it difficult for us to rapidly adjust our costs during the quarter in response to a revenue shortfall, which could adversely affect our operating results.

• Since the beginning of fiscal year 2013, we have attempted to simplify our organization, to reduce operating costs through expense reduction and global workforce reductions, to reduce the complexity of our product portfolio, and to better align costs with our current business as we attempt to expand from PC accessories to growth

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opportunities in accessories for mobile devices, digital music, gaming and video collaboration. We may not achieve the cost savings or other anticipated benefits from these efforts, and such efforts may cause our operating results to fluctuate from quarter to quarter, making our results difficult to predict.

• Fluctuations in currency exchange rates can impact our revenues, expenses and profitability because we report our financial statements in U.S. Dollars, whereas a significant portion of our revenues and expenses are in other currencies. We attempt to adjust product prices over time to offset the impact of currency movements. However, over short periods of time, during periods of weakness in consumer spending or given high levels of competition in many product categories, our ability to change local currency prices to offset the impact of currency fluctuations is limited.

Because our operating results are difficult to predict, our results may be below the expectations of financial analysts and investors, which could cause the price of our shares to decline.

If we fail to innovate and develop new products in a timely and cost-effective manner for our new and existing product categories, our business and operating results could be adversely affected.

The peripherals industry is characterized by short product life cycles, frequent new product introductions, rapidly changing technology, dynamic consumer demand and evolving industry standards. As a result, we must continually innovate in our new and existing product categories, introduce new products and technologies, and enhance existing products in order to remain competitive.

The success of our product portfolio depends on several factors, including our ability to:

• Identify new features, functionality and opportunities;

• Anticipate technology, market trends and consumer preferences;


•	Develop innovative, high-quality, and reliable new products and enhancements in a cost-effective and timely manner;

• Distinguish our products from those of our competitors; and

• Offer our products at prices and on terms that are attractive to our customers and consumers.

If we do not execute on these factors successfully, products that we introduce or technologies or standards that we adopt may not gain widespread commercial acceptance, and our business and operating results could suffer. In addition, if we do not continue to differentiate our products through distinctive, technologically advanced features, designs, and services that are appealing to our customers and consumers, as well as continue to build and strengthen our brand recognition and our access to distribution channels, our business could be adversely affected.

The development of new products and services is very difficult and requires high levels of innovation. The development process is also lengthy and costly. There are significant initial expenditures for research and development, tooling, manufacturing processes, inventory and marketing, and we may not be able to recover those investments. If we fail to accurately anticipate technological trends or our users’ needs or preferences, are unable to complete the development of products and services in a cost-effective and timely fashion or are unable to appropriately increase production to fulfill customer demand, we will be unable to successfully introduce new products and services into the market or compete with other providers. Even if we complete the development of our new products and services in a cost-effective and timely manner, they may be not competitive with products developed by others, they may not achieve acceptance in the market at anticipated levels or at all, they may not be profitable or, even if they are profitable, they may not achieve margins as high as our expectations or as high as the margins we have achieved historically.

As we introduce new or enhanced products, integrate new technology into new or existing products, or reduce the overall number of products offered, we face risks including, among other things, disruption in customers’ ordering patterns, excessive levels of new and existing product inventories, revenue deterioration in our existing product lines, insufficient supplies of new products to meet customers’ demand, possible product and technology defects, and a potentially different sales and support environment. Premature announcements or leaks of new products, features or technologies may exacerbate some of these risks by reducing the effectiveness of our product

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launches, reducing sales volumes of current products due to anticipated future products, making it more difficult to compete, shortening the period of differentiation based on our product innovation, straining relationships with our partners or increasing market expectations for the results of our new products before we have had an opportunity to demonstrate the market viability of the products. Our failure to manage the transition to new products or the integration of new technology into new or existing products could adversely affect our business, results of operations, operating cash flows and financial condition.

We believe sales of our PC peripherals will continue to decline, and that our future growth will depend on our product growth categories, and if we do not successfully execute on our growth opportunities, if our growth opportunities are more limited than we expect or if our sales of PC peripherals are less than we expect, our operating results could be adversely affected.

We have historically targeted peripherals for the PC platform. Consumer demand for PCs, especially in our traditional, mature markets such as North America, Western and Nordic Europe, Japan and Australia, has been declining and we expect it to continue to decline in the future. As a result, consumer demand for PC peripherals in many of our markets is slowing and in some cases declining. We expect this trend to continue. For example, we experienced weak consumer demand for many of our PC peripherals in each quarter of fiscal years 2015 and 2014, which adversely affected our financial performance.

From time to time, our channel partners have also reduced their inventory levels for PC peripherals in periods of PC market decline. In addition, our sales of PC peripherals might be less than we expect due to a decline in business or economic conditions in one or more of the countries or regions, a greater decline than we expect in demand for our products, our inability to successfully execute our sales and marketing plans, or for other reasons. Global economic concerns, such as the varying pace of global economic recovery, the impact of sovereign debt issues in Europe, the impact of low oil prices on Russia and conflicts with either local or global financial implications in places such as Russia and Ukraine, create unpredictability and add risk to our future outlook.

As a result, we are focusing more of our personnel, financial resources, and management attention on product innovations and growth opportunities, on products for gaming, on products for tablets and mobile devices, on products for the consumption of digital music, on products for video collaboration, and on other potential growth opportunities. Our investments may not result in the growth we expect, or when we expect it, for a variety of reasons including those described below.

Mobile Speakers. We are focused on products for the consumption of digital music as a future sales growth area. Competition in the mobile speaker category is intense, and we expect it to increase. If we are not able to introduce differentiated product and marketing strategies to separate ourselves from competitors, our mobile speaker efforts will not be successful, and our business and results of operations could be adversely affected.

Gaming . We are building a diverse business that features a variety of gaming peripherals. The rapidly evolving and changing market and increasing competition increase the risk that we do not allocate our resources in line with the market and our business and results of operations could be adversely affected.

Video Collaboration. While we view the small and medium sized user groups' opportunity to be large and relatively unaddressed, this is a new and evolving market segment that we are developing. If the market opportunity proves to exist, we expect increasing competition from the strong competitors in the video conferencing market as well as potential new entrants. In addition, as this category develops, our video collaboration products may overlap with and reduce the sales of our existing video conferencing products.

Tablets & Other Mobile Devices. The increasing popularity of smaller, mobile computing devices such as tablets with touch interfaces is rapidly changing the consumer computing market. In our retail channels, tablets and other mobile devices are sold by retailers without peripherals. We believe this creates opportunities to sell products to consumers to help make their devices more productive and comfortable. However, consumer acceptance for tablet and mobile devices peripherals is still uncertain. Also, while this product category grew significantly during fiscal years 2014 and 2013 and we still view it as a growth category, shipments of iPad devices declined significantly throughout fiscal year 2015 and continue to decline in fiscal year 2016. While we have introduced tablet peripherals for certain Android tablets, that segment of the market is currently much smaller than the market for iPad peripherals, more fragmented and may similarly not continue its growth trend. We also may not be as successful in competing in that segment to generate sales, margin or growth. Moreover, the increasing popularity of tablets and other mobile devices has decreased consumer demand for our PC peripherals, which has adversely affected our

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sales of these products. If we do not successfully innovate and market products designed for tablets and other mobile devices, if our distributor or retailer customers do not choose to carry or market such peripherals, or if general consumer demand for tablet and mobile devices peripherals for use with these devices does not increase, our business and results of operations could be adversely affected.

In addition to our current growth opportunities, our future growth may be reliant on our ability to identify and develop potential new growth opportunities. This process is inherently risky and will result in investments in time and resources for which we do not achieve any return or value.

Each of these growth categories is subject to rapidly changing and evolving technologies and may be replaced by new technology concepts or platforms. Some of these growth categories are also dependent on rapidly changing and evolving consumer preferences with respect to design and features that require calculated risk-taking and fast responsiveness. If we do not develop innovative and reliable peripherals and enhancements in a cost-effective and timely manner that are attractive to consumers in these markets, if we are otherwise unsuccessful entering and competing in these growth categories, if the growth categories in which we invest our limited resources do not emerge as the opportunities or do not produce the growth or profitability we expect, or when we expect it, or if we do not correctly anticipate changes and evolutions in technology and platforms, our business and results of operations could be adversely affected.

If we do not compete effectively, demand for our products could decline and our business and operating results could be adversely affected.

The peripherals industry is intensely competitive. The peripherals industry is characterized by large, well-financed competitors, short product life cycles, continual performance enhancements, and rapid adoption of technological and product advancements by competitors in our retail markets, and price sensitivity in the OEM market. We experience aggressive price competition and other promotional activities from our primary competitors and from less-established brands, including brands owned by retail customers known as house brands. In addition, our competitors may offer customers terms and conditions that may be more favorable than our terms and conditions and may require us to take actions to increase our customer incentive programs, which could impact our revenues and operating margins.

In recent years, we have expanded the categories of products we sell, and entered new markets. We remain alert to opportunities in new categories and markets. As we do so, we are confronting new competitors, many of which have more experience in the categories or markets and have greater marketing resources and brand name recognition than we have. In addition, because of the continuing convergence of the markets for computing devices and consumer electronics, we expect greater competition in the future from well-established consumer electronics companies in our developing categories as well as in future categories we might enter. Many of these companies, such as Microsoft, Apple, Cisco, Sony Corporation, Polycom and others, have greater financial, technical, sales, marketing and other resources than we have.

Microsoft, Apple and Google are leading producers of operating systems, hardware and applications with which our mice, keyboards and other peripherals are designed to operate. In addition, Microsoft, Apple and Google each has significantly greater financial, technical, sales, marketing and other resources than Logitech, as well as greater name recognition and a larger customer base. As a result, Microsoft, Apple and Google each may be able to improve the functionality of its peripherals, if any, or may choose to show preference to our competitors' peripherals, to correspond with ongoing enhancements to its operating systems, hardware and software applications before we are able to make such improvements. This ability could provide Microsoft, Apple, Google or other competitors with significant lead-time advantages. In addition, Microsoft, Apple, Google or other competitors may be able to offer pricing advantages on bundled hardware and software products that we may not be able to offer, and may be financially positioned to exert significant downward pressure on product prices and upward pressure on promotional incentives in order to gain market share.

Retail Strategic - Growth Categories

Mobile Speakers. Our competitors for Bluetooth wireless speakers include Bose, JBL, Hammon Kardon, and Beats Electronics. Bose is our largest competitor. Apple's acquisition of Beats Electronics may impact our access to shelf space in Apple retail stores and adversely impact our ability to succeed in this important growth category.

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Gaming. Competitors for our Gaming peripheral products include Razer USA Ltd., SteelSeries, Turtle Beach and Mad Catz Interactive.

V ideo Collaboration. Our competitors for Video Collaboration products include Cisco Systems, Inc.,

Polycom, Inc., and Avaya, Inc.

Tablet & Other Accessories. We primarily manufacture tablet keyboards and other accessories for Apple products, such as iPad and iPhone, and Android products. Competitors in the tablet keyboard market are Zagg, Kensington, Belkin, Targus and other less-established brands. Although we are the one of the market leaders in the tablet keyboard market, and as we continue to expand our product portfolio to other tablet and mobile device products, we expect the competition will increase. Other large tablet and mobile device manufacturers, such as Apple and Samsung, could offer tablet keyboards and other accessories along with their tablet and other mobile device products. If such manufacturers of tablets and other mobile devices compete with us in the Tablet and Other Accessories category without substantially growing the peripherals market, it could adversely affect our ability to succeed in this growth category.

Retail Strategic - Profit Maximization Categories

Pointing Devices and Keyboards & Combos. Microsoft Corporation is our main competitor in our mice, keyboard and desktop product lines. We also experience competition and pricing pressure for corded and cordless mice and desktops from less-established brands, including house brands, which we believe have impacted our market share in some sales geographies and which could potentially impact our market share.

Audio — PC & Wearables. In the PC speaker business, our competitors include Bose, Cyber Acoustics, Phillips

and Creative Labs, Inc. In the PC headset business, our main competitors include Plantronics and Altec Lansing. In earphones competitors include Skull Candy, Sennheiser, Sony, and others.

PC Webcams. Our primary competitor for PC webcams is Microsoft, with various other manufacturers taking smaller market share. The worldwide market for consumer PC webcams has been declining, and as a result, fewer competitors have entered the market.

Home Control. Our primary competitors for remotes include Philips, Universal Remote Control, Inc., General Electric, RCA and Sony. We expect that the technological innovation in smartphone and tablet devices, as well as subscriber service specific remotes such as Comcast and Direct TV, will likely result in increased competition.

Our business depends in part on access to third-party platforms or technologies, and if the access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies change without notice to us, our business and operating results could be adversely affected.

Our peripherals business has historically been built largely around the PC platform, which over time became relatively open, and its inputs and operating system standardized. With the growth of mobile, tablet, gaming and other computer devices, the number of platforms has grown, and with it the complexity and increased need for us to have business and contractual relationships with the platform owners in order to produce products compatible with these platforms. Our product portfolio includes current and future products designed for use with third-party platforms or software, such as the Apple iPad, iPod and iPhone and Android phones and tablets. Our business in these categories relies on our access to the platforms of third parties, some of whom are our competitors. Platform owners that are competitors have a competitive advantage in designing products for their platforms and may produce peripherals or other products that work better, or are perceived to work better, than our products in connection with those platforms. As we expand the number of platforms and software applications with which our products are compatible, we may not be successful in launching products for those platforms or software applications, we may not be successful in establishing strong relationships with the new platform or software owners, or we may negatively impact our ability to develop and produce high-quality products on a timely basis for those platforms and software applications or we may otherwise adversely affect our relationships with existing platform or software owners.

Our access to third-party platforms may require paying a royalty, which lowers our product margins, or may otherwise be on terms that are not acceptable to us. In addition, the third-party platforms or technologies used to interact with our product portfolio can be delayed in production or can change without prior notice to us, which can result in our having excess inventory or lower margins.

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If we are unable to access third-party platforms or technologies, or if our access is withdrawn, denied, or is not available on terms acceptable to us, or if the platforms or technologies are delayed or change without notice to us, our business and operating results could be adversely affected.

If we do not accurately forecast market demand for our products, our business and operating results could be adversely affected.

We use our forecasts of product demand to make decisions regarding investments of our resources and production levels of our products. Although we receive forecasts from our customers, many are not obligated to purchase the forecasted demand. Also, actual sales volumes for individual products in our retail distribution channel can be volatile due to changes in consumer preferences and other reasons. In addition, our retail products have short product life cycles, so a failure to accurately predict high demand for a product can result in lost sales that we may not recover in subsequent periods, or higher product costs if we meet demand by paying higher costs for materials, production and delivery. We could also frustrate our customers and lose shelf space. Our failure to predict low demand for a product can result in excess inventory, lower cash flows and lower margins if we are required to reduce product prices in order to reduce inventories.

If our sales channel partners have excess inventory of our products or decide to decrease their inventories for any reason, they may decrease the amount of products they acquire in subsequent periods, causing disruption in our business and adversely affecting our forecasts and sales.

Over the past few years, we have expanded the types of products we sell, and the geographic markets in which we sell them. The changes in our product portfolio and the expansion of our sales markets have increased the difficulty of accurately forecasting product demand.

In addition, during fiscal year 2016 we are increasing the percentage of our peripheral products that we manufacture in our own facilities. This increases the inventory that we purchase and maintain to support such manufacturing. We are also utilizing sea shipments more extensivley than air delivery, which will cause us to build and ship products to our distribution centers earlier and will also result in increases in inventory. These operational shifts increase the risk that we have excess or obsolete inventory if we do not accurately forecast product demand.

We have experienced large differences between our forecasts and actual demand for our products. We expect other differences between forecasts and actual demand to arise in the future. If we do not accurately predict product demand, our business and operating results could be adversely affected.

Our success largely depends on our ability to hire, retain, integrate and motivate sufficient numbers of qualified personnel, including senior management. Our strategy and our ability to innovate, design and produce new products, sell products, maintain operating margins and control expenses depend on key personnel that may be difficult to replace.

Our success depends on our ability to attract and retain highly skilled personnel, including senior management and international personnel. From time to time, we experience turnover in some of our senior management positions.

We compensate our employees through a combination of salary, bonuses, benefits and equity compensation. Recruiting and retaining skilled personnel, including software and hardware engineers, is highly competitive. If we fail to provide competitive compensation to our employees, it will be difficult to retain, hire and integrate qualified employees and contractors, and we may not be able to maintain and expand our business. If we do not retain our senior managers or other key employees for any reason, we risk losing institutional knowledge, experience, expertise and other benefits of continuity as well as the ability to attract and retain other key employees. In addition, we must carefully balance the size of our employee base with our current infrastructure, management resources and anticipated operating cash flows. If we are unable to manage the size of our employee base, particularly engineers, we may fail to develop and introduce new products successfully and in a cost-effective and timely manner. If our revenue growth or employee levels vary significantly, our operating cash flows and financial condition could be adversely affected. Volatility or lack of positive performance in our stock price, including declines in our stock prices in the past year, may also affect our ability to retain key employees, many of whom have been granted equity incentives. Logitech’s practice has been to provide equity incentives to its employees, but the number of

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shares available for equity grants is limited. We may find it difficult to provide competitive equity incentives, and our ability to hire, retain and motivate key personnel may suffer.

Recently and in past years, we have initiated reductions in our workforce to align our employee base with our business strategy, our anticipated revenue base or with our areas of focus. We have also experienced turnover in our workforce. These reductions and turnover have resulted in reallocations of duties, which could result in employee uncertainty and discontent. Reductions in our workforce could make it difficult to attract, motivate and retain employees, which could adversely affect our business.

Our gross margins can vary significantly depending on multiple factors, which can result in unanticipated fluctuations in our operating results.

Our gross margins can vary due to consumer demand, competition, product life cycle, new product introductions, unit volumes, commodity and supply chain costs, geographic sales mix, currency exchange rates, and the complexity and functionality of new product innovations. In particular, if we are not able to introduce new products in a timely manner at the product cost we expect, or if consumer demand for our products is less than we anticipate, or if there are product pricing, marketing and other initiatives by our competitors to which we need to react or that are initiated by us to drive sales that lower our margins, then our overall gross margin will be less than we project.

In addition, our gross margins may vary significantly by product line, sales geography and customer type, as well as within product lines. When the mix of products sold shifts from higher margin product lines to lower margin product lines, to lower margin sales geographies, or to lower margin products within product lines, our overall gross margins and our profitability may be adversely affected.

As we expand into accessories for tablets and other mobile devices, and digital music, our products in those categories may have lower gross margins than in our traditional product categories. Consumer demand in these product categories, based on style, color and other factors, tends to be less predictable and tends to vary more across geographic markets. As a result, we may face higher up-front investments, inventory costs associated with attempting to anticipate consumer preferences, and increased inventory write-offs. If we are unable to offset these potentially lower margins by enhancing the margins in our more traditional product categories, our profitability may be adversely affected.

The impact of these factors on gross margins can create unanticipated fluctuations in our operating results, which may cause volatility in the price of our shares.

As we continue our efforts to lower our costs and improve our operating leverage as part of our turnaround, we may or may not fully realize our goals.

Our turnaround strategy over the past couple years has been based in part on simplifying the organization, reducing operating costs through global workforce reductions and a reduction in the complexity of our product portfolio, with the goal of better aligning costs with our current business and with our decreasing revenues. We restructured our business in fiscal years 2015 and 2014, and we are continuing to restructure in fiscal year 2016 as we divest or discontinue non-strategic product categories, we're exiting our OEM business and we're reorganizing our Lifesize reporting unit. In addition, we are continuing the rationalization of our G&A, infrastructure and indirect procurement to reduce operating expenses.

Our ability to achieve the desired and anticipated cost savings and other benefits from these simplification, cost-cutting and restructuring activities, and within our desired and expected timeframes, are subject to many estimates and assumptions, and the actual savings and timing for those savings may vary materially based on factors such as local labor regulations, negotiations with third parties, and operational requirements. These estimates and assumptions are also subject to significant economic, competitive and other uncertainties, some of which are beyond our control. There can be no assurance that we will fully realize the desired and anticipated benefits from these activities. To the extent that we are unable to improve our financial performance, further restructuring measures may be required in the future. Furthermore, we are expecting to be able to use the anticipated cost savings from these activities to fund and support our current growth opportunities and incremental investments for future growth. If the cost-savings do not materialize as anticipated, or within our expected timeframes, our ability to invest in growth may be limited and our business and operating results may be adversely affected.

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As part of the restructuring plans, we reduced the size of our product portfolio and the assortment of similar products at similar price points within each product category over the past several fiscal years. While we are constantly replacing products and are dependent on the success of our new products, this product portfolio simplification has made us even more dependent on the success of the new products that we are introducing.

As we focus on growth opportunities, we are divesting or discontinuing non-strategic product categories and pursuing strategic acquisitions and investments, which, if unsuccessful, could have an adverse impact on our business.

During the third quarter of fiscal year 2013, the declining trends in our PC peripherals accelerated, and we made a strategic decision to divest or discontinue certain non-strategic product categories and products. We continue to review our product portfolio and update our non-strategic product categories and products. During the third quarter of fiscal year 2016, we divested our Lifesize video conferencing business and completed our exit from the OEM business. If we are unable to effect sales on favorable terms or if realignment is more costly or distracting than we expect or has a negative effect on our organization, employees and retention, then our business and operating results may be adversely affected. Discontinuing products with service components may also cause us to continue to incur expenses to maintain services within the product life cycle or to adversely affect our customer and consumer relationships and brand. In addition, discontinuing product categories, even categories that we consider non-strategic, reduces the size and diversification of our business and causes us to be more dependent on a smaller number of product categories.

As we attempt to grow our business in strategic product categories and emerging market geographies, we will consider growth through acquisition or investment. We will evaluate acquisition opportunities that could provide us with additional product or service offerings or with additional industry expertise, assets and capabilities. Acquisitions could result in difficulties integrating acquired operations, products, technology, internal controls, personnel and management teams and result in the diversion of capital and management’s attention away from other business issues and opportunities. If we fail to successfully integrate acquisitions, our business could be harmed. Moreover, our acquisitions may not be successful in achieving our desired strategic objectives, which would also cause our business to suffer. Acquisitions can also lead to large non-cash charges that can have an adverse effect on our results of operations as a result of write-offs for items such as future impairments of intangible assets and goodwill or the recording of stock-based compensation. Several of our past acquisitions have not been successful and have led to impairment charges, including a $122.7 million and $214.5 million non-cash goodwill impairment charge in fiscal years 2015 and 2013, respectively, related to our Lifesize video conferencing reporting unit. In addition, from time to time we make strategic venture investments in other companies that provide products and services that are complementary to ours. If these investments are unsuccessful, this could have an adverse impact on our results of operations, operating cash flows and financial condition.

We rely on third parties to sell and distribute our products, and we rely on their information to manage our business. Disruption of our relationship with these channel partners, changes in their business practices, their failure to provide timely and accurate information, changes in distribution partners, practices or models or conflicts among our channels of distribution could adversely affect our business, results of operations, operating cash flows and financial condition.

Our sales channel partners, the distributors and retailers who distribute and sell our products, also sell products offered by our competitors and, in the case of retailer house brands, may also be our competitors. If product competitors offer our sales channel partners more favorable terms, have more products available to meet their needs, or utilize the leverage of broader product lines sold through the channel, or if our retailer channel partners show preference for their own house brands, our sales channel partners may de-emphasize or decline to carry our products. In addition, certain of our sales channel partners could decide to de-emphasize the product categories that we offer in exchange for other product categories that they believe provide them with higher returns. If we are unable to maintain successful relationships with these sales channel partners or to maintain our distribution channels, our business will suffer.

As we expand into new product categories and markets in pursuit of growth, we will have to build relationships with new channel partners and adapt to new distribution and marketing models. These new partners, practices and models may require significant management attention and operational resources and may affect our accounting, including revenue recognition, gross margins, and the ability to make comparisons from period to period. Entrenched and more experienced competitors will make these transitions difficult. If we are unable to build

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successful distribution channels or successfully market our products in these new product categories, we may not be able to take advantage of the growth opportunities, and our business and our ability to effect a turnaround in our business could be adversely affected.

We reserve for cooperative marketing arrangements, direct and indirect customer incentive programs and pricing programs with our sales channel partners. These reserves are based on judgments and estimates, using historical experience rates, inventory levels in distribution, current trends and other factors. There could be significant differences between the actual costs of such arrangements and programs and our estimates.

The impact of economic conditions, evolving consumer preferences, and purchasing patterns on our distribution partners, or competition between our sales channels, could result in sales channel disruption. For example, if sales at large retail stores are displaced as a result of bankruptcy, competition from Internet sales channels or otherwise, our product sales could be adversely affected. Any loss of a major partner or distribution channel or other channel disruption could make us more dependent on alternate channels, increase pricing and promotional pressures from other partners and distribution channels, increase our marketing costs, or adversely impact buying and inventory patterns, payment terms or other contractual terms.

We use retail sell-through data, which represents sales of our products by our direct retailer customers to consumers, and by our distributor customers to their customers, along with other metrics, to assess consumer demand for our products. Sell-through data is subject to limitations due to collection methods and the third-party nature of the data and thus may not be an accurate indicator of actual consumer demand for our products. In addition, the customers supplying sell-through data vary by geographic region and from period to period, but typically represent a majority of our retail sales. If we do not receive this information on a timely and accurate basis, or if we do not properly interpret this information, our results of operations and financial condition may be adversely affected.

Our principal manufacturing operations and third-party contract manufacturers are located in China and Southeast Asia, which exposes us to risks associated with doing business in that geographic area.

We produce approximately half of our peripheral products at facilities we own in China, and we plan to increase that percentage to approximately 60 percent of our peripheral products during fiscal year 2016. The majority of our other production is performed by third-party contract manufacturers, including other design manufacturers, in China.

Our manufacturing operations in China could be adversely affected by changes in the interpretation and enforcement of legal standards, by strains on China’s available labor pool, changes in labor costs and other employment dynamics, high turnover among Chinese employees, communications, trade, and other infrastructures, by natural disasters, by conflicts or disagreements between China and Taiwan or China and the United States, by labor unrest, and by other trade customs and practices that are dissimilar to those in the United States and Europe. Interpretation and enforcement of China’s laws and regulations continue to evolve and we expect differences in interpretation and enforcement to continue in the foreseeable future.

Our manufacturing operations at third-party contractors could be adversely affected by contractual disagreements, by labor unrest, by natural disasters, by strains on local communications, trade, and other infrastructures, by competition for the available labor pool or manufacturing capacity, by increasing labor and other costs, and by other trade customs and practices that are dissimilar to those in the United States and Europe.

Further, we may be exposed to fluctuations in the value of the local currency in the countries in which manufacturing occurs. Future appreciation of these local currencies could increase our component and other raw material costs. In addition, our labor costs could continue to rise as wage rates increase and the available labor pool declines. These conditions could adversely affect our financial results.

We purchase key components and products from a limited number of sources, and our business and operating results could be adversely affected if supply were delayed or constrained or if there were shortages of required components.

We purchase certain products and key components from a limited number of sources. If the supply of these products or key components, such as micro-controllers, and optical sensors, were to be delayed or constrained, or if one or more of our single-source suppliers goes out of business as a result of adverse global economic conditions or natural disasters, we might be unable to find a new supplier on acceptable terms, or at all, and our product

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shipments to our customers could be delayed, which could adversely affect our business, financial condition and operating results.

Lead times for materials, components and products ordered by us or by our contract manufacturers can vary significantly and depend on factors such as contract terms, demand for a component, and supplier capacity. From time to time, we have experienced component shortages and extended lead times on semiconductors, such as micro-controllers and optical sensors, and base metals used in our products. Shortages or interruptions in the supply of components or subcontracted products, or our inability to procure these components or products from alternate sources at acceptable prices in a timely manner, could delay shipment of our products or increase our production costs, which could adversely affect our business and operating results.

Conflict minerals regulations are causing us to incur additional expenses, could limit the supply and increase the cost of certain metals used in manufacturing our products and could adversely affect the distribution and sales of our products.

As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC adopted disclosure requirements regarding the use of certain minerals, known as conflict minerals, which are mined from the Democratic Republic of Congo and adjoining countries, as well as procedures regarding a manufacturer’s efforts to identify and prevent the sourcing of such minerals and metals produced from those minerals. Additional reporting obligations are being considered by the European Union. The implementation of the existing U.S. requirements and any additional requirements in Europe could affect sourcing at competitive prices and availability in sufficient quantities of certain minerals used in the manufacture of our products. The number of suppliers who provide conflict-free minerals may be limited, and the implementation of these requirements may decrease the number of suppliers capable of supplying our needs for certain metals. In addition, there may be material costs associated with complying with the disclosure requirements, such as costs related to the due diligence process of determining the source of certain minerals used in our products, as well as costs of possible changes to products, processes, or sources of supply as a consequence of such verification activities. As our supply chain is complex and we use contract manufacturers for some of our products, we may not be able to sufficiently verify the origins of the relevant minerals used in our products through the due diligence procedures that we implement, which may adversely affect our reputation. We may also encounter challenges to satisfy those customers who require that all of the components of our products be certified as conflict-free, which could, if we are unable to satisfy their requirements or pass through any increased costs associated with meeting their requirements place us at a competitive disadvantage, adversely affect our business and operating results, or both. We filed our report for the calendar year 2014 with the SEC on May 29, 2015.

If we do not successfully coordinate the worldwide manufacturing and distribution of our products, we could lose sales.

Our business requires us to coordinate the manufacture and distribution of our products over much of the world. We rely on third parties to manufacture many of our products, manage centralized distribution centers, and transport our products. If we do not successfully coordinate the timely manufacturing and distribution of our products, we may have insufficient supply of products to meet customer demand, we could lose sales, we may experience a build-up in inventory, or we may incur additional costs.

By locating our manufacturing in China and Southeast Asia, we are reliant on third parties to get our products to distributors around the world. Transportation costs, fuel costs, labor unrest, natural disasters and other adverse effects on our ability, timing and cost of delivering products can increase our inventory, decrease our margins, adversely affect our relationships with distributors and other customers and otherwise adversely affect our results of operations and financial condition.

A significant portion of our quarterly retail orders and product deliveries generally occur in the last weeks of the fiscal quarter. This places pressure on our supply chain and could adversely affect our revenues and profitability if we are unable to successfully fulfill customer orders in the quarter.

We conduct operations in a number of countries, and have invested significantly in growing our sales and marketing activities in China, and the effect of business, legal and political risks associated with international operations could adversely affect us.

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We conduct operations in a number of countries, and have invested significantly in growing our personnel and sales and marketing activities in China and, to a lesser extent, other emerging markets. We may also increase our investments to grow sales in other emerging markets, such as Latin America and Eastern Europe. There are risks inherent in doing business in international markets, including:


•	Difficulties in staffing and managing international operations;

• Compliance with laws and regulations, including environmental, tax and anti-corruption laws, which vary from country to country and over time, increasing the costs of compliance and potential risks of non-compliance;

• Varying laws, regulations and other legal protections, uncertain and varying enforcement of those laws and regulations, dependence on local authorities, and the importance of local networks and relationships;

• Exposure to political and financial instability, especially with the uncertainty associated with the ongoing sovereign debt crisis in certain Euro zone countries, which may lead to currency exchange losses and collection difficulties or other losses;

• Lack of infrastructure or services necessary or appropriate to support our products and services;

• Exposure to fluctuations in the value of local currencies;

• Difficulties and increased costs in establishing sales and distribution channels in unfamiliar markets, with their own market characteristics and competition, including entrenched local competition;

• Weak protection of our intellectual property rights;

• Higher credit risks;

• Changes in VAT (value-added tax) or VAT reimbursement;

• Imposition of currency exchange controls;

• Import or export restrictions that could affect some of our products, including those with encryption technology;

• Delays from customs brokers or government agencies; and

• A broad range of customs, consumer trends, and more.

Any of these risks could adversely affect our business, financial condition and operating results.

Sales growth in China is an important part of our expectations for our business. As a result, if Chinese economic, political or business conditions deteriorate, or if one or more of the risks described above materializes in China, our overall business and results of operations will be adversely affected.

Our financial performance is subject to risks associated with fluctuations in currency exchange rates.

A significant portion of our business is conducted in currencies other than the U.S. Dollars. Therefore, we face exposure to movements in currency exchange rates.

Our primary exposure to movements in currency exchange rates relates to non-U.S. Dollar denominated sales and operating expenses worldwide. For fiscal year 2015, approximately 44% of our revenue was in non-U.S. denominated currencies. Weakening of currencies relative to the U.S. Dollar adversely affects the U.S. Dollar value of our non-U.S. Dollar-denominated sales and earnings. If we raise international pricing to compensate, it could potentially reduce demand for our products, adversely affecting our sales and potentially having an adverse impact on our market share. Margins on sales of our products in non-U.S. Dollar denominated countries and on sales of products that include components obtained from suppliers in non-U.S. Dollar denominated countries could be adversely affected by currency exchange rate fluctuations. In some circumstances, for competitive or other reasons, we may decide not to raise local prices to fully offset the U.S. Dollar’s strengthening, which would adversely affect

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the U.S. Dollar value of our non-U.S. Dollar-denominated sales and earnings. Competitive conditions in the markets in which we operate may also limit our ability to increase prices in the event of fluctuations in currency exchange rates. Conversely, strengthening of currency rates may also increase our product component costs and other expenses denominated in those currencies, adversely affecting operating results. We further note that a larger portion of our sales than of our expenses are denominated in non-U.S. denominated currencies.

We use derivative instruments to hedge certain exposures to fluctuations in currency exchange rates. The use of such hedging activities may not offset any, or more than a portion, of the adverse financial effects of unfavorable movements in currency exchange rates over the limited time the hedges are in place and do not protect us from long term shifts in currency exchange rates.

As a result, fluctuations in currency exchange rates could adversely affect our business, operating results and financial condition. Moreover, these exposures may change over time.

As a Swiss, dual-listed company operating in many markets and jurisdictions and expanding into new growth categories, we are subject to risks associated with new, existing and potential future laws and regulations.

Based on our current business model and as we expand into new markets and product categories, we must comply with a wide variety of laws, standards and other requirements governing, among other things, health and safety, hazardous materials usage, product-related energy consumption, packaging, recycling and environmental matters. Our products may be required to obtain regulatory approvals and satisfy other regulatory concerns in the various jurisdictions where they are manufactured, sold or both. These requirements create procurement and design challenges, which, among other things, require us to incur additional costs identifying suppliers and contract manufacturers who can provide or obtain compliant materials, parts and end products. Failure to comply with such requirements can subject us to liability, additional costs, and reputational harm and, in severe cases, force us to recall products or prevent us from selling our products in certain jurisdictions.

As a Swiss company with shares listed on both the SIX Swiss Exchange and the Nasdaq Global Select Market, we are also subject to both Swiss and United States corporate governance and securities laws and regulations. In addition to the extra costs and regulatory burdens of our dual regulatory obligations, the two regulatory regimes may not always be compatible and may impose disclosure obligations or operating restrictions on our business to which our competitors and other companies are not subject. For example, on January 1, 2014, subject to certain transitional provisions, the Swiss Federal Council Ordinance Against Excessive Compensation at Public Companies (the “Ordinance”) became effective in connection with the Minder initiative approved by Swiss voters during 2013. The Ordinance, among other things, (a) requires a binding shareholder “say on pay” vote with respect to the compensation of members of our executive management and Board of Directors, (b) generally prohibits the making of severance, advance, transaction premiums and similar payments to members of our executive management and Board of Directors, (c) imposes other restrictive compensation practices, and (d) requires that our articles of incorporation specify various compensation-related matters. In addition, during 2013, Swiss voters considered an initiative to limit pay for a chief executive officer to a multiple of no more than twelve times the salary of the lowest-paid employee. Although voters rejected that initiative, it did receive substantial voter support. The Ordinance, potential future initiatives relating to corporate governance or executive compensation, and Swiss voter sentiment in favor of such regulations may increase our non-operating costs and adversely affect our ability to attract and retain executive management and members of our Board of Directors.

As a result of changes in tax laws, treaties, rulings, regulations or agreements, or their interpretation, of Switzerland or any other country in which we operate, the loss of a major tax dispute or a successful challenge to our operating structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, or other factors, our effective income tax rates may increase in the future, which could adversely affect our net income and cash flows.

We operate in multiple jurisdictions and our profits are taxed pursuant to the tax laws of these jurisdictions. Our effective income tax rate may be affected by changes in or interpretations of tax laws, treaties, rulings, regulations or agreements in any given jurisdiction, utilization of net operating loss and tax credit carryforwards, changes in geographical allocation of income and expense, and changes in management’s assessment of matters such as the realizability of deferred tax assets. In the past, we have experienced fluctuations in our effective income tax rate. Our effective income tax rate in a given fiscal year reflects a variety of factors that may not be present in the

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succeeding fiscal year or years. There is no assurance that our effective income tax rate will not change in future periods.

We are incorporated in the Canton of Vaud in Switzerland and our effective income tax rate benefits from a longstanding ruling from the Canton of Vaud. The tax rules in Switzerland are expected to change in response to certain guidance and demands from both the European Union and the Organization for Economic Co-operation and Development and that could have an adverse effect on our tax ruling and effective income tax rate. Switzerland’s implementation of any material change in tax laws or policies or its adoption of new interpretations of existing tax laws and rulings, or changes in our tax ruling from the Canton of Vaud, could result in a higher effective income tax rate on our worldwide earnings and such change could adversely affect our net income.

We file Swiss and foreign tax returns. We are frequently subject to tax audits, examinations and assessments in various jurisdictions. If any tax authority successfully challenges our operational structure, intercompany pricing policies or the taxable presence of our key subsidiaries in certain countries, if the terms of certain income tax treaties are interpreted in a manner that is adverse to our structure, or if we lose a material tax dispute in any country, our effective income tax rate could increase. A material assessment by a governing tax authority could adversely affect our profitability. If our effective income tax rate increases in future periods, our net income and cash flows could be adversely affected.

Claims by others that we infringe their proprietary technology could adversely affect our business.

We have been expanding the categories of products we sell, such as entering new markets and introducing products for tablets, other mobile devices, digital music, and video collaboration. We expect to continue to enter new categories and markets. As we do so, we face an increased risk that claims alleging we infringe the patent or other intellectual property rights of others, regardless of the merit of the claims, may increase in number and significance. Infringement claims against us may also increase as the functionality of video, voice, data and conferencing products begin to overlap. This risk is heightened by the increase in lawsuits brought by holders of patents that do not have an operating business or are attempting to license broad patent portfolios and by the increasing attempts by companies in the technology industries to enjoin their competitors from selling products that they claim infringe their intellectual property rights. Intellectual property lawsuits are subject to inherent uncertainties due to the complexity of the technical issues involved, and we cannot be certain that we will be successful in defending ourselves against intellectual property claims. A successful claimant could secure a judgment that requires us to pay substantial damages or prevents us from distributing certain products or performing certain services. We might also be required to seek a license for the use of such intellectual property, which may not be available on commercially acceptable terms or at all. Alternatively, we may be required to develop non-infringing technology, which could require significant effort and expense and may ultimately not be successful. Any claims or proceedings against us, whether meritorious or not, could be time consuming, result in costly litigation or the diversion of significant operational resources, or require us to enter into royalty or licensing agreements, any of which could materially and adversely affect our business and results of operations.

We may be unable to protect our proprietary rights. Unauthorized use of our technology may result in the development of products that compete with our products.

Our future success depends in part on our proprietary technology, technical know-how and other intellectual property. We rely on a combination of patent, trade secret, copyright, trademark and other intellectual property laws, and confidentiality procedures and contractual provisions such as nondisclosure terms and licenses, to protect our intellectual property.

We hold various United States patents and pending applications, together with corresponding patents and pending applications from other countries. It is possible that any patent owned by us will be invalidated, deemed unenforceable, circumvented or challenged, that the patent rights granted will not provide competitive advantages to us, or that any of our pending or future patent applications will not be granted. In addition, other intellectual property laws or our confidentiality procedures and contractual provisions may not adequately protect our intellectual property. Also, others may independently develop similar technology, duplicate our products, or design around our patents or other intellectual property rights. Unauthorized parties have copied and may in the future attempt to copy aspects of our products or to obtain and use information that we regard as proprietary. Any of these events could adversely affect our business, financial condition and operating results.

Product quality issues could adversely affect our reputation and could impact our operating results.

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The market for our products is characterized by rapidly changing technology and evolving industry standards. To remain competitive, we must continually introduce new products and technologies. The products that we sell could contain defects in design or manufacture. Defects could also occur in the products or components that are supplied to us. There can be no assurance we will be able to detect and remedy all defects in the hardware and software we sell. Failure to do so could result in product recalls, product redesign efforts, lost revenue, loss of reputation, and significant warranty and other expenses to remedy.

The collection, storage, transmission, use and distribution of user data could give rise to liabilities and additional costs of operation as a result of laws, governmental regulation and risks of security breaches.

In connection with certain of our products, we collect data related to our consumers. This information is increasingly subject to legislation and regulations in numerous jurisdictions around the world, and especially in Europe. Government actions are typically intended to protect the privacy and security of personal information and its collection, storage, transmission, use and distribution in or from the governing jurisdiction. In addition, because various jurisdictions have different laws and regulations concerning the use, storage and transmission of such information, we may face requirements that pose compliance challenges in existing markets as well as new international markets that we seek to enter. The collection of user data heightens the risk of security breaches related to our IT systems and the systems of third-party data storage and other service and IT providers. Such laws and regulations, and the variation between jurisdictions, as well as additional security measures and risk, could subject us to costs, liabilities or negative publicity that could adversely affect our business.

We are upgrading our worldwide business application suite, and difficulties, distraction or disruptions may interrupt our normal operations and adversely affect our business and operating results.

During fiscal years 2014 and 2015, we devoted significant resources to the upgrade of our worldwide business application suite to Oracle’s version R12. We recently implemented that upgrade and will be reviewing the success of that implementation through fiscal year 2016 and into fiscal year 2017. As we transition to the new business application suite, we may experience difficulties with our systems, management distraction, lack of visibility into our business operations and results, and significant business disruptions. Difficulties with our systems may interrupt our normal operations, including our enterprise resource planning, forecasting, demand planning, supply planning, intercompany processes, promotion management, internal financial controls, pricing, and our ability to provide quotes, process orders, ship products, provide services and support to our customers and consumers, bill and track our customers, fulfill contractual obligations, and otherwise run and track our business. For example, the transition has resulted in delays in processing customer claims for claims accruals. In addition, we may need to expend significant attention, time and resources to correct problems or find alternative sources for performing these functions. Any such difficulty or disruption may adversely affect our business and operating results.

In previous periods, we identified material weaknesses in our internal control over financial reporting and, if we are unable to satisfy regulatory requirements relating to internal controls or if our internal control over financial reporting is not effective, our business and stock price could be adversely affected.

In connection with Section 404 of the Sarbanes-Oxley Act, we have identified in the past and may, from time-to-time in the future, identify issues with our internal controls and deficiencies in our internal control over financial reporting. Certain of these material weaknesses were identified during the independent investigation by our Audit Committee in fiscal year 2015 and a review of related accounting matters that resulted in late filings of our Annual Report on Form 10-K for fiscal year 2014 and our Quarterly Reports on Form 10-Q for the first and second quarters of fiscal year 2015 and a restatement of our financial results for fiscal years 2011 and 2012 and the first quarter of fiscal year 2012. This also follows the identification of material weaknesses in our internal control over financial reporting in our Annual Report on Form 10-K for the fiscal year ended March 31, 2013, as amended on Form 10-K/A, and the identification in previous periods of significant deficiencies in our internal controls over financial reporting. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As a result of these material weaknesses, our management concluded that our internal control over financial reporting was not effective as of March 31, 2013 and March 31 2014, based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-An Integrated Framework (1992). While we believe that we have remediated these material weaknesses, if we find that our remediation efforts were not effective or if additional material weaknesses or significant deficiencies in our internal controls are discovered or occur in the future, our

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consolidated financial statements may contain material misstatements and we could be required to restate our financial results again, we could be subject to litigation which, whether meritorious or not, could be time consuming, costly or divert significant operational resources, we could lose investor confidence in the accuracy and completeness of our financial reports, and our reputation, business, results of operations and stock price could be adversely affected.

In addition, in May 2013, COSO issued a new version of its internal control framework, which has been deemed by COSO to supersede the 1992 version of the framework as of December 15, 2014. We are developing our plan for transition to application of the 2013 edition of the framework to our assessment of our internal control over financial reporting. During the course of the transition to the new framework and its application to our assessment of our internal control over financial reporting, we may determine that other deficiencies exist in our internal controls that may rise to the level of material weaknesses. Such an occurrence, or a failure to effectively remedy such a deficiency, could adversely affect investor confidence in the accuracy and timeliness of our financial reports.

Goodwill impairment charges could have an adverse effect on the results of our operations.

Goodwill associated with a number of previous acquisitions could result in impairment charges. The slowdown in the overall video conferencing industry together with the competitive environment in fiscal year 2013 resulted in a $214.5 million non-cash goodwill impairment charge in fiscal year 2013, which substantially impacted our operating results. We recorded an additional impairment charge of goodwill of $122.7 million related to our video conferencing reporting unit in fiscal year 2015, reducing the goodwill of our video conferencing reporting unit to zero, which substantially impacted our operating results again. As we attempt to effect a turnaround of our business, and divesting or discontinuing product categories or products that we previously acquired, we will need to continue to evaluate the carrying value of our goodwill. Additional impairment charges could adversely affect our results of operations.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

Exhibit Index



Exhibit No.		Description

10.1**		Employment Agreement between Logitech Inc. and Bracken Darrell, dated as of December 18, 2015.

10.2**		Employment Agreement between Logitech Inc. and Vincent Pilette, dated as of December 18, 2015.

10.3**		Employment Agreement between Logitech Inc. and L. Joseph Sullivan, dated as of December 18, 2015.

10.4**		Employment Contract between Logitech Europe S.A. and Marcel Stolk, dated as of December 18, 2015.

10.5		Series B Preferred Stock Purchase Agreement by and among Logitech International S.A., Lifesize, Inc., and entities affiliated with Redpoint Ventures, Sutter Hill Ventures and Meritech Capital Partners, dated December 28, 2015

31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.

31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

32.1		Section 1350 Certifications of Chief Executive Officer and Chief Financial Officer.*

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Definition Linkbase Document

* This exhibit is furnished herewith, but not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we explicitly incorporate it by reference.

** Indicates management compensatory plan, contract or arrangement.

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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, thereunto duly authorized.



		LOGITECH INTERNATIONAL S.A.


		/s/ Bracken P. Darrell
		Bracken P. Darrell
		President and
		Chief Executive Officer


		/s/ Vincent Pilette
		Vincent Pilette
		Chief Financial Officer

January 22, 2016

Exhibit 10.1

LOGITECH INC.

EMPLOYMENT AGREEMENT

December 18, 2015

WHEREAS, Bracken Darrell (“Executive”) is a member of the Group Management Team of Logitech International, S.A., a Swiss corporation (the “Parent”);

WHEREAS, Executive is currently employed by Logitech Inc. (the “Company”), a wholly-owned subsidiary of the Parent (the Parent and its direct and indirect subsidiaries - including the Company - are collectively referred to as “Logitech”) and is a party to an offer letter, employment agreement and/or a change in control agreement;

WHEREAS, the Parent is subject to compliance with the Swiss Ordinance Against Excessive Remuneration by Listed Companies (the so-called “Minder Ordinance”) and any successor and other laws, ordinances, rules and regulations resulting from the provisions of the Swiss Federal Constitution prohibiting excessive compensation in Swiss listed companies;

WHEREAS, the Minder Ordinance does not permit the Parent to have severance or change of control agreements or arrangements with members of its Group Management Team; and

WHEREAS, the Company and Executive now wish to amend the terms of Executive’s employment with the Company to eliminate certain severance and change of control benefits to which Executive was entitled under his employment and compensation arrangements with the Company in accordance with the Minder Ordinance.

NOW, THEREFORE, in consideration of Executive’s continued employment with the Company, Executive and the Company hereby agree, effective as of the date first written above:


1.	This Employment Agreement (this “Agreement”) sets forth certain terms of Executive’s employment with the Company, as well as the parties’ understanding with respect to any termination of that employment relationship.

Executive will continue to be employed by the Company as Chief Executive Officer and President, and will serve in the positions assigned to Executive by the Board of Directors of the Company (the “Board”) from time to time. Executive agrees to devote his or her full business time, energy and skill to the assigned duties. Executive agrees that, without the approval of the Board, Executive shall not, during the period of employment with the Company, devote any time to any business affiliation which would interfere with or derogate from Executive’s obligations under this Agreement.


3.	Executive will be compensated for his or her services to the Company as follows:

(a) Cash Compensation: Executive will continue to receive his or her base salary as currently assigned in accordance with normal payroll procedures, and remain eligible to participate in the Logitech Management Performance Bonus Plan, which may be amended from time to time. Executive’s compensation will be reviewed by the Board or the Compensation Committee of the Board (the “Compensation Committee”) from time to time and may be subject to adjustment based on various factors including, but not limited to, individual performance, Logitech’s performance and the approval of the compensation of the Group Management Team by the shareholders of the Parent in compliance with the Parent’s Articles of Incorporation and the Minder Ordinance. Any adjustment to Executive’s compensation shall be in the sole discretion of the Board or the Compensation Committee.

(b) Benefits: Executive will have the right, on the same basis as other employees of the Company, to participate in and to receive benefits under any applicable medical, disability or other group insurance plans, as well as under the Company’s business expense reimbursement, vacation policy and other policies. The Company reserves the right to cancel or change the benefit plans, programs and policies it offers to its employees at any time.

Executive agrees to provide the Company with up to one (1) year of notice prior to the effective date of any termination of employment, with the length of notice (if any) within that range to be at the discretion of Executive (the “Executive Notice Period”). Except in cases where the Company terminates Executive’s employment for Cause (as defined below), the Company agrees to provide Executive with one (1) year of notice prior to the effective date of any termination of employment (the “Company Notice Period”; the Executive Notice Period or the Company Notice Period, as applicable, is referred to in this Agreement as the “Notice Period”). Notice of termination by either party shall be provided in writing. Executive shall remain a full-time employee of the Company during the Notice Period and shall not accept employment with any other entity during the Notice Period. Subject to specific terms contemplated in equity award agreements or equity or bonus plans, during the Notice Period, Executive shall continue to receive his or her base salary at the rate in effect as of the date either party has provided the other party with a notice of termination of employment (the “Date of Notice”), and Executive shall remain eligible for (i) all employee benefits in accordance with the provisions of the plans under which the benefits are provided, (ii) the payment of bonuses to the extent they become payable during the Notice Period or that become payable after the Notice Period but relate to a performance period that commenced during any portion of the Notice Period, with the bonus amount determined at the discretion of the Board or the Compensation Committee acting in good faith based on the Executive’s target bonus (currently calculated as a percentage of base salary) in effect as of the Date of Notice and on the attainment level of the performance goals and metrics (corporate, business group and individual, as applicable) established by the Board or Compensation Committee for Executive within the applicable fiscal year bonus program and in accordance with the applicable bonus plans, and payable at the time all other members of the Group Management Team are paid their bonuses; provided, however, that any bonus relating to a performance period that ends following the last day of the Notice Period shall be prorated based on the number of days Executive is employed during the performance period, and (iii) continued vesting of awards to acquire, or that are denominated in, shares of the Parent (“Equity Awards”) that were outstanding as of the Date of Notice. Executive shall be entitled to the acceleration of vesting of Equity Awards that were outstanding as of the Date of Notice in connection with a change of control of the Parent, termination of Executive’s employment, or both, to the extent set forth in any agreement evidencing the Equity Awards and only to the extent permitted under the Laws (as defined in Section 10 below) of Switzerland and California. Executive shall not be entitled to any new Equity Awards, bonuses, promotions, or salary increases during the Notice Period. As of the Date of Notice and at any time during the Notice Period, the Company may at its absolute discretion decide to release Executive from his duty to perform any services in favor of the Company during the Notice Period. As of the Date of Notice and at any time during the Notice Period, Executive may at his absolute discretion waive the Notice Period and be released from his obligation not to accept employment with any other entity during the Notice Period, in which event Executive's employment will terminate upon the effective date of such waiver and Executive shall only be entitled to base salary, any accrued and unused vacation benefits, and any other compensation earned through the date of termination, and such waiver shall constitute a waiver of the compensation, benefits and continued vesting of Equity Awards set forth in this Section as of the effective date of such waiver.

The Company may terminate Executive’s employment at any time without notice for Cause, including during any Notice Period, as determined in the Company’s sole discretion and in good faith. Where the Company terminates Executive for Cause, the termination of employment shall occur with immediate effect. Upon the effective date of Executive’s termination for Cause, Executive shall only be entitled to base salary, any accrued and unused vacation benefits, and any other compensation, earned through the date of termination.

For purposes of this Agreement, “Cause” means Executive’s: (i) willful dishonesty or fraud with respect to the business affairs of Logitech; (ii) intentional falsification of any employment or Logitech records; (iii) misappropriation of or intentional damage to the business or property of Logitech, including (but not limited to) the improper use or disclosure of the confidential or proprietary information of Logitech (excluding misappropriation or damage that results in a loss of little or no consequence to the business or property of Logitech); (iv) conviction (including any plea of guilty or nolo contendere) of a felony that, in the judgment of the Board (excluding Executive), materially impairs Executive's ability to perform his or her duties for Logitech or adversely affects Logitech’s standing in the community or reputation; (v) willful misconduct that is injurious to the reputation or business of Logitech; or (vi) refusal or willful failure to perform any assigned duties reasonably expected of a person in his or her position (excluding during any statutory leaves of absence

as permitted by law, and with reasonable accommodations for any disability required by law) after receipt of written notice by the Chief Executive Officer or Executive Chairman of the Company or Parent of such refusal or failure and a reasonable opportunity to cure (as described below). Executive shall be given written notice by the Company of its intention to terminate Executive for Cause, which notice (a) shall state with particularity the grounds on which the proposed termination for Cause is based and (b) shall be given no later than ninety (90) days after the occurrence of the event giving rise to such grounds (or ninety (90) days after such later date as represents the actual knowledge by an executive officer of the Company or Parent (excluding Executive) of such grounds). The termination shall be effective upon Executive's receipt of such notice; provided, however, that with respect to subsection (vi) of this Section, Executive shall have thirty (30) days after receiving such notice in which to cure any refusal or willful failure to perform (to the extent such cure is possible). If Executive fails to cure such failure to perform within such thirty-day (30-day) period, Executive’s employment with the Company shall thereupon be terminated for Cause.

This Agreement supersedes the Change of Control Severance Agreement dated April 9, 2012 and the provisions in Executive’s Applicable Offer Letter dated March 13, 2013, and any prior offer letter or employment agreement between Executive and Logitech, in their entirety with respect to the subject matter covered by this Agreement. The Change of Control Severance Agreement dated April 9, 2012 and all other severance, notice of termination, and change of control agreements and arrangements of any similar nature between Logitech and Executive shall be terminated effective as of the date of this Agreement. This Agreement shall serve as a novation of such obligations, and the parties hereby waive all current and future rights and entitlements under such previous agreements or arrangements.


7.	The Company and Executive acknowledge that Executive’s employment with the Company is and shall continue to be at-will, subject to compliance with the Notice Period pursuant to Section 4 above. Specifically, either the Company or Executive may terminate Executive’s employment for any reason.

This Agreement shall be effective as of the date first set forth above. This Agreement shall terminate upon the earlier of (i) the expiration of the Notice Period or (ii) the expiration of the Agreement Term (as defined below); provided, however, that if notice of termination of employment by either party (other than notice of termination by the Company for Cause pursuant to Section 5 above) is provided to the other party prior to expiration of the Agreement Term, then this Agreement shall terminate upon the expiration of the Notice Period. Unless this Agreement has terminated based on expiration of the Notice Period or on termination by the Company for Cause, the expiration of the Agreement Term shall not result in the termination of Executive’s employment with the Company or, if applicable, with Logitech. The “Agreement Term” shall mean the period commencing on the effective date of this Agreement and continuing through the second anniversary of the date of this Agreement; provided, however, that the Agreement Term shall be extended for an additional year upon the expiration of the original term and each anniversary thereof, unless the Company has provided a written notice of non-renewal to Executive at least one (1) year prior to the then applicable expiration date of the term.

Subject to Section 10 and 12 below, this Agreement shall be governed by the laws of the State of California, without reference to conflicts of law principles, and the parties hereby consent to the exclusive jurisdiction of the competent courts, federal or state, located in Santa Clara County, California. Each party waives all defenses of lack of personal jurisdiction and forum non conveniens. Notwithstanding the foregoing, Section 12 is governed by the Federal Arbitration Act.

10.

This Agreement may be amended only in a writing signed by both parties to this Agreement, provided that, notwithstanding Section 9 above, the parties agree that the Company has the right to unilaterally amend this Agreement without compensation solely if an amendment is determined to be reasonably necessary by the Company’s legal counsel for Logitech to comply with existing or adopted ordinances, laws, rules or regulations applicable to Executive or Logitech (“Laws”) (even if such Laws have not yet taken effect), including but not limited to the Minder Ordinance and any other Laws resulting from the provisions of the Swiss Federal Constitution prohibiting excessive compensation in Swiss listed companies, and such counsel determines that the amendment reasonably addresses such need. No amendment made to this Agreement under this provision shall affect the vested rights of the Employee. No failure or delay by either party in exercising any right hereunder or any partial exercise thereof shall operate as a waiver thereof or preclude any other or further exercise of any right hereunder.


11.	In view of the personal nature of the services to be performed under this Agreement by Executive, Executive cannot assign or transfer any of his or her obligations under this Agreement.


12.	Arbitration.

(a) Scope of Arbitration Requirement . Logitech and Executive hereby waive their rights to a trial before a judge or jury and agree to arbitrate before a neutral arbitrator any and all claims or disputes arising out of this Agreement and any and all claims arising from or relating to Executive’s employment, including (but not limited to) claims against the Parent or the Company or against any current or former Executive, director or agent of the Parent or the Company, claims of wrongful termination, retaliation, discrimination, harassment, breach of contract, breach of the covenant of good faith and fair dealing, defamation, invasion of privacy, fraud, misrepresentation, constructive discharge or failure to provide a leave of absence, or claims regarding commissions, stock options or bonuses, infliction of emotional distress or unfair business practices.

(b) Procedure . The arbitrator’s decision shall be written and shall include the findings of fact and law that support the decision. The arbitrator’s decision shall be final and binding on both parties, except to the extent that applicable law allows for judicial review of arbitration awards. The arbitrator may award any remedies that would otherwise be available to the parties if they were to bring the dispute in court. The arbitration shall be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association; provided, however that the arbitrator shall allow the discovery authorized by the California Arbitration Act or the discovery that the arbitrator deems necessary for the parties to vindicate their respective claims or defenses. The arbitration shall take place in Alameda County, California, or, at Executive’s option, the county in which Executive primarily worked with the Company at the time when the arbitrable dispute or claim first arose.

(c) Costs . The parties shall share the costs of arbitration equally, except that the Parent or the Company shall bear the cost of the arbitrator’s fee and any other type of expense or cost that Executive would not be required to bear if he were to bring the dispute or claim in court. The Parent, the Company and Executive shall be responsible for their own attorneys’ fees, and the arbitrator may not award attorneys’ fees unless a statute or contract at issue specifically authorizes such an award.

(d) Applicability . This Section shall not apply to (i) workers’ compensation or unemployment insurance claims or (ii) claims concerning the validity, infringement or enforceability of any trade secret, patent right, copyright or any other trade secret or intellectual property held or sought by Executive or Logitech.


13.	IRS Section 409A Matters.

(a) The payments and benefits to which Executive could become entitled to under Section 4 above are intended be exempt from Section 409A of the Internal Revenue Code of 1986, as amended ( “Section 409A”), under the separation pay plan and short-term deferral exception to the maximum extent permitted under Section 409A and the guidance promulgated thereunder, and the Agreement shall be interpreted and administered in a manner consistent with such intent. If the Company believes, at any time, that any such payment or benefit is not exempt or does not comply with Section 409A, the Company may amend the terms of the Agreement to avoid the application of Section 409A in a particular circumstance or as necessary or desirable to satisfy any of the requirements under Section 409A or to mitigate any additional tax, interest and/or penalties that may apply under Section 409A if exemption or compliance is not practicable, but the Company shall not be under any obligation to make any such amendment. Nothing in this Agreement shall provide a basis for any person to take action against Logitech or any affiliate thereof based on matters covered by Section 409A, including the tax treatment of any amount paid under the Agreement, and neither Logitech nor any of its affiliates shall under any circumstances have any liability to Executive or his estate or any other party for any taxes, penalties or interest due on amounts paid or payable under this Agreement, including taxes, penalties or interest imposed under Section 409A.

deferred compensation subject to Section 409A is payable upon Executive’s separation from service and Executive is a “specified employee” (within the meaning of Section 409A) as of the date of the separation from service, such amount shall instead be paid or provided to Executive on the earlier of (i) the first business day after the date that is six (6) months following Executive’s separation from service or (ii) the date of Executive’s death, to the extent such delayed payment is required to avoid a prohibited distribution under Section 409A. The provisions of this Section 13 will qualify and supersede all other provisions of this Agreement as necessary to fulfill the foregoing intention. Each payment and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 409A.

14.

To the extent that Executive remains or is otherwise performing the duties of an executive officer of Logitech during the periods under this Agreement (including but not limited to any applicable Notice Period) or as otherwise required pursuant to applicable Laws, all compensation payable under this Agreement is subject to any clawback provisions in Logitech’s compensation plans, programs or agreements applicable to Executive or clawback policy that Logitech is required to adopt pursuant to any applicable Laws, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, or that Logitech determines is necessary or appropriate.


15.	This Agreement constitutes the entire agreement between Executive and the Company regarding the subject matter covered by this Agreement, and supersedes all prior negotiations, representations or agreements between Executive and the Company regarding the subject matter covered by this Agreement, whether written or oral.

ACCEPTED AND AGREED.

LOGITECH INC.

By: /s/ Bryan Ko

Name: Bryan Ko

Title: General Counsel and Secretary

EMPLOYEE: Bracken Darrell

By:

/s/ Bracken Darrell

Exhibit 10.2

LOGITECH INC.

EMPLOYMENT AGREEMENT

December 18, 2015

WHEREAS, Vincent Pilette (“Executive”) is a member of the Group Management Team of Logitech International, S.A., a Swiss corporation (the “Parent”);

WHEREAS, the Minder Ordinance does not permit the Parent to have severance or change of control agreements or arrangements with members of its Group Management Team; and

NOW, THEREFORE, in consideration of Executive’s continued employment with the Company, Executive and the Company hereby agree, effective as of the date first written above:


1.	This Employment Agreement (this “Agreement”) sets forth certain terms of Executive’s employment with the Company, as well as the parties’ understanding with respect to any termination of that employment relationship.

Executive will continue to be employed by the Company as Chief Financial Officer, and will serve in the positions assigned to Executive by the Board of Directors of the Company (the “Board”) or the Chief Executive Officer of the Company (the “CEO”), as applicable, from time to time. Executive agrees to devote his or her full business time, energy and skill to the assigned duties. Executive agrees that, without the approval of the Board or the CEO, as applicable, Executive shall not, during the period of employment with the Company, devote any time to any business affiliation which would interfere with or derogate from Executive’s obligations under this Agreement.


3.	Executive will be compensated for his or her services to the Company as follows:

Company reserves the right to cancel or change the benefit plans, programs and policies it offers to its employees at any time.

is injurious to the reputation or business of Logitech; or (vi) refusal or willful failure to perform any assigned duties reasonably expected of a person in his or her position (excluding during any statutory leaves of absence as permitted by law, and with reasonable accommodations for any disability required by law) after receipt of written notice by the Chief Executive Officer or Executive Chairman of the Company or Parent of such refusal or failure and a reasonable opportunity to cure (as described below). Executive shall be given written notice by the Company of its intention to terminate Executive for Cause, which notice (a) shall state with particularity the grounds on which the proposed termination for Cause is based and (b) shall be given no later than ninety (90) days after the occurrence of the event giving rise to such grounds (or ninety (90) days after such later date as represents the actual knowledge by an executive officer of the Company or Parent (excluding Executive) of such grounds). The termination shall be effective upon Executive's receipt of such notice; provided, however, that with respect to subsection (vi) of this Section, Executive shall have thirty (30) days after receiving such notice in which to cure any refusal or willful failure to perform (to the extent such cure is possible). If Executive fails to cure such failure to perform within such thirty-day (30-day) period, Executive’s employment with the Company shall thereupon be terminated for Cause.

This Agreement supersedes the Change of Control Severance Agreement dated September 3, 2013 and the provisions in Executive’s Applicable Offer Letter dated September 3, 2013, and any prior offer letter or employment agreement between Executive and Logitech, in their entirety with respect to the subject matter covered by this Agreement. The Change of Control Severance Agreement dated September 3, 2013 and all other severance, notice of termination, and change of control agreements and arrangements of any similar nature between Logitech and Executive shall be terminated effective as of the date of this Agreement. This Agreement shall serve as a novation of such obligations, and the parties hereby waive all current and future rights and entitlements under such previous agreements or arrangements.


7.	The Company and Executive acknowledge that Executive’s employment with the Company is and shall continue to be at-will, subject to compliance with the Notice Period pursuant to Section 4 above. Specifically, either the Company or Executive may terminate Executive’s employment for any reason.

10.

hereunder or any partial exercise thereof shall operate as a waiver thereof or preclude any other or further exercise of any right hereunder.


11.	In view of the personal nature of the services to be performed under this Agreement by Executive, Executive cannot assign or transfer any of his or her obligations under this Agreement.


12.	Arbitration.


13.	IRS Section 409A Matters.

(b) Anything in this Agreement to the contrary notwithstanding, no amount payable under this Agreement upon a termination of Executive’s employment that is non-qualified deferred compensation subject to Section 409A, as determined in the Company’s sole discretion, will be paid unless Executive experiences a “separation from service” (within the meaning of Section 409A). In addition, to the extent any non-qualified deferred compensation subject to Section 409A is payable upon Executive’s separation from service and Executive is a “specified employee” (within the meaning of Section 409A) as of the date of the separation from service, such amount shall instead be paid or provided to Executive on the earlier of (i) the first business day after the date that is six (6) months following Executive’s separation from service or (ii) the date of Executive’s death, to the extent such delayed payment is required to avoid a prohibited distribution under Section 409A. The provisions of this Section 13 will qualify and supersede all other provisions of this Agreement as necessary to fulfill the foregoing intention. Each payment and benefit payable under this Agreement is intended to constitute a separate payment for purposes of Section 409A.

14.


15.	This Agreement constitutes the entire agreement between Executive and the Company regarding the subject matter covered by this Agreement, and supersedes all prior negotiations, representations or agreements between Executive and the Company regarding the subject matter covered by this Agreement, whether written or oral.

ACCEPTED AND AGREED.

LOGITECH INC.

By: /s/ Bracken Darrell

Name: Bracken Darrell

Title: President and Chief Executive Officer

EMPLOYEE: Vincent Pilette

By:

/s/ Vincent Pilette

Exhibit 10.3

LOGITECH INC.

EMPLOYMENT AGREEMENT

December 18, 2015

WHEREAS, L. Joseph Sullivan (“Executive”) is a member of the Group Management Team of Logitech International, S.A., a Swiss corporation (the “Parent”);

WHEREAS, the Minder Ordinance does not permit the Parent to have severance or change of control agreements or arrangements with members of its Group Management Team; and

NOW, THEREFORE, in consideration of Executive’s continued employment with the Company, Executive and the Company hereby agree, effective as of the date first written above:


1.	This Employment Agreement (this “Agreement”) sets forth certain terms of Executive’s employment with the Company, as well as the parties’ understanding with respect to any termination of that employment relationship.

Executive will continue to be employed by the Company as Senior Vice President, Worldwide Operations, and will serve in the positions assigned to Executive by the Board of Directors of the Company (the “Board”) or the Chief Executive Officer of the Company (the “CEO”), as applicable, from time to time. Executive agrees to devote his or her full business time, energy and skill to the assigned duties. Executive agrees that, without the approval of the Board or the CEO, as applicable, Executive shall not, during the period of employment with the Company, devote any time to any business affiliation which would interfere with or derogate from Executive’s obligations under this Agreement.


3.	Executive will be compensated for his or her services to the Company as follows:

Company reserves the right to cancel or change the benefit plans, programs and policies it offers to its employees at any time.

Executive agrees to provide the Company with up to nine (9) months of notice prior to the effective date of any termination of employment, with the length of notice (if any) within that range to be at the discretion of Executive (the “Executive Notice Period”). Except in cases where the Company terminates Executive’s employment for Cause (as defined below), the Company agrees to provide Executive with nine (9) months of notice prior to the effective date of any termination of employment (the “Company Notice Period”; the Executive Notice Period or the Company Notice Period, as applicable, is referred to in this Agreement as the “Notice Period”). Notice of termination by either party shall be provided in writing. Executive shall remain a full-time employee of the Company during the Notice Period and shall not accept employment with any other entity during the Notice Period. Subject to specific terms contemplated in equity award agreements or equity or bonus plans, during the Notice Period, Executive shall continue to receive his or her base salary at the rate in effect as of the date either party has provided the other party with a notice of termination of employment (the “Date of Notice”), and Executive shall remain eligible for (i) all employee benefits in accordance with the provisions of the plans under which the benefits are provided, (ii) the payment of bonuses to the extent they become payable during the Notice Period or that become payable after the Notice Period but relate to a performance period that commenced during any portion of the Notice Period, with the bonus amount determined at the discretion of the Board or the Compensation Committee acting in good faith based on the Executive’s target bonus (currently calculated as a percentage of base salary) in effect as of the Date of Notice and on the attainment level of the performance goals and metrics (corporate, business group and individual, as applicable) established by the Board or Compensation Committee for Executive within the applicable fiscal year bonus program and in accordance with the applicable bonus plans, and payable at the time all other members of the Group Management Team are paid their bonuses; provided, however, that any bonus relating to a performance period that ends following the last day of the Notice Period shall be prorated based on the number of days Executive is employed during the performance period, and (iii) continued vesting of awards to acquire, or that are denominated in, shares of the Parent (“Equity Awards”) that were outstanding as of the Date of Notice. Executive shall be entitled to the acceleration of vesting of Equity Awards that were outstanding as of the Date of Notice in connection with a change of control of the Parent, termination of Executive’s employment, or both, to the extent set forth in any agreement evidencing the Equity Awards and only to the extent permitted under the Laws (as defined in Section 10 below) of Switzerland and California. Executive shall not be entitled to any new Equity Awards, bonuses, promotions, or salary increases during the Notice Period. As of the Date of Notice and at any time during the Notice Period, the Company may at its absolute discretion decide to release Executive from his duty to perform any services in favor of the Company during the Notice Period. As of the Date of Notice and at any time during the Notice Period, Executive may at his absolute discretion waive the Notice Period and be released from his obligation not to accept employment with any other entity during the Notice Period, in which event Executive's employment will terminate upon the effective date of such waiver and Executive shall only be entitled to base salary, any accrued and unused vacation benefits, and any other compensation earned through the date of termination, and such waiver shall constitute a waiver of the compensation, benefits and continued vesting of Equity Awards set forth in this Section as of the effective date of such waiver.

This Agreement supersedes the Change of Control Severance Agreement dated December 3, 2008 and the provisions in Executive’s Employment Agreement dated December 3, 2008, and any prior offer letter or employment agreement between Executive and Logitech, in their entirety with respect to the subject matter covered by this Agreement. The Change of Control Severance Agreement dated December 3, 2008 and all other severance, notice of termination, and change of control agreements and arrangements of any similar nature between Logitech and Executive shall be terminated effective as of the date of this Agreement. This Agreement shall serve as a novation of such obligations, and the parties hereby waive all current and future rights and entitlements under such previous agreements or arrangements.


7.	The Company and Executive acknowledge that Executive’s employment with the Company is and shall continue to be at-will, subject to compliance with the Notice Period pursuant to Section 4 above. Specifically, either the Company or Executive may terminate Executive’s employment for any reason.

10.

hereunder or any partial exercise thereof shall operate as a waiver thereof or preclude any other or further exercise of any right hereunder.


11.	In view of the personal nature of the services to be performed under this Agreement by Executive, Executive cannot assign or transfer any of his or her obligations under this Agreement.


12.	Arbitration.


13.	IRS Section 409A Matters.

14.


15.	This Agreement constitutes the entire agreement between Executive and the Company regarding the subject matter covered by this Agreement, and supersedes all prior negotiations, representations or agreements between Executive and the Company regarding the subject matter covered by this Agreement, whether written or oral.

ACCEPTED AND AGREED.

LOGITECH INC.

By: /s/ Bracken Darrell

Name: Bracken Darrell

Title: President and Chief Executive Officer

EMPLOYEE: L. Joseph Sullivan

By:

/s/ L. Joseph Sullivan

Exhibit 10.4

M. Marcel STOLK

Logitech Europe S.A.

EPFL - Quartier de l’Innovation

Daniel Borel Innovation Center

1015 Lausanne, Switzerland

Lausanne, 18 ^th December 2015

EMPLOYMENT CONTRACT

Dear Marcel,

In replacement of your employment contract, dated as of April 26, 2012 (the “Original Employment Contract”) which succeeded an earlier agreement dated March 14, 2011, Logitech Europe S.A. (the “Company” or “we”) is pleased to confirm hereafter the main points of your employment contract going forward:

Position

Your title is: Senior Vice President, CCP Business Group. Furthermore, you are currently designated as an executive officer and a member of the Group Management Team of the Company’s parent company, Logitech International S.A. (“Logitech” or the “Parent’) by the Parent’s Board of Directors (the “Board”). Nothing in this employment agreement shall be considered as a right in your favor to remain designated as an executive officer or a member of the Group Management Team of Logitech.

Compensation regime

As long as you are designated as a member of the Group Management Team of Logitech, any compensation under this employment contract is subject to approval of the aggregate compensation of the Group Management Team by the shareholders of the Parent on an annual basis, consistent with the Parent’s Articles of Incorporation and the Swiss Ordinance Against Excessive Remuneration by Listed Companies (the so-called “Minder Ordinance”). You also acknowledge that (i) the Parent is subject to compliance with the Minder Ordinance and any successor and other laws, ordinances, rules and regulations resulting from the provisions of the Swiss Federal Constitution prohibiting excessive compensation in Swiss listed companies and (ii) the Minder Ordinance does not permit Logitech or any company belonging to the group Logitech (hereinafter collectively referred to as "Logitech Companies") to have severance or change of control agreements or arrangements with members of the Group Management Team of Logitech.

Starting date

The present employment contract is for an indefinite period of time. The employment contract became effective under the Original Employment Contract when the valid work permit was received.

Salary

Basic gross annual salary : CHF 523’510 - payable in 13 monthly installments to the bank account of your choice before the end of each month. The 13 ^th salary is paid in December of each year and is already included in the annual salary mentioned here above. In case of termination of this employment contract in the course of a year, the 13 ^th salary will be paid in proportion to the time worked during the relevant year.

Bonus

You are entitled to participate in Logitech’s Leadership Team Bonus Program under the Logitech Management Performance Bonus Plan (the “Bonus Plan”) as follows:


•	Target: 80% of your base salary at 100% of objectives;


•	Potential Total Target Cash Compensation (together with base salary): CHF 942’318.

You acknowledge that the eligibility criteria as well as any payment under the Leadership Team Bonus Program and the Bonus Plan will be determined by Logitech in its absolute discretion. Logitech may modify or repeal the Leadership Team Bonus Program or the Bonus Plan or both at its discretion at any time. Your rights and obligations under the Leadership Team Bonus Program and the Bonus Plan are governed by the terms of the Leadership Team Bonus Program and the Bonus Plan, each as amended from time to time.“

Representation Fees

You might be eligible for representation fees if you comply with the conditions set by the Vaud tax authorities. The potential representation fees are already included in the basic salary mentioned above.

Logitech Shares

You will be entitled to receive equity awards in shares of the Parent as determined by the Board or the Compensation Committee of the Board (the “Compensation Committee”) in its sole discretion. The receipt of any such grant is conditioned upon your execution of the associated grant agreement.

You will be subject to Logitech’s stock ownership guidelines.

Business expenses

Business expenses are paid according to the Company policy.

Hours of work

Your normal hours of work are 42 hours per week spread over five days from Monday to Friday.

Overtime (heures supplémentaires)

Due to the nature of our business, you may be required to work a reasonable amount of overtime (according to the “code suisse des obligations”). The salary mentioned above includes all compensation for overtime. You are not entitled for any additional remuneration or for any other compensation for overtime hours worked.

Holidays / Vacation

4 weeks (20 working days) from Monday to Friday, per year (plus Swiss public holidays).

Financial or personal data transfer

The employee understands that some financial or personal data related to its employment relationship with the Company and Logitech, such as information regarding employee’s term of employment, salary, bonus, allowances, resume, projects (e.g. product developments), promotions, performance etc, may be transferred to and accessible by Logitech entities outside Switzerland for the purpose of employment related analyses and processing, for example in connection with the bonus or employee participation plans. Access to employment related data is only granted to the Direct Manager and a few selected employees of Logitech’s Human Resources, who are subject to strict confidentiality obligations. The employee has the right to demand review and in case of inaccuracy, correction of such data pertaining to himself.

No sensitive data such as data regarding religion, political views, trade union memberships and activities, health, intimacy sphere etc. are collected and processed.

Accessory activities

The employee is not allowed to exercise accessory activities, even during his holidays, without the employer's prior written consent. Active participation in other companies' business is also considered as an accessory activity. The employer will refuse to give his approval only if such activity is prejudicial to his interests or jeopardizes the business.

Confidentiality agreement

The employee agrees both during and after employment by the Company not to disclose to others, except with the Company's prior written consent or in the performance of the employee's employment duties, any information (including, but not limited to, trade secrets, know-how, technical and commercial data including computer programs, listings of suppliers and of customers, tooling, manufacturing processes, components, financial data, future plans and further information related to Logitech, including information received from third parties under disclosure restrictions), which the employee has acquired by reason of employment by the Company, or which the employee had developed in the course of such employment and which has not been made available to the public generally. The employee further agrees not to use any such information except in the course of employment.

The employee hereby acknowledges the Company's right to possession and title in and to all papers, documents, tapes, drawings, computer programs or other records, prepared by the employee during employment or provided by the Company, or which otherwise come into the employee's possession by reason of employment by the Company. The employee agrees not to make or permit to be made, except in pursuance of employee's duties hereunder, any copies of such materials. The employee further agrees to deliver to employee's manager, upon request, all such materials in employee's possession. This agreement is fully part of the employment contract between the Company and the employee. However, the obligations of the employee under the paragraphs above shall continue after termination of the employment contract. Swiss legal provisions on employee’s inventions and competition’s prohibition are applicable.

Working place

The working place is at the Company offices in EPFL, Quartier de l’Innovation, Daniel Borel Innovation Center in Lausanne, but your position will require a number of trips in Europe, in Asia and in the U.S. In case of necessity, the Company can give to the employee other responsibilities related to his education and competences and base him in another working place. In such a case, the present contract shall not be amended.

Inability to work

Should the employee be prevented from working due to illness or for other justified reasons, he will immediately notify the Company accordingly. In case of illness, the employee must produce a doctor's certificate after the 3 ^rd day at the latest.

Accident and illness insurance

The employee is insured against the risks of professional accidents and illness as well as non professional accidents, in accordance with the Swiss law. Mandatory insurance premium for professional accidents and illness are paid by the employer. Non professional accident insurance premium is paid 1/3 by the employee and 2/3 by the employer.

The loss of income due to illness is covered by the Company for the first 30 days. The insurance will cover the loss of income due to illness at 100% after the first 30 days during the employment contract. 50% of the corresponding premium is paid by the employer and 50% is paid by the employee. In case of employment contract termination, the general conditions of the collective insurance are applicable; for the insurance "loss of income in case of illness”, an individual cover can be concluded within 30 days as of termination date by the employee with the same insurance company, on a private basis, and at the employee's expense, in order to maintain the same cover.

Personnel Welfare Foundation (2nd pilier)

Personnel Welfare Foundation contributions are paid as per the rules of the Pension Fund which under the current Maxi Plan are paid equally by the Employer and the Employee for your age group.

Trial Period / Termination of contract

There is no trial period.

Notice of termination of service by either party shall be given in writing.

The notice period is nine (9) months as per the last day of a calendar month (the “Notice Period”).

The employee shall remain a full-time employee of the Company during the Notice Period and shall not accept employment with any other entity during the Notice Period. Subject to specific terms contemplated in equity award agreements or equity or bonus plans, during the Notice Period, the employee shall continue to receive his base salary at the rate in effect as of the date either party has provided the other party with a notice of termination of employment (the “Date of Notice”), and the employee shall remain eligible for (i) all employee benefits in accordance with the provisions of the plans under which the benefits are provided, (ii) the payment of bonuses to the extent they become payable during the Notice Period or that become payable after the Notice Period but relate to a performance period that commenced during any portion of the Notice Period, with the bonus amount determined at the discretion of the Board or the Compensation Committee acting in good faith based on the employee’s target bonus (currently calculated as a percentage of base salary) in effect as of the Date of Notice and on the attainment level of the performance goals and metrics (corporate, business group and individual, as applicable) established by the Board or Compensation Committee for the employee within the applicable fiscal year bonus program and in accordance with the applicable bonus plans, and payable at the time all other members of the Group Management Team are paid their bonuses; provided, however, that any bonus relating to a performance period that ends following the last day of the Notice Period shall be prorated based on the number of days the employee is employed during the performance period, and (iii) continued vesting of awards to acquire, or that are denominated in, shares of the Parent (“Equity Awards”) that were outstanding as of the Date of Notice. The employee shall be entitled to the acceleration of vesting of Equity Awards that were outstanding as of the Date of Notice in connection with a change of control of the Parent, termination of the employee’s employment, or both, to the extent set forth in any agreement evidencing the Equity Awards and only to the extent permitted under the Laws of Switzerland. The employee shall not be entitled to any new Equity Awards, bonuses, promotions, or salary increases during the Notice Period.

In the event of termination, the employee agrees that no severance payment will be made by the employer.

Non Solicitation Clause

Since the employee in his position as Director/VP/SVP/EVP has obtained and is likely to obtain in the course of his employment contract the knowledge of, confidence of and influence over employees of the Logitech Companies and in recognition that the Logitech Companies have an interest in preserving their connection with such employees, the employee hereby agrees that he will not at any time during his notice period and during a period of 6 (six) months immediately following the last day of employment relationship, directly or indirectly, approach any employee of any Logitech Companies with the purpose of enticing such employee away from the employment of Logitech Companies.

Employment contract amendments

Parties agree that the present contract supersedes any prior written or oral agreement with respect to the matter hereof, including but not limited to the Original Employment Contract and the Change of Control Severance Agreement, dated as of September 6, 2012. The Change of Control Severance Agreement, dated as of September 6, 2012, and all other severance, notice of termination, and change of control agreements and arrangements of any similar nature between the employee and Logitech Companies shall be terminated effective as of the date of this employment contract. This employment contract shall serve as a novation of such obligations, and the parties hereby waive all current and future rights and entitlements under such previous agreements or arrangements.

Any modification to the present contract shall be done in writing.

Permitted modifications to comply with Laws

Notwithstanding the previous section, you agree that the Company has the right to unilaterally amend this agreement without compensation solely if an amendment is determined to be reasonably necessary by the Company’s or Logitech’s legal counsel for the Company or Logitech to comply with existing or adopted ordinances, laws, rules or regulations applicable to the employee or Logitech (“Laws”) (even if such Laws have not yet taken effect), including but not limited to the Minder Ordinance and any other Laws resulting from the provisions of the Swiss Federal Constitution prohibiting excessive compensation in Swiss listed companies, and such counsel determines that the amendment reasonably addresses such need. No amendment made to the agreement under this provision shall affect the vested rights of the employee.

Applicability of clawback policy

To the extent that the employee remains or is otherwise performing the duties of an executive officer of Logitech during the periods under this employment contract (including but not limited to any applicable notice period) or as otherwise required pursuant to applicable Laws, all compensation payable under this employment contract is subject to any clawback provisions in Logitech’s compensation plans, programs or agreements applicable to the employee or clawback policy that Logitech is required to adopt pursuant to any applicable Laws, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, or that Logitech determines is necessary or appropriate.

Place of jurisdiction and applicable law

Any dispute arising regarding the interpretation or application of the present contract shall be submitted to the competent Court of Lausanne. The present contract shall be governed and construed in accordance with the laws of Switzerland.

If all of the above accurately reflects the continuation of your employment relationship, please sign the enclosed copy of this contract and return it to us. Should you require further information on or explanation of the foregoing, please address your request to the Human Resources Department.

Yours sincerely,


LOGITECH EUROPE SA	Place and date

Amsterdam, December 18, 2015

François Stettler Employee’s signature

Senior Director & General Counsel EMEA M. Marcel Stolk

/s/ Francois Stettler /s/ Marcel Stolk

Catherine Bédat Gervais

Senior Human Resources Manager

/s/ Catherine Bédat Gervais

Exhibit 10.5

LIFESIZE, INC.

SERIES B PREFERRED STOCK PURCHASE AGREEMENT

December 28, 2015

TABLE OF CONTENTS



		Page
SECTION 1 AUTHORIZATION, SALE AND ISSUANCE		1
1.1	Authorization	1
1.2	Sale and Issuance of Shares	1
1.3	Sale of Secondary Shares	1
SECTION 2 CLOSING DATES AND DELIVERY		2
2.1	Closing	2
2.2	Delivery of Original Issue Shares	2
2.3	Delivery of Secondary Shares.	2
SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY		3
3.1	Organization, Good Standing and Qualification	3
3.2	Subsidiaries	3
3.3	Capitalization	4
3.4	Authorization	5
3.5	Financial Statements	5
3.6	Changes	6
3.7	Accounts Receivable; Inventory	7
3.8	Material Contracts	7
3.9	Intellectual Property	9
3.10	Sufficiency	12
3.11	Title to Properties and Assets; Liens	12
3.12	Compliance with Other Instruments	12
3.13	Litigation	13
3.14	Governmental Consent	13
3.15	Governmental Authorization	13
3.16	Permits	13
3.17	Offering	13
3.18	Registration and Voting Rights	14
3.19	Brokers or Finders	14
3.20	Tax Returns and Payments	14
3.21	Corporate Documents	15
3.22	Restructuring Plan	15
3.23	Employees	15
3.24	Employee Benefit Plans	16
3.25	Environmental and Safety Laws	18
3.26	Compliance with Laws	18
3.27	Insurance	19
3.28	Customers and Suppliers	19
3.29	Interested Party Transactions	20
3.30	Export Controls and Economic Sanctions	20
3.31	Foreign Corrupt Practice Act and Anti-Corruption	21
3.32	Disclosure	22

-i-

TABLE OF CONTENTS
(continued)



		Page
SECTION 4 REPRESENTATIONS AND WARRANTIES OF LOGITECH		22
4.1	Organization, Good Standing and Qualification	22
4.2	Secondary Share Transfer	22
4.3	Authorization	22
4.4	Governmental Consent	22
4.5	Brokers or Finders	23
4.6	Restructuring Plan	23
4.7	Representations Complete	23
SECTION 5 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS		23
5.1	No Registration	23
5.2	Investment Intent	23
5.3	Investment Experience	23
5.4	Speculative Nature of Investment	23
5.5	Access to Data	24
5.6	Accredited Investor	24
5.7	Residency	24
5.8	Rule 144	24
5.9	No Public Market	25
5.10	Authorization	25
5.11	Brokers or Finders	25
5.12	Tax Advisors	25
5.13	Legends	25
5.14	No “Bad Actor” Disqualification Events	26
SECTION 6 CONDITIONS TO INVESTORS’ OBLIGATIONS TO CLOSE		26
6.1	Representations and Warranties of the Company	26
6.2	Representations and Warranties of Logitech	26
6.3	Covenants of the Company	26
6.4	Covenants of Logitech	26
6.5	Blue Sky	26
6.6	Restated Certificate	26
6.7	Rights Agreement	26
6.8	Voting Agreement	26
6.9	Right of First Refusal and Co-Sale Agreement	27
6.10	Closing Deliverables of the Company	27
6.11	Closing Deliverables of Logitech	27
6.12	Consents and Waivers	27
6.13	Logitech Agreements	27
6.14	Board of Directors	27
6.15	IP Agreements	27
6.16	No Material Adverse Effect	28
SECTION 7 CONDITIONS TO COMPANY’S AND LOGITECH’S OBLIGATION TO CLOSE		28
7.1	Representations and Warranties	28
7.2	Covenants	28

-ii-

TABLE OF CONTENTS
(continued)



		Page
7.3	Compliance with Securities Laws	28
7.4	Restated Certificate	28
7.5	Rights Agreement	28
7.6	Voting Agreement	28
7.7	Right of First Refusal and Co-Sale Agreement	28
7.8	Consents and Waivers	28
7.9	IP Agreements	28
SECTION 8 FURTHER AGREEMENTS OF THE PARTIES		29
8.1	Net Working Capital	29
SECTION 9 MISCELLANEOUS		30
9.1	Amendment	30
9.2	Notices	30
9.3	Governing Law; Jurisdiction; Venue	31
9.4	Brokers or Finders	32
9.5	Expenses	32
9.6	Survival	32
9.7	Logitech Indemnification	32
9.8	Successors and Assigns	35
9.9	Entire Agreement	35
9.10	Delays or Omissions	35
9.11	Severability	36
9.12	Counterparts	36
9.13	Telecopy Execution and Delivery	36
9.14	Further Assurances	36
9.15	Jury Trial	36
9.16	Certain Definitions	36

-iii-

EXHIBITS


A	Schedule of Investors


B	Amended and Restated Certificate of Incorporation


C	Investors’ Rights Agreement


D	Voting Agreement


E	Right of First Refusal and Co-Sale Agreement


F	Company Schedule of Exceptions


G	Compliance Certificate


H	Secretary’s Certificate


I	Opinion of Counsel to the Company


J	Transition Services Agreement


K	Restructuring Plan and Excluded Items


L	[Reserved]


M	Form of Stock Power and Assignment Certificate


N	Accounting Principles


O	Form of Directors’ and Officers’ Indemnification Agreement


P	Logitech Compliance Certificate


Q	Current Products


R	Form of IP Agreements

-iv-

LIFESIZE, INC.

SERIES B PREFERRED STOCK PURCHASE AGREEMENT

This Series B Preferred Stock Purchase Agreement (this “ Agreement ”) is dated as of December 28, 2015 and is among Lifesize, Inc., a Delaware corporation (the “ Company ”), Logitech International S.A. organized under the laws of Switzerland (“ Logitech ”), and the persons and entities (each, an “ Investor ” and collectively, the “ Investors ”) listed on the Schedule of Investors attached as Exhibit A (the “ Schedule of Investors ”).

WHEREAS , pursuant to this Agreement, the Investors are purchasing, and (i) the Company is selling to the Investors 17,500,000 shares of Series B Preferred (as defined below) and (ii) Logitech is selling to the Investors 2,500,000 shares of Series B Preferred, at the Closing (as defined below).

Section 1
AUTHORIZATION, SALE AND ISSUANCE

1.1 Authorization. The Company has authorized (a) the sale and issuance of up to 17,500,000 shares (the “ Original Issue Shares ”) of the Company’s Series B Preferred Stock, par value $0.00001 per share (the “ Original Issue Series B Preferred ”), having the rights, privileges, preferences and restrictions set forth in the amended and restated certificate of incorporation of the Company, in substantially the form of Exhibit B (the “ Restated Certificat e ); and (b) the reservation of shares of Common Stock for issuance upon conversion of the Shares (the “ Conversion Shares ”).

1.2 Sale and Issuance of Shares. Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase, and the Company agrees to sell and issue to each Investor, the number of shares of Series B Preferred Stock set forth in the column designated “Number of Original Issue Series B Preferred” opposite such Investor’s name on the Schedule of Investors, at a cash purchase price of $1.00 per share (the “ Purchase Price ”). The Company’s agreement with each Investor is a separate agreement, and the sale and issuance of the Shares to each Investor is a separate sale and issuance.

1.3 Sale of Secondary Shares. Subject to the terms of this Agreement, Logitech proposes to sell, at Closing, an aggregate of 2,500,000 shares (the “ Secondary Shares ”, and together with the Original Issue Shares, the “ Shares ” ) of the Company’s Series B Preferred Stock, par value $0.00001 per share (the “ Secondary Series B Preferred ”, and together with the Original Issue Series B Preferred, the “ Series B Preferred ”) to the Investors at the Purchase Price. Subject to the terms and conditions of this Agreement, each Investor agrees, severally and not jointly, to purchase, and Logitech agrees to sell to each Investor, the number of Secondary Shares set forth in the column designated “Number of Secondary Series B Preferred” opposite such Investor’s name on the Schedule of Investors, at the Purchase Price. Logitech’s agreement with each Investor is a separate agreement, and the sale and issuance of the Shares to each Investor is a separate sale and issuance.

SECTION 2
CLOSING DATES AND DELIVERY

2.1 Closing.

(a) The purchase, sale and issuance of the Shares shall take place at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation 650 Page Mill Road, Palo Alto, California 94304, at 10:00 a.m. local time on the date hereof (the “ Closing ”).

(b) The Investors shall, upon execution and delivery of the relevant signature pages, become parties to, and be bound by, this Agreement, the Investors’ Rights Agreement in substantially the form of Exhibit C (the “ Rights Agreement ”), the Voting Agreement in substantially the form of Exhibit D (the “ Voting Agreement ”), and the Right of First Refusal and Co-Sale Agreement in substantially the form of Exhibit E (the “ Right of First Refusal and Co-Sale Agreement ,” and together with this Agreement, the Voting Agreement and the Rights Agreement, the “ Investor Agreements ”), without the need for an amendment to any of the Agreements except to add such person’s or entity’s name to the appropriate exhibit to such Investor Agreements, and shall have the rights and obligations hereunder and thereunder, in each case as of the date of the Closing.

(c) The Company and Logitech shall, upon execution and delivery of the relevant signature pages, become parties to, and be bound by, this Agreement, the Intellectual Property Agreement and Intellectual Property Amendment Agreement, in each case in the form set forth in Exhibit R (collectively, the “ IP Agreements ”), and the Transition Services Agreement in the form of Exhibit J (the “ Transition Services Agreement ” and collectively with the IP Agreements, the “ Logitech Agreements ”), in each case as of the date of the Closing. The Investor Agreements and the Logitech Agreements are collectively referred to as the “ Agreements ”.

(d) The obligation of each of the Company and Logitech to issue and sell the Series B Preferred as provided herein is subject to the purchase of all of the Series B Preferred by the Investors at the Closing.

2.2 Delivery of Original Issue Shares. At the Closing, the Company will deliver to each Investor in the Closing a certificate registered in such Investor’s name representing the number of Original Issue Shares that such Investor is purchasing in the Closing against payment of the purchase price therefor as set forth in the column designated “Purchase Price” opposite such Investor’s name on the Schedule of Investors, by wire transfer in accordance with the Company’s instructions.

2.3 Delivery of Secondary Shares.

(a) At the Closing, Logitech will deliver to the applicable Investors in the Closing, against payment of the purchase price with respect to the number of Secondary Shares that such Investor is purchasing in the Closing as set forth in the column designated “Purchase Price” opposite such Investor’s name on the Schedule of Investors to the applicable Investors:

(i) All stock certificate(s) representing the Secondary Shares such Investor is purchasing in the Closing; and

-2-

(ii) one (1) copy of the executed and completed Stock Power and Assignment Certificate attached hereto as Exhibit M , transferring the Secondary Shares to be transferred at the Closing to the applicable Investor.

(b) At the Closing, Logitech shall instruct the Company to and the Company shall: (i) cancel any stock certificates issued to Logitech representing Secondary Shares and (ii) issue duly executed stock certificates evidencing the Secondary Shares in each applicable Investor’s name.

SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

A Company Schedule of Exceptions, attached as Exhibit F (each, a “ Company Schedule of Exceptions ”), shall be delivered to the Investors in connection with the Closing. Except as set forth on the Company Schedule of Exceptions delivered to the Investor at the Closing, the Company hereby represents and warrants to the Investors as follows:

3.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own and operate its properties and assets, to carry on its business as presently conducted and as presently contemplated to be conducted, to execute and deliver the Agreements, to issue and sell the Original Issue Shares and the Conversion Shares and to perform its obligations pursuant to the Agreements and the Restated Certificate. The Company is presently qualified to do business as a foreign corporation in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualifications necessary, except where the failure to be so qualified could not reasonably be expected to material to the Company. The operations now being conducted by the Company are not now, and have never been, conducted by the Company under any other name.

3.2 Subsidiaries. Set forth in Section 3.2 of the Company Schedule of Exceptions is a complete and correct list of each subsidiary of the Company. Each of the Company’s subsidiaries is duly organized, validly existing and in good standing, where applicable, under the laws of its jurisdiction of organization. None of the Company’s subsidiaries owns or leases property or engages in any activity in any jurisdiction that might require its qualification to do business as a foreign corporation in such jurisdiction and in which the failure to qualify as such would not be material to the Company or the applicable subsidiary. The Company is not a participant in any joint venture, partnership, limited liability company or similar equity based arrangement. All of the outstanding shares of capital stock of each subsidiary of the Company are owned of record and beneficially by the Company. All outstanding shares of stock of each subsidiary of the Company are, to the extent applicable, duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights created by applicable law, the charter documents or bylaws of such subsidiary, or any agreement to which such subsidiary is a party or by which it is bound, and have been issued in compliance with applicable law. There are no options, warrants, calls, rights, commitments or agreements of any character, to which any such subsidiary is a party or by which any such subsidiary is bound obligating such subsidiary to issue, deliver, sell, repurchase or redeem, or cause to be issued, sold, repurchased or redeemed, any shares of the capital stock of such subsidiary or obligating such subsidiary to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call right, commitment or agreement. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to any of the subsidiaries of the Company. Neither the Company nor any

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of its subsidiaries has agreed or is obligated to make any future investment in or capital contribution to any Person.

3.3 Capitalization.

(a) Immediately prior to the Closing, the authorized capital stock of the Company consists of 96,000,000 shares of capital stock, of which 40,000,000 shares are designated Common Stock (the “ Common Stock ”), none of which are issued and outstanding, 12,000,000 shares are designated Class A Common Stock (the “ Class A Common Stock ”), none of which are issued and outstanding, 12,000,000 shares are designated Series A Preferred (the “ Series A Preferred ”), all of which are issued and outstanding, 12,000,000 shares are designated Series A-1 Preferred (the “ Series A-1 Preferred ” and, together with the Series A Preferred and Series A-1 Preferred, the “ Preferred Stock ”), none of which are issued and outstanding, 20,000,000 shares are designated Series B Preferred, of which 2,500,000 are issued and outstanding. The Common Stock, the Class A Common Stock the Series A Preferred, the Series A-1 Preferred and the Series B Preferred shall have the rights, preferences, privileges and restrictions set forth in the Restated Certificate.

(b) The outstanding shares have been duly authorized and validly issued in compliance with applicable laws, and are fully paid and nonassessable. There are no declared or accrued but unpaid dividends with respect to any shares of Common Stock or Preferred Stock. There is no indebtedness having the right to vote on any matters on which stockholders of the Company may vote.

(i) the Original Issue Shares for issuance pursuant to this Agreement;

(ii) 32,000,000 shares of Common Stock (as may be adjusted in accordance with the provisions of the Restated Certificate) for issuance upon conversion of the Shares, Series A-1 Preferred and shares of Class A Common Stock;

(iii) 12,000,000 shares of Series A-1 Preferred (as may be adjusted in accordance with the provisions of the Restated Certificate) for issuance upon transfer of Series A Preferred to any person or entity that is not a “Related Party” in accordance with the provisions of the Restated Certificate;

(iv) 12,000,000 shares of Class A Common Stock (as may be adjusted in accordance with the provisions of the Restated Certificate) for issuance upon conversion of Series A Preferred in accordance with the provisions of the Restated Certificate; and

(vi) 8,000,000 shares of Common Stock for issuance to employees, consultants and directors pursuant to a stock plan to be adopted by the Board of Directors of the Company, under which no options to purchase shares are issued and outstanding as of the date of this Agreement.

(d) All issued and outstanding shares of the Preferred Stock (i) have been duly authorized and validly issued and are fully paid and nonassessable, and (ii) were issued in compliance with all applicable state and federal laws concerning the issuance of securities.

(e) Each share of Series B Preferred Stock is convertible into Common Stock, and each share of Series A Preferred Stock is convertible into Class A Common Stock, on a one-for-one basis as of the date hereof, and the consummation of the transactions contemplated hereunder will not result in any anti-dilution adjustment or other similar adjustment to the outstanding shares of Preferred Stock.

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(f) The Original Issue Shares, when issued and delivered and paid for in compliance with the provisions of this Agreement, will be validly issued, fully paid and nonassessable. The Conversion Shares have been duly and validly reserved and, when issued in compliance with the provisions of this Agreement, the Restated Certificate and applicable law, will be validly issued, fully paid and nonassessable. The Original Issue Shares and the Conversion Shares will be free of any liens or encumbrances, other than any liens or encumbrances created by or imposed upon the Investors; provided, however , that the Original Issue Shares and the Conversion Shares are subject to restrictions on transfer under U.S. state and/or federal securities laws and as set forth herein and in the Right of First Refusal and Co-Sale Agreement and Rights Agreement. Except as set forth in the Rights Agreement or the Right of First Refusal and Co-Sale Agreement, the Original Issue Shares and the Conversion Shares are not subject to any preemptive rights or rights of first refusal. The Company has obtained valid waivers of any rights by other parties to purchase any of the Shares covered by this Agreement.

(g) Except for the conversion privileges of the Series A Preferred and Series B Preferred, the rights provided pursuant to the Rights Agreement and the Right of First Refusal and Co-Sale Agreement or as otherwise described in this Agreement, there are no options, warrants, calls or other rights, convertible securities, commitments or agreements of any character, written or oral, to which the Company is a party or by which the Company is bound that obligate the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the Company’s capital stock or obligating the Company to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement, or to purchase any of the Company’s authorized and unissued capital stock. There are no outstanding or authorized stock appreciation, phantom stock, profit, participation, or other similar rights with respect to the equity of the Company (whether payable in equity, cash or otherwise). Except as contemplated hereby, including the Voting Agreement and the Right of First Refusal and Co-Sale Agreement, there are no voting trusts, proxies, or other agreements or undertakings with respect to the voting of the Company.

3.4 Authorization. The Company has all requisite power and authority to enter into the Agreements to which it is party and to consummate the transactions contemplated hereby and thereby. All corporate action on the part of the Company and its directors, officers and stockholders necessary for the authorization, execution and delivery of the Agreements (including the Restructuring Plan) by the Company, the authorization, sale, issuance and delivery of the Original Issue Shares and the Conversion Shares, and the performance of all of the Company’s obligations under the Agreements (including the Restructuring Plan) has been taken or will be taken prior to the Closing. The Agreements have been duly executed and delivered by the Company, and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute valid and binding obligations of the Company, enforceable in accordance with their terms, except (i) as limited by laws of general application relating to bankruptcy, insolvency and the relief of debtors, (ii) as limited by rules of law governing specific performance, injunctive relief or other equitable remedies and by general principles of equity, and (iii) to the extent the indemnification provisions contained in the Agreements may further be limited by applicable laws and principles of public policy. This Agreement and the transactions contemplated hereby have been unanimously approved by the Board of Directors of the Company.

3.5 Financial Statements. The Company has delivered to the Investors the unaudited consolidated pro forma profit and loss statements of the Company as of and for the fiscal year ended March 31, 2015 and for the period ended November 20, 2015, and an unaudited consolidated pro forma balance sheet as of November 20, 2015 (the “ Current Balance Sheet ” and, collectively, the “ Pro Forma Financials ”). The Pro Forma Financials are true, correct and complete in all material respects (subject, in the case of interim period financial statements, to normally recurring year-end adjustments). The Pro Forma Financials

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present fairly in all material respects the Company’s financial condition and operating results as of the dates and during the periods indicated therein. As of the date of this Agreement, the Company does not have any liabilities (subject, in the case of interim period financial statements, to normally recurring year-end adjustments) except for liabilities which (a) have been reflected or reserved against in the Pro Forma Financials or disclosed in the notes thereto, (b) have arisen in the ordinary course of business since the Current Balance Sheet or in connection with the authorization, preparation, negotiation, execution or performance of this Agreement or the consummation of the transactions contemplated hereby, (c) are executory obligations under the agreements of the Company that have not arisen from a breach thereof or default thereunder, or (d) are the subject of another representation or warranty in this Agreement, or (e) do not, individually or in the aggregate, exceed $500,000. The Company does not have any “off balance sheet arrangements” (as such term is defined in Item 303(a)(4) of the Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)).

3.6 Changes. Since November 20, 2015 (the “ Balance Sheet Date ”) there has not been:

(a) any change in the assets, liabilities, financial condition or operating results of the Company from that reflected in the Pro Forma Financials, except changes in the ordinary course of business, that are not material to the Company or its subsidiaries, taken as a whole;

(b) any damage, destruction or loss, whether or not covered by insurance, that is material to the Company or its subsidiaries, taken as a whole;

(d) any change or amendment to an agreement by which the Company or any of its assets or properties is bound or subject that is material to the Company or its subsidiaries, taken as a whole;

(e) any loans made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the ordinary course of its business;

(f) any resignation or termination of any executive officer or key employee of the Company, and the Company has not received any notice in writing of any impending resignation or termination of employment of any such officer or key employee;

(g) any material change in any compensation arrangement or agreement with any executive officer, director or stockholder;

(h) any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets;

(i) any satisfaction or discharge of any lien, claim, or encumbrance or payment of any obligation by the Company, except in the ordinary course of business and that is not material to the business, properties, prospects or financial condition of the Company;

(j) any declaration, setting aside or payment or other distribution in respect of any of the Company’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any of such stock by the Company;

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(k) any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for Taxes not yet due or payable, or being contested in good faith by appropriate proceedings and for which reserves have been established in accordance with the Accounting Principles;

(l) to the Knowledge of the Company, any other event or condition of any character that is material to the Company or its subsidiaries, taken as a whole; or

(m) any agreement or commitment by the Company to do any of the things described in this Section 3.6.

3.7 Accounts Receivable; Inventory.

(a) All of the accounts receivable, whether billed or unbilled, of the Company and its subsidiaries (i) arose in the ordinary course of business, (ii) are carried at values determined in accordance with the Company’s internal accounting policies and procedures consistently applied and (iii) do not represent obligations for goods sold on consignment, on approval or on a sale or return basis or subject to any other repurchase or return arrangement. No Person has any lien or encumbrance on any accounts receivable of the Company and its subsidiaries.

(b) The inventory set forth in the Current Balance Sheet was determined in accordance with the Company’s internal accounting policies and procedures. Since the Balance Sheet Date, the inventory of the Company and its subsidiaries has been maintained in the ordinary course of business. All such inventory is owned free and clear of all liens and encumbrances. Subject to any reserves for obsolete inventory determined in accordance the Company’s internal accounting policies and procedures set forth therein, all of the inventory recorded in the Pro Forma Financials consist of, items of a quality usable or saleable in the ordinary course of business. The values at which inventory is carried reflect the inventory valuation policy of the Company, which is consistent with its past practices and in accordance with internal accounting policies and procedures in all material respects.

3.8 Material Contracts.

(a) Except for the agreements explicitly contemplated hereby, there are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company or any of its subsidiaries or, with respect to the Business, Logitech or any of its affiliates, is a party or by which it is bound which may involve:

(i) payments to the Company or any of its subsidiaries, or Logitech or any of its affiliates, in excess of $500,000 during the twelve (12) month period prior to the date of this Agreement and any agreements in effect on the date of this Agreement that involve obligations of the Company or any of its subsidiaries in excess of $150,000 for the twelve (12) month period following the date of this Agreement, other than any reseller, referral, joint marketing agreements containing minimum commitment provisions that may exceed $150,000 for such twelve (12) month period;

(ii) any employment or consulting Contract with an employee or individual consultant or salesperson or consulting or sales Contract with a firm or organization to provide services to the Company or any of its subsidiaries, or Logitech or any of its affiliates, with the salary or contract value in excess of $150,000 during the twelve (12) month period prior to the date of this Agreement, other than any offer letters entered into in the ordinary course of business that do not contain any severance obligations;

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(iii) any reseller, referral, joint marketing, or other agreements that involve the sharing of profits, in each case involving in excess of $500,000 during the twelve (12) month period prior to the date of this Agreement or for the twelve (12) month period following the date of this Agreement, other than any reseller, referral, joint marketing agreements containing minimum commitment provisions that may exceed $150,000 for such twelve (12) month period;

(iv) any agreement that materially restricts the ability of the Company or any of its subsidiaries to conduct the Business, or compete with any Person in any geographical area;

(v) any agreement to exclusively negotiate or deal with, or grant a right of first refusal or first offer to, any person;

(vi) any lease of real property;

(vii) other than the Agreements, any agreement between the Company or any of its subsidiaries on one hand, and Logitech or any of its affiliates on the other hand;

(viii) any agreement that as a result of the execution of the Agreements by the Company or any of its subsidiaries, or Logitech or any of its affiliates, would require the Company or any of its subsidiaries, or Logitech or any of its affiliates, to provide notice to another Person, or would otherwise give rise to any additional rights or obligations under such agreement;

(ix) any agreement relating to the settlement of any action, suit, claim, or proceeding, in each case exceeding $500,000 or pursuant to which the Company or any of its subsidiaries, or Logitech or any of its affiliates, will have any material obligation (other than as to confidentiality) after the date of this Agreement;

(x) other than the Restructuring Plan, any employment, contractor or consulting agreement granting any severance or termination pay not required by Law at or over $75,000, to any employee, individual consultant or any contractor;

(xi) any mortgages, indentures, guarantees, loans or credit agreements, or security agreements relating to the borrowing of money or extension of credit;

(xii) any agreement that includes a “most favored nation” or similar clause;

(xiii) any joint venture, partnership, or other similar agreements; or

(xiv) any other agreement that is material to the Business to which the Company or its subsidiaries, is a party or by which it is bound.

(b) True, correct and complete copies of each contract disclosed in the Company Schedule of Exceptions, or required to be disclosed pursuant to this Section 3.8 or Section 3.9 of this Agreement (each, a “ Material Contract ”, collectively the “ Material Contracts ”) have been made available to the Investors. All of the Material Contracts are valid, binding and in full force and effect in all material respects, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies and to general principles of equity. Neither the Company is nor, to the Knowledge of the Company, is any other party to, the Material Contracts in material default under any of such Material Contracts.

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3.9 Intellectual Property.

(a) Company Registered IP . Section 3.9(a) of the Company Schedule of Exceptions lists all of the following items of Company Intellectual Property (collectively, the “ Company Registered Intellectual Property ”): (a) all registered Trademarks and Trademark applications; (b) all Patents (including patent applications); (c) all registered Copyrights and Copyright applications; and (d) Domain Names, in each case listing, as applicable, (I) the name of the applicant/registrant and current owner, (II) the jurisdiction of the application/registration, (III) the application or registration number, and (IV) any proceedings or actions in which the Company or any of its subsidiaries, or Logitech or any of its affiliates, is a party before any court or tribunal (including the United States Patent and Trademark Office (the “ PTO ”) or equivalent authority anywhere in the world) related thereto. All registration, maintenance and renewal-related actions currently due in connection with such Company Registered Intellectual Property have been timely taken. To the Knowledge of the Company, none of the Company Registered Intellectual Property is invalid or unenforceable (other than with respect to pending applications therefor), and to the Knowledge of the Company there are no facts or circumstances that would render any Company Registered Intellectual Property invalid or, except with respect to pending applications, unenforceable.

(b) Company Intellectual Property . All Company Intellectual Property is owned exclusively by the Company or its subsidiaries free and clear of all liens and encumbrances other than nonexclusive licenses of the same granted in the ordinary course of the Business. As of the date of this Agreement, neither the Company or any of its subsidiaries, or Logitech or any of its affiliates is a party to any agreement, order, stipulation, nor is there any pending or, to the Knowledge of the Company, threatened claim challenging the validity or enforceability of, or contesting or, in any material manner, restricting the Company’s or any of its subsidiaries’ rights with respect to, any of the Company Intellectual Property. No Intellectual Property that was Company Intellectual Property has been transferred to a third party or licensed to a third party on an exclusive basis, and, other than in the reasonable business judgment of the Company or any of its subsidiaries, or Logitech or any of its affiliates, as applicable, no Intellectual Property that was material Company Intellectual Property has been permitted to lapse or enter the public domain. All Company Intellectual Property will be fully transferable, alienable and licensable by the Company immediately following the date of this Agreement, without restriction and without payment of any kind to any Person.

(c) Company Products . Section 3.9(c) of the Company Schedule of Exceptions contains a complete and accurate list of all currently commercially available Company Products by name.

(d) Company Intellectual Property Agreements . Sections 3.9(d)(i) and (ii) (as applicable) of the Company Schedule of Exceptions contain a complete and accurate list of all agreements as of the date of this Agreement to which the Company or any of its subsidiaries, or, with respect to the Business, Logitech or any of its affiliates is a party or bound by (i) under which the Company or any of its subsidiaries or, with respect to the Business, Logitech or any of its affiliates, is granted a right or license to any third party’s Intellectual Property, other than (A) licenses and related services agreements for generally commercially available Technology, (B) non-disclosure agreements, (C) licenses to Open Source Software (collectively, such agreements, “ In-Licenses ”), or (D) licenses of Logitech or any of affiliates which are either not material for the conduct of the Business or for which the Company or any of its subsidiaries have independently obtained on the same or substantially similar terms in all material respects or (ii) under which a third party has been granted any licenses or rights under any material Company Intellectual Property, other than non-exclusive customer, developer, and reseller licenses, non-disclosure agreements, and other nonexclusive license agreements, in each case, entered into in the ordinary course of business consistent with past practices, and that do not grant any rights with respect to any source code that embodies any

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Company Intellectual Property (collectively, all such agreements under (ii) “ Out-Licenses ”, and together with In-Licenses, the “ Company Intellectual Property Agreements ”).

(e) Protection of Confidential Information; Invention Assignment . Each of the Company and each of its subsidiaries and, with respect to the Business, Logitech and each of its affiliates has at all times taken reasonable and appropriate steps (including by implementing trade secret and confidentiality procedures with respect to employees, consultants and third parties), consistent with industry standards or required by all applicable laws and contractual obligations, to protect and preserve the confidentiality of material Confidential Information (including Customer Data and Personal Data), including such Confidential Information they are obligated by third parties to protect, and, to the Knowledge of the Company, there has been no misappropriation of its Trade Secrets by any Person. In each case in which Company or any of its subsidiaries, or Logitech or any of its affiliates, has engaged any employee, consultant or any other Person to develop or create any Technology for the Company or any of its subsidiaries, or otherwise any Technology embodying any Company Intellectual Property, the Company, its subsidiary, Logitech or its affiliate, if applicable, has obtained sole and exclusive ownership of all Intellectual Property in or to such Technology so developed, by operation of law or by a valid and enforceable assignment sufficient to irrevocably transfer all Intellectual Property in or to such Technology thereto, and all moral rights in relation to such Technology have been waived in favor thereof.

(f) Non-Infringement . To the Knowledge of the Company, none of the Company’s or any of its subsidiaries’, or Logitech’s or any of its affiliates’, operation of the Business, or such Person’s making or selling Company Products, is infringing upon or otherwise violating, or has infringed, misappropriated or otherwise violated, in any respect, the Intellectual Property of any third party, or is constituting unfair competition or trade practices under the laws of any applicable jurisdiction. As of the date of this Agreement, there is no Intellectual Property infringement suit, claim, action, investigation or proceeding made, conducted or brought by a third party that has been served upon or, to the Knowledge of the Company, filed or threatened with respect to the operation of the Business by the Company, any of its subsidiaries, Logitech or any of its Affiliates. The operation of the Business as conducted as of and immediately following the Closing by the Company and its subsidiaries does not infringe or violate, in any respect the Intellectual Property of Logitech or any of its affiliates. To the Knowledge of the Company, no Person is infringing or violating any Company Intellectual Property.

(g) Security Measures. To the extent customers of the Company or any of its subsidiaries use any Company Product to store Personal Data, the Company or a Company subsidiary secures such Personal Data as required by the Contract with such customer for such Company Product. The Company has not received any notices of a security breach of the systems of Company’s hosting service providers for Company Products, and to the Knowledge of the Company, there has been no misappropriation, as maintained by or on behalf of the Company, any of its subsidiaries, Logitech, or any of its affiliates, of any of the foregoing, by any Person.

(h) Open Source Software . Section 3.9(h) of the Company Schedule of Exceptions lists all Open Source Software that is or has been incorporated into, linked with, distributed with, or material to the development of any currently commercially available Company Product in any way, or from which any part of any such Company Product has been derived, and also lists the applicable license terms for each such item of Open Source Software. With respect to any Open Source Software that has been used by the Company or any of its subsidiaries or, with respect to any Company Product, Logitech or any of its affiliates, such Person is (and, as applicable, has been) in compliance with all applicable agreements and prudent business practices with respect thereto. None of the Company, any of its subsidiaries, Logitech or any of its affiliates has used or distributed Open Source Software in any manner that (i) requires the disclosure or distribution

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in source code form of any Company Intellectual Property or any portion of any Company Product other than such Open Source Software itself, (ii) requires the licensing of any Company Intellectual Property, or any portion of any Company Product other than such Open Source Software itself, for the purpose of making derivative works, (iii) imposes any restriction on the consideration to be charged for the distribution of any Company Intellectual Property, or any portion of any Company Product other than such Open Source Software itself or (iv) or grants to any third party, any rights or immunities under Company Intellectual Property.

(i) Source Code . No source code for any Company Product (other than third party Open Source Software) has been provided or licensed by the Company or any of its subsidiaries or Logitech or any of its affiliates to any third party (including any escrow agent), other than the disclosure of Company Source Code to employees and consultants of the Company or its affiliates in the ordinary course of business, subject to commercially reasonable confidentiality restrictions, and none of the Company or any of its Subsidiaries, or Logitech or its Affiliates has any obligation to do any of the foregoing.

(j) Bugs . Section 3.9(j) of the Company Schedule of Exceptions sets forth the Company’s current (as of the date hereof) list of known bugs maintained by its development or quality control groups with respect to any of the Company Products in the ordinary course of business.

(k) Contaminants . None of the Company, any of its subsidiaries, Logitech, or any of its affiliates has included in any Company Products any “back door,” “time bomb,” “Trojan horse,” “worm,” “drop dead device,” “virus” or other software routines or hardware components that permit unauthorized access or the unauthorized disablement or erasure of Company Products or any other Technology (“ Contaminants ”). The Company and its subsidiaries and, with respect to the Business, Logitech and its affiliates, have taken commercially reasonable steps to protect the information technology systems used in connection with the operation of the Business from Contaminants.

(l) Personal Data and Customer Data . Section 3.9(l) of the Company Schedule of Exceptions sets forth the categorical types of Personal Data that have been collected, processed, transmitted, stored and used by the Company and its Subsidiaries (or, if applicable, Logitech on behalf of the Company and its Subsidiaries) in connection with the operation of the Business in the European Union. The Company and its subsidiaries, and, with respect to the Business, Logitech and its affiliates, have complied in all respects with each Company Privacy Policy, and all applicable laws and contractual requirements pertaining to the collection, storage, transfer, retention, disposal and any other processing of any Personal Data and Customer Data (“ Privacy Requirements ”). Neither the transfer to Company or any of its subsidiaries, the consummation of the transactions contemplated by any of the Agreements, or the Company’s or any of its subsidiaries’ possession or use (as such information has been used in connection with the Business), of any Personal Data or Customer Data will, as a result of the consummation of the transactions contemplated by the Agreements, result in any violation of any Privacy Requirements.

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3.10 Sufficiency. Except as set forth in Section 3.10 of the Company Schedule of Exceptions, and except for those services and assets the benefit of which the Company will receive pursuant to, and for the duration of, the Intellectual Property Agreement and the Transition Services Agreement (provided that the Company exercises the remedies afforded under any such separate agreement), immediately following the Closing the Company will own, or otherwise have the rights to possess and use, all assets, tangible or intangible, that were being used or held for use by the Company or any of its subsidiaries or, with respect to their operation of the Business, Logitech or any of its affiliates, immediately prior to the Closing, and such assets are sufficient for the Company and its subsidiaries to operate the Business immediately following the Closing in the same manner in which such Business was conducted immediately prior to the Closing; provided, that the foregoing is not a representation or warranty of non-infringement of Intellectual Property of a third party.

3.11 Title to Properties and Assets; Liens. Neither the Company nor any of its subsidiaries owns any real property, nor has the Company or any of its subsidiaries ever owned any real property, other than leasehold interests entered into in the ordinary course of business. The Company and each of its subsidiaries has good and marketable title to its properties and assets, and has good title to all its leasehold interests, in each case subject to no material mortgage, pledge, lien, lease, encumbrance or charge, other than (i) liens for current Taxes not yet due and payable, or being contested in good faith by appropriate proceedings and for which reserves have been established in accordance with the Accounting Principles, (ii) liens imposed by law and incurred in the ordinary course of business for obligations not past due, (iii) liens in respect of pledges or deposits under workers’ compensation laws or similar legislation, and (iv) liens, encumbrances and defects in title which do not in any case materially detract from the value of the property subject thereto and which have not arisen otherwise than in the ordinary course of business. With respect to the property and assets it leases, the Company and each of its subsidiaries is in compliance with such leases in all material respects and, to the Knowledge of the Company, holds a valid leasehold interest free of any liens, claims or encumbrances, subject to clauses (i)-(iv) above. To the Knowledge of the Company, there is not, under any of such leases, any existing default (or event that with notice or lapse of time, or both, would constitute a default) which would be material to the operation of the business of the Company and its subsidiaries, taken as a whole, and no rent is past due. Neither the Company nor any of its subsidiaries has received any notice of a default, alleged failure to perform, or any offset or counterclaim with respect to any such lease that has not been fully remedied and withdrawn. All material items of equipment owned or leased by the Company or any of its subsidiaries are (i) sufficient for the conduct of the business of the Company and its subsidiaries as currently conducted and (ii) in good working condition.

3.12 Compliance with Other Instruments. The Company is not in violation of (i) any term of its certificate of incorporation or bylaws, each as amended to date, or (ii) in any material respect, of any term or provision of any Material Contract, judgment, order or decree, in each case to which it is party or by which it is bound. The Company is not in material violation of any federal or state statute, rule or regulation applicable to the Company. The execution and delivery of the Agreements by the Company, the performance by the Company of its obligations pursuant to the Agreements (including the Restructuring Plan), and the issuance of the Original Issue Shares, and the Conversion Shares, will not result in any violation of, or conflict with, or constitute a material default under, or give rise to the acceleration of any right under or any obligation to provide any notice pursuant to, the Company’s certificate of incorporation or bylaws, each as amended to date, or any of its Material Contracts, nor, to the Knowledge of the Company, result in the creation of any material mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets. The Company has avoided every condition, and has not performed any act, the occurrence of which would result in the Company’s loss of any material right granted under any license, distribution agreement or other agreement. Following the

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Closing, the Company will be permitted to exercise all of its rights under its Material Contracts without payment of any additional amounts or consideration other than ongoing fees, royalties or payments that the Company would otherwise be required to pay pursuant to the terms of such agreements had the issuance and sale of the Series B Preferred not occurred.

3.13 Litigation. There are no actions, suits, claims, proceedings or investigations pending, or to the Knowledge of the Company, threatened, against the Company or any of its subsidiaries or their respective properties before any court or governmental agency that, either individually or in the aggregate, if determined adversely to the Company, would or could reasonably be expected to be material to the Company. Neither the Company nor its subsidiaries is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. Neither the Company or its subsidiaries nor, to the Knowledge of the Company, any of their respective officers or directors is a party or is named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality (in the case of officers or directors, such as would affect the Company or its subsidiaries). There is no action, suit, proceeding or investigation by the Company or any of its subsidiaries pending or which the Company or any of its subsidiaries intends to initiate. Schedule 3.13 includes a description of all material actions, suits, claims, proceedings and investigations involving the Company occurring, arising or existing during the past three (3) years.

3.14 Governmental Consent. No consent, waiver, approval or authorization of or registration, designation, declaration or filing with any governmental authority on the part of the Company is required in connection with the valid execution and delivery of this Agreement, or the offer, sale or issuance of the Original Issue Shares and the Conversion Shares, or the consummation of any other transaction contemplated by this Agreement, except (i) filing of the Restated Certificate with the office of the Secretary of State of the State of Delaware, (ii) the filing of such notices as may be required under the Securities Act of 1933, as amended (the “ Securities Act ”) and (iii) such filings as may be required under applicable state securities laws.

3.15 Governmental Authorization. Each consent, license, permit, grant or other authorization from any Governmental Entity (a) pursuant to which the Company currently operates or holds any interest in any of its properties, or (b) that is required for the operation of the Company’s business as currently conducted (collectively, “ Company Authorizations ”) has been issued or granted to the Company or the Company believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business.

3.16 Permits. Each of the Company and its subsidiaries has all material franchises, permits, licenses, and any similar authority necessary for the conduct of the Business as now being conducted by it, and believes it can obtain, without undue burden or expense, any similar authority for the conduct of the Business as currently proposed to be conducted. Neither the Company nor any of its subsidiaries is in default in any material respect under any of such franchises, permits, licenses or other similar authority.

3.17 Offering. Subject to the accuracy of the Investors’ representations and warranties in Section 5, the offer, sale and issuance of the Original Issue Shares to be issued in conformity with the terms of this Agreement and the issuance of the Conversion Shares, constitute transactions exempt from the registration requirements of Section 5 of the Securities Act and from the registration or qualification requirements of applicable state securities laws, and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption.

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3.18 Registration and Voting Rights. Except as set forth in the Rights Agreement, the Company is presently not under any obligation and has not granted any rights to register under the Securities Act any of its presently outstanding securities or any of its securities that may hereafter be issued. Except as contemplated in the Voting Agreement, no stockholder of the Company has entered into any agreements with respect to the voting of capital shares of the Company.

3.19 Brokers or Finders. Neither the Company nor any of its subsidiaries has incurred, or will incur, directly or indirectly, as a result of any action taken by the Company or its subsidiaries, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or any of the transactions contemplated hereby.

3.20 Tax Returns and Payments. For purposes of this Section 3.20, references to the Company include any subsidiaries of the Company.

(a) The Company has timely filed all income and other material Tax Returns required to be filed by it with appropriate federal, state and local governmental agencies, and each such income and other material Tax Return is true, correct and complete in all material respects.

(b) The Company has timely paid all income and other material Taxes, whether or not shown to be due and payable on any Tax Returns.

(c) The Pro Forma Financials reflect in accordance with the Accounting Principles all liabilities for unpaid Taxes of the Company for periods (or portions of periods) through the Balance Sheet Date. The Company has no liability for unpaid Taxes accruing after the Balance Sheet Date except for Taxes arising in the ordinary course of business or in connection with the transactions contemplated by this Agreement subsequent to the Balance Sheet Date.

(d) There is (i) no claim for Taxes being asserted in writing or otherwise to the Company’s Knowledge against the Company that has resulted in an encumbrance against the property of the Company other than such encumbrance for Taxes not yet due and payable, or being contested in good faith through appropriate proceedings and for which reserves have been established in accordance with the Accounting Principles, (ii) no audit of, or Tax controversy associated with, any Tax Return of the Company being conducted by a Tax authority, (iii) no extension or waiver currently in effect of any statute of limitations on the assessment of any material Taxes granted by the Company, and (iv) no agreement to any extension of time for filing any Tax Return which has not been filed, other than automatic extensions. No written claim has ever been made by any Governmental Entity in a jurisdiction where the Company does not file Tax Returns that the Company is or may be subject to taxation by that jurisdiction.

(e) The Company is not a party to or bound by any Tax sharing, Tax indemnity or Tax allocation agreement, and the Company does not have any liability or potential Liability to another Person under any such agreement, other than any commercial agreement entered into in the ordinary course of business or any lending agreement the primary purpose of which is unrelated to Taxes.

(f) Neither the Company nor any predecessor of the Company has ever been a member of a consolidated, combined, unitary or aggregate group of which the Company or any predecessor of the Company was not the ultimate parent corporation.

(g) The Company will not be required to include any item of income in, or exclude any item of deduction from, Taxable income for any Taxable period (or portion thereof) ending after the Closing as a result of (i) any change in accounting method for a taxable period ending on or before the Closing (ii) use

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of an improper method of accounting for a taxable period ending on or prior to the Closing (iii) any “closing agreement” as described in Section 7121 of the Code (or any similar provision of state or local tax law) entered into prior to the Closing, or (iv) any election under Section 108(i) of the Code.

(h) The Company has not entered into a listed transaction as defined in Section 6707A of the Code and Treasury Regulations Section 1.6011-4(b)(2).

(i) The Company has not distributed stock of another Person or had its stock distributed by another Person, in a transaction that was intended to be governed in whole or in part by Section 355 of the Code.

3.21 Corporate Documents. The Restated Certificate and bylaws of the Company are in the form provided to counsel for the Investors. The Company has provided to Investors’ counsel complete and correct minutes of all meetings of directors and stockholders and all actions by written consent without a meeting by the directors and stockholders since its incorporation.

3.22 Restructuring Plan. All corporate action on the part of the Company and its subsidiaries and their respective directors, officers and stockholders necessary for the authorization by the Company and its subsidiaries of the Restructuring Plan has been taken prior to the Closing. Neither the Company nor any of its subsidiaries is in violation of any term of the Restructuring Plan. The terms of the Restructuring Plan do not violate any federal or state statute, rule or regulation applicable to the Company or any of its subsidiaries in any material respect.

3.23 Employees.

(a) Section 3.23(a) of the Company Schedule of Exceptions contains a list of the name of each current officer and employee of the Company (each such employee, a “ Company Employee ”), together with (i) dates of employment (ii) each such person’s job title, (iii) location of employment (iv) annual base salary or wages; (v) total anticipated earning; (vi) current accrued but unused vacation; (vii) visa status; (viii) notice or severance payment required upon termination; and (ix) exemption status. The Company is not delinquent in payments to any of its employees (including any Company Employee) for any wages, salaries, commissions, bonuses or other direct compensation for any services performed for the Company or amounts required to be reimbursed to such employees. Within the last three (3) years, no labor union or any representative thereof represents, or has made any attempt to organize or represent, employees of the Company. The Company is not a party to any collective bargaining agreements, letters of understanding or similar agreements. There are no strikes or lockouts or work stoppages or slowdowns pending or, to the Knowledge of the Company, threatened against the Company. The Company is not currently engaged in any labor negotiation. No officer or key Company Employee, to the Knowledge of the Company, has any plan or intention to terminate his or her employment. All Company Employees work in the United States and are either United States citizens or permanent residents of the United States. No Company Employee is currently on a leave of absence.

(b) The Company: (i) is in compliance, and has been in such compliance at all times, in all material respects with all applicable laws, orders, rulings, decrees, judgments or arbitration awards of any arbitrator or any court or other Governmental Entity respecting employment, employment practices, terms and conditions of employment, wages, hours or other labor-related matters, including laws, orders, rulings, decrees, judgments and awards relating to discrimination, wages and hours, including the proper classification of workers as independent contractors and consultants, labor relations, leave of absence requirements, occupational health and safety, privacy, harassment, retaliation, immigration, accessibility, workers compensation, wrongful termination or violation of the personal rights of Company Employees or

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prospective employees; (ii) has withheld and reported all material amounts required by any law or contract to be withheld and reported with respect to wages, salaries and other payments to any Company Employee; (iii) has no material liability for any arrears of wages or any Taxes or any penalty for failure to comply with any of the foregoing; and (iv) has no material liability for any payment to any trust or other fund governed by or maintained by or on behalf of any Governmental Entity with respect to unemployment compensation benefits, social security or other benefits or obligations for any Company Employee (other than routine payments to be made in the normal course of business and consistent with past practice).

(c) Section 3.23(c) of the Company Schedule of Exceptions accurately sets forth, with respect to each Person who was an independent contractor of the Company over the last three (3) years: (i) the name of such independent contractor; (ii) the date as of which such independent contractor was originally engaged by the Company; (iii) (as applicable) the date such engagement ended or the date such engagement is scheduled to end; (iv) location of services provided; (v) description of services; (vi) pay arrangement, including aggregate pay; and (vii) any notice or pay required upon termination. No contractor of the Company could be deemed to be a misclassified employee. No independent contractor is eligible to participate in any Company Employee Program. The Company has never had any temporary or leased employees that were not treated and accounted for in all respects as employees of the Company.

(d) No current or former employee or contractor of the Company could be deemed to be misclassified as exempt from the hours of work and overtime requirements of applicable employment standards legislation.

3.24 Employee Benefit Plans.

(a) Section 3.24(a) of the Company Schedule of Exceptions sets forth a true, complete and correct list of every Employee Program that is maintained by the Company or with respect to which the Company has or may have any liability (the “ Company Employee Programs ”).

(b) True, complete and correct copies of the following documents, with respect to each Company Employee Program, where applicable, have previously been delivered to the Investors: (i) all documents embodying or governing such Company Employee Program and any funding medium for the Company Employee Program; (ii) the most recent IRS determination or opinion letter; (iii) the most recently filed IRS Form 5500; (iv) the most recent actuarial valuation report; (v) the most recent summary plan description (or other descriptions provided to employees) and all modifications thereto; and (vi) all non-routine correspondence to and from any state or federal agency.

(c) Each Company Employee Program that is intended to qualify under Section 401(a) or 501(c)(9) of the Code is so qualified and has received a favorable determination or approval letter from the IRS with respect to such qualification, or may rely on an opinion letter issued by the IRS with respect to a prototype plan adopted in accordance with the requirements for such reliance, or has time remaining for application to the IRS for a determination of the qualified status of such Company Employee Program for any period for which such Company Employee Program would not otherwise be covered by an IRS determination and, to the Knowledge of the Company, no event or omission has occurred that would cause any Company Employee Program to lose such qualification.

(d) (i) Each Company Employee Program is, and has been operated in material compliance with applicable laws and regulations and is and has been administered in all material respects in accordance with applicable laws and regulations and with its terms. (ii) No litigation or governmental administrative proceeding, audit or other proceeding (other than those relating to routine claims for benefits) is pending or, to the Knowledge of the Company, threatened with respect to any Company Employee Program

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or any fiduciary or service provider thereof, and, to the Knowledge of the Company, there is no reasonable basis for any such litigation or proceeding. (iii) All material payments and/or contributions required to have been made with respect to all Company Employee Programs either have been made or have been accrued in accordance with the terms of the applicable Company Employee Program and applicable law.

(e) No Company Employee Program is a single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for which the Company or any ERISA Affiliate could incur liability under Section 4063 or 4064 of ERISA or a plan maintained by more than one employer as described in Section 413(c) of the Code.

(f) Neither the Company nor any ERISA Affiliate has ever maintained any employee benefit plan that is or was subject to Title IV of ERISA, Section 412 of the Code, Section 302 of ERISA or is a Multiemployer Plan and neither the Company nor any ERISA Affiliate has incurred any liability under Title IV of ERISA that has not been paid in full.

(g) No Company Employee Program provides health care or any other non-pension benefits to any employees after their employment is terminated (other than as required by Part 6 of Subtitle B of Title I of ERISA or similar state law) and the Company has never promised to provide such post-termination benefits.

(h) Each Company Employee Program may be amended, terminated, or otherwise modified by the Company to the greatest extent permitted by applicable law, including the elimination of any and all future benefit accruals thereunder and no employee communications or provision of any Company Employee Program has failed to effectively reserve the right of the Company or the ERISA Affiliate to so amend, terminate or otherwise modify such Company Employee Program. Neither the Company nor any of its ERISA Affiliates has announced its intention to modify or terminate any Company Employee Program or adopt any arrangement or program which, once established, would come within the definition of a Company Employee Program. Each asset held under each Company Employee Program may be liquidated or terminated without the imposition of any redemption fee, surrender charge or comparable liability.

(i) Each Company Employee Program that constitutes in any part a nonqualified deferred compensation plan within the meaning of Section 409A of the Code (each, a “ NQDC Plan ”) has been operated and maintained in material accordance with Section 409A of the Code and applicable guidance thereunder. No payment to be made under any Company Employee Program is, or to the Knowledge of the Company, will be, subject to the penalties of Section 409A(a)(1) of the Code.

(j) Neither the execution and delivery of this Agreement, the shareholder approval of this Agreement, nor the consummation of the transactions contemplated hereby could (either alone or in conjunction with any other event) (i) result in, or cause the accelerated vesting payment, funding or delivery of, or increase the amount or value of, any payment or benefit to any employee, officer, director or other service provider of the Company or any of its ERISA Affiliates; (ii) limit the right of the Company or any of its ERISA Affiliates to amend, merge, terminate or receive a reversion of assets from any Company Employee Program or related trust; (iii) result in any “parachute payment” as defined in Section 280G(b)(2) of the Code (whether or not such payment is considered to be reasonable compensation for services rendered); or (iv) result in a requirement to pay any Tax “gross-up” or similar “make-whole” payments to any employee, director or consultant of the Company or an ERISA Affiliate.

(k) No Company Employee Program, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Section 162(m) of the Code or any

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other provision of the Code or any similar foreign law, as a result of the transactions contemplated by this Agreement alone or together with any other event.

(l) For purposes of this Agreement:

(i) “ Employee Program ” means (A) an employee benefit plan within the meaning of Section 3(3) of ERISA whether or not subject to ERISA; (B) stock option plans, stock purchase plans, bonus or incentive award plans, severance pay plans, programs or arrangements, deferred compensation arrangements or agreements, employment agreements, executive compensation plans, programs, agreements or arrangements, change in control plans, programs or arrangements, supplemental income arrangements, vacation plans, and all other employee benefit plans, agreements, and arrangements, not described in (A) above; and (C) plans or arrangements providing compensation to employee and non-employee directors. In the case of a Company Employee Program funded through a trust described in Section 401(a) of the Code or an organization described in Section 501(c)(9) of the Code, or any other funding vehicle, each reference to such Employee Program shall include a reference to such trust, organization or other vehicle.

(ii) “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

(iii) An entity is an “ ERISA Affiliate ” of the Company if it would have ever been considered a single employer with the Company under Section 4001(b) of ERISA or part of the same “controlled group” as the Company for purposes of Section 302(d)(3) of ERISA.

(iv) An entity “maintains” an Employee Program if such entity sponsors, contributes to, or provides benefits under or through such Employee Program, or has any obligation to contribute to or provide benefits under or through such Employee Program, or if such Employee Program provides benefits to or otherwise covers current or former employee, officer or director of such entity (or their spouses, dependents, or beneficiaries).

(v) “ Multiemployer Plan ” means an employee pension or welfare benefit plan to which more than one unaffiliated employer contributes and which is maintained pursuant to one or more collective bargaining agreements.

3.25 Environmental and Safety Laws. To the Knowledge of the Company, neither the Company nor any of its subsidiaries is in material violation of any applicable statute, law, or regulation relating to the environment or occupational health and safety, and to the Knowledge of the Company, no material expenditures are or will be required in order to comply with any such existing statute, law, or regulation.

3.26 Compliance with Laws. Each of the Company and its subsidiaries is, and for the past three (3) years has been, in compliance in all material respects with all applicable laws to which the Company and its subsidiaries, their respective properties and assets and the respective business and marketing and sales activities, as currently conducted, are subject. Neither the Company nor its subsidiaries has received any notice (whether formal or informal, including without limitation whistleblower or similar complaints) of any violation with respect to any applicable law.

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3.27 Insurance. Section 3.27 of the Company Schedule of Exceptions lists all material insurance policies and fidelity bonds covering the assets, business, equipment, properties, operations, employees, officers and directors of the Company or any of its subsidiaries, including the type of coverage, the carrier, the amount of coverage, the term and the annual premiums of such policies, in each case that are maintained by the Company or its subsidiaries. There is no material claim by the Company or any of its subsidiaries pending under any of such policies or bonds as to which coverage has been denied or disputed, or to the Knowledge of the Company, will be denied or disputed, by the underwriters of such policies or bonds. In addition, there is no pending claim for which the total value (inclusive of defense expenses) the Company or any of its subsidiaries expects to exceed the policy limits. All premiums due and payable under all such policies and bonds have been paid (or if installment payments are due, will be paid if incurred prior to the Closing), and each of the Company and its subsidiaries is otherwise in material compliance with the terms of such policies and bonds (or other policies and bonds providing substantially similar insurance coverage). To the Knowledge of the Company, neither it nor any of its subsidiaries has been threatened termination of, or premium increase with respect to, any of such policies. Neither the Company nor any of its subsidiaries has ever maintained, established, sponsored, participated in or contributed to any self-insurance plan.

3.28 Customers and Suppliers.

(a) Neither the Company nor any of its subsidiaries, nor, with respect to the Business, Logitech or any of its affiliates, has any outstanding material disputes concerning its products and/or services with any customer, dealer, reseller, sales representative, OEM or distributor who, in the year ended March 31, 2015 or as of the Balance Sheet Date was one of the 20 largest sources of revenues for the Company and its subsidiaries, taken as a whole, measured by dollar volume paid or payable by such customer (each, a “ Significant Customer ”). Each Significant Customer is listed on Section 3.28(a) of the Company Schedule of Exceptions. Neither the Company nor any of its subsidiaries, nor, with respect to the Business, Logitech or any of its affiliates, has received any written, or to the Knowledge of the Company, oral information from any Significant Customer that such customer shall terminate or materially reduce its relationship as a customer of the Company or such subsidiary, whether after the Closing or otherwise, or that such customer intends to terminate or materially modify, in a manner materially adverse to the Company or any of its subsidiaries, existing agreements with the Company or such subsidiary.

(b) Neither the Company nor any of its subsidiaries, nor, with respect to the Business, Logitech or any of its affiliates, has any outstanding material dispute concerning products and/or services provided by any supplier, ODM or contract manufacturer who, in the year ended March 31, 2015 or as of the Balance Sheet Date was one of the 20 largest suppliers of products and/or services to the Company and its subsidiaries, taken as a whole, measured by dollar volume of purchases from such suppliers (each, a “ Significant Supplier ”). Each Significant Supplier is listed on Section 3.28(b) of the Company Schedule of Exceptions. Neither the Company nor any of its subsidiaries, nor, with respect to the Business, Logitech or any of its affiliates, has received any written, or to the Knowledge of the Company, oral information from any Significant Supplier that such supplier shall terminate or materially reduce its relationship as a supplier to the Company or such subsidiary, whether after the Closing or otherwise, or that such supplier intends to terminate or materially modify, in a manner materially adverse to the Company or any of its subsidiaries, existing agreements with the Company or such subsidiary.

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3.29 Interested Party Transactions. Except as set forth in Section 3.29 of the Company Schedule of Exceptions, no officer or director of the Company or any of its subsidiaries, and to the Knowledge of the Company, no employee of the Company or any immediate family member of any of such Persons or any trust, partnership or corporation in which any of such Persons has an interest (each, an “ Interested Party ”), has, directly or indirectly, (i) any interest in any Person that furnished or sold, or furnishes or sells, services, products, or technology that the Company or any of its subsidiaries furnishes or sells, or proposes to furnish or sell; (ii) any interest in any Person that purchases from or sells or furnishes to the Company or any of its subsidiaries, any goods or services; or (iii) any interest in, or is a party to, any agreement to which the Company or any of its subsidiaries is a party or by which any properties or assets of the Company or any of its subsidiaries are bound or has, to the Knowledge of the Company, any right or claim against the Company or any of its subsidiaries or any of their respective assets; provided, however, that ownership of no more than five percent (5%) of the outstanding voting stock of a publicly traded corporation shall not be deemed to be an “interest in any Person” for purposes of this Section 3.29.

3.30 Export Controls and Economic Sanctions.

(a) To the Knowledge of the Company, the Company, its predecessors, and its current and former subsidiaries are in compliance, in all material respects, with all applicable trade laws, including import and export control laws, trade embargoes, and anti-boycott laws, and, except as specifically authorized by a Governmental License, license exception, or other permit or applicable authorization of a Governmental Authority, or except as set forth on Section 3.30(a) of the Company Schedule of Exceptions, have not:

(i) exported, reexported, transferred, or brokered the sale of any goods, services, technology, or technical data to any destination to which, or individual for whom, a license or other authorization is required under the U.S. Export Administration Regulations (the “ EAR ,” 15 C.F.R. § 730 et seq.), the International Traffic in Arms Regulations (the “ ITAR ,” 22 C.F.R. § 120 et seq.), or the U.S. economic sanctions administered by the Office of Foreign Assets Control (“ OFAC ,” 31 C.F.R. Part 500 et seq.);

(ii) exported, reexported, or transferred any goods, services, technology, or technical data to, on behalf of, or for the benefit of any person or entity (i) designated as a Specially Designated National or appearing on OFAC’s Consolidated Sanctions List, or (ii) on the Denied Persons, Entity, or Unverified Lists of the Bureau of Industry and Security, or (iii) on the Debarred List of the Directorate of Defense Trade Controls (if applicable);

(iii) exported any goods, services, technology, or technical data that have been or will be used for any purposes associated with nuclear activities, missiles, chemical or biological weapons, or terrorist activities, or that have been or will be used, transshipped or diverted contrary to applicable U.S. trade controls;

(iv) exported, reexported, transferred, or imported any goods, services, technology, or technical data to or from Cuba, Crimea, Iran, Libya, North Korea, Syria, or Sudan during a time at which such country/region and/or its government was subject to U.S. trade embargoes under OFAC regulations, the EAR, or any other applicable statute or Executive Order;

(v) manufactured any defense article as defined in the ITAR, including within the United States and without regard to whether such defense article was subsequently exported, without being registered and in good standing with the Directorate of Defense Trade Controls, U.S. Department of State;

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(vi) imported any goods except in full compliance with the import and Customs laws of the United States, including but not limited to Title 19 of the United States Code, Title 19 of the Code of Federal Regulations, and all other regulations administered or enforced by the Bureau of Customs and Border Protection; or

(vii) violated the antiboycott prohibitions, or failed to comply with the reporting requirements, of the EAR (15 C.F.R. § 760) and the Tax Reform Act of 1976 (26 U.S.C. § 999).

(b) Set forth in Section 3.30(b) to the Company Schedule of Exceptions is a true and accurate table to the Knowledge of the Company identifying each of the items currently being exported by the Company and its U.S. subsidiaries, including, for each item, the correct Export Control Classification Number (under the Commerce Control List of the EAR) or United States Munitions List Category (of the ITAR), and an indication whether the item was self-classified or was the result of an agency determination.

(c) The Company and its subsidiaries have in place adequate controls to ensure compliance with any applicable Laws pertaining the export and import of goods, services, and technology, including without limitation the EAR, the ITAR, the U.S. economic sanctions administered by OFAC, and the import and Customs laws. Neither the Company nor any of its subsidiaries has undergone or is undergoing, any audit, review, inspection, investigation, survey or examination by a Governmental Authority relating to export, import, or other trade-related activity. To the Knowledge of the Company, there are no threatened claims, nor presently existing facts or circumstances that would constitute a reasonable basis for any future claims, with respect to exports, imports, or other trade-related activity by the Company, its predecessors, or its current or former subsidiaries.

3.31 Foreign Corrupt Practice Act and Anti-Corruption.

(a) Neither the Company, nor any of its Subsidiaries (including to the Knowledge of the Company any of their respective employees, officers or directors), has taken or failed to take any action that would cause it to be in material violation of the Foreign Corrupt Practices Act of 1977, as amended (the “ FCPA ”), the UK Bribery Act 2010 (“ UKBA ”), any rules or regulations under these laws, or any other applicable anti-corruption or anti-kickback law or regulation, including without limitation:

(i) the making of any offer or promise to pay, payment of, or authorization of payment of, directly or indirectly, money or anything of value to any person or Official, for the purpose of corruptly influencing an act or decision, inducing the doing or omission of any act in violation of a lawful duty, or securing an improper advantage, or the receipt of a corrupt payment or of anything of value under such circumstances;

(ii) use of any corporate funds for any illegal contributions, gifts, entertainment or other unlawful expenses relating to political activity;

(iii) establishment or maintenance of any unlawful fund of corporate monies or other properties;

(iv) making of any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment of any nature.

For purposes of this Agreement, an “ Official ” shall include any appointed or elected official, any government employee, any political party, party official, or candidate for political office, or any officer,

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director or employee of any Governmental Authority or employees of state-owned or state-controlled businesses.

(b) The Company and each of its Subsidiaries have in place controls and systems to ensure compliance with applicable Laws pertaining to anti-corruption, including the FCPA. To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has undergone or is undergoing, any audit, review, inspection, investigation, or examination by a Governmental Entity relating to the FCPA, anti-corruption, or anti-kickback activity.

3.32 Disclosure. To the Knowledge of the Company, neither the Agreements nor any other documents or certificates delivered in connection herewith, when taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made. The Company does not represent or warrant that it will achieve any financial projections provided to the Investors and represents only that such projections were prepared in good faith.

SECTION 4
REPRESENTATIONS AND WARRANTIES OF LOGITECH

Logitech hereby represents and warrants to the Investors as follows:

4.1 Organization, Good Standing and Qualification. Logitech is a corporation duly organized and validly existing under the laws of Switzerland. Logitech has the requisite corporate power and authority to execute and deliver this Agreement and the Logitech Agreements, to sell the Secondary Shares and to perform its obligations pursuant to this Agreement.

4.2 Secondary Share Transfer. Logitech is the sole record and beneficial owner of the Secondary Shares and the Series A Preferred, free and clear of any liens or encumbrances, other than the restrictions on transfer under U.S. state and/or federal securities laws. The Secondary Shares are not subject to any preemptive rights or rights of first refusal. Logitech has the sole right to transfer such Secondary Shares to the Investors.

4.3 Authorization. All corporate action on the part of the Logitech necessary for the authorization, execution and delivery of this Agreement and the Logitech Agreements by Logitech, the sale and delivery of the Secondary Shares, and the performance of all of Logitech’s obligations under this Agreement and the Logitech Agreements, has been taken prior to the Closing. This Agreement and the Logitech Agreements, when executed and delivered by Logitech, shall constitute valid and binding obligations of Logitech, enforceable in accordance with their terms, except (i) as limited by laws of general application relating to bankruptcy, insolvency and the relief of debtors, (ii) as limited by rules of law governing specific performance, injunctive relief or other equitable remedies and by general principles of equity, and (iii) to the extent the indemnification provisions contained in the Agreements may further be limited by applicable laws and principles of public policy.

4.4 Governmental Consent. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of Logitech is required in connection with the valid execution and delivery of this Agreement (including the Restructuring Plan), or the offer or sale of the Secondary Shares or the consummation of any other transaction contemplated by this Agreement (including the Restructuring Plan), except (i) filing of the Restated Certificate with the office of the Secretary

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of State of the State of Delaware, (ii) the filing of such notices as may be required under the Securities Act, and (iii) such filings as may be required under applicable state securities laws.

4.5 Brokers or Finders. Logitech has not incurred, and will not incur, directly or indirectly, as a result of any action taken by the Logitech, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Agreement or any of the transactions contemplated hereby, including but not limited to Secondary Shares.

4.6 Restructuring Plan. All corporate action on the part of Logitech necessary for the authorization by Logitech of the Restructuring Plan has been taken. Logitech and its affiliates are not in violation of any term of the Restructuring Plan in any material respect. The terms of the Restructuring Plan do not violate any federal or state statute, rule or regulation applicable to Logitech or the Company in any material respect.

4.7 Representations Complete. The representations and warranties made by the Company in this Agreement, as qualified by the Company Schedule of Exceptions, are true and correct in all material respects.

SECTION 5
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS

Each Investor hereby, severally and not jointly, represents and warrants to the Company and Logitech as follows:

5.1 No Registration. The Investor understands that the Shares and the Conversion Shares, have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Investor’s representations as expressed herein or otherwise made pursuant hereto.

5.2 Investment Intent. The Investor is acquiring the Shares and the Conversion Shares, for investment for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof, and that the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. The Investor further represents that it does not have any contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participation to such person or entity or to any third person or entity with respect to any of the Shares or the Conversion Shares.

5.3 Investment Experience. The Investor, or its purchaser representative, within the meaning of Regulation D, Rule 501(h), promulgated by the Securities and Exchange Commission (its “ Purchaser Representative ”), has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company and acknowledges that the Investor or its Purchaser Representative can protect its own interests. The Investor or its Purchaser Representative has such knowledge and experience in financial and business matters so that the Investor or its Purchaser Representative is capable of evaluating the merits and risks of its investment in the Company.

5.4 Speculative Nature of Investment. The Investor understands and acknowledges that the Company has a limited financial and operating history and that an investment in the Company is highly speculative and involves substantial risks. The Investor can bear the economic risk of the Investor’s

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investment and is able, without impairing the Investor’s financial condition, to hold the Shares and the Conversion Shares for an indefinite period of time and to suffer a complete loss of the Investor’s investment.

5.5 Access to Data. The Investor acknowledges that any business plans prepared by the Company have been, and continue to be, subject to change and that any projections included in such business plans or otherwise are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results. The Investor also acknowledges that it is relying solely on its own counsel and not on any statements or representations of the Company or its agents for legal advice with respect to this investment or the transactions contemplated by the Investor Agreements.

5.6 Accredited Investor. The Investor is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission under the Securities Act and shall submit to the Company such further assurances of such status as may be reasonably requested by the Company. The Investor has furnished or made available any and all information requested by the Company or otherwise necessary to satisfy any applicable verification requirements as to “accredited investor” status. Any such information is true, correct, timely and complete.

5.7 Residency. The residency of the Investor (or, in the case of a partnership or corporation, such entity’s principal place of business) is correctly set forth on the Schedule of Investors.

5.8 Rule 144. The Investor acknowledges that the Shares and the Conversion Shares must be held indefinitely unless subsequently registered under the Securities Act or an exemption from such registration is available. The Investor is aware of the provisions of Rule 144 promulgated under the Securities Act which permit resale of shares purchased in a private placement subject to the satisfaction of certain conditions, which may include, among other things, the availability of certain current public information about the Company; the resale occurring not less than a specified period after a party has purchased and paid for the security to be sold; the number of shares being sold during any three-month period not exceeding specified limitations; the sale being effected through a “brokers’ transaction,” a transaction directly with a “market maker” or a “riskless principal transaction” (as those terms are defined in the Securities Act or the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder); and the filing of a Form 144 notice, if applicable. The Investor understands that the current public information referred to above is not now available and the Company has no present plans to make such information available. The Investor acknowledges and understands that notwithstanding any obligation under the Rights Agreement, the Company may not be satisfying the current public information requirement of Rule 144 at the time the Investor wishes to sell the Shares or the Conversion Shares, and that, in such event, the Investor may be precluded from selling such securities under Rule 144, even if the other applicable requirements of Rule 144 have been satisfied. The Investor acknowledges that, in the event the applicable requirements of Rule 144 are not met, registration under the Securities Act or an exemption from registration will be required for any disposition of the Shares or the underlying Common Stock. The Investor understands that, although Rule 144 is not exclusive, the Securities and Exchange Commission has expressed its opinion that persons proposing to sell restricted securities received in a private offering other than in a registered offering or pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales and that such persons and the brokers who participate in the transactions do so at their own risk.

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5.9 No Public Market. The Investor understands and acknowledges that no public market now exists for any of the securities issued by the Company and that the Company has made no assurances that a public market will ever exist for the Company’s securities.

5.10 Authorization.

(a) The Investor has all requisite power and authority to execute and deliver the Investor Agreements, to purchase the Shares hereunder and to carry out and perform its obligations under the terms of the Investor Agreements. All action on the part of the Investor necessary for the authorization, execution, delivery and performance of the Investor Agreements, and the performance of all of the Investor’s obligations under the Investor Agreements, has been taken or will be taken prior to the Closing.

(b) The Investor Agreements, when executed and delivered by the Investor, will constitute valid and legally binding obligations of the Investor, enforceable in accordance with their terms except: (i) to the extent that the indemnification provisions contained in the Rights Agreement may be limited by applicable law and principles of public policy, (ii) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (iii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies or by general principles of equity.

(c) No consent, approval, authorization, order, filing, registration or qualification of or with any court, governmental authority or third person is required to be obtained by the Investor in connection with the execution and delivery of the Investor Agreements by the Investor or the performance of the Investor’s obligations hereunder or thereunder.

5.11 Brokers or Finders. The Investor has not engaged any brokers, finders or agents, and neither the Company nor any other Investor has, nor will, incur, directly or indirectly, as a result of any action taken by the Investor, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Investor Agreements.

5.12 Tax Advisors. The Investor has reviewed with its own Tax advisors the U.S. federal, state, local and foreign Tax consequences of this investment and the transactions contemplated by the Investor Agreements. The Investor understands that it (and not the Company) shall be responsible for its own Tax liability that may arise as a result of this investment or the transactions contemplated by the Investor Agreements.

5.13 Legends. The Investor understands and agrees that the certificates evidencing the Shares or the Conversion Shares, or any other securities issued in respect of the Shares or the Conversion Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall bear the following legend (in addition to any legend required by the Rights Agreement or under applicable state securities laws):

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER

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EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

5.14 No “Bad Actor” Disqualification Events. Neither (i) the Investor, (ii) any of its directors, executive officers, other officers that may serve as a director or officer of any company in which it invests, general partners or managing members, nor (iii) any beneficial owner of the Company’s voting equity securities (in accordance with Rule 506(d) of the Securities Act) held by the Investor is subject to any Disqualification Event, except for Disqualification Events covered by Rule 506(d)(2)(ii) or (iii) or (d)(3) under the Securities Act and disclosed reasonably in advance of the Closing in writing in reasonable detail to the Company.

SECTION 6
CONDITIONS TO INVESTORS’ OBLIGATIONS TO CLOSE

Each Investor’s obligation to purchase the Shares at a Closing is subject to the fulfillment on or before the Closing of each of the following conditions, unless waived in writing by the applicable Investor purchasing the Shares in the Closing:

6.1 Representations and Warranties of the Company. Except as set forth in or modified by the Company Schedule of Exceptions, the representations and warranties made by the Company in Section 3 shall be true and correct in all material respects as of the date of the Closing.

6.2 Representations and Warranties of Logitech. Except as set forth in or modified by the Logitech Schedule of Exceptions, the representations and warranties made by Logitech in Section 4 shall be true and correct in all material respects as of the date of the Closing.

6.3 Covenants of the Company. The Company shall have performed or complied with all covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company on or prior to the Closing in all material respects.

6.4 Covenants of Logitech. Logitech shall have performed or complied with all covenants, agreements and conditions contained in Section 8 of this Agreement to be performed or complied with by Logitech on or prior to the Closing in all material respects.

6.5 Blue Sky. The Company shall have obtained all necessary Blue Sky law permits and qualifications, or have the availability of exemptions therefrom, required by any state for the offer, sale and transfer of the Shares and the Conversion Shares.

6.6 Restated Certificate. The Restated Certificate shall have been duly authorized, executed and filed with and accepted by the Secretary of State of the State of Delaware.

6.7 Rights Agreement. The Company, Logitech and the Investors (each as defined in the Rights Agreement) shall have executed and delivered the Rights Agreement.

6.8 Voting Agreement. The Company, Logitech and the Investors (each as defined in the Voting Agreement) shall have executed and delivered the Voting Agreement.

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6.9 Right of First Refusal and Co-Sale Agreement. The Company, Logitech and the Investors (each as defined in the Right of First Refusal and Co-Sale Agreement) shall have executed and delivered the Right of First Refusal and Co-Sale Agreement.

6.10 Closing Deliverables of the Company. The Company shall have delivered to counsel to the Investors the following:

(a) a certificate executed by the Chief Executive Officer, President or Chief Financial Officer of the Company on behalf of the Company, in substantially the form of Exhibit G , certifying the satisfaction of the conditions to closing listed in Sections 6.1 and 6.3.

(b) a certificate of the Secretary of State of the State of Delaware, dated as of a date within five days of the date of the Closing, with respect to the good standing of the Company.

(c) a certificate of the Company executed by the Company’s Secretary, in substantially the form of Exhibit H , attaching and certifying to the truth and correctness of (1) the Restated Certificate, (2) the bylaws and (3) the board and stockholder resolutions adopted in connection with the transactions contemplated by this Agreement.

(d) with respect to the Closing only, an opinion from Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel to the Company, dated as of the Closing, in substantially the form of Exhibit I .

(e) a form of Directors and Officers Indemnification Agreement, in substantially the form of Exhibit O .

6.11 Closing Deliverables of Logitech. Logitech shall have delivered to counsel to the Investors the following:

(a) certificates and documents referenced in Section 2.3;

(b) a certificate executed by an officer of Logitech on behalf of Logitech, in substantially the form of Exhibit P , certifying the satisfaction of the conditions to closing listed in Sections 6.2 and 6.4.

6.12 Consents and Waivers. The Company, Logitech and the Investors shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreements.

6.13 Logitech Agreements. The Company and Logitech shall have executed and delivered the Transition Services Agreement.

6.14 Board of Directors. Effective upon the Closing, each Investor hereby elects Craig Malloy, Andy Sheehan, Jeff Brody, George Bischof and one (1) vacancy as the directors that the Restated Certificate provides are to be elected by the holders of the Series B Preferred. Effective upon the Closing, the Board of Directors of the Company shall consist of Craig Malloy, Andy Sheehan, Jeff Brody, George Bischof and one (1) vacancy.

6.15 IP Agreements. The Company and Logitech shall have executed and delivered the IP Agreements in the form set forth in Exhibit U .

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6.16 No Material Adverse Effect. There shall not have occurred and be continuing a Material Adverse Effect with respect to the Company.

SECTION 7
CONDITIONS TO COMPANY’S AND LOGITECH’S OBLIGATION TO CLOSE

The Company’s obligation to sell and issue the Issuer Shares, and Logitech’s obligation to sell the Secondary Shares, at the Closing is subject to the fulfillment on or before the Closing of the following conditions, unless waived in writing by the Company and Logitech:

7.1 Representations and Warranties. The representations and warranties made by the Investors in the Closing in Section 5 shall be true and correct in all material respects (disregarding any standards of materiality contained in such representations and warranties) when made and shall be true and correct in all material respects as of the date of the Closing.

7.2 Covenants. The Investors shall have performed or complied with all covenants, agreements and conditions contained in the Investor Agreements to be performed or complied with by the Investors on or prior to the date of the Closing in all material respects.

7.3 Compliance with Securities Laws. The Company and Logitech shall be satisfied that the offer, sale and transfer of the Shares and the Conversion Shares shall be qualified or exempt from registration or qualification under all applicable federal and state securities laws (including receipt by the Company of all necessary blue sky law permits and qualifications required by any state, if any).

7.4 Restated Certificate. The Restated Certificate shall have been duly authorized, executed and filed with and accepted by the Secretary of State of the State of Delaware.

7.5 Rights Agreement. The Company, Logitech and the Investors (each as defined in the Rights Agreement) shall have executed and delivered the Rights Agreement.

7.6 Voting Agreement. The Company, Logitech and the Investors (each as defined in the Voting Agreement) shall have executed and delivered the Voting Agreement.

7.7 Right of First Refusal and Co-Sale Agreement. The Company, Logitech and the Investors (each as defined in the Right of First Refusal and Co-Sale Agreement) shall have executed and delivered the Right of First Refusal and Co-Sale Agreement.

7.8 Consents and Waivers. The Company, Logitech and the Investors shall have obtained any and all consents, permits and waivers necessary or appropriate for consummation of the transactions contemplated by the Agreements.

7.9 IP Agreements. The Company and Logitech shall have executed and delivered the IP Agreements in the form set forth in Exhibit U .

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SECTION 8
FURTHER AGREEMENTS OF THE PARTIES

8.1 Net Working Capital.

(a) No later than two (2) Business Days prior to Closing, Logitech shall have delivered to the Lead Investor a written statement (the “ Estimated Net Working Capital Statement ”) which sets forth an estimate of the amount of Net Working Capital (such estimate, the “ Estimated Net Working Capital ”), which shall be calculated in accordance with the accounting principles, practices, procedures, policies and methods set forth on Exhibit N (the “ Accounting Principles ”).

(b) To the extent that the Estimated Net Working Capital of the Company as of the Closing, as determined in accordance with Section 8.1(a) above, is greater than $20,000,000 (the “ Upper Target Working Capital Amount ”) or less than $18,000,000 (the “ Lower Target Working Capital Amount ”), Logitech shall, on the date of Closing, contribute funds to, or receive a distribution of funds from, the Company, as applicable, necessary to cause Net Working Capital, as of the Closing, to be no less than the Lower Target Working Capital Amount or no more than the Upper Target Working Capital Amount, as applicable (the “ Closing Net Working Capital Adjustment ”).

(c) Within sixty (60) days after the Closing, the Lead Investor shall deliver to Logitech a written statement (the “ Working Capital Reconciliation Notice ”) which includes a calculation of the actual Net Working Capital based on the Accounting Principles, and the difference, if any, between the Estimated Net Working Capital and such calculation of the actual Net Working Capital of the Company as of the Closing.

(d) If Logitech disputes the actual Net Working Capital set forth in the Working Capital Reconciliation Notice, Logitech shall deliver to the Lead Investor written notice of such dispute (the “ Working Capital Dispute Notice ”) within thirty (30) days of receipt of the Working Capital Reconciliation Notice, which shall list with reasonable specificity the points of disagreement with the calculation of the actual Net Working Capital. Logitech’s failure to provide a Working Capital Dispute Notice within thirty (30) days after receipt of the Working Capital Reconciliation Notice shall be deemed an acceptance of the calculation of the actual Net Working Capital set forth in the Working Capital Reconciliation Notice. Upon receipt of the Working Capital Dispute Notice, the Lead Investor and Logitech shall promptly consult with each other with respect to the specified points of disagreement in an effort to resolve the dispute during the thirty (30) days immediately following receipt of the Working Capital Dispute Notice, or such longer period as the Lead Investor and Logitech may mutually agree. Any such disputed items that are resolved by the Lead Investor and Logitech during such period shall be final and binding on the parties hereto and not subject to appeal. If the Lead Investor and Logitech do not resolve all such disputed items by the end of such thirty (30) day period, then, at the request of the Lead Investor or Logitech, as applicable, the Lead Investor and Logitech shall submit all items remaining in dispute with respect to the Working Capital Dispute Notice to a nationally recognized independent accounting firm upon which the Lead Investor and Logitech shall reasonably agree (the “ Accounting Firm ”) for review and resolution. The Accounting Firm shall act as an expert and not an arbitrator. The Accounting Firm shall make all calculations in accordance with the Accounting Principles, shall determine only those items remaining in dispute between the Lead Investor and Logitech, and shall only be permitted or authorized to determine an amount with respect to any such disputed item that no greater than the highest and no less than the lowest of the positions of the Lead Investor in the Working Capital Reconciliation Notice and Logitech in the Working Capital Dispute Notice, as applicable. Each of the Lead Investor and Logitech shall (i) enter into a customary engagement letter with the Accounting Firm at the time such dispute is submitted to the Accounting Firm and otherwise cooperate with the Accounting Firm, (ii) have the opportunity to submit a written statement in support of their respective positions with respect

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to such disputed items, to provide supporting material to the Accounting Firm in defense of their respective positions with respect to such disputed items and to submit a written statement responding to the other party’s position with respect to such disputed items and (iii) subject to customary confidentiality and indemnity agreements, provide the Accounting Firm with access to the Company’s books, records, personnel and representatives and such other information as the Accounting Firm may require in order to render its determination. The Accounting Firm shall be instructed to deliver to the Lead Investor and Logitech a written determination (such determination to include a worksheet setting forth all material calculations used in arriving at such determination and to be based solely on information provided to the Accounting Firm by the Lead Investor, the Company and Logitech) of the disputed items within thirty (30) days of receipt of the disputed items, which determination shall be final and binding on the parties hereto and not subject to appeal. Fifty percent (50%) of any expenses relating to the engagement of the Accounting Firm shall be paid by Logitech and fifty percent 50% of such expenses shall be paid by the Investors.

(e) If, upon the final determination of the actual Net Working Capital of the Company as of the Closing (the “ Final Net Working Capital ”), the Closing Net Working Capital Adjustment calculated using the Final Net Working Capital would be greater than the Upper Target Working Capital Amount or less than the Lower Target Working Capital Amount calculated pursuant to Section 8.1(b) using the Estimated Net Working Capital, then Logitech shall contribute funds to, or receive a distribution of funds from, the Company, as applicable, in an amount such that, after taking into account all payments made pursuant to Sections 8.1(b) and (e), the Net Working Capital as of the Closing is no less than the Lower Target Working Capital Amount or no more than the Upper Target Working Capital Amount, as applicable.

SECTION 9
MISCELLANEOUS

9.1 Amendment. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument referencing this Agreement and signed by the Company and the Investors holding a majority of the Common Stock issued or issuable upon conversion of the Shares issued pursuant to this Agreement (excluding any of such shares that have been sold to the public or pursuant to Rule 144). Any such amendment, waiver, discharge or termination effected in accordance with this paragraph shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities have been converted or exchanged or for which such securities have been exercised) and each future holder of all such securities.

9.2 Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail (if to an Investor or any other holder of Company securities) or otherwise delivered by hand, messenger or courier service addressed:

(a) if to an Investor, to the Investor’s address, facsimile number or electronic mail address as shown in the Company’s records, as may be updated in accordance with the provisions hereof, with a copy (which shall not constitute notice) to Craig Schmitz and Michael Kendall, Goodwin Procter LLP, 135 Commonwealth Drive, Menlo Park, CA 94025;

(b) if to any other holder of any Shares or Conversion Shares, to such address, facsimile number or electronic mail address as shown in the Company’s records, or, until any such holder so furnishes

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an address, facsimile number or electronic mail address to the Company, then to the address of the last holder of such Shares or Conversion Shares for which the Company has contact information in its records;

(c) if to the Company, to the attention of the Chief Executive Officer or the Chief Financial Officer of the Company at 1601 S. MoPac Expressway, Suite 100, Austin, Texas 78746, or at such other current address as the Company shall have furnished to the Investors and Logitech; or

(d) if to Logitech, to the attention of the Chief Executive Officer, Chief Financial Officer or the General Counsel of Logitech at c/o Logitech, Inc., 7700 Gateway Blvd, Newark, CA 94560, or at such other current address as Logitech shall have furnished to the Investors and the Company, with a copy (which shall not constitute notice) to Steven V. Bernard, Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill Road, Palo Alto, California 94304.

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.

Subject to the limitations set forth in Delaware General Corporation Law §232(e), each Investor or other security holder consents to the delivery of any notice to stockholders given by the Company under the Delaware General Corporation Law or the Company’s certificate of incorporation or bylaws by (i) facsimile telecommunication to the facsimile number set forth on Exhibit A (or to any other facsimile number for the Investor or other security holder in the Company’s records), (ii) electronic mail to the electronic mail address set forth on Exhibit A (or to any other electronic mail address for the Investor or other security holder in the Company’s records), (iii) posting on an electronic network together with separate notice to the Investor or other security holder of such specific posting or (iv) any other form of electronic transmission (as defined in the Delaware General Corporation Law) directed to the Investor or other security holder. This consent may be revoked by an Investor or other security holder by written notice to the Company and may be deemed revoked in the circumstances specified in Delaware General Corporation Law §232.

9.3 Governing Law; Jurisdiction; Venue. This Agreement shall be governed in all respects by the internal laws of the State of Delaware as applied to agreements entered into among Delaware residents to be performed entirely within Delaware, without regard to principles of conflicts of law. In any action between the parties hereto arising out of or relating to this Agreement or any of the transactions contemplated by this Agreement: (i) each of the parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of either the state courts located in Santa Clara County, California or the United States District Court for the Northern District of California and (ii) each of the parties irrevocably consents to service of process by first class certified mail, return receipt requested, postage prepaid.

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9.4 Brokers or Finders. The Company shall indemnify and hold harmless each Investor from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission (and the costs and expenses of defending against such liability or asserted liability) for which such Investor or any of its constituent partners, members, officers, directors, employees or representatives is responsible to the extent such liability is attributable to any inaccuracy or breach of the representations and warranties contained in Section 3.19, and each Investor agrees to indemnify and hold harmless the Company and each other Investor from any liability for any commission or compensation in the nature of a brokerage or finder’s fee or agent’s commission (and the costs and expenses of defending against such liability or asserted liability) for which the Company, any other Investor or any of their constituent partners, members, officers, directors, employees or representatives is responsible to the extent such liability is attributable to any inaccuracy or breach of the representations and warranties contained in Section 5.11.

9.5 Expenses. The Company, Logitech, and the Investors shall each pay their own expenses in connection with the transactions contemplated by this Agreement; provided, however , that if the Closing is effected, the Company shall reimburse the reasonable and customary documented fees of one counsel for the Investors up to a maximum of $200,000, within thirty (30) days of presentation of a final invoice.

9.6 Survival. The representations, warranties, covenants and agreements made in this Agreement by the Company, Logitech and the Investors shall survive any investigation made by any party hereto and the closing of the transactions contemplated hereby for one (1) year from the date of the Closing; provided, however, that (i) the representations and warranties of the Company and Logitech, as applicable, contained in Section 3.1 (Organization, Good Standing and Qualification), Section 3.2 (Subsidiaries), Section 3.3 (Capitalization), Section 3.4 (Authorization), Section 3.19 (Brokers or Finders), Section 3.20 (Tax Returns and Payments), Section 4.1 (Organization, Good Standing and Qualification), Section 4.2 (Secondary Share Transfer), Section 4.3 (Authorization) and Section 4.5 (Brokers or Finders) (collectively, the “ Fundamental Representations ”) shall survive until the expiration of the statute of limitations applicable thereto, and (ii) the representations and warranties of the Company contained in Section 3.9 (Intellectual Property) (the “ IP Representations ”) shall survive for two (2) years from the date of the Closing. The covenants and agreements contained herein to be performed or complied with after the Closing shall survive in accordance with their respective terms or, absent a specific term, indefinitely. Any claim that has been asserted in accordance with Section 9.7 and that is pending on the date of the expiration of the applicable survival period set forth in this Section 9.6 may continue to be asserted until fully and finally resolved.

9.7 Logitech Indemnification.

(a) From and after the Closing and subject to and as limited by the time limitations in Section 9.6 and the provisions of this Section 9.7, Logitech agrees to indemnify and hold the Investors, their respective affiliates and direct and indirect partners (including partners of partners and stockholders and members of partners), members, stockholders, directors, officers, employees and agents (collectively, the “ Investor Indemnified Parties ” and, individually, an “ Investor Indemnified Party ”) harmless against all losses, Taxes, liabilities, damages, diminution in value, costs, interest, awards, judgments, penalties and expenses, including reasonable attorneys’ and consultants’ fees and expenses and including any such reasonable expenses incurred in connection with investigating, defending against or settling any of the foregoing (hereinafter individually a “ Loss ” and collectively “ Losses ”) paid, incurred or sustained by any Investor Indemnified Party as a result of (i) any breach or inaccuracy of a representation or warranty by the Company contained in Section 3 of this Agreement or by Logitech contained in Section 4 of this Agreement, including, without limitation, any failure of such representations and warranties to be true and correct as of the Closing, (ii) any failure by Logitech to perform or comply with any of its covenants or agreements under this Agreement, (iii) any fraud committed by or on behalf of the Company or Logitech related to this

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Agreement, (iv) without duplication, any unpaid Pre-Closing Taxes that are not taken into account in determining Net Working Capital, (v) without duplication, any unpaid Third Party Expenses of the Company that are not taken into account in determining Net Working Capital or (vi) without duplication, the terms of the Restructuring Plan (other than the Excluded Items) set forth on Exhibit K hereto. For the purpose of this Section 9.7, solely when determining the amount of Losses paid, incurred or sustained (but not whether a breach, inaccuracy or failure has occurred) by an Investor Indemnified Party as a result of any breach or inaccuracy of a representation or warranty or any failure to perform or comply with any covenant or agreement that is qualified or limited in scope as to materiality or Material Adverse Effect, such representation, warranty, covenant or agreement shall be deemed to be made without such qualification or limitation. The rights of the Investor Indemnified Parties to indemnification or any other remedy under this Agreement shall not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing, with respect to the accuracy or inaccuracy of or compliance with, any representation, warranty, covenant or agreement made by the Company or Logitech or any other matter. The waiver of any condition set forth in Section 6 of this Agreement based on the accuracy of any such representation or warranty, or on the performance of or compliance with any such covenant or agreement, shall not affect the right to indemnification or any other remedy based on any such representation, warranty, covenant or agreement. For the avoidance of doubt, in no event shall any item be taken into account more than once that is included in any of clauses (i) through (vi) of this Section 9.7 in determining the amount of any Losses.

(b) No Investor Indemnified Party shall be entitled to recovery of Losses pursuant to Section 9.7(a)(i) for breaches or inaccuracies of representations or warranties (other than Fundamental Representations and IP Representations) until such time (if at all) as the total amount of all Losses that have been paid, incurred or sustained thereunder exceeds $100,000 (the “ Threshold Amount ”), then the Investor Indemnified Parties shall, subject to the limitations in this Section 9.7, be entitled to recovery for all such Losses in excess of the Threshold Amount, subject to the limitations herein.

(c) The Lead Investor (on behalf of all Investor Indemnified Parties) may seek recovery of Losses pursuant to this Section 9.7 by delivery of a certificate executed by an authorized person on behalf of the Lead Investor no later than 5:00 p.m. Pacific time on the applicable survival date set forth in Section 9.6 setting forth an indemnification claim for Losses (an “ Indemnification Claim ”): (A) stating that the Investor Indemnified Parties have paid, incurred or sustained, or believe in good faith that the Investor Indemnified Parties are reasonably likely to pay, incur or sustain, a Loss and (B) specifying in reasonable detail the nature and amount of the Loss so stated (an “ Authorized Person Certificate ”); provided , however , that the Authorized Person Certificate need only specify such information to the knowledge of such Investor Indemnified Party as of the date of the Indemnification Claim. Logitech shall have 30 days to object in writing to any Indemnification Claim set forth in an Authorized Person Certificate. If Logitech shall so object, Logitech and the Lead Investor will attempt in good faith to agree upon the rights of the respective parties with respect to such claims. In the event the parties cannot come to an agreement within 30 days after the date on which Logitech objected in writing to any Indemnification Claim set forth in an Authorized Person Certificate, Logitech and the Lead Investor shall mutually agree on one mediator not affiliated with either party or any other Investor for determination of the rights of the respective parties with respect to each of such claims. The parties shall cooperate with one another in scheduling mediation proceedings, shall act in good faith in such mediation, shall share equally in the costs of any mediation, and shall use good faith efforts to cause such mediation to be completed within 60 days after the date on which Logitech objected in writing to the Indemnification Claim. If a resolution is not agreed upon after completion of such mediation, either party may begin litigation proceedings.

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(d) Following the final determination of a claim for indemnification hereunder pursuant to Section 9.7(c) or in connection with an Order that is finally adjudicated and resolved by a court of competent jurisdiction, and subject to the limitations herein, Logitech shall satisfy the amount of such finally determined Loss to the Investor Indemnified Parties by adjusting the Series B Conversion Price (as defined in the Restated Certificate) in the manner described in Section 4(h) of the Restated Certificate; provided that the Investor Indemnified Parties may, at their option, in lieu of adjusting the Series B Conversion Price, cause Logitech to satisfy the amount of such Loss by paying by wire transfer of immediately available funds to the Investor Indemnified Parties within 10 days of such final determination an amount equal to (50%) of the amount of such finally determined Loss; provided further that in no event shall the aggregate cash amount payable by Logitech under this Section 9.7(d) exceed $1,000,000 (the “ Maximum Cash Indemnity Amount ”). For the avoidance of doubt, no Series B Conversion Price adjustment or payment due under this Section 9.7(d) shall be made until an Indemnification Claim is finally determined to be indemnifiable pursuant to Section 9.7(c) herein or pursuant to an Order that is finally adjudicated and resolved by a court of competent jurisdiction.

(e) Except with respect to Losses paid, incurred or sustained as a result of fraud or intentional misrepresentation, the maximum amount that the Investor Indemnified Parties may recover for Losses pursuant to Section 9.7 shall be as follows:

(i) For any Losses that are indemnifiable under Section 9.7(a)(i), other than with respect to any breach or inaccuracy of the Fundamental Representations or the IP Representations, liability shall be limited to $2,000,000 (the “ General Representations and Warranties Cap ”).

(ii) For any Losses that are indemnifiable under Section 9.7(a)(i) with respect to IP Representations, liability shall be limited to $4,000,000 less any amounts paid or payable pursuant to Section 9.7(e)(i) (the “ IP Representations and Warranties Cap ”).

(iii) With respect to all Losses that are indemnifiable under Section 9.7(a), liability shall be limited to $20,000,000, inclusive of the Maximum Cash Indemnity Amount, the General Representations and Warranties Cap and the IP Representations and Warranties Cap (the “ Maximum Indemnity Amount ”).

(f) Notwithstanding anything to the contrary contained in this Agreement and without limiting the effect of any other limitation contained in this Section 9.7, for purposes of computing the amount of any Losses incurred by any Investor Indemnified Party under this Section 9.7, the amount of any Losses recoverable hereunder shall be calculated net of (i) the amount of any Tax benefits recognized in the same year as and in connection with the payment or incurrence of such Losses or (ii) the amount of any insurance proceeds, indemnification payments, contribution payments or reimbursements received by the Investor Indemnified Parties (net of any costs of recovery or collection, deductibles, retroactive premium adjustments, reimbursement obligations or other costs related thereto).

(g) The Investor Indemnified Parties and the Company agree to use commercially reasonable efforts to mitigate any Losses that the Investor Indemnified Parties may recover pursuant to this Section 9.7.

(h) Notwithstanding anything to the contrary herein, in no event will the Investor Indemnified Parties be entitled to be indemnified for, nor will Logitech have any obligation to indemnify with respect to, (i) the amount, value or condition of, or any limitations on, any Tax asset or attribute of the Company or any of its subsidiaries or the Business ( e.g. , net operating losses) arising in any Tax period or portion thereof ending on or prior to the Closing Date (each, a “ Tax Attribute ”), or the ability of any Person, including the Company and its subsidiaries, to utilize such Tax Attributes after the Closing, (ii) any Taxes

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attributable to any action taken by or with respect to the Company or any of its subsidiaries on the Closing Date after the Closing outside of the ordinary course of business (including making any Tax election), (iii) any Taxes attributable to any Tax period or portion of a period beginning after the Closing Date, except to the extent resulting from a breach of the representation and warranties set forth in Section 3.20(e), (f), (g), (h), or (i), (iv) except to the extent incurred (x) in connection with the Restructuring Plan or (y) in the ordinary course of the Company’s business in any Pre-Closing Period, any social security, Medicare, unemployment or other employment or payroll Tax imposed in connection with any compensation payments contemplated by this Agreement, for which the Company shall be solely responsible or (v) any Transfer Taxes, which shall be borne by the Investor Indemnified Parties if imposed thereon by applicable law or otherwise by the Company, and in no event will any of the foregoing be treated as Pre-Closing Taxes or as Working Capital Liabilities for purposes of the determination of Estimated Net Working Capital or Final Working Capital.

(i) The rights and remedies expressly provided in this Section 9.7 will constitute the sole and exclusive remedy of the Investor Indemnified Parties against Logitech and the Company with respect to the representations, warranties, covenants and agreements of Logitech and the Company contained in this Agreement; provided, that, notwithstanding anything herein to the contrary, nothing in this Agreement, including the limitations on indemnification set forth in this Section 9.7, shall limit the right of any Investor Indemnified Party (i) in the case of fraud or intentional misrepresentation, against the Person who allegedly committed such fraud or intentional misrepresentation, or (ii) to specific performance or injunctive relief.

9.8 Successors and Assigns. This Agreement, and any and all rights, duties and obligations hereunder, shall not be assigned, transferred, delegated or sublicensed by any Investor without the prior written consent of the Company. Any attempt by an Investor without such permission to assign, transfer, delegate or sublicense any rights, duties or obligations that arise under this Agreement shall be void. Subject to the foregoing and except as otherwise provided herein, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto.

9.9 Entire Agreement. This Agreement, including the exhibits attached hereto, constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. No party shall be liable or bound to any other party in any manner with regard to the subjects hereof or thereof by any warranties, representations or covenants except as specifically set forth herein or therein.

9.10 Delays or Omissions. Except as expressly provided herein, no delay or omission to exercise any right, power or remedy accruing to any party to this Agreement upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy of such non-defaulting party, nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring, nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party to this Agreement, shall be cumulative and not alternative.

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9.11 Severability. If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement, and such court will replace such illegal, void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, void or unenforceable provision. The balance of this Agreement shall be enforceable in accordance with its terms.

9.12 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

9.13 Telecopy Execution and Delivery. A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto and delivered by such party by facsimile or any similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen. Such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties hereto agree to execute and deliver an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof.

9.14 Further Assurances. Each party hereto agrees to execute and deliver, by the proper exercise of its corporate, limited liability company, partnership or other powers, all such other and additional instruments and documents and do all such other acts and things as may be necessary to more fully effectuate this Agreement.

9.15 Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATED TO THIS AGREEMENT. This paragraph shall not restrict a party from exercising remedies under the Uniform Commercial Code or from exercising pre-judgment remedies under applicable law.

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

(a) “ affiliate ” means with respect to a Person, any other Person, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any investment fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person.

(b) “ Business ” means the operations with respect to the designing, developing, having made, making, marketing, distributing, operating and selling of any Company Products or any other products and services that have been sold under the Company brand.

(c) “ Business Day ” means any day other than (a) a Saturday or Sunday or (b) a day on which banking institutions located in Switzerland, the Canton of Vaud or San Francisco, California are permitted or required by law, executive order or governmental decree to remain closed.

(d) “ Code ” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.

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(e) “ Company Intellectual Property ” means all of the Intellectual Property owned by or purported to be owned by or exclusively licensed to the Company or any of its subsidiaries, including without limitation all Intellectual Property assigned or purported to be assigned to the Company pursuant to the Intellectual Property Agreement.

(f) “ Company Privacy Policy ” means any external or internal, past or present privacy policy of the Company or any of its subsidiaries or, as applicable to the Business, Logitech or any of its affiliates relating to the collection, storage, disclosure, and transfer of any Customer Data or Personal Data, or any employee information.

(g) “ Company Products ” means the Current Products, and high-definition, digital video conferencing hardware (as well as any embedded software) and cloud-based SaaS products and services targeted to the enterprise customer market, developed by or on behalf of the Company or sold (or currently under development and intended to be sold) under the Company brand, for clarity, including any such cloud-based SaaS products and services sold on a stand-alone basis.

(h) “ Customer Data ” means all data, meta data, information or other content transmitted by users and customers (i) to the Company or any of its subsidiaries, or Logitech or any of its affiliates, in connection with the Company Products, or (ii) otherwise stored or hosted by or on behalf of the Company Products, the Company, any of its subsidiaries, or, in connection with the Business, Logitech or any of its affiliates.

(i) “ Confidential Information ” shall mean information that is not generally known or readily ascertainable through proper means, including algorithms, customer lists, ideas, designs, flow charts, formulas, know-how, methods, processes, programs, schematics, and techniques.

(j) “ Covered Persons ” are those persons specified in Rule 506(d)(1) under the Securities Act, including the Company; any predecessor or affiliate of the Company; any director, executive officer, other officer participating in the offering, general partner or managing member of the Company; any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power; any promoter (as defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of the sale of the Shares; and any person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of the Shares (a “ Solicitor ”), any general partner or managing member of any Solicitor, and any director, executive officer or other officer participating in the offering of any Solicitor or general partner or managing member of any Solicitor.

(k) “ Current Products ” means the products specifically set forth on Exhibit Q.

(l) “ Disqualification Events ” shall mean, in accordance with SEC rules and guidance any Covered Person that is subject to any of the “bad actor” disqualifications described in Rule 506(d)(1)(i) through (viii) under the Securities Act.

(m) “ Excluded Items ” means those items set forth on Exhibit K designated therein as “ Excluded Items ”.

(n) “ Governmental Entity ” shall mean any government, any governmental or regulatory entity or body, department, commission, board, taxing authority, agency or instrumentality, public international organization (e.g., World Bank, Red Cross, etc.), political party, royal family, any government-

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owned or controlled enterprise, organization, or body, and any court, tribunal or judicial body, in each case whether transnational, federal, state, county, provincial, and whether local or foreign.

(o) “ Intellectual Property ” shall mean all rights arising out of the following in any jurisdiction throughout the world: (i) patents and applications therefor and all other rights corresponding thereto and all reissues, divisions, re-examinations, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and equivalent or similar rights in inventions and discoveries including without limitation invention disclosure (“ Patents ”), (ii) trade-secret rights and all other rights in confidential business or technical information (“ Trade Secrets ”), (iii) all rights associated with works of authorship, including copyrights, copyrights registrations and applications therefor (including mask works and integrated circuit topographies) and all other rights corresponding thereto, including moral rights (“ Copyrights ”), (iv) domain names, uniform resource locators, other names and locators associated with the Internet, and applications or registrations therefor (“ Domain Names ”), (v) trade names, logos, common law trademarks and service marks and trademark and service mark registrations, and related goodwill and applications therefor (“ Trademarks ”), (vi) all rights in databases and data collections, and (vii) any similar or equivalent rights to any of the foregoing, including but not limited to moral rights (as applicable).

(p) “ Intellectual Property Agreement ” means the Intellectual Property Agreement, by and between Logitech and the Company, dated December 28, 2015, in the form set forth in Exhibit U.

(q) “ Knowledge of the Company ” means the actual knowledge of any of Craig Malloy, Michael Lovell, Michael Helmbreecht and Joe Bulger, after reasonable inquiry of all employees, consultants and advisors of the Company and its subsidiaries who would reasonably be expected to have actual knowledge of the matters in question.

(r) “ Knowledge of Logitech ” means the actual knowledge of any of Guerrino De Luca, Bracken P. Darrell, Vincent Pilette and Bryan Ko.

(s) “ Material Adverse Effect ” means, with respect to an entity, any change, development, event or effect that, either alone or in combination with any other changes, developments, events or effects, is, or is reasonably expected to be, materially adverse to the business, assets (whether tangible or intangible), condition (financial or otherwise) or operations of such entity and its subsidiaries (if any), taken as a whole; provided, however , none of the following shall be deemed in and of themselves, either alone or in combination, to constitute, and none of the following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect: (i) any adverse effect that results from changes attributable to conditions affecting the industries in which such entity participates, or general economic conditions or financial markets (to the extent that such changes do not materially and disproportionately adversely affect such entity as a whole compared to others in the same industry); (ii) any adverse effect that results from any act of God, any act of terrorism, war (whether declared or undeclared) or other armed hostilities, or the escalation thereof, any regional, national or international calamity or any other similar event; (iii) any failure by such entity to meet any projections, budgets or estimates of revenue or earnings (it being understood that the facts giving rise to such failure may be taken into account in determining whether there has been a Material Adverse Effect (except to the extent such facts are otherwise excluded from being taken into account by this proviso)), and (iv) any changes in any applicable law or legal, regulatory or political conditions or changes in GAAP or other applicable accounting standards.

(t) “ Net Working Capital ” means (i) Working Capital Assets (as defined in Exhibit N ) minus (ii) Working Capital Liabilities (as defined in Exhibit N ), in each case, as of immediately prior to the

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Closing, calculated in accordance with the accounting principles, practices, procedures, policies and methods set forth on Exhibit N .

(u) “ Open Source Software ” means all software that is distributed as “open source software” or “free software,” including any software distributed under an “open source” licensing or distribution model (including but not limited to the GNU General Public License (GPL), GNU Lesser General Public License (LGPL), Mozilla Public License (MPL), BSD licenses, the Artistic License, the Netscape Public License, the Sun Community Source License (SCSL), the Sun Industry Standards License (SISL) and the Apache License).

(v) “ Order ” means any judgment, order, writ, injunction, ruling, stipulation, determination, award or decree of or by, or any settlement under the jurisdiction of, any federal, state, regional, provincial, county, city, municipal, whether foreign or domestic, court, arbitrator or other tribunal, or governmental, regulatory, legislative or administrative body, that is final and non-appealable.

(w) “ Person ” means an individual or entity, including a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a Governmental Entity (or any department, agency, or political subdivision thereof).

(x) “ Personal Data ” means a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank information, or biometric identifiers or any other similar piece of information that allows the identification of, or contact with, a natural person.

(y) “ Pre-Closing Period ” shall mean any taxable period (or portions of period) that end on or before the Closing.

(z) “ Pre-Closing Taxes ” shall mean (i) any Taxes payable with respect to Company or any of its subsidiaries for any Pre-Closing Period, (ii) any Taxes of any member of an affiliated, consolidated, combined or unitary group of which Company or any of its subsidiaries (or any predecessor of any of the foregoing) is or was a member prior to the Closing (excluding groups of which Company was the parent entity), including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar state, local or foreign law or regulation, (iii) any Taxes of any Person (other than Company or any of its subsidiaries) imposed on Company or any of its subsidiaries as a transferee or successor by contract (other than commercial contracts or agreements entered into in the ordinary course of business and any lending agreements the principal purpose of each of which is not with respect to Taxes) and (iv) any Tax liability of the Company or its subsidiaries as a result of the Transfer Transactions. In the case of a Taxable period that includes but does not end on the Closing, the Pre-Closing Taxes shall be: (A) in the case of Taxes that are imposed on a periodic basis (and not based on invoices, receipts, sales or payments), deemed to be the amount of such Taxes for the entire period multiplied by a fraction, the numerator of which is the number of calendar days in the portion of such period ending on (and including) the Closing and the denominator of which is the number of calendar days in the entire relevant Taxable period, and (B) in the case of Taxes not described in (A) (such as Taxes that are either (x) income Taxes, or (y) imposed in connection with any sale or other transfer or assignment of property (real or personal, tangible or intangible)), deemed to be equal to the amount that would be payable if the Taxable year or period ended and the books closed at the close of the Closing, except that exemptions, allowances or deductions that are calculated on an annual basis (including depreciation and amortization deductions), other than with respect to property placed in service after the Closing, shall be allocated on a daily basis in a manner similar to that set forth in clause (A).

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(aa) “ Restructuring Plan ” means the material terms and conditions of the transactions contemplated in connection with the restructuring of the Company as set forth on Exhibit K .

(bb) “ Tax ” (and, with correlative meaning, “ Taxes ” and “ Taxable ”) shall mean any net income, capital gains, alternative or add-on minimum tax, gross income, estimated, gross receipts, sales, use, ad valorem, value added, transfer, franchise, fringe benefit, capital shares, profits, registration, withholding, payroll, social security (or equivalent) employment, unemployment, disability, excise, severance, stamp, occupation, premium, property (real, tangible or intangible), environmental or windfall profit tax, custom duty or other tax, governmental fee or other like assessment or charge in the nature of taxes, together with any interest or any penalty, addition to tax or additional amount (whether disputed or not) imposed by any Governmental Entity responsible for the imposition of any such tax (domestic or foreign), whether computed on a separate, consolidated, unitary, combined, or any other basis.

(cc) “ Tax Return ” shall mean any return, consolidated return, statement, report or form (including estimated Tax returns and reports, withholding Tax returns and reports, any schedule or attachment, and information returns and reports) required to be filed with respect to Taxes.

(dd) “ Technology ” shall mean: tangible embodiments of Intellectual Property including inventions (whether or not patentable), discoveries and improvements, works of authorship, diagrams, formulae, APIs, software (whether in source code or in executable code form), user interfaces, architecture, documentation, databases, data compilations and collections and technical data, Confidential Information, trade secrets, mask works, models, know-how, and other information, including all methods, protocols, techniques, and processes, devices, prototypes, designs, design and manufacturing documentation, schematics, algorithms, routines, patterns, and compilations. Technology specifically excludes any and all Intellectual Property.

(ee) “ Third Party Expenses ” means all fees and expenses of the Company incurred in connection with this Agreement or any of the transactions contemplated hereby (other than (i) any expenses of the Investors that are reimbursed by the Company pursuant to Section 9.5 and (ii) fees and costs payable to the Company’s legal counsel) including (A) all accounting, financial advisory, consulting and all other fees and expenses of third parties incurred by the Company (that are not otherwise paid or payable by Logitech) in connection with the negotiation or effectuation of the terms and conditions of this Agreement or the transactions contemplated hereby, including any payments made or required to be made by the Company as a brokerage or finders’ fee, agents’ commission or any similar charge, in connection therewith, in each case whether or not yet due and payable, and (B) except to the extent included in the Restructuring Plan, any bonus, severance, change-in-control payments or similar payment obligations (including payments with “single-trigger” provisions triggered at and as of the consummation of the transactions contemplated hereby) that become due or payable in connection with the consummation of the transactions contemplated hereby. For the avoidance of doubt, in no event shall any item that is taken into account in determining Net Working Capital be deemed a Third Party Expense.

(ff) “ Transfer Taxes ” shall mean all transfer, documentary, sales, use, value added, goods and services, stamp, registration and other substantially similar Taxes and fees incurred in connection with the purchase of the Shares pursuant to this Agreement.

(gg) “ Transfer Transactions ” shall mean all transactions pursuant to which Logitech, directly or indirectly, contributed or otherwise transferred assets, liabilities and employees of the Business to the Company.

( signature page follows )

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The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

Lifesize, Inc.

a Delaware corporation

By: /s/ Craig Brown Malloy

Name: Craig Brown Malloy

Title: President and Chief Executive Officer

( Signature page to the Series B Preferred Stock Purchase Agreement )

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Redpoint Omega II, LP , by its General Partner

Redpoint Omega II, LLC

By:_ /s/ Jeffrey D. Brody _____________

Jeffrey D. Brody, Managing Director

Redpoint Omega Associates II, LLC , as nominee

By:__ /s/ Jeffrey D. Brody _____________

Jeffrey D. Brody, Managing Director

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Meritech Capital Partners V L.P.


By:	Meritech Capital Associates V L.L.C. its General Partner

By: /s/ George Bischof
George Bischof, a managing member

Meritech Capital Affiliates V L.P.


By:	Meritech Capital Associates V L.L.C. its General Partner

By: /s/ George Bischof
George Bischof, a managing member

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

SUTTER HILL VENTURES, A CALIFORNIA LIMITED PARTNERSHIP

By: Sutter Hill Ventures, L.L.C.

Its: General Partner

By: _ /s/ Andrew Sheehan ________________

Name: _ Andrew Sheehan ________________

Title: Managing Director

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

YOVEST, L.P.

By: /s/ William H. Younger, Jr..

William H. Younger, Jr., Trustee of The

William H. Younger, Jr. Revocable

Trust U/A/D 8/5/09, General Partner

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

TENCH COXE AND SIMONE OTUS COXE, CO-TRUSTEES OF

THE COXE REVOCABLE TRUST U/A/D 4/23/98

By: /s/ Tench Coxe

Tench Coxe, Trustee

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

ROOSTER PARTNERS, L.P.

By: /s/ Tench Coxe

Tench Coxe, Trustee of The Coxe

Revocable Trust U/A/D 4/23/98,

General Partner

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

NESTEGG HOLDINGS, LP

By: /s/ Jeffrey W. Bird

Jeffrey W. Bird, Trustee of Jeffrey W.

and Christina R. Bird Trust U/A/D 10/31/00,

General Partner

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

ANDREW T. SHEEHAN AND NICOLE J. SHEEHAN

AS TRUSTEES OF SHEEHAN 2003 TRUST

By: /s/ Andrew T. Sheehan

Andrew T. Sheehan, Trustee

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

CHATTER PEAK PARTNERS, L.P.

By: /s/ Michael L. Speiser

Michael L. Speiser, Trustee of

Speiser Trust U/A/D 7/19/06,

General Partner

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

STEFAN A. DYCKERHOFF AND WENDY G. DYCKERHOFF-JANSSEN,

OR THEIR SUCCESSOR(S) AS TRUSTEES UNDER THE DYCKERHOFF

2001 REVOCABLE TRUST AGREEMENT DATED AUGUST 30, 2001

By: /s/ Stefan A. Dyckerhoff

Stefan A. Dyckerhoff, Trustee

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

SAMUEL J. PULLARA III AND LUCIA CHOI PULLARA,

CO-TRUSTEES OF THE PULLARA REVOCABLE TRUST U/A/D 8/21/13

By: /s/ Samuel J. Pullara III

Samuel J. Pullara III, Trustee

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

DOUGLAS T. MOHR AND BETH Z. MOHR,

CO-TRUSTEES OF THE MOHR FAMILY TRUST U/A/D 2/17/15

By: /s/ Douglas T. Mohr

Douglas T. Mohr, Trustee

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

SHV Profit Sharing Plan FBO Robert Yin

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

SHV Profit Sharing Plan FBO Tench Coxe

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

Tench Coxe Roth IRA

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

SHV Profit Sharing Plan FBO James N. White

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

James N. White Roth IRA

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

SHV Profit Sharing Plan FBO David E. Sweet (Rollover)

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

SHV Profit Sharing Plan FBO Diane J. Naar

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

SHV Profit Sharing Plan FBO Yu-Ying Chen

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

SHV Profit Sharing Plan FBO Barbara Niss

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Wells Fargo Bank, N.A. FBO

SHV Profit Sharing Plan FBO Patricia Tom (Rollover)

By: /s/ Michael J. Wade

Name: Michael J. Wade

Title: Vice President

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

INVESTOR

Tippet Venture Partners L.P.

By: /s/ Andrew Sheehan

Name: Andrew Sheehan

Title:

The parties are signing this Series B Preferred Stock Purchase Agreement as of the date stated in the introductory clause.

LOGITECH INTERNATIONAL S.A.

By: /s/ Bracken Darrell

Name: Bracken Darrell

Title: President and Chief Executive Officer

By: /s/ Vincent Pilette

Name: Vincent Pilette

Title: Chief Financial Officer

Exhibit 31.1

CERTIFICATIONS

I, Bracken P. Darrell, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Logitech International S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



January 22, 2016


/s/ Bracken P. Darrell
Bracken P. Darrell
President and Chief Executive Officer

Exhibit 31.2

CERTIFICATIONS

I, Vincent Pilette, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Logitech International S.A.;

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



January 22, 2016


/s/ Vincent Pilette
Vincent Pilette
Chief Financial Officer

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(B) OR RULE 15D-14(B) AND SECTION 1350 OF CHAPTER 63 OF TITLE 18 OF

THE UNITED STATES CODE

The certification set forth below is being submitted in connection with this quarterly report on Form 10-Q (the “Report”) of Logitech International S.A. (“the Company”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Bracken P. Darrell, Chief Executive Officer of the Company, and Vincent Pilette, Chief Financial Officer of the Company, each certify that, to the best of his knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

January 22, 2016



/s/ Bracken P. Darrell
Bracken P. Darrell
President and
Chief Executive Officer


/s/ Vincent Pilette
Vincent Pilette
Chief Financial Officer