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Nevada
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27-2767540
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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100 Summit Lake Drive, Suite 100
Valhalla, New York
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10595
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
¨
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Accelerated filer
ý
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Non-accelerated filer
¨
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Smaller reporting company
¨
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(Do not check if a smaller
reporting company)
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Page
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PART I. FINANCIAL INFORMATION
|
|
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Item 1.
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Condensed Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013
|
|
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Condensed Consolidated Statements of Operations for the quarters ended March 31, 2014 and 2013 (unaudited)
|
|
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Condensed Consolidated Statements of Cash Flows for the quarters ended March 31, 2014 and 2013 (unaudited)
|
|
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Notes to Condensed Consolidated Financial Statements (unaudited)
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 3.
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Quantitative and Qualitative Disclosures about Market Risk
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Item 4.
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Controls and Procedures
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PART II. OTHER INFORMATION
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||
|
|
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Item 1.
|
Legal Proceedings
|
|
|
|
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Item 1A.
|
Risk Factors
|
|
|
|
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
|
|
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|
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Item 6.
|
Exhibits
|
|
|
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SIGNATURES
|
|
As of
|
|
As of
|
||||
|
March 31, 2014
|
|
December 31, 2013
|
||||
ASSETS
|
(unaudited)
|
|
|
|
|||
CURRENT ASSETS:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
5,552
|
|
|
$
|
6,509
|
|
Accounts receivable
|
28,904
|
|
|
48,542
|
|
||
Inventories
|
41,584
|
|
|
49,643
|
|
||
Deferred tax assets
|
9,745
|
|
|
2,214
|
|
||
Prepaid expenses and other current assets
|
4,131
|
|
|
3,561
|
|
||
Prepaid income taxes
|
2,925
|
|
|
2,925
|
|
||
Total Current Assets
|
92,841
|
|
|
113,394
|
|
||
Property and equipment, net
|
6,229
|
|
|
7,369
|
|
||
Deferred financing costs, net
|
449
|
|
|
1,575
|
|
||
Deferred tax assets, long-term portion
|
6,322
|
|
|
827
|
|
||
Intangible assets, net
|
40,210
|
|
|
3,972
|
|
||
Goodwill
|
80,868
|
|
|
—
|
|
||
Other assets
|
119
|
|
|
170
|
|
||
TOTAL ASSETS
|
$
|
227,038
|
|
|
$
|
127,307
|
|
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
||
CURRENT LIABILITIES:
|
|
|
|
|
|
||
Revolving credit facilities
|
$
|
34,490
|
|
|
$
|
39,736
|
|
Term loan, current portion
|
—
|
|
|
14,500
|
|
||
Subordinated notes
|
17,737
|
|
|
—
|
|
||
Accounts payable
|
28,833
|
|
|
44,136
|
|
||
Accrued liabilities
|
10,341
|
|
|
8,615
|
|
||
Due to shareholders, current portion
|
3,125
|
|
|
3,125
|
|
||
Capital lease obligation, current portion
|
38
|
|
|
—
|
|
||
Other current liabilities
|
288
|
|
|
1,097
|
|
||
Total Current Liabilities
|
94,852
|
|
|
111,209
|
|
||
Series B redeemable preferred stock
|
13,983
|
|
|
13,713
|
|
||
Income tax payable, long-term portion
|
1,986
|
|
|
1,986
|
|
||
Capital lease obligation, long-term portion
|
75
|
|
|
—
|
|
||
Deferred tax liabilities
|
14,325
|
|
|
850
|
|
||
Subordinated note
|
—
|
|
|
10,342
|
|
||
TOTAL LIABILITIES
|
125,221
|
|
|
138,100
|
|
||
Commitments and Contingencies
|
|
|
|
|
|
||
Series A convertible stock, $0.01 par value - 50,000,000 shares authorized; 48,689,555 shares issued and outstanding as of December 31, 2013
|
—
|
|
|
24,345
|
|
||
STOCKHOLDERS' EQUITY (DEFICIT)
|
|
|
|
|
|
||
Common stock, $0.001 par value - 50,000,000 shares authorized; 37,651,247 shares issued and outstanding as of March 31, 2014 and 12,700,460 shares issued and outstanding as of December 31, 2013
|
38
|
|
|
13
|
|
||
Additional paid-in capital
|
85,678
|
|
|
(54,031
|
)
|
||
Retained earnings
|
15,868
|
|
|
18,775
|
|
||
Accumulated other comprehensive income
|
233
|
|
|
105
|
|
||
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
|
101,817
|
|
|
(35,138
|
)
|
||
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$
|
227,038
|
|
|
$
|
127,307
|
|
|
Quarter Ended
|
|
Quarter Ended
|
||||
|
March 31, 2014
|
|
March 31, 2013
|
||||
Net Revenue
|
$
|
38,288
|
|
|
$
|
29,533
|
|
Cost of Revenue
|
26,012
|
|
|
20,908
|
|
||
Gross Profit
|
12,276
|
|
|
8,625
|
|
||
Operating expenses:
|
|
|
|
|
|
||
Selling and marketing
|
7,000
|
|
|
5,706
|
|
||
Research and development
|
1,998
|
|
|
887
|
|
||
General and administrative
|
3,573
|
|
|
2,370
|
|
||
Business transaction costs
|
4,228
|
|
|
—
|
|
||
Total operating expenses
|
16,799
|
|
|
8,963
|
|
||
Operating loss
|
(4,523
|
)
|
|
(338
|
)
|
||
Other (income) expense, net:
|
|
|
|
|
|
||
Interest expense
|
4,240
|
|
|
1,314
|
|
||
Other (income) expense, net
|
(25
|
)
|
|
389
|
|
||
Total other expense, net
|
4,215
|
|
|
1,703
|
|
||
Loss before (benefit) provision for income taxes
|
(8,738
|
)
|
|
(2,041
|
)
|
||
(Benefit) provision for income taxes
|
(5,832
|
)
|
|
263
|
|
||
Net loss
|
$
|
(2,906
|
)
|
|
$
|
(2,304
|
)
|
|
|
|
|
||||
Net loss per share:
|
|
|
|
|
|
||
Basic
|
$
|
(0.09
|
)
|
|
$
|
(0.18
|
)
|
Diluted
|
$
|
(0.09
|
)
|
|
$
|
(0.18
|
)
|
Weighted-average shares used to compute net loss per share:
|
|
|
|
||||
Basic
|
33,715
|
|
|
12,700
|
|
||
Diluted
|
33,715
|
|
|
12,700
|
|
|
Quarter Ended
|
|
Quarter Ended
|
||||
|
March 31, 2014
|
|
March 31, 2013
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
||
Net loss
|
$
|
(2,906
|
)
|
|
$
|
(2,304
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of property and equipment
|
1,814
|
|
|
936
|
|
||
Amortization of intangible assets
|
237
|
|
|
231
|
|
||
Amortization of debt financing costs
|
2,545
|
|
|
199
|
|
||
Stock-based compensation
|
1,049
|
|
|
708
|
|
||
Accrued interest on Series B redeemable preferred stock
|
270
|
|
|
243
|
|
||
Paid in kind interest
|
396
|
|
|
—
|
|
||
Deferred income taxes
|
(6,331
|
)
|
|
(91
|
)
|
||
Reversal of sales returns reserve
|
1,265
|
|
|
1,482
|
|
||
Reversal of doubtful accounts
|
(151
|
)
|
|
—
|
|
||
Provision for obsolete inventory
|
381
|
|
|
—
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
18,618
|
|
|
45,190
|
|
||
Inventories
|
8,360
|
|
|
1,924
|
|
||
Accounts payable
|
(15,845
|
)
|
|
(16,491
|
)
|
||
Accrued liabilities
|
81
|
|
|
(112
|
)
|
||
Prepaid expenses and other current assets
|
(646
|
)
|
|
1,142
|
|
||
Income taxes payable
|
188
|
|
|
(8,106
|
)
|
||
Other liabilities
|
(423
|
)
|
|
—
|
|
||
Net cash provided by operating activities
|
8,902
|
|
|
24,951
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Purchase of property and equipment
|
(468
|
)
|
|
(254
|
)
|
||
Cash acquired in business combination
|
4,093
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
3,625
|
|
|
(254
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Borrowings on revolving credit facilities
|
44,490
|
|
|
9,000
|
|
||
Repayment of revolving credit facilities
|
(49,736
|
)
|
|
(33,000
|
)
|
||
Repayment of capital leases
|
(6
|
)
|
|
—
|
|
||
Repayment of term loan
|
(14,500
|
)
|
|
(3,750
|
)
|
||
Proceeds from exercise of stock options and warrants
|
559
|
|
|
—
|
|
||
Debt financing costs
|
(1,419
|
)
|
|
—
|
|
||
Proceeds from issuance of subordinated notes
|
7,000
|
|
|
—
|
|
||
Net cash used in financing activities
|
(13,612
|
)
|
|
(27,750
|
)
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
128
|
|
|
—
|
|
||
|
|
|
|
||||
Net decrease in cash and cash equivalents
|
(957
|
)
|
|
(3,053
|
)
|
||
Cash and cash equivalents - beginning of period
|
6,509
|
|
|
5,219
|
|
||
Cash and cash equivalents - end of period
|
$
|
5,552
|
|
|
$
|
2,166
|
|
|
|
|
|
||||
SUPPLEMENTAL DISCLOSURE OF INFORMATION
|
|
|
|
||||
Cash paid for interest
|
$
|
563
|
|
|
$
|
725
|
|
Cash paid for income taxes
|
$
|
14
|
|
|
$
|
7,535
|
|
Value of shares issued to acquire Parametric
|
$
|
113,782
|
|
|
$
|
—
|
|
|
As of March 31, 2014
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial Assets and Liabilities:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents - money market funds
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Total financial assets
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Other current liabilities - derivative liabilities
|
$
|
—
|
|
|
$
|
(29
|
)
|
|
$
|
—
|
|
|
$
|
(29
|
)
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
(29
|
)
|
|
$
|
—
|
|
|
$
|
(29
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
As of December 31, 2013
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial Assets and Liabilities:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents - money market funds
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Total financial assets
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
Other current liabilities - derivative liabilities
|
$
|
—
|
|
|
$
|
(392
|
)
|
|
$
|
—
|
|
|
$
|
(392
|
)
|
Total financial liabilities
|
$
|
—
|
|
|
$
|
(392
|
)
|
|
$
|
—
|
|
|
$
|
(392
|
)
|
|
As of
March 31, 2014 |
|
As of
December 31, 2013 |
||||
|
(in thousands)
|
||||||
Raw materials
|
$
|
2,867
|
|
|
$
|
5,499
|
|
Finished goods
|
38,717
|
|
|
44,144
|
|
||
Total inventories, net
|
$
|
41,584
|
|
|
$
|
49,643
|
|
|
As of
March 31, 2014 |
|
As of
December 31, 2013 |
||||
|
(in thousands)
|
||||||
Sales return reserves, beginning balance
|
$
|
6,266
|
|
|
$
|
7,748
|
|
Reserve accrual
|
1,236
|
|
|
20,146
|
|
||
Recoveries and deductions, net
|
(2,501
|
)
|
|
(21,628
|
)
|
||
Sales return reserves, ending balance
|
$
|
5,001
|
|
|
$
|
6,266
|
|
|
As of
March 31, 2014 |
|
As of
December 31, 2013 |
||||
|
(in thousands)
|
||||||
Machinery and equipment
|
$
|
551
|
|
|
$
|
249
|
|
Software and software development
|
674
|
|
|
581
|
|
||
Furniture and fixtures
|
264
|
|
|
144
|
|
||
Tooling
|
1,909
|
|
|
1,756
|
|
||
Leasehold improvements
|
86
|
|
|
59
|
|
||
Demonstration units and convention booths
|
10,098
|
|
|
10,014
|
|
||
Total property and equipment, gross
|
13,582
|
|
|
12,803
|
|
||
Less: accumulated depreciation and amortization
|
(7,353
|
)
|
|
(5,434
|
)
|
||
Total property and equipment, net
|
$
|
6,229
|
|
|
$
|
7,369
|
|
|
As of
March 31, 2014 |
|
As of
December 31, 2013 |
||||
|
(in thousands)
|
||||||
Accrued Expenses
|
$
|
5,619
|
|
|
$
|
5,295
|
|
Accrued compensation expenses
|
2,387
|
|
|
2,089
|
|
||
Other
|
2,335
|
|
|
1,231
|
|
||
Total accrued liabilities
|
$
|
10,341
|
|
|
$
|
8,615
|
|
|
As of
March 31, 2014 |
|
As of
December 31, 2013 |
||||
|
(in thousands)
|
||||||
Warranty - beginning of period
|
$
|
139
|
|
|
$
|
165
|
|
Warranty costs accrued
|
154
|
|
|
614
|
|
||
Warranty claims
|
(161
|
)
|
|
(640
|
)
|
||
Warranty - end of period
|
$
|
132
|
|
|
$
|
139
|
|
|
(in thousands)
|
||
Legal fees
|
$
|
785
|
|
Accounting fees
|
84
|
|
|
Advisory fees
|
2,704
|
|
|
Termination and severance
|
450
|
|
|
Other
|
205
|
|
|
Total Transaction Costs
|
$
|
4,228
|
|
|
(in thousands)
|
||
Fair Value of Parametric shares outstanding
|
$
|
104,027
|
|
Fair Value of Parametric stock options
|
9,755
|
|
|
Purchase Price
|
$
|
113,782
|
|
|
(in thousands)
|
||
Cash and cash equivalents
|
$
|
4,093
|
|
Accounts receivable
|
95
|
|
|
Deferred tax asset
|
6,696
|
|
|
Other current assets
|
740
|
|
|
Property and equipment
|
206
|
|
|
Intangible assets:
|
|
||
In-process research and development (IPR&D)
|
27,100
|
|
|
Developed technology
|
8,880
|
|
|
Customer relationships
|
270
|
|
|
Trade name
|
170
|
|
|
Goodwill
|
80,868
|
|
|
Accounts payable and accrued liabilities
|
(1,741
|
)
|
|
Capital lease obligation
|
(120
|
)
|
|
Deferred tax liabilities
|
(13,475
|
)
|
|
Total Net Assets Acquired
|
$
|
113,782
|
|
|
Quarter Ended
|
|
Quarter Ended
|
||||
|
March 31, 2014
|
|
March 31, 2013
|
||||
|
(in thousands)
|
||||||
Pro Forma Net Revenues
|
$
|
38,288
|
|
|
$
|
29,688
|
|
Pro Forma Net Income (Loss)
|
$
|
(4,996
|
)
|
|
$
|
(4,310
|
)
|
|
As of March 31, 2014
|
||||||||||||
|
Amortization Period at Date of Acquisition
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||
|
(in thousands)
|
||||||||||||
Customer relationships
|
2-13 years
|
|
$
|
5,796
|
|
|
$
|
1,828
|
|
|
$
|
3,968
|
|
Non-compete agreements
|
2 years
|
|
177
|
|
|
127
|
|
|
50
|
|
|||
In-process Research and Development
|
Indefinite
|
|
27,100
|
|
|
—
|
|
|
27,100
|
|
|||
Developed technology
|
7 years
|
|
8,880
|
|
|
6
|
|
|
8,874
|
|
|||
Trade names
|
5 years
|
|
170
|
|
|
7
|
|
|
163
|
|
|||
Patent and trademarks
|
Indefinite
|
|
55
|
|
|
—
|
|
|
55
|
|
|||
Total Intangible Assets
|
|
|
$
|
42,178
|
|
|
$
|
1,968
|
|
|
$
|
40,210
|
|
Goodwill
|
|
|
$
|
80,868
|
|
|
|
|
$
|
80,868
|
|
||
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||
|
As of December 31, 2013
|
||||||||||||
|
Amortization Period at Date of Acquisition
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Net Book Value
|
||||||
|
(in thousands)
|
||||||||||||
Customer relationships
|
2-13 years
|
|
$
|
5,526
|
|
|
$
|
1,623
|
|
|
$
|
3,903
|
|
Non-compete agreements
|
2 years
|
|
177
|
|
|
108
|
|
|
69
|
|
|||
Total
|
|
|
$
|
5,703
|
|
|
$
|
1,731
|
|
|
$
|
3,972
|
|
|
Estimated Amortization Expense
|
||
|
(in thousands)
|
||
2014
|
$
|
1,088
|
|
2015
|
2,343
|
|
|
2016
|
2,049
|
|
|
2017
|
1,882
|
|
|
2018
|
1,802
|
|
|
Thereafter
|
3,891
|
|
|
Total
|
$
|
13,055
|
|
|
As of
March 31, 2014 |
|
As of
December 31, 2013 |
||||
|
(in thousands)
|
||||||
Revolving credit facility, maturing March 2019
|
$
|
34,490
|
|
|
$
|
—
|
|
Revolving line of credit
|
—
|
|
|
39,736
|
|
||
Term loans
|
—
|
|
|
14,500
|
|
||
Subordinated notes
|
17,737
|
|
|
10,342
|
|
||
Total outstanding debt
|
52,227
|
|
|
64,578
|
|
||
Less: current portion of revolving line of credit
|
(34,490
|
)
|
|
(39,736
|
)
|
||
Less: current portion of term loan
|
—
|
|
|
(14,500
|
)
|
||
Less: current portion of subordinated notes
|
(17,737
|
)
|
|
—
|
|
||
Total noncurrent portion of long-term debt
|
$
|
—
|
|
|
$
|
10,342
|
|
|
|
(in thousands)
|
||
Balance at December 31, 2013
|
|
$
|
105
|
|
Foreign currency exchange adjustments
|
|
128
|
|
|
Balance at March 31, 2014
|
|
$
|
233
|
|
|
Quarter Ended
|
|
Quarter Ended
|
||||
|
March 31, 2014
|
|
March 31, 2013
|
||||
|
(in thousands, except per-share data)
|
||||||
Numerator:
|
|
|
|
||||
Basic and diluted:
|
|
|
|
||||
Net Loss
|
$
|
(2,906
|
)
|
|
$
|
(2,304
|
)
|
Basic:
|
|
|
|
||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic
|
33,715
|
|
|
12,700
|
|
||
Diluted:
|
|
|
|
||||
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic
|
33,715
|
|
|
12,700
|
|
||
Added weighted-average effect of dilutive securities
|
—
|
|
|
—
|
|
||
Weighted-average shares used in computing net loss per share attributable to common stockholders, diluted
|
33,715
|
|
|
12,700
|
|
||
Net loss per share:
|
|
|
|
||||
Basic
|
$
|
(0.09
|
)
|
|
$
|
(0.18
|
)
|
Diluted
|
$
|
(0.09
|
)
|
|
$
|
(0.18
|
)
|
|
Quarter Ended
|
|
Quarter Ended
|
||
|
March 31, 2014
|
|
March 31, 2013
|
||
|
(in thousands)
|
||||
Stock options to purchase common stock
|
5,664
|
|
|
3,658
|
|
Warrants to purchase common stock
|
51
|
|
|
—
|
|
Unvested restricted stock awards
|
4
|
|
|
—
|
|
Total
|
5,719
|
|
|
3,658
|
|
|
Quarter Ended
|
|
Quarter Ended
|
||||
|
March 31, 2014
|
|
March 31, 2013
|
||||
|
(in thousands)
|
||||||
United States
|
$
|
27,085
|
|
|
$
|
22,809
|
|
Europe
|
9,790
|
|
|
4,516
|
|
||
Other
|
1,413
|
|
|
2,208
|
|
||
Total revenues
|
$
|
38,288
|
|
|
$
|
29,533
|
|
|
For the Quarter Ended March 31,
|
||||||
|
2014
|
|
2013
|
||||
|
(in thousands)
|
||||||
Cost of revenue
|
$
|
30
|
|
|
$
|
20
|
|
Selling and marketing
|
120
|
|
|
75
|
|
||
Product development
|
206
|
|
|
65
|
|
||
General and administrative
|
693
|
|
|
548
|
|
||
Total stock-based compensation
|
$
|
1,049
|
|
|
$
|
708
|
|
|
For the Quarter Ended
|
|
March 31, 2014
|
Expected term (in years)
|
6.1 - 6.3
|
Risk-free interest rate
|
1.9% - 2.0%
|
Expected volatility
|
49.7% - 49.8%
|
Dividend rate
|
0%
|
|
(in thousands)
|
|
Balance at December 31, 2013
|
1,439
|
|
VTBH 2011 Plan terminated at Merger
|
(1,439
|
)
|
2013 Plan adopted at Merger
|
2,372
|
|
Options granted
|
(947
|
)
|
RSAs granted
|
(6
|
)
|
Balance at March 31, 2014
|
1,419
|
|
|
Options Outstanding
|
|||||||||
|
Number of Shares Underlying Outstanding Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term
|
|
Aggregate Intrinsic Value
|
|||
|
|
|
|
|
(In years)
|
|
|
|||
Outstanding at December 31, 2013
|
3,960,783
|
|
|
4.70
|
|
8.45
|
|
|
3,031,094
|
|
Granted
|
947,327
|
|
|
15.63
|
|
|
|
|
||
Assumed in acquisition
|
1,392,854
|
|
|
6.02
|
|
|
|
|
||
Exercised
|
(127,179
|
)
|
|
4.60
|
|
|
|
|
||
Forfeited
|
(52,752
|
)
|
|
—
|
|
|
|
|
||
Outstanding at March 31, 2014
|
6,121,033
|
|
|
6.92
|
|
7.96
|
|
|
48,829,243
|
|
Vested and expected to vest at March 31, 2014
|
6,121,033
|
|
|
6.92
|
|
7.96
|
|
|
48,829,243
|
|
Exercisable at March 31, 2014
|
2,769,932
|
|
|
4.50
|
|
5.81
|
|
|
26,592,151
|
|
|
RSAs outstanding
|
|
Weighted Average Grant Date Fair Value
|
|||
Unvested at January 1, 2014
|
—
|
|
|
$
|
—
|
|
Granted
|
6,396
|
|
|
15.63
|
|
|
Unvested at March 31, 2014
|
6,396
|
|
|
15.63
|
|
|
Expected to vest at March 31, 2014
|
6,396
|
|
|
$
|
15.63
|
|
|
Quarter Ended
|
|
Quarter Ended
|
||||
|
March 31, 2014
|
|
March 31, 2013
|
||||
|
(in thousands)
|
||||||
Net Revenue
|
$
|
38,288
|
|
|
$
|
29,533
|
|
Cost of Revenue
|
26,012
|
|
|
20,908
|
|
||
Gross Profit
|
12,276
|
|
|
8,625
|
|
||
Operating expenses:
|
|
|
|
||||
Selling and marketing
|
7,000
|
|
|
5,706
|
|
||
Research and development
|
1,998
|
|
|
887
|
|
||
General and administrative
|
3,573
|
|
|
2,370
|
|
||
Business transaction costs
|
4,228
|
|
|
—
|
|
||
Total operating expenses
|
16,799
|
|
|
8,963
|
|
||
Operating loss
|
(4,523
|
)
|
|
(338
|
)
|
||
Other (income) expense, net:
|
|
|
|
||||
Interest expense
|
4,240
|
|
|
1,314
|
|
||
Other (income) expense, net
|
(25
|
)
|
|
389
|
|
||
Total other expense, net
|
4,215
|
|
|
1,703
|
|
||
Loss before (benefit) provision for income taxes
|
(8,738
|
)
|
|
(2,041
|
)
|
||
(Benefit) provision for income taxes
|
(5,832
|
)
|
|
263
|
|
||
Net loss
|
$
|
(2,906
|
)
|
|
$
|
(2,304
|
)
|
|
|
Quarter Ended
|
|
Quarter Ended
|
||||
|
|
March 31, 2014
|
|
March 31, 2013
|
||||
|
|
(in thousands)
|
||||||
Net loss
|
|
$
|
(2,906
|
)
|
|
$
|
(2,304
|
)
|
Interest expense, net
|
|
4,240
|
|
|
1,314
|
|
||
Depreciation and amortization
|
|
2,051
|
|
|
1,167
|
|
||
Stock-based compensation
|
|
1,049
|
|
|
708
|
|
||
(Benefit) provision for income taxes
|
|
(5,832
|
)
|
|
263
|
|
||
Business transaction costs
|
|
4,228
|
|
|
—
|
|
||
Payments to founders
|
|
—
|
|
|
527
|
|
||
Adjusted EBITDA
|
|
$
|
2,830
|
|
|
$
|
1,675
|
|
|
|
Quarter Ended
|
|
Quarter Ended
|
||||
|
|
March 31, 2014
|
|
March 31, 2013
|
||||
|
|
(in thousands)
|
||||||
Cash and Cash equivalents at beginning of year
|
|
$
|
6,509
|
|
|
$
|
5,219
|
|
Net cash provided by operating activities
|
|
8,902
|
|
|
24,951
|
|
||
Net cash provided by (used in) investing activities
|
|
3,625
|
|
|
(254
|
)
|
||
Net cash (used in) financing activities
|
|
(13,612
|
)
|
|
(27,750
|
)
|
||
Effect of foreign exchange on cash
|
|
128
|
|
|
—
|
|
||
Cash and Cash equivalents at end of year
|
|
$
|
5,552
|
|
|
$
|
2,166
|
|
|
|
Payments Due by Period
|
||||||||||||||||||
|
|
(in thousands)
|
||||||||||||||||||
|
|
Total
|
|
Less Than One Year
|
|
1 - 3 Years
|
|
3 - 5 Years
|
|
More Than Five Years
|
||||||||||
Contractual Obligations: (1)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating lease obligations (2)
|
|
$
|
3,566
|
|
|
$
|
886
|
|
|
$
|
1,259
|
|
|
$
|
1,098
|
|
|
323
|
|
|
Series B redeemable preferred stock (3)
|
|
51,928
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,928
|
|
|||||
Principal payments on long term debt (4)
|
|
34,490
|
|
|
34,490
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Due to shareholders
|
|
3,125
|
|
|
3,125
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Subordinated notes (5)
|
|
17,737
|
|
|
17,737
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
110,846
|
|
|
$
|
56,238
|
|
|
$
|
1,259
|
|
|
$
|
1,098
|
|
|
$
|
52,251
|
|
1.1
|
Underwriting Agreement between the Company and Needham & Company, LLC as representative for the
several other underwriters named therein, dated as of April 24, 2014. (Incorporated by reference to the Company's current report on Form 8-K filed April 29, 2014.)
|
|
|
2.1
|
Agreement and Plan of Merger, dated August 5, 2013, among the Company, Merger Sub and VTBH (Incorporated by reference to Exhibit 2.1 to the Company’s current report on Form 8-K originally filed with the SEC on August 5, 2013).*
|
|
|
3.1
|
Articles of Incorporation of Parametric Sound Corporation (Incorporated by reference to Exhibit 3.1 to the Company’s quarterly report on Form 10-Q filed with the SEC on August 5, 2010).
|
|
|
3.2
|
Bylaws, as amended, of Parametric Sound Corporation (Incorporated by reference to Exhibit 3.2.1 to the Company’s report on Form 10 filed with the SEC on June 24, 2013).
|
|
|
4
|
Form of Common Stock Certificate of Parametric Sound Corporation (Incorporated by reference to Exhibit 4.1 to the Company’s Form 10-12G/A filed with the SEC on July 27, 2010).
|
|
|
10.1
|
Credit Agreement, dated August 22, 2012, among Voyetra Turtle Beach, Inc., as the Borrower, VTBH, the various financial institutions and other persons party thereto from time to time as Lenders, PNC Bank, National Association, as administrative and collateral agent for the Lenders, Swingline Lender and as the Issuer, PNC Capital Markets LLC, as a Joint Lead Arranger and Sole Bookrunner, Manufacturers and Traders Trust Company, Silicon Valley Bank, and Citibank, N.A., each as a Lender, Joint Lead Arranger and Co-Syndication Agent, and National Penn Bank and Sumitomo Mitsui Banking Corp., each as a Lender and Co-Documentation Agent (Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on January 16, 2014).
|
|
|
10.2
|
Waiver and First Amendment, dated July 17, 2013, to the Credit Agreement, dated August 22, 2012, by and among Voyetra Turtle Beach, Inc., as the Borrower, VTBH, the various financial institutions and other Persons from time to time party thereto as Lenders, and PNC Bank, National Association, as administrative agent and collateral agent for the Lenders (Incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed with the SEC on January 16, 2014).
|
|
|
10.3
|
Second Amendment, dated August 5, 2013, to the Credit Agreement, dated August 22, 2012 (as amended), by and among Voyetra Turtle Beach, Inc., as the Borrower, VTBH, the various financial institutions and other Persons from time to time party thereto as Lenders, and PNC Bank, National Association, as administrative agent and collateral agent for the Lenders (Incorporated by reference to Exhibit 10.3 to the Company’s current report on Form 8-K filed with the SEC on January 16, 2014).
|
|
|
10.4
|
Third Amendment, dated January 15, 2014 , to the Credit Agreement, dated August 22, 2012 (as amended), by and among Voyetra Turtle Beach, Inc., as the Borrower, VTBH, the various financial institutions and other Persons from time to time party thereto as Lenders, and PNC Bank, National Association, as administrative agent and collateral agent for the Lenders (Incorporated by reference to Exhibit 10.4 to the Company’s current report on Form 8-K filed with the SEC on January 16, 2014).
|
|
|
10.5
|
Fourth Amendment, dated March 13, 2014 and effective February 28, 2014, to the Credit Agreement, dated
August 22, 2012 (as amended), by and among Voyetra Turtle Beach, Inc., Parametric Sound Corporation,
VTB Holdings, Inc., the various financial institutions and other Persons from time to time party thereto as
Lenders, PNC Bank, National Association, as administrative agent and collateral agent for the Lenders.
(Incorporated by reference to the Company's current report on Form 8-K filed March 19, 2014.)
|
|
|
10.6
|
Joinder Agreement, dated as of January 15, 2014, between the Company and PNC Bank, National
Association as administrative agent. (Incorporated by reference to the Company's current report on Form
8-K filed January 16, 2014.)
|
|
|
10.7
|
Guaranty Agreement, dated as of January 15, 2014, among HyperSound Health, Inc., PSC Licensing Corp.
and PNC, as administrative agent. (Incorporated by reference to the Company's current report on Form 8-
K filed January 16, 2014.)
|
|
|
10.8
|
Subordinated Promissory Note, dated August 30, 2013, among VTBH and SG VTB Holdings, LLC (Incorporated by reference to Exhibit 10.8 to the Company’s current report on Form 8-K filed with the SEC on January 16, 2014).
|
|
|
10.9
|
Subordinated Promissory Note, dated January 15, 2014, among VTBH and SG VTB Holdings, LLC (Incorporated by reference to Exhibit 10.10 to the Company’s current report on Form 8-K filed with the SEC on January 16, 2014).
|
|
|
10.10
|
Loan, Security and Guarantee Agreement, dated as of March 31, 2014, among Parametric Sound
Corporation and Voyetra Turtle Beach, Inc. as US Borrowers and UK Guarantors, Turtle Beach Europe
Limited as UK Borrower, PSC Licensing Corp. and VTB Holdings, Inc. as a US Guarantor and a UK
Guarantor, and Bank of America, N.A., as Agent, Sole Lead Arranger and Sole Bookrunner.
|
|
|
10.11
|
Master Purchasing Agreement, dated December 5, 2011, between the Company and Weifang GoerTek Electronics, Co., Ltd. and GoerTek Inc.
|
|
|
10.12
|
Right of First Refusal Agreement, dated as of January 7, 2011, by and between VTB Holdings, Inc. and the holders of VTB Holdings, Inc. Series B Preferred Stock.
|
|
|
10.13
|
VTB Holdings, Inc. 2011 Phantom Equity Appreciation Plan.
|
|
|
10.14
|
Offer Letter, dated as of August 13, 2012, between Voyetra Turtle Beach, Inc. and Juergen Stark.
|
|
|
10.15
|
Stock Option Award Agreement, dated as of September 4, 2012, by and between VTB Holdings, Inc. and Juergen Stark.
|
|
|
10.16
|
Stock Award Agreement, dated as of June 21, 2011, by and between VTB Holdings, Inc. and Ronald Doornink.
|
|
|
10.17
|
First Amendment to Stock Award Agreement, dated as of February 26, 2013, by and between VTB Holdings, Inc. and Ronald Doornink.
|
|
|
10.18
|
Consulting Agreement, dated as of October 12, 2010, by and between Voyetra Turtle Beach, Inc. and Ronald Doornink.
|
|
|
10.19
|
Termination of Consulting Agreement and Continued Service on the Board of Directors, dated as of February 26, 2013, by and between Voyetra Turtle Beach, Inc. and Ronald Doornink.
|
|
|
10.20
|
Performance Bonus Agreement, dated as of October 12, 2010, by and among the Company, Carmine J. Bonnano and Frederick J. Romano.
|
|
|
10.21
|
Employment Agreement, dated as of October 12, 2010, by and between Voyetra Turtle Beach, Inc. and Carmine J. Bonnano.
|
|
|
10.22
|
Severance Agreement, dated as of August 2, 2012, by and between Voyetra Turtle Beach, Inc. and Carmine J. Bonnano.
|
|
|
10.23
|
Employment Agreement, dated as of October 12, 2010, by and between Voyetra Turtle Beach, Inc. and Frederick J. Romano.
|
|
|
10.24
|
Severance Agreement, dated as of August 2, 2012, by and between Voyetra Turtle Beach, Inc. and Frederick J. Romano.
|
|
|
10.25
|
Offer Letter, dated as of October 21, 2013, by and between Voyetra Turtle Beach, Inc. and Frederick J. Romano.
|
|
|
10.26
|
Offer Letter, dated as of September 16, 2013, by and between Voyetra Turtle Beach, Inc. and John Hanson.
|
|
|
10.27
|
Form of Indemnification Agreement dated September 27, 2010 (Incorporated by reference to Exhibit 10.7 to the Company’s current report on Form 8-K filed with the SEC on October 1, 2010).
|
|
|
21
|
Subsidiaries of the Company.
|
|
|
31.1
|
Certification of Juergen Stark, Principal Executive Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
31.2
|
Certification of John T. Hanson, Principal Financial Officer, pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
32.1
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Juergen Stark, Principal Executive Officer and John Hanson, Principal Financial Officer.
|
|
|
*
|
All exhibits and schedules to the Agreement and Plan of Merger have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish the omitted exhibits and schedules to the SEC upon request by the SEC.
|
|
|
|
Extensible Business Reporting Language (XBRL) Exhibits*
|
101.INS
|
XBRL Instance Document*
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document*
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document*
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*
|
|
|
|
|
PARAMETRIC SOUND CORPORATION
|
|
|
|
Date: May 12, 2014
|
By:
|
/S/ JOHN T. HANSON
|
|
|
John T. Hanson
Chief Financial Officer, Treasurer and Secretary
|
|
|
(Principal Financial Officer and duly authorized to sign on behalf of the registrant)
|
|
Table of Contents
|
|
|||
|
|
|
Page
|
|
SECTION 1.
|
DEFINITIONS; RULES OF CONSTRUCTION
|
1
|
|
|
|
1.1
|
Definitions
|
1
|
|
|
1.2
|
Accounting Terms
|
36
|
|
|
1.3
|
Uniform Commercial Code
|
36
|
|
|
1.4
|
Certain Matters of Construction
|
36
|
|
|
1.5
|
Currency Equivalents.
|
37
|
|
SECTION 2.
|
CREDIT FACILITIES
|
37
|
|
|
|
2.1
|
Revolver Commitment
|
37
|
|
|
2.2
|
[Reserved]
|
40
|
|
|
2.3
|
Letter of Credit Facility
|
40
|
|
SECTION 3.
|
INTEREST, FEES AND CHARGES
|
43
|
|
|
|
3.1
|
Interest
|
43
|
|
|
3.2
|
Fees
|
45
|
|
|
3.3
|
Computation of Interest, Fees, Yield Protection
|
46
|
|
|
3.4
|
Reimbursement Obligations
|
46
|
|
|
3.5
|
Illegality
|
47
|
|
|
3.6
|
Inability to Determine Rates
|
47
|
|
|
3.7
|
Increased Costs; Capital Adequacy
|
47
|
|
|
3.8
|
Mitigation
|
48
|
|
|
3.9
|
Funding Losses
|
49
|
|
|
3.10
|
Maximum Interest
|
49
|
|
SECTION 4.
|
REVOLVER LOAN ADMINISTRATION
|
49
|
|
|
|
4.1
|
Manner of Borrowing and Funding Revolver Loans
|
49
|
|
|
4.2
|
Defaulting Lender
|
51
|
|
|
4.3
|
Number and Amount of Interest Period Loans; Determination of Rate
|
52
|
|
|
4.4
|
Borrower Agent
|
52
|
|
|
4.5
|
One Obligation
|
52
|
|
|
4.6
|
Effect of Termination
|
52
|
|
SECTION 5.
|
PAYMENTS
|
53
|
|
|
|
5.1
|
General Payment Provisions
|
53
|
|
|
5.2
|
Repayment of Revolver Loans
|
53
|
|
|
5.3
|
[Reserved]
|
53
|
|
|
5.4
|
Payment of Other Obligations
|
53
|
|
|
5.5
|
Marshaling; Payments Set Aside
|
53
|
|
|
5.6
|
Application and Allocation of Payments
|
53
|
|
|
5.7
|
Dominion Account
|
55
|
|
|
5.8
|
Account Stated
|
56
|
|
|
5.9
|
Taxes
|
56
|
|
|
5.10
|
Lender Tax Information
|
58
|
|
|
5.11
|
Nature and Extent of Each US Borrower’s Liability
|
59
|
|
|
5.12
|
United Kingdom Tax Matters
|
61
|
|
SECTION 6.
|
CONDITIONS PRECEDENT
|
66
|
|
|
6.1
|
Conditions Precedent to Initial Revolver Loans
|
66
|
|
|
6.2
|
Conditions Precedent to All Credit Extensions
|
68
|
|
|
6.3
|
Post-Closing Date Conditions
|
69
|
|
SECTION 7.
|
COLLATERAL
|
70
|
|
|
|
7.1
|
Grant of Security Interest in US Collateral
|
70
|
|
|
7.2
|
Lien on Deposit Accounts; Cash Collateral
|
71
|
|
|
7.3
|
Real Estate Collateral
|
71
|
|
|
7.4
|
Other Collateral
|
71
|
|
|
7.5
|
Limitations
|
71
|
|
|
7.6
|
Further Assurances
|
71
|
|
|
7.7
|
Foreign Subsidiary Stock
|
72
|
|
SECTION 8.
|
COLLATERAL ADMINISTRATION
|
72
|
|
|
|
8.1
|
Borrowing Base Certificates
|
72
|
|
|
8.2
|
Accounts
|
72
|
|
|
8.3
|
Inventory
|
73
|
|
|
8.4
|
Equipment
|
74
|
|
|
8.5
|
Deposit Accounts
|
74
|
|
|
8.6
|
Administration of Equity Interests and Instruments
|
74
|
|
|
8.7
|
Administration of Investment Property
|
75
|
|
|
8.8
|
Administration of Letter of Credit Rights
|
76
|
|
|
8.9
|
General Provisions
|
76
|
|
|
8.10
|
Power of Attorney
|
78
|
|
SECTION 9.
|
REPRESENTATIONS AND WARRANTIES
|
78
|
|
|
|
9.1
|
General Representations and Warranties
|
78
|
|
|
9.2
|
Complete Disclosure
|
84
|
|
|
9.3
|
Existing Subordinated Debt
|
84
|
|
SECTION 10.
|
COVENANTS AND CONTINUING AGREEMENTS
|
84
|
|
|
|
10.1
|
Affirmative Covenants
|
84
|
|
|
10.2
|
Negative Covenants
|
87
|
|
|
10.3
|
Financial Covenants
|
93
|
|
SECTION 11.
|
GUARANTY
|
93
|
|
|
|
11.1
|
Guaranty by US Guarantors
|
93
|
|
|
11.2
|
Guaranty by UK Guarantors
|
93
|
|
|
11.3
|
Evidence of Debt
|
94
|
|
|
11.4
|
No Setoff or Deductions; Taxes; Payments
|
95
|
|
|
11.5
|
Rights of Lender
|
95
|
|
|
11.6
|
Certain Waivers
|
95
|
|
|
11.7
|
Obligations Independent
|
96
|
|
|
11.8
|
Subrogation
|
96
|
|
|
11.9
|
Termination; Reinstatement
|
96
|
|
|
11.10
|
Subordination
|
96
|
|
|
11.11
|
Stay of Acceleration
|
96
|
|
|
11.12
|
Miscellaneous
|
96
|
|
|
11.13
|
Condition of Borrowers
|
97
|
|
|
11.14
|
Setoff
|
97
|
|
|
11.15
|
Representations and Warranties
|
97
|
|
|
11.16
|
Additional Guarantor Waivers and Agreements
|
97
|
|
SECTION 12.
|
EVENTS OF DEFAULT; REMEDIES ON DEFAULT
|
98
|
|
|
|
12.1
|
Events of Default
|
98
|
|
|
12.2
|
Remedies upon Default
|
100
|
|
|
12.3
|
License
|
100
|
|
|
12.4
|
Setoff
|
100
|
|
|
12.5
|
Remedies Cumulative; No Waiver.
|
101
|
|
SECTION 13.
|
AGENT
|
101
|
|
|
|
13.1
|
Appointment, Authority and Duties of Agent
|
101
|
|
|
13.2
|
Agreements Regarding Collateral and Borrower Materials
|
103
|
|
|
13.3
|
Reliance By Agent
|
104
|
|
|
13.4
|
Action Upon Default
|
104
|
|
|
13.5
|
Ratable Sharing
|
104
|
|
|
13.6
|
Indemnification
|
104
|
|
|
13.7
|
Limitation on Responsibilities of Agent
|
104
|
|
|
13.8
|
Successor Agent and Co-Agents
|
105
|
|
|
13.9
|
Due Diligence and Non-Reliance
|
105
|
|
|
13.10
|
Remittance of Payments and Collections
|
106
|
|
|
13.11
|
Individual Capacities
|
106
|
|
|
13.12
|
Titles
|
106
|
|
|
13.13
|
Bank Product Providers
|
106
|
|
|
13.14
|
No Third Party Beneficiaries
|
107
|
|
SECTION 14.
|
|
BENEFIT OF AGREEMENT; ASSIGNMENTS
|
107
|
|
|
14.1
|
Successors and Assigns
|
107
|
|
|
14.2
|
Participations
|
107
|
|
|
14.3
|
Assignments
|
108
|
|
|
14.4
|
Replacement of Certain Lenders
|
109
|
|
|
14.5
|
Register
|
109
|
|
SECTION 15.
|
MISCELLANEOUS
|
109
|
|
|
|
15.1
|
Consents, Amendments and Waivers
|
109
|
|
|
15.2
|
Indemnity
|
110
|
|
|
15.3
|
Notices and Communications
|
110
|
|
|
15.4
|
Performance of Obligors’ Obligations
|
111
|
|
|
15.5
|
Credit Inquiries
|
111
|
|
|
15.6
|
Severability
|
111
|
|
|
15.7
|
Cumulative Effect; Conflict of Terms
|
112
|
|
|
15.8
|
Counterparts; Execution
|
112
|
|
|
15.9
|
Entire Agreement
|
112
|
|
|
15.10
|
Relationship with Lenders
|
112
|
|
|
15.11
|
No Advisory or Fiduciary Responsibility
|
112
|
|
|
15.12
|
Confidentiality
|
113
|
|
|
15.13
|
Reserved
|
113
|
|
|
15.14
|
GOVERNING LAW
|
113
|
|
|
15.15
|
Consent to Forum
|
113
|
|
|
15.16
|
Waivers by Obligors
|
114
|
|
|
15.17
|
Patriot Act Notice
|
114
|
|
|
15.18
|
NO ORAL AGREEMENT
|
115
|
|
Exhibit A
|
Assignment and Acceptance
|
Exhibit B
|
Assignment Notice
|
|
|
Schedule 1.1
|
Commitments of Lenders
|
Schedule 1.1C
|
Eligible Inventory
|
Schedule 1.1S
|
Equity Interest Holders
|
Schedule 8.5
|
Deposit Accounts
|
Schedule 8.6.1
|
Equity Interests
|
Schedule 8.6.2
|
Debt Securities Instruments
|
Schedule 8.8
|
Letters of Credit
|
Schedule 8.9.1
|
Location of Collateral
|
Schedule 9.1.4
|
Names and Capital Structure
|
Schedule 9.1.11
|
Patents, Trademarks, Copyrights and Licenses
|
Schedule 9.1.14
|
Environmental Matters
|
Schedule 9.1.15
|
Restrictive Agreements
|
Schedule 9.1.16
|
Litigation
|
Schedule 9.1.18
|
Pension Plans
|
Schedule 9.1.20
|
Labor Contracts
|
Schedule 10.2.2
|
Existing Liens
|
Schedule 10.2.17
|
Existing Affiliate Transactions
|
Level
|
Fixed Charge
Coverage Ratio
|
US Base Rate
Loans
|
US LIBOR
Loans
|
UK Base Rate
Loans
|
UK LIBOR
Loans
|
I
|
<
1.10:1.00
|
1.50%
|
2.50%
|
2.50%
|
2.50%
|
II
|
> 1.10:1.00
<
1.25:1.00
|
1.25%
|
2.25%
|
2.25%
|
2.25%
|
III
|
> 1.25:1.00
|
1.00%
|
2.00%
|
2.00%
|
2.00%
|
|
|
|
|
|
|
|
OBLIGORS
:
PARAMETRIC SOUND CORPORATION,
a Nevada corporation, as a US Borrower and a UK Guarantor
By:
Name:
Title:
Address:
Attn:
Telecopy:
|
|
VOYETRA TURTLE BEACH, INC.,
a Delaware corporation, as a US Borrower and a UK Guarantor
By:
Name:
Title:
Address:
Attn:
Telecopy:
|
|
TURTLE BEACH EUROPE LIMITED,
as UK Borrower
By:
Name:
Title:
Address:
Attn:
Telecopy:
|
|
PSC LICENSING CORP.,
a California corporation,
as a US Guarantor and a UK Guarantor
By:
Name: Juergen Stark
Title: President
Address:
Attn:
Telecopy:
|
|
VTB HOLDINGS, INC.,
a Delaware corporation, as a US Guarantor and a UK Guarantor
By:
Name: Juergen Stark
Title: Chief Executive Officer and President
Address:
Attn:
Telecopy:
|
|
AGENT AND LENDERS
:
BANK OF AMERICA, N.A.,
as Agent and US Lender
By:
Name:
Title:
Address:
Attn:
Telecopy:
|
|
BANK OF AMERICA, N.A.,
(acting through its London branch), as UK Lender
By:
Name:
Title:
Address:
Attn:
Telecopy:
|
1.
|
a principal amount of $[________] of Assignor’s outstanding US Revolver Loans and $[___________] of Assignor’s participations in US LC Obligations,
|
2.
|
the amount of $[__________] of Assignor’s US Revolver Commitment (which represents [____]% of the total US Revolver Commitments),(the foregoing items (a) and (b) being, collectively, the “
US Assigned Interest
”),
|
(a)
|
a principal amount of $[________] of Assignor’s outstanding UK Revolver Loans and $[___________] of Assignor’s participations in UK LC Obligations, and
|
(b)
|
the amount of $[__________] of Assignor’s UK Revolver Commitment (which represents [____]% of the total UK Revolver Commitments), (the foregoing items (c) and (d) being, collectively, the “
UK Assigned Interest
”; and together with the US Assigned Interests, collectively the “
Assigned Interests
”).
|
(a)
|
If to Assignee, to the following address (or to such other address as Assignee may designate from time to time):
|
(b)
|
If to Assignor, to the following address (or to such other address as Assignor may designate from time to time):
|
Lender
|
US Revolver
Commitment |
UK Revolver
Commitment |
Revolver
Commitment |
Bank of America, N.A.
|
$50,000,000
|
$0
|
$50,000,000
|
Bank of America, N.A. (London Branch)
|
$0
|
$10,000,000
|
$10,000,000
|
1
|
The Mandatory Cost is an addition to the interest rate to compensate Lenders for the cost of compliance with (a) the requirements of the Bank of England and/or the Financial Conduct Authority and/or the Prudential Regulation Authority (or, in either case, any other authority which replaces all or any of its functions); or (b) the requirements of the European Central Bank.
|
2.
|
On the first day of each Interest Period (or as soon as possible thereafter) Agent shall calculate, as a percentage rate, a rate (the “Additional Cost Rate”) for each Lender in accordance with the paragraphs set out below. The Mandatory Cost will be calculated by Agent as a weighted average of the Lenders’ Additional Cost Rates (weighted in proportion to the percentage participation of each Lender in the relevant Loan) and will be expressed as a percentage rate per annum.
|
3.
|
The Additional Cost Rate for any Lender lending from a Lending Office in any Participating Member State will be the percentage notified by that Lender to Agent. This percentage will be certified by that Lender in its notice to Agent to be its reasonable determination of the cost (expressed as a percentage of that Lender’s participation in all Loans made from that Lending Office) of complying with the minimum reserve requirements of the European Central Bank in respect of loans made from that Lending Office.
|
4.
|
The Additional Cost Rate for any Lender lending from a Lending Office in the United Kingdom will be calculated by the Agent as follows:
|
A
|
is the percentage of Eligible Liabilities (assuming these to be in excess of any stated minimum) which that Lender is from time to time required to maintain as an interest free cash ratio deposit with the Bank of England to comply with cash ratio requirements.
|
B
|
is the percentage rate of interest (excluding the Applicable Margin and the Mandatory Cost and, if an unpaid Obligation, the additional rate of interest applicable thereto under the definition of “Default Rate”) payable for the relevant Interest Period on that unpaid Obligation.
|
C
|
is the percentage (if any) of Eligible Liabilities which that Lender is required from time to time to maintain as interest bearing Special Deposits with the Bank of England.
|
D
|
is the percentage rate per annum payable by the Bank of England to Agent on interest bearing Special Deposits.
|
E
|
is designed to compensate Lenders for amounts payable under the Fees Rules and is calculated by Agent as being the average of the most recent rates of charge supplied by the three leading banks in the London interbank market appointed by the Agent (the "Reference Banks") to the Agent pursuant to paragraph 7 below and expressed in Sterling per £1,000,000.
|
5.1
|
“Eligible Liabilities”
and
“Special Deposits”
have the meanings given to them from time to time under or pursuant to the Bank of England Act 1998 of England or (as may be appropriate) by the Bank of England;
|
5.2
|
“Fees Rules”
means the rules on periodic fees contained in the Financial Services Authority Fees Manual or the Prudential Regulation Authority Fees Manual or such other law or regulation as may be in force from time to time in respect of the payment of fees for the acceptance of deposits;
|
5.3
|
“Fee Tariffs”
means the fee tariffs specified in the Fees Rules under the activity group A.1 Deposit acceptors (ignoring any minimum fee or zero rated fee required pursuant to the Fees Rules but taking into account any applicable discount rate);
|
5.4
|
“Tariff Base”
has the meaning given to it in, and will be calculated in accordance with, the Fees Rules; and
|
6.
|
In application of the above formulae, A, B, C and D will be included in the formulae as percentages (i.e. 5 per cent. will be included in the formula as 5 and not as 0.05). A negative result obtained by subtracting D from B shall be taken as zero. The resulting figures shall be rounded to four decimal places.
|
7.
|
If requested by Agent, each Reference Bank shall, as soon as practicable after publication by the Financial Conduct Authority or the Prudential Regulation Authority, supply to Agent, the rate of charge payable by that Reference Bank to the Financial Conduct Authority or the Prudential Regulation Authority pursuant to the Fees Rules in respect of the relevant financial year of the Financial Conduct Authority or the Prudential Regulation Authority (calculated for this purpose by that Reference Bank as being the average of the Fee Tariffs applicable to that Reference Bank for that financial year) and expressed in Sterling per £1,000,000 of the Tariff Base of that Reference Bank.
|
8.
|
Each Lender shall supply any information required by Agent for the purpose of calculating its Additional Cost Rate. In particular, but without limitation, each Lender shall supply the following information in writing on or prior to the date on which it becomes a Lender:
|
9.
|
The percentages of each Lender for the purpose of A and C above and the rates of charge of each Reference Bank for the purpose of E above shall be determined by Agent based upon the information supplied to it pursuant to paragraphs 7 and 8 above and on the assumption that, unless a Lender notifies Agent to the contrary, each Lender’s obligations in relation to cash ratio deposits and Special Deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Lending Office in the same jurisdiction as its Lending Office.
|
10.
|
Agent shall have no liability to any person if such determination results in an Additional Cost Rate which over or under compensates any Lender and shall be entitled to assume that the information provided by any Lender or Reference Bank pursuant to paragraphs 3, 7 and 8 above is true and correct in all respects.
|
11.
|
Agent shall distribute the additional amounts received as a result of the Mandatory Cost to Lenders on the basis of the Additional Cost Rate for each Lender based on the information provided by each Lender and each Reference Bank pursuant to paragraphs 3, 7 and 8 above.
|
12.
|
Any determination by Agent pursuant to this Schedule in relation to a formula, the Mandatory Cost, an Additional Cost Rate or any amount payable to a Lender shall, in the absence of manifest error, be conclusive and binding on all parties hereto.
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13.
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Agent may from time to time, after consultation with Lenders, determine and notify to all parties hereto any amendments which are required to be made to this Schedule in order to comply with any change in law, regulation or any requirements from time to time imposed by the Bank of England, the Financial Conduct Authority, the Prudential Regulation Authority or the European Central Bank (or, in any case, any other authority which replaces all or any of its functions) and any such determination shall, in the absence of manifest error, be conclusive and binding on all parties hereto.
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Depository Bank
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Type of Account
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Account Number
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1.
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Borrowers currently have the following business locations, and no others:
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2.
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In the five years preceding the Closing Date, Borrowers have had no office or place of business located in any county other than as set forth above, except:
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3.
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Each Subsidiary currently has the following business locations, and no others:
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4.
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The following bailees, warehouseman, similar parties and consignees hold inventory of a Borrower or Subsidiary:
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Name and Address of Party
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Nature of
Relationship |
Amount of Inventory
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Owner of Inventory
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1.
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The corporate names, jurisdictions of incorporation, and authorized and issued Equity Interests of each Borrower and Subsidiary are as follows:
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Name
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Jurisdiction
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Number and Class
of Authorized Shares
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Number and Class
of Issued Shares
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2.
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The record holders of Equity Interests of each Borrower (other than Parametric) and Subsidiary are as follows:
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Name
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Class of Stock
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Number of Shares
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Record Owner
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3.
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All agreements binding on holders of Equity Interests of Borrowers and Subsidiaries with respect to such interests are as follows:
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4.
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In the five years preceding the Closing Date, no Borrower or Subsidiary has acquired any substantial assets from any other Person nor been the surviving entity in a merger, amalgamation, or combination, except:
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Patent
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Owner
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Status in
Patent Office |
Federal
Registration No. |
Registration
Date |
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Trademark
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Owner
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Status in
Trademark Office |
Federal
Registration No. |
Registration
Date |
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Copyright
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Owner
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Status in
Copyright Office |
Federal
Registration No. |
Registration
Date |
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4.
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Borrowers’ and Subsidiaries’ licenses (other than routine business licenses, authorizing them to transact business in local jurisdictions):
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Licensor
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Description of License
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Term of License
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Royalties Payable
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Entity
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Agreement
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Restrictive Provisions
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Parties
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Type of Agreement
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Term of Agreement
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Exhibit 10.11
Master Purchasing Agreement
This Master Purchasing Agreement (hereinafter the Agreement ) is effective as of December 5, 2011 (hereinafter the business located at 150 Clearbrook Rd., Suite 162, Elmsford, NY 10523, Weifang GoerTek Electronics, Co., Ltd. (hereinafter GoerTek ), with business license number [NUMBER] and registered address at [Dongfang North Road, Hi-Tech Industry Development District, Weifang Shandong, China]; and [ Goertek Inc . ] (hereinafter GoerTek Parent Company ), with business license number [NUMBER] and registered address at [Address]. In this Agreement, the term Party refers individually to VTB, GoerTek, or the GoerTek Parent Company and the term Parties refers collectively to VTB, GoerTek, and the GoerTek Parent Company.
1. | Definitions |
1.1 | Affiliate means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. For the purpose of this definition, the term control (including with correlative meanings, the terms controlling, controlled by and under common control with), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. |
1.2 | IPRs means any and all intellectual and industrial property and other proprietary rights, arising in any jurisdiction, whether registered or unregistered, including such rights in: (a) patents, patent applications, inventions and other industrial property rights, including all applications, registrations, extensions, renewals, continuations, continuations-in-part, combinations, divisions and reissues of the foregoing, (b) non-public technical or business information, Know-How, trade secrets, ideas, confidential information and rights to limit the use or disclosure thereof by any person, in each case whether or not patentable including business and technical information, inventions and discoveries, (c) works of authorship, whether or not copyrightable, including writings, databases, computer software programs and documentation; (d) copyrights, mask works, registrations or applications for registration of copyrights or mask work rights, and any renewals or extensions thereof; and (f) all rights of any kind in databases, inventions, designs, industrial designs, topographies, firmware, software, trade names, business names, internet domain names, trademarks, services marks, and devices (whether or not registered). |
1.3 | Know-How means information, practical knowledge, techniques, and skill required to manufacture a given product or technology, and any training in any of the foregoing or physical embodiments thereof. |
1.4 | Person means a natural person, firm, corporation, partnership, association, limited liability company, union, trust or estate or any other entity or organization whether or not having separate legal existence, including any government authority. |
1.5 | Purchase Order ( PO ) means a purchase order in the form attached hereto as Schedule A issued to GoerTek by VTB either by fax, email or other written format, specifying in writing a request for Products and/or Services. |
1.6 | Product means goods ordered by VTB from GoerTek, either in the form of assembled Printed Circuit Boards (PCB) or completed units with or without PCBs inside an enclosure, as specified in a PO. Products include VTB Products, as defined below. |
1.7 | VTB Product means a Product that is designed in part or entirely by or on behalf of VTB or incorporates or uses any VTB IPR. |
1.8 | Services means any services provided by GoerTek for the manufacturing and delivery of Products specified in a PO, which may include one or more of the following: (a.) Procure electronic components, assembly parts, PCBs, enclosures, and other Components or tooling. (b.) Manufacture, test, perform quality control, assemble, and provide other necessary production services. (c.) Procure cables and accessories, printed materials and other Components required for the packaging of Products as finished retail goods. (d.) Obtain required regulatory certifications. |
1.9 | Specifications means documents provided by VTB for the purpose of defining the operating parameters, industrial design and styling, electrical specifications, testing procedures, and other quality requirements or metrics for Products. |
1.10 | Vendor means a third party Person provider who is contracted by GoerTek to assist in the production of Products or to provide any Services. |
2. | General Terms Applicable to the Sale and Purchase of all Products and Services |
2.1 | General Purchasing Terms : Subject to Sections 3.4 and 7.2 hereof, the price for Services and for Products shall be as agreed from time to time by GoerTek and VTB and set forth in POs issued by VTB and accepted by GoerTek. VTB shall not be liable to pay any amounts, fees or costs to GoerTek except (i) pursuant to a valid PO issued by VTB and accepted by GoerTek on the terms and conditions of this Agreement or (ii) for any unused materials existing upon termination of this Agreement by VTB that were purchased by GoerTek prior to delivery of a notice of such termination as required by and in accordance with (a) the lead times set forth in a valid 8 week open PO issued by VTB and accepted by Goertek or (b) mutually agreed long lead time purchase commitments based on the VTB official forecasts, in each case, on the terms and conditions of this Agreement to the extent that Goertek is unable to otherwise use such materials (the Remaining Materials). Unless otherwise specified in the PO, the price specified in such PO shall be the total gross amount payable in respect of the Products or Services ordered thereunder, inclusive of all charges and amounts whatsoever, including packaging, boxing, and processing; provided, that, such prices will be adjusted to reflect any changes in terms from FCA, Incoterms 2010, Qingdao. Without limitation of the foregoing, all prices for Products and Services shall be inclusive of all national, provincial, local and other taxes, duties, and charges in the jurisdiction where GoerTek is located, including, without limitation, PRC VAT and PRC business tax. VTB shall have no liability for any taxes, duties or other charges for which it has an appropriate exemption. |
2.2 | Transfer of Title : GoerTek shall make the Product shipments available FCA, Incoterms 2010, Qingdao, unless different terms are specified in the relevant PO. GoerTek shall execute and deliver a bill of sale or any other document that may be reasonably requested by VTB in order to convey good title to VTB at the time of delivery. GoerTek shall, at the request of VTB, do or procure to be done all further acts and execute all further documents and instruments that may from time to time be necessary to vest in VTB good and valid title to the Products. |
2.3 | Purchase Orders and Acceptance : GoerTek shall, within seven (7) business days of receipt of a PO from VTB, respond to such PO by: (a) agreeing to provide the Products and/or Services specified therein by indicating its acceptance in the space provided for that purpose on the PO and returning an executed copy to VTB; (b) rejecting such PO by indicating its rejection in the space provided for that purpose on the PO and returning an executed copy to VTB; or (c) rejecting such PO, and proposing changes to the PO, by indicating its rejection and counterproposal in the space provided for that purpose on the PO and returning an executed copy to VTB with a detailed written statement of its counterproposal. GoerTek shall be deemed to accept, without modification, any PO which it does not formally reject within the initial seven (7) business day period in the manner described for rejection by the preceding sentence. No terms and conditions in any counterproposal by GoerTek shall be deemed accepted by VTB until incorporated in a revised valid PO issued by VTB to GoerTek in accordance with this Agreement. The Parties agree that the only method for validly rejecting or proposing changes to a PO shall be to indicate such rejection, or such rejection and counterproposal, in the appropriate places on the PO and returning to VTB in accordance with this Section 2.3. Any other form of response, including any different, additional, or contrary terms contained in any GoerTek form or pre-printed response, shall be disregarded. GoerTeks right to reject a PO shall further be subject to the limitations of Section 3.4 hereof. VTB may withdraw a PO at any time prior to GoerTeks acceptance without liability of any kind. |
3. | VTB Products |
3.1 | Manufacturing Process and Specifications : GoerTek shall manufacture all VTB Products in accordance with the Specifications provided by VTB. Finished products shall be consistent in all material respects with any samples approved by VTB. GoerTek shall not modify any Specifications without VTBs prior express written approval, provided, however, that GoerTek shall immediately notify VTB of any design errors, defects, ambiguities, inconsistencies or omissions in any Specifications which may come to the attention of GoerTek. Manufacturing and quality testing processes for VTB Products shall be mutually agreed upon and shall not be changed by GoerTek without VTBs express written approval. |
3.2 | Price for VTB Products : VTB Products shall be priced on a costs plus profits basis. As to any VTB Product, GoerTek shall provide a proposed price quotation and a detailed statement of the costs and profit used to determine such proposed price (a Price Analysis). The Price Analysis shall include time analysis for production and testing, material costs (supported by a detailed Bill of Materials (BOM) providing a list of the raw materials, sub-assemblies, intermediate assemblies, sub-components, components, parts (collectively, Components) and the quantities and unit prices of each needed to manufacture the VTB Product), tooling, Vendor services, labor and overhead. The BOM shall include all Component details, including supplier name, part number, and cost; provided, that, GoerTek shall provide the location of a supplier upon request by VTB. All costs of manufacturing other than GoerTeks profit shall hereinafter be referred to as Manufacturing Costs. Manufacturing Costs shall not include any NRE activities in accordance with Section 3.6 hereof. As to each VTB Product, GoerTek and VTB shall agree in writing on a final Price Analysis setting forth an agreed Manufacturing Cost and profit margin per unit, along with an agreed final price per unit for any initial order (the Initial Price). GoerTek may not change any Components without VTBs prior written approval. |
3.3 | Continuous Cost Reductions : GoerTek and VTB agree to work together in good faith for continuous reductions in Manufacturing Costs, including Component, labor, overhead and other Manufacturing Costs. GoerTek agrees to use commercially reasonable efforts to ensure that the same individuals are available to review Manufacturing Costs on a monthly basis and propose reductions in writing to VTB. |
3.4 | Price Adjustments : The price for each VTB Product shall be the Initial Price as adjusted from time to time: (a) as volume milestones are reached, in accordance with Schedule B, VTB GoerTek Cost Reduction Commitments and (b) as may be required by Section 7.2 hereof. Notwithstanding anything expressed or implied to the contrary in Section 2.3 or elsewhere in this Agreement: (a) GoerTek agrees, during the term of this Agreement, to manufacture all of VTBs requirements for VTB Products as ordered by VTB at the price determined in accordance with this Section 3.4; and (b) GoerTek shall accept all POs validly issued by VTB in accordance with this Agreement for VTB Products provided that such PO specifies a price no less than the price determined in accordance with this Section 3.4. |
3.5 | Vendors : GoerTek shall inform VTB of any Vendors it intends to use in the manufacture of any VTB Products or providing any Services to VTB. GoerTek shall not employ any Vendor, or otherwise subcontract any aspect of manufacturing VTB Products or providing Services to VTB, without VTBs prior express written consent. GoerTek shall procure that VTB have the right, at any time during business hours and from time to time, to inspect the facilities of any Vendor If VTB does not approve a Vendor proposed by GoerTek, GoerTek shall propose alternative Vendors to replace the Vendor of which VTB disapproved. VTB may at any time and from time to time withdraw any consent to a particular Vendor. |
3.6 | Engineering Labor : GoerTek shall not charge VTB the full engineering labor fees associated with the non-recurring engineering (NRE) activities during the product development phase of new products, however, if VTB wishes to attain the sole and exclusive ownership to IPR determined according to section 5.2 below, VTB shall pay to GTK the full engineering labor cost reflected in the most recently updated product cost quote shown in the labor worksheet, prior to mass production, or as otherwise agreed upon by the parties in writing. Subject to Section 2.1 hereof, GoerTek may charge VTB for fees associated with other aspects of product development, including, but not limited to, product certification, tooling, specific testing and production equipment and samples in accordance with a valid PO for such services issued by VTB and accepted by GoerTek specifying the fees for such services, which shall be mutually agreed upon by the parties. |
4. | Payment and Delivery |
4.1 | Delivery : GoerTek shall comply with VTBs billing and delivery instructions shown on the PO or otherwise communicated to GoerTek. GoerTek shall deliver the Products ordered by VTB to any common carrier or shipper designated by VTB FCA, Incoterms 2010, Qingdao, or on such other terms as may be specified in the PO, on the date specified in the PO. Without limitation of the foregoing, the Seller shall at all times maintain inventory, materials and Components on hand sufficient to meet reasonably projected requirements for the production and timely delivery of Products to VTB. When Products are received improperly marked or routed and VTB is put to extra expense to deliver such Products to the proper location, VTB may offset the extra expense incurred against sums otherwise owed to GoerTek. |
4.2 | Change Orders : Subject to Section 4.3 and Section 4.4 hereof, VTB may change the shipping instructions, extend the delivery date as to all or part of any order, or cancel all or part of an order set forth in any accepted PO by providing written notice to GoerTek prior to the delivery shipment date specified on the PO (a Change Order). |
4.3 | Extending Delivery Date . VTB may provide a Change Order extending the delivery date otherwise specified in a PO, without penalty, as to a number of units of Products up to the following percentages of the total units of Products ordered in the PO, such extension not to exceed 90 calendar days: |
Number of Calendar Days of Advanced Notice Before Delivery Date in the PO |
Percentage of Units Ordered under a Given PO the Delivery Date of Which May Be Extended by up to 90 Calendar Days |
|
0 - 21 days |
0% | |
22 - 50 days |
Up to 50% | |
51 - 77 days |
Up to 75% | |
78 days or more |
Up to 100% |
For the purposes of calculating the number of units the delivery date of which may be extended, no distinction shall be made between Products of different types ordered in a single PO and VTB may allocate the permitted percentage of units to be rescheduled among different Product types in its discretion.
4.4 | Cancellation : VTB may provide a Change Order cancelling an order for Products up to the following percentages of the total units of Products ordered in the relevant PO: |
Number of Calendar Days of Advanced Notice Before Delivery Date in the PO |
Percentage of Scheduled Shipment that May Be Cancelled |
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0 - 30 days |
0% | |
31 to 60 days |
Up to 25% | |
61 - 90 days |
Up to 50% | |
More than 90 days |
Up to 100% |
As to cancellations permitted by this Section 4.4, GoerTek may nevertheless charge a cancellation fee not to exceed its actual costs from the cancellation, which cancellation fee shall be its sole remedy. After receipt of a Change Order specifying a cancellation, GoerTek shall use its best efforts to mitigate its actual costs, including without limitation by stopping production, cancelling materials with its suppliers, and using materials and Components for other products as much as possible to reduce VTBs liability. Notwithstanding anything herein to the contrary, in no event shall VTBs liability for cancellation of an order of VTB Products exceed the cost of Components for the cancelled units as shown in the relevant BOM, as such cost may be reduced from time to time in accordance with Section 3 hereof. As to any cancelled order for which GoerTek has charged a cancellation fee, all Components, partially-assembled Products, or Products in respect of which a cancellation fee has been charged shall be the sole property of VTB and GoerTek shall ship such materials to any address specified by VTB at VTBs expense.
4.5 | Customs Clearance : Upon GoerTeks written request, VTB shall provide necessary documents according to Chinas regulations to facilitate GoerTek to handle customs clearance as required. GoerTek will provide an appropriate certification stating the country of origin for Products sufficient to satisfy the requirements of the customs authorities of the destination country or countries and any applicable customs or import/export regulations of such countries, including without limitation |
those of the United States. GoerTek will assure that Products and containers of Products are marked with the country of origin, as required by applicable regulations of any jurisdiction or as otherwise reasonably requested by VTB. If Products are imported into the United States, or another destination as stated in the PO, GoerTek will, upon direction by VTB, allow VTB or its designated customer to be the importer of record. If VTB is not the importer of record, GoerTek will, upon VTBs request, provide VTB with documents required by the customs authorities of the country of receipt to prove proper importation. If the customs clearance is delayed due to VTBs insufficient information or VTBs fault, GoerTek is not liable for VTBs loss. |
4.6 | Late Delivery : GoerTek shall deliver the Products on the date indicated in the relevant PO. If GoerTek fails to make timely deliveries of the Products meeting the product quality standards set forth in this Agreement and as provided for in any submitted and accepted PO, VTB shall not be required to accept such delivery. If GoerTek is unable to (i) deliver the Products within fourteen (14) calendar days after the date indicated in the relevant PO or (ii) make available to the common carrier within seven (7) calendar days after the date indicated in the relevant PO, GoerTek shall deliver such Products to a common carrier approved by VTB for overnight air shipment at GoerTeks expense. In the event GoerTek makes a delayed delivery of the Products, VTB may agree (while reserving all other rights) to accept such delivery and adjust the purchase price by an amount equal to the original purchase price multiplied by 0.05 percent per day multiplied by the number of calendar days delivery of conforming Products was delayed, provided that such delay was (a) not caused by an event of force majeure and (b) not solely due to delays in common carrier booking caused by VTB. |
4.7 | Deliveries of Less than Full Amount : In the event that a delivery contains less than 99% of the Products than ordered by VTB in the related submitted and accepted PO, VTB may reject such delivery in its entirety. Provided that shipment for the lesser amount shows no signs of tempering or broken custom seal at the time of receiving. Alternatively, VTB shall have the right, but not the obligation, to accept the lesser quantity and reduce the purchase price pro rata to the amount and type of the Products actually delivered. Acceptance of such lesser amount shall not preclude VTB from pursuing any remedies available to it resulting from Sellers failure to deliver the full amount of Products ordered. |
4.8 | Payment Currency : Unless otherwise agreed to by both parties in writing, all transactions under this Agreement shall be in United States dollars. |
4.9 | Credit Line : GoerTek shall provide VTB a revolving line of credit (hereinafter the Credit Line ) of Ten Million United States Dollars (US$10,000,000) for use in purchasing Products and Services from GoerTek. GoerTek shall apply the Credit Line automatically to any amounts payable for the purchase of Products or Services on the date of delivery. Funds borrowed against the Credit Line shall be due sixty (60) calendar days after the date applied to the purchase price of Products or Services. Simple interest on late payments shall accrue at the rate of 3.5% per annum. GoerTek shall provide VTB with detailed monthly written statements showing amounts charged against the Credit Line, the dates such charges were made, the date payment is due, and any interest on such amounts. The written statements shall additionally show the total amount remaining on the Credit Line. Amounts due exceeding the available credit under the Credit Line shall be paid by means mutually agreeable to the GoerTek and VTB. Notwithstanding any prior payment or application to the Credit Line, all Products and Services hereunder shall be subject to final inspection and approval by VTB, within thirty (30) calendar days after delivery. VTB is not required to accept any Non-Conforming Products, notwithstanding any usage of trade or common practices to the contrary, and VTB shall have no obligation to make any payment in respect of Non-Conforming Products. For the avoidance of doubt, the acceptance of Products for delivery by a common carrier or shipper does not constitute VTBs acceptance of such Products under this Section 4.9 and acceptance of products by VTB shall not preclude any other remedy by VTB in respect of defective or Non-Conforming Products or otherwise for breach of this Agreement. |
5. | Intellectual Property and Proprietary Materials |
5.1 | Intellectual Property : All IPRs and other legal, moral and equitable rights of any kind provided by VTB or any of its Affiliates to GoerTek (collectively, VTB IPR) shall remain the exclusive property of VTB. For the avoidance of doubt, any IPRs embedded in or derived from VTBs proprietary Audio Signal Processing technology shall constitute VTB IPRs. |
5.2 | VTB and GoerTek IPRs Developed by GoerTek : Any new IPRs and other new legal, and equitable rights of any kind created by GoerTek or its Affiliates or its Vendors, or any of their respective agents, directors, or employees (collectively, GoerTek Representatives) during the performance of any design, engineering, or other work in connection with the design or manufacture of a VTB Product, or by GoerTek or GoerTek Representatives jointly with VTB, or otherwise by GoerTek or GoerTek Representatives at VTBs request or for VTBs benefit (collectively, the Work), shall constitute VTB IPRs and belong to VTB subject to full payment of Non-Recurring Engineering (NRE) charge. All modifications or improvements to VTB Products developed by GoerTek or GoerTek Representatives, whether independently or in cooperation with VTB, shall be the property of VTB subject to full payment of Non-Recurring Engineering (NRE) charge. VTB grants GoerTek a limited non-exclusive, royalty free license to use VTB IPRs during the course of the Agreement only to the extent necessary to perform its obligations under the Agreement. GoerTek will retain ownership of any improvements to its own IPRs developed independently of, and not derived from, the VTB IPRs, though it grants VTB, and its successors, assigns, or designees a perpetual, royalty-free, non-exclusive license to use such IPRs only as incorporated into the Work to the extent necessary to continue to produce, sell or develop of the VTB Products, as set forth in greater detail in Section 5.8 below. |
VTB shall have the right to use the whole Work, any part or parts thereof, or none of the Work, as it deems fit in its sole and absolute discretion. VTB may alter the Work, add to it, or combine it with any other work or works, in its sole and absolute discretion. All original material created by GoerTek or GoerTek Representatives related to the Work or this Agreement, and all original material submitted by GoerTek or GoerTek Representatives to VTB, including but not limited to BOMs, Price Analyses, design, documentation, graphic renderings, industrial design and styling sketches, diagrams, notes, computer files, and memoranda, shall be the property of VTB whether or not VTB uses such material.
All documentation and all other materials and information prepared by any Person in connection with the production of the Work, except improvements to GoerTeks IPRs that are developed independently of, and not derived from VTB IPRs, shall be VTBs property and GoerTek shall provide all such material or documentation to VTB upon any request by VTB. To the extent that any such material remains in the possession of GoerTek or GoerTek Representatives upon the termination or conclusion of this Agreement, GoerTek, without requirement of demand or notice of any kind from VTB, shall provide, within seven business days, such material to VTB (keeping no copies, including both electronic and hard copies, or other physical embodiments of such material of any kind).
Whenever any material with copyright or patentable rights in connection with a VTB Product is prepared by GoerTek or GoerTek Representatives, either solely or in collaboration with others, including employees of VTB or any of its Affiliates, GoerTek shall use its best efforts to give VTB written notice thereof and shall furnish VTB with complete information relating thereto, including but not limited to a complete written disclosure of such copyrighted or patentable material.
GoerTek hereby irrevocably and unconditionally assigns, and agrees to cause all GoerTek Representatives irrevocably and unconditionally to assign, to VTB, all IPRs and all other right, title and interest in and to all copyrighted or patentable materials, works of authorship and other proprietary data and all other materials (as well as commercial secrets and similar rights attendant thereto) conceived, invented, designed, reduced to practice, authored or developed by GoerTek or GoerTek Representatives, either solely or jointly with others, in connection with the Work. Without limitation of any other duty of confidentiality hereunder, GoerTek and its Representatives shall keep confidential such copyrighted or patentable materials, works of authorship, proprietary data or other materials. GoerTek agrees that it shall, and shall cause its Representatives to, do all things and execute all documents as VTB may deem necessary or advisable to vest in VTB the rights referred to herein and to secure for VTB all trademark, copyright or patent protection, which may be available in respect thereof. GoerTeks obligations hereunder shall survive the expiration or termination of this Agreement. Neither GoerTek nor any of the GoerTek Representatives shall be entitled to any additional royalty, license fee, or compensation in respect of their obligations under this Section 5.2.
5.3 | Know-How and other IPRs Provided by VTB : To the extent that VTB provides any Know-How or other IPRs to GoerTek in connection with this Agreement, including any physical embodiments of such Know-How and other IPRs, such Know-How and other IPRs shall constitute VTB IPR. GoerTek shall use such Know-How and other IPRs only as necessary to fulfill its obligations under this Agreement or as authorized in writing by VTB, and only to manufacture VTB Products for VTB and for no other purpose whatsoever. |
5.4 | Know-How and other IPRs Provided by GoerTek : To the extent that GoerTek provides any Know-How or other IPRs to VTB in connection with this Agreement, including any physical embodiments of such Know-How and other IPRs, such Know-How and other IPRs shall constitute GoerTek IPRs. VTB shall use such Know-How and other IPRs only as incorporated into the Work to the extent they are necessary to the produce, sell or develop the VTB Products or as authorized in writing by GoerTek, and only to manufacture VTB Products for VTB and for no other purpose whatsoever. |
5.5 | VTB Proprietary Materials : All physical and electronic embodiments of any VTB IPRs, including without limitation BOMs, Price Analyses, design, documentation, graphic renderings, industrial design and styling sketches, diagrams, notes, software, firmware, computer files, and memoranda, and including any documents or materials generated from, including, or reflecting any VTB IPRs (collectively, VTB Proprietary Materials), whether generated by GoerTek, provided by VTB, provided by a third party Person designated by VTB or Goertek, or otherwise obtained by GoerTek or any GoerTek Representative, shall constitute VTBs sole and exclusive property and shall further constitute Confidential Information as defined by Section 8 of this Agreement. Within seven business days of the expiration or early termination of this Agreement or VTBs request, all VTB Proprietary Materials under the control of GoerTek or any GoerTek Representative shall unconditionally be returned to VTB and neither GoerTek nor any GoerTek Representatives shall retain any copies of such VTB Proprietary Materials (including any electronic or backup copies). Neither GoerTek nor any GoerTek Representative shall use any VTB Proprietary Material for any purpose other than to manufacture Products for VTB. |
5.6 | Specific Prohibited Actions : Without limitation of any more general obligation set forth in this Section 5, neither GoerTek nor any GoerTek Representative shall, or shall permit any Person to, reverse-compile or reverse-assemble VTB object code, or copy, edit or otherwise modify portions of VTB source code or object code or create derivative works of VTB Proprietary Materials or VTB Products. GoerTek shall not sell or otherwise provide any product incorporating or derived from any VTB IPRs to any Person other than VTB or as expressly directed in writing by VTB. |
5.7 | Protection of VTB Proprietary Materials : GoerTek acknowledges VTBs right, title and interest in and to VTB IPRs and will not at any time do or cause to be done any act or thing contesting or in any way impairing or intended to impair any part of such right, title or interest. If GoerTek becomes aware of any infringement of VTBs intellectual property rights or Confidential Information, GoerTek shall immediately notify VTB of such infringement and cooperate with VTB in the enforcement of VTBs intellectual property rights. Any decision regarding enforcement of VTBs intellectual property rights shall be made by VTB at its sole discretion. |
5.8 | Protection of GoerTek Proprietary Materials : GoerTek owns and shall retain sole and exclusive ownership of GoerTek-developed IPRs and other new legal, and equitable rights of any kind, such as patents, copyrights, hardware designs, software, documentation, processes, know-how, methodologies, architecture, specifications, technology, trade secrets, including GoerTeks proprietary Audio Signal Processing technologies, relating exclusively to Products which are not VTB Products or derived from VTB IPRs, and except to the extent any such IPR constitutes VTB IPR (collectively, GoerTek IPRs), provided , however , that GoerTek hereby irrevocably and unconditionally grants VTB, and its successors, assigns, or designees an irrevocable, royalty-free, perpetual, and non-exclusive license to use GoerTek IPRs in connection with the work for the purchase, marketing, and sale of VTB Products, and Goertek covenants not to pursue any proceeding, arbitration, lawsuit, or other action against VTB, either directly or indirectly, in connection with Products incorporating GoerTek IPRs. Notwithstanding anything expressed or implied to the contrary in this Section 5.8, and without limitation of Section 5.2 hereof, any IPRs developed by GoerTek for which VTB has paid a development fee to Goertek, shall constitute Work which is owned exclusively by VTB. |
5.9 |
Goertek Proprietary Materials : All physical and electronic embodiments of any GoerTek IPRs, (defined below) including without limitation BOMs, Price Analyses, design, documentation, graphic renderings, industrial design and styling sketches, diagrams, notes, software, firmware, computer files, and memoranda, and including any documents or materials generated from, including, or reflecting any Goertek IPRs (collectively, GoerTek Proprietary Materials), whether generated by VTB, provided by GoerTek, provided by a third party Person designated by GoerTek or VTB, or |
otherwise obtained by VTB or any VTB Representative, shall constitute GoerTeks sole and exclusive property and shall further constitute Confidential Information as defined by Section 8 of this Agreement. Within seven business days of the expiration or early termination of this Agreement or GoerTeks request, all GoerTeks Proprietary Materials under the control of VTB or any VTB Representative shall unconditionally be returned to GoerTek and neither VTB nor any VTB Representatives shall retain any copies of such GoerTek Proprietary Materials (including any electronic or backup copies). Neither VTB nor any VTB Representative shall use any GoerTek Proprietary Material for any purpose other than to manufacture Products for VTB. |
6. | Product Quality and Warranty |
6.1 | Warranty : GoerTek represents and warrants on an ongoing basis that: (a.) all Products shall be free from defects in material, manufacturing, design and workmanship, including, without limitation, cosmetic defects, and shall conform to specifications, all for a period of 12 months from date of delivery, provided , however , that GoerTek shall not be responsible for defects caused exclusively by engineering design errors in Specifications provided by VTB; (b.) VTB will acquire on delivery good, valid and marketable title to the Products and that the Products shall be free and clear of all liens, encumbrances and other restrictions; (c.) Product is new and does not contain used or refurbished parts; (d.) Products designed by GoerTek shall not infringe the intellectual property rights of any third party Person, (e.) Products will be manufactured according to the highest quality workmanship using the Consigned Materials (if provided) and otherwise the best materials according to any applicable BOM or product specifications; (f.) Products are merchantable and are fit for the specific purposes for which the Products are intended to be used, except to the extent that any failure of merchantability or fitness for the purposes intended is caused by VTBs Specifications; and (g.) VTB Products will meet the Specifications, and VTB Products and all other Products will meet the specifications, tolerances and quality metrics specified for such Products, and will be consistent with any samples provided by GoerTek to VTB. |
6.2 | Non-Conforming Products : As to any Products (each, a Non-Conforming Product) which (i) violate any representation or warranty of GoerTek (other than with respect to the representations and warranties contained in Section 6.1(a)), VTB shall be entitled to return to GTK for rework, (or rework through a third party agreed by both VTB and GTK), or a credit equal to the full purchase price if the invoice for such products have been paid and such Non-Conforming Products have been tested as non-conforming prior to resale by VTB or (ii) violate any representation or warranty contained in Section 6.1(a), VTB shall be entitled to a refund equal to 50% of the full purchase price of such Non-Conforming Products. VTB shall use the services of a third party returns and refurbishment vendor (currently Sohnen Enterprises) to test each returned Product and to provide reports documenting the quantity and nature of each defect and will retain the defective product for use in its refurbishment operations. GoerTek shall provide a credit memo or a cash refund if no open invoice, within thirty (30) calendar days after receiving VTBs written request, by bank transfer of immediately available funds to an account designated by VTB. VTB shall be entitled to offset the amount of any future payment to GoerTek by the amount of any unapplied credit memo. VTB shall not be required to return Non-Conforming Products to GoerTek. |
6.3 | Consigned Materials : Consigned Materials means the materials necessary for manufacturing Products that are provided by VTB. VTB agrees to deliver Consigned Materials to the destination designated by GoerTek within the lead-time agreed upon by GoerTek and VTB. VTB will use its best efforts to assure Consigned Materials arrive at GoerTeks factory no later than seven (7) calendar days from the projected arrival date. GoerTek shall not be liable for any delayed shipments of Products to the extent such delay is caused by the late arrival of Consigned Materials. If GoerTek changes the destination, then GoerTek shall be responsible for all costs associated with transferring the Consigned Materials to the new destination. GoerTek shall retain full responsibility for the security and care of Consigned Materials and shall protect VTB against any loss or damage of Consigned Materials. GoerTek shall reimburse VTB for any Consigned Materials not used in the production of Products if, within thirty (30) calendar days after written request, such Consigned Material is not returned to VTB in materially the same condition in which it was provided to GoerTek (ignoring any reductions in quantity or amount resulting from the use of such Consigned Materials). The price and payment terms of the reimbursed parts charged to GoerTek shall be the same as the price paid by VTB. VTB shall pay approved shipping charges on any returned Consigned Material. |
6.4 | Production Waste and Loss : If requested by GoerTek, VTB shall provide up to 1.5% of the total quantity of its Consigned Materials for waste and production loss by GoerTek. As part of its request, GoerTek shall provide detailed information regarding the cause of said production loss and the actions taken to minimize additional loss. GoerTek will immediately notify VTB of poor quality materials if any occurrence shall take place and shall assist VTB in reconciling the settlement of claims against the third-party Person provider of said defective Consigned Materials. With the exception of defective materials, if the monthly waste and production loss of Consigned Materials exceeds 0.5% and GoerTek requests more spare parts, GoerTek shall pay for said additional parts and VTB shall supply said parts at its earliest possible opportunity. The price and payment terms of the additional spare parts charged to GoerTek shall be the same as VTBs buying price and payment terms. |
6.5 | Inventory Management : Upon request, GoerTek shall submit to VTB an inventory reconciliation of all Consigned Materials. Within thirty (30) calendar days following the termination of this Agreement or VTBs written request, as the case may be, GoerTek will return all Consigned Materials to VTB, or to any other location specified by VTB, per the shipping instructions provided by VTB. Approved shipping costs for said return shall be paid by VTB. |
6.6 | Management of equipment, molds, jigs and tools, etc : GoerTek shall be responsible for the management of equipment, molds, toolings, dies, jigs and tools, etc. and measuring instruments and testing apparatus, etc., necessary for production of the Products (hereinafter, the Production Materials), and shall manage the Production Materials such that they keep the necessary accuracy at all times, in order to maintain the quality of the Products. Any Production Materials used to manufacture VTB Products and paid for by VTB (VTB Production Materials) shall be the sole property of VTB. GoerTek shall grant VTB reasonable access to VTB Production Materials at all times, and shall deliver any VTB Production Material in undamaged condition (save ordinary wear and tear) to VTB at an address designated by VTB within 15 calendar days of VTBs written request. In the event of any dispute with VTB, GoerTek shall have no lien over or right to retain any VTB Production Material beyond the time period set forth in this paragraph, and failure to turn over any VTB Production Material within the time period specified by this paragraph shall constitute a material breach. GoerTek may not use or retain any VTB Production Material to satisfy in whole or in part any claim GoerTek may have against VTB. No VTB Production Materials or Consigned Materials shall be used in the manufacture of any non-VTB products, nor used for any other purpose other than manufacturing VTB Products to fulfill GoerTeks responsibilities under this Agreement. |
6.7 | Product Regulations Conformity : Unless otherwise agreed to by VTB in writing and without limitation of any other product quality requirements, Products shall adhere to the following regulations and shall be labeled accordingly: (a.) Product shall comply with the specifications of the CE mark. (b.) Emissions (EMC): CE mark for European Union (EU) market. EN55022 Class B. US/Canadian/Mexico market, FCC Class B verified. (c.) Product Safety: UL flammability rating of 94V-0 and traceable to the UL components directory. (d.) RoHS Directive (the restriction of the use of certain hazardous substances in electrical and electronic equipment). (e.) Product shall comply with any other specifications and requirements designated from time to time by VTB of any government, administrative, industry or other regulation or standard, of the United States, European Union, Japan, or other institution, Person, market or jurisdiction anywhere in the world, and shall be labeled accordingly. |
6.8 |
Hazard Condition : In the event either GoerTek or VTB becomes aware of any information which reasonably supports a conclusion that a defect may exist in any Product and the defect could cause death or bodily injury to any person or property damage (hereinafter a Hazard), the Party becoming aware of this information shall immediately notify the other of the Hazard. Whenever possible, notification to the other Party shall precede notice to any governmental agency, unless required by law. GoerTek and VTB shall promptly exchange all relevant data and then, if practical, as promptly as possible, meet in person or telephonically to review and discuss the information, tests, and conclusions relating to the alleged Hazard. At this meeting the parties shall discuss the basis for any action, including a recall, and the origin or causation of the alleged Hazard, provided, however, that the VTB shall have the right to make the ultimate decision as to any recall or other method of addressing a Hazard. The Seller agrees and undertakes that it will indemnify and hold VTB and its Affiliates harmless from and against any and all claims, demands, causes of action, actions or suits, whether at law or in equity, judgments, decrees, damages, or any liability whatsoever asserted or entered against VTB arising out of or relating to any Hazard, except to the extent such Hazard is caused exclusively by a defect in VTBs design as set forth in the Specifications (a VTB Hazard). GoerTek shall be solely responsible for all costs of all Hazards other than VTB Hazards, including the costs of effecting a recall and the related reasonable out-of-pocket |
costs to VTB and its customers. Each Party shall, on request, provide to the other reasonable assistance in (a.) determining how best to deal with the Hazard; and (b.) preparing for and making any presentation before any governmental agency which may have jurisdiction over Hazards involving Products. |
6.9 | Defective Product Condition : In the event either GoerTek or VTB becomes aware of any information which reasonably supports a conclusion that a defect may exist in any Product and the defect could cause said Product to be returned by VTBs Customers (hereinafter a Defect), the Party becoming aware of this information shall immediately notify the other of the Defect. Whenever possible, notification to the other Party shall precede notice to any governmental agency, unless required by law. GoerTek and VTB shall promptly exchange all relevant data and then, if practical, as promptly as possible, meet to review and discuss the information, tests, and conclusions relating to the alleged Defect. At this meeting the parties shall discuss the basis for any action, including a recall, and the origin or causation of the alleged Defect, provided , however , that the VTB shall have the right to make the ultimate decision as to any recall or other method of addressing a Hazard. GoerTek agrees and undertakes that it will indemnify and hold VTB and its Affiliates harmless from and against any and all claims, demands, causes of action, actions or suits, whether at law or in equity, judgments, decrees, damages, or any liability whatsoever asserted or entered against VTB arising out of or relating to any Defect, except to the extent such Hazard is caused exclusively by a defect in VTBs design as set forth in the Specifications (a VTB Defect). GoerTek shall be solely responsible for all costs of all Defects other than VTB Defects, including the costs of effecting a recall and the related reasonable out-of-pocket costs to VTB and its customers. Each Party shall, on request, provide to the other reasonable assistance in (a.) determining how best to deal with the Defect; and (b.) preparing for and making any presentation before any governmental agency which may have jurisdiction over Defects involving Products. |
7. | Additional Covenants |
7.1 | Exclusivity : GoerTek shall manufacture VTB Products exclusively for VTB, and shall not provide any VTB Product or derivative thereof to any other Person. Without limitation of the foregoing, GoerTek and the GoerTek Parent Company shall not, and shall cause each of their respective Affiliates not to, sell VTB Products or derivatives thereof under a different label in the PRC or any other market. |
7.2 | Most Favored Pricing : Notwithstanding anything expressed or implied to the contrary in this Agreement, GoerTek shall provide terms and conditions for the purchase of the Components and Services by VTB that are no less favorable to VTB than those offered from time to time by GoerTek or any of its Affiliates to any other customer for similar Components or Services on a worldwide basis irrespective of volume commitments. |
7.3 | Working Conditions : GoerTek shall, and shall cause its Affiliates and Vendors to, comply with all applicable PRC laws, regulations, and guidelines relating to employment, working conditions, occupational health and safety, and environmental compliance, and, without limitation of any other remedy available to VTB hereunder, GoerTek shall defend, indemnify, and hold harmless VTB, its OEM customers, and their respective directors, officers, employees, agents, customers and distributors from any damage to any of their reputations, business, or public image as a result of GoerTeks violation of this Section 7.3. |
7.4 | Audit Rights : VTB shall have the right, at any time and from time to time during the term of this Agreement, to audit GoerTeks compliance with the terms of this Agreement (an Audit). VTB may appoint one or more independent auditors (an Independent Auditor) to assist with an Audit. The scope of an Audit may include, without limitation, the accuracy of any Price Analysis or BOM, compliance with GoerTeks obligations of confidentiality, compliance with the most favored pricing obligation set forth in Section 7.2 hereof, and compliance with the provisions relating to VTB IPR. |
GoerTek shall, and shall cause each Vendor and GoerTek Representative to, co-operate fully with any Audit and provide any materials reasonably requested in connection therwith. Without limitation of the generality of this obligation, VTB and any Independent Auditor may inspect, during normal business hours, the premises and facilities of GoerTek and GoerTek Representatives. GoerTek shall further make its, and each of its Affiliates, Vendors, employees, contractors, directors, officers and other representatives available for interview by VTB and any Independent Auditor at reasonable times and places, and shall cause all such Persons to cooperate fully with any Audit, and shall promptly provide any books, records, or other documents requested by VTB or an Independent Auditor in such form as may be requested by VTB or such Independent Auditor.
GoerTek shall retain and preserve all contracts, emails, purchase orders, projections, shipping receipts, production notes, and other documents concerning or relating to any provision of this Agreement for a period of at least two years from the date such document was created or received.
VTB shall pay for the full costs and fees associated with any Independent Auditor, provided, however, that GoerTek shall pay, on time and in full, the full costs and fees of an Independent Auditor if the Independent Auditors report reflects any breach by GoerTek of this Agreement. To the extent that VTB has paid or pays any such costs or fees, GoerTek shall reimburse VTB for such costs and fees within ten calendar days of being notified of the relevant amount by VTB.
Notwithstanding anything to the contrary in this Section 7.5, to the extent Goertek is unable to disclose or make available information as a result of a bona fide contractual confidentiality obligation with third parties or under applicable law, Goertek may redact or anonymize such information to the extent necessary to comply with such obligations or laws.
8. | Confidential Information, Liability and Indemnification |
8.1 | Confidential Information : Confidential information means any and all confidential and proprietary information, including both technical and non-technical information, exchanged among the Parties at any time, before or after the date of this Agreement, whether verbally or in writing or by other means, and including: (a) copyright, trade secret and proprietary information; (b) techniques, algorithms, firmware and software programs related to the current, future and proposed business, products and service of a Party; (c) information concerning research, engineering, industrial design and styling; (d) financial information, procurement requirements, purchasing information, customer lists, business forecasts, sales and merchandising information, marketing plans and marketing information; (e) the terms and conditions of this Agreement; or (f) any other information that has been designated as Confidential. Each Party shall at all times, both during the term of this Agreement and after its expiration, keep in confidence, and not disclose to any third party, any Confidential Information of the other Parties and shall not use such Confidential Information without the protected Partys express written consent except in the performance of its duties or as contemplated under this Agreement. GoerTek and the GoerTek Parent Company agree that they shall not disclose VTBs Confidential Information to their own employees, advisors, agents or independent contractors except to the extent necessary for the purposes permitted under this Agreement and in such case, only if the disclosing Party (a.) first obtains from such parties a signed confidentiality agreement with terms at least as restrictive as those specified in this Agreement and which expressly names VTB as an intended third-party beneficiary with standing to sue and (b.) first provides a copy of said confidentiality agreement to VTB. |
8.2 | Protection of Confidential Information : Each Party will take reasonable measures to maintain the confidentiality of the Confidential Information, but not less than the measures it uses for its own Confidential Information of similar type. Each Party will immediately give notice to the other Parties of any unauthorized use or disclosure of the Confidential Information. Each Party agrees to assist the other Parties in remedying such unauthorized use or disclosure of the Confidential Information. The foregoing obligation, and the obligations described in Section 8.1, will not apply to the extent that the receiving Party can demonstrate that the disclosed information is: (i) information which it learned from a third party Person having the right to make the disclosure, provided the restricted Party complies with any restrictions imposed by the third party Person; (ii) information which is rightfully in the restricted Partys possession prior to the time of disclosure by the protected Party and not acquired by the restricted Party under a confidentiality obligation; or (iii) information which enters the public domain without breach of confidentiality by the restricted Party or any other Person under a duty of confidentiality. In the event that any Party is requested or becomes legally compelled (including, pursuant to any applicable tax, securities, stock exchange rules or regulations or other laws and regulations of any jurisdiction) to disclose any Confidential Information, such Party shall provide the protected Party with prompt written notice of that fact and shall consult with the protected Party regarding such disclosure. At the request of the protected Party, the restricted Party shall, to the extent available, seek a protective order, confidential treatment or other appropriate remedy. In any event, the restricted Party shall furnish only that portion of the Confidential Information that is legally required to be disclosed and shall use its best efforts to obtain reliable assurance that confidential treatment will be accorded such information. |
8.3 | Limitation of Liability : VTBs liability to GoerTek under this Agreement shall be limited to the total purchase price for Products duly ordered according to valid POs issued by VTB and accepted by GoerTek and the cost of any Remaining Materials. |
8.4 | GoerTek Indemnification : Without limitation of any other remedy available to VTB, GoerTek agrees to defend, indemnify and hold harmless VTB, its OEM customers, and their respective directors, officers, employees, agents, customers and distributors from and against any and all claims, actions, demands, legal proceedings, liabilities, damages, judgments, settlements, reasonable costs and expenses, including, without limitation, attorneys reasonable fees and costs, arising out of or in connection with any alleged or actual: (a.) breach of any of GoerTeks covenants, representations, or warranties contained in this Agreement; (b.) violation by GoerTek of any governmental laws, rules, ordinances or regulations; (c.) claim arising out of or relating to Products that contain used or refurbished parts (except to the extent that VTB expressly orders such Products in an accepted PO and such Products are clearly and conspicuously labeled by GoerTek as containing used or refurbished parts); (d.) products liability claim or other claim relating to the quality, manufacture, safety, or function of any Products, except to the extent such claim arises solely from defects in VTBs design or actions by VTB; (e.) claim by or on behalf of Vendors or agents that is related to the purchase of the Products by VTB under this Agreement or (f) infringement of any intellectual property rights held by a third party with respect to IPRs provided by GoerTek or any of its Affiliates to VTB. |
8.5 | VTB Indemnification: Without limitation of any other remedy available to GoerTek, VTB agrees to defend, indemnify and hold harmless GoerTek and its Representative and their respective directors, officers, employee, attorneys, and agents, and its successors, licensee and assigns (the GoerTek Indemnified Parties) from any and all claims which may be obtained against, imposed upon or suffered by the GoerTek Indemnified Parties by reason of or arising out of any infringement of any intellectual property right held by a third party with respect to IPRs provided by VTB or any of its Affiliates to GoerTek. |
9. | Termination and Term of Agreement |
9.1 | Term of Agreement : This Agreement shall begin on the Effective Date and continue for a period of 2 years from the date hereof (the Initial Term), unless earlier terminated under any of the following provisions: |
a) | Breach: GoerTek may terminate this Agreement, effective sixty (60) calendar days after serving written notice, if VTB commits a material breach of the terms hereof, unless, in the case of a breach capable of remedy; (a.) specific action to cure the breach is taken within thirty (30) calendar days of the receipt by the defaulting Party of notice specifying the breach and requiring its remedy; (b.) the breach is remedied in all material respects within sixty (60) calendar days of the receipt by the breaching Party of notice specifying the breach, and; (c.) the breaching Party takes prompt and reasonable action to minimize the effect of such breach and to prevent future such breaches. VTB may terminate this Agreement, effective sixty (60) calendar days after serving written notice, if GoerTek or the GoerTek Parent Company commits a material breach of the terms hereof, unless, in the case of a breach capable of remedy; (a.) specific action to cure the breach is taken within thirty (30) calendar days of the receipt by the defaulting Party of notice specifying the breach and requiring its remedy; (b.) the breach is remedied in all material respects within sixty (60) calendar days of the receipt by the breaching Party of notice specifying the breach, and; (c.) the breaching Party takes prompt and reasonable action to minimize the effect of such breach and to prevent future such breaches. |
b) | Insolvency: GoerTek may terminate this Agreement upon seven (7) calendar days notice if VTB (a.) enters into bankruptcy, liquidation, or similar proceedings, or; (b.) becomes insolvent or unable to pay its debts in the ordinary course of business, or; (c.) ceases doing business as an ongoing concern. VTB may terminate this Agreement upon seven (7) calendar days notice if GoerTek or the GoerTek Parent Company (a.) enters into bankruptcy, liquidation, or similar proceedings, or; (b.) becomes insolvent or unable to pay its debts in the ordinary course of business, or; (c.) ceases doing business as an ongoing concern |
9.2 | Extension : This Agreement will automatically renew for an extended term of one year at the expiration of the Initial Term or any extension thereof, unless either GoerTek or VTB provides written notice of non-renewal to the other of such Parties at least 60 calendar days prior to such expiration. |
9.3 | Surviving Termination : At least ten (10) calendar days prior to the termination date of this Agreement, GoerTek will provide unambiguous and thorough documentation as necessary for VTB to reconcile its Consigned Materials and other inventory held by GoerTek and to carry on its activities with Vendors as provided in this Agreement, including Vendor contact information, purchasing records, etc. For a period of six (6) months following the termination date of this Agreement, GoerTek will provide VTB with reasonable assistance and information to facilitate the return of Consigned Materials and other inventory materials to VTB and for the uninterrupted continuation of VTBs purchasing activities initiated under this Agreement. After the expiration or early termination of this Agreement in accordance with the terms hereof, this Agreement shall forthwith become null and void, and there shall be no further liability or obligation on the Parties; provided, however, that (i) this Section 9.3 and Sections 1, 5, 6, 7.1, 7.3, 8, and 10 shall survive termination of this Agreement, and (ii) each Party shall remain liable to the other Parties for any breach of this Agreement existing at the time of such termination or in respect of any PO accepted prior to termination. |
10. | General |
10.1 | Governing Law and Dispute Resolution : This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to its conflicts of law principles. The United Nations Convention on Contracts for the International Sale of Goods (CISG) shall not apply. |
The Parties shall use good faith efforts to resolve any dispute, controversy or claim arising out of, relating to or in connection with this Agreement or the breach, termination or invalidity thereof (Dispute) through friendly consultations among the Parties. If no settlement is reached within twenty (20) calendar days from the date one Party notifies another Party in writing of its intention to submit the Dispute to arbitration in accordance with this clause, then any such Dispute will be finally and exclusively settled by arbitration by the Hong Kong International Arbitration Center (HKIAC) in accordance with the HKIAC Administered Arbitration Rules as then in effect and as may be amended by this Article Dispute Resolution.
The place of arbitration will be in Hong Kong at the HKIAC. The arbitration proceedings will be conducted in English. The arbitration tribunal (Tribunal) will consist of three (3) members. GoerTek and the GoerTek Parent Company will together select one (1) arbitrator, and VTB will select one (1) arbitrator. Each Party-appointed arbitrator shall be appointed within twenty (20) days of commencement of the arbitration. The presiding arbitrator will be selected by agreement between the arbitrators selected by the Parties or, failing agreement within ten (10) calendar days of the appointment of the arbitrators selected by the Parties, by the Secretary General of the HKIAC.
Without limiting the power of the Tribunal to issue any particular type of relief, the Tribunal is specifically empowered to award preliminary and permanent equitable or injunctive relief, specific performance and/or damages. The Tribunal shall award the costs of arbitration (including, without limitation, witness expenses and attorneys fees) against the losing party, unless the Tribunal specifically determines that such an award would be unjust.
In any arbitration proceeding, each Party will cooperate with the other Parties in making full disclosure of and providing complete access to all information and documents requested by such other Party which are reasonably likely to be relevant to the contested issues in such arbitration proceeding, subject to any confidentiality obligations to third parties binding on such Party, and subject to the attorney-client and related privileges against disclosure.
The arbitration award will be final and binding on the Parties, and the Parties agree to be bound thereby and to act accordingly. Any arbitration award may be enforced by any court having jurisdiction over the Party against which the award has been rendered, or wherever assets of that Party are located, and will be enforceable in accordance with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) or under the Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland China and the Hong Kong Special Administrative Region, as the case may be. The costs (including, without limitation, attorneys fees) of enforcing the arbitration award shall be borne by the party resisting such enforcement.
10.2 | Notices : Any notice or other communication under this Agreement shall be in writing and shall be deemed to have been fully given or made when personally delivered, delivered by a reputable express courier service, or when sent by electronic mail to the addresses set forth below if sent between 8:00 a.m. and 5:00 p.m. recipients local time on a Business Day, or on the next Business Day if sent by electronic mail to the addresses set forth below if sent other than between 8:00 a.m. and 5:00 p.m. recipients local time on a Business Day, or three (3) calendar days after being mailed by registered or certified mail, postage prepaid, to the following addresses or such other addresses as a Party may provide by notice to the other Party from time to time: |
For GoerTek and GoerTek Parent Company legal matters: |
Att: Long Jiang, President | |
long.jiang@goertekusa.com 2620 Augustine Dr., Suite 245, Santa Clara CA 95054 |
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For GoerTek and GoerTek Parent Company purchasing, delivery, and financial matters: |
Att: Tina Ren, Account Manager | |
tina.ren@goertek.com 5F, No. 3 Building, Fortune Centre No. 18, Qinling Road, Laoshan District Qingdao, 266061 China |
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For GoerTek and GoerTek Parent Company project development matters: |
Att: Kenneth Li, Program Manager | |
kenneth.li@goertek.com Joe Lu, Product Manager Joe.Lu@goertekusa.com 2620 Augustine Dr., Suite 245, Santa Clara CA 95054 |
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For VTB legal and technical matters: | Att: Carmine J. Bonanno, President and CEO | |
Carmine@voyetra.com 150 Clearbrook Rd., Ste 162 Elmsford, NY 10523 |
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For VTB purchasing and delivery matters: |
Att: Frederick J. Romano, Executive VP and COO Fred@voyetra.com Cc: Scott Rankin, Director of Operations srankin@voyetra.com 150 Clearbrook Rd., Ste 162 Elmsford, NY 10523 |
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For VTB financial matters: |
Att: Bruce Murphy, CFO Bruce.murphy@turtlebeach.com cc: Rhonda Robinson, Director of Finance Rhonda@voyetra.com cc: Frederic J. Romano, Executive VP and COO Fred@voyetra.com 150 Clearbrook Rd., Ste 162 Elmsford, NY 10523 |
10.3 | Assignment : Neither this Agreement, nor any rights or obligations contained therein, may be assigned or delegated by GoerTek or the GoerTek Parent Company without the prior written consent of VTB, and any such purported assignment or delegation shall be void and of no effect. This Agreement shall be binding on the Parties and their respective successors and permitted assigns. |
10.4 | Amendments and Waivers : No amendment, modification or waiver of any provision of this Agreement shall be effective unless set forth in a writing executed by an authorized representative of each Party. No failure or delay by any Party in exercising any right, power or remedy will operate as a waiver of any such right, power or remedy. No waiver of any provision of this Agreement shall constitute a continuing waiver or a waiver of any similar provision unless expressly set forth in a writing signed by an authorized representative of each Party. |
10.5 | Compliance with Law : Each Party agrees to comply with all applicable laws, rules, regulations, orders and ordinances of the United States and in any other state or country with jurisdiction over the Party or the Partys activities in performance of its obligations hereunder, including, without limitation, all applicable import or export regulations and all licensing or permitting requirements. |
10.6 | Severability : Should any provision herein be held by a court of competent jurisdiction to be illegal, invalid or unenforceable, such provision shall be modified to reflect the intentions of the Parties. All other terms and conditions shall remain in full force and effect. All headings and section captions in this Agreement are for reference only and shall not be considered in construing this Agreement. |
10.7 | Independent Parties : The relationship created between GoerTek and VTB under this Agreement shall be that of seller and purchaser. Neither GoerTek nor any GoerTek Representative shall under any circumstances be deemed agents or representatives of VTB and GoerTek shall have no right to enter into any contracts or commitments in the name or on behalf of VTB or to bind VTB in any respect whatsoever, except as VTB may specifically authorize in writing. |
10.8 | Force Majeure : No Party will be liable for any delay in performing under this Agreement to the extent such delay is caused by weather, fire, explosion, floods, riots or civil disturbances, in each case to the extent such condition is beyond the Partys reasonable control. Such delay, however, shall only be excused for the period during which such condition continues. |
10.9 | Specific Performance : Each Party hereto agrees that its obligations hereunder are necessary and reasonable in order to protect the other Parties to this Agreement, and each Party expressly agrees and understands that monetary damages would inadequately compensate an injured Party for the breach of this Agreement, that this Agreement shall be specifically enforceable, and that, in addition to any other remedies that may be available at law, in equity or otherwise, any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order, without the necessity of proving actual damages or posting bond. Further, each Party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach. |
10.10 | Parent Company Guarantee : The GoerTek Parent Company hereby unconditionally and irrevocably guarantees to VTB each obligation of GoerTek under this Agreement, and any accepted PO under this Agreement, in accordance with the terms and conditions contained herein and therein. The liability of the GoerTek Parent Company as aforesaid shall not be released or diminished by any arrangements or alterations of terms of this Agreement or any forbearance, compromise, neglect or delay in seeking performance of the obligations hereby imposed or any granting of time for such performance or the dissolution or insolvency or liquidation or any change in the constitution or the status of the GoerTek Parent Company or GoerTek. The GoerTek Parent Company hereby waives any rights which it may have to require VTB to proceed first against or claim payment from GoerTek. This guarantee is to be a continuing security to VTB. The GoerTek Parent Companys obligations under this Section 10.10 are primary obligations and not those of a mere surety. The GoerTek Parent Company agrees that if any obligation in this Agreement may not be enforceable against or recoverable from GoerTek by reason of any legal limitation, disability or incapacity of such entity or any other fact or circumstance, such obligation shall nevertheless be enforceable against or recoverable from the GoerTek Parent Company as though the same had been incurred by it and it was the sole or principal obligor in respect thereof and shall be performed or paid by it on demand. |
10.11 | Interpretation : When a reference is made in this Agreement to Sections, paragraphs or Schedules, such reference shall be to a Section, paragraph, or Schedule to this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words include, includes or including are used in this Agreement, they shall be deemed to be followed by the words without limitation. The words hereof, herein and hereunder and words |
of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The terms defined in the singular have a comparable meaning when used in the plural, and vice versa. References herein to any gender include each other gender. The Schedules hereto are an integral part of this Agreement and shall be deemed part of this Agreement and included in any reference to this Agreement. In this Agreement, following terms shall have the meanings ascribed to them below |
10.12 | Entire Agreement : This Agreement sets forth the entire agreement and understanding of the Parties relating to the subject matter contained herein, and merges all prior discussions and agreements, both oral and written, matter contained herein, and merges all prior discussions and agreements, both oral and written, between the Parties. Any POs issued by VTB to GoerTek after the Effective Date shall be governed by this Agreement and not by any prior agreement between VTB and GoerTek. |
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the day and year first written herein. |
Agreed to and accepted on behalf of VTB: |
Agreed to and accepted on behalf of GoerTek: |
|||||||||||
[Company Chop and Authorized Signature Below] | ||||||||||||
By: |
/s/ Frederick J. Romano |
1/20/2012 |
By: |
/s/ Long Jiang |
1/17/2012 |
|||||||
Frederick J. Romano, Exec VP, COO | Date | Long Jiang, Legal Representative | Date | |||||||||
Agreed to and accepted on behalf of the GoerTek Parent Company: |
||||||||||||
[Company Chop and Authorized Signature Below] | ||||||||||||
By: |
1/17/2012 |
|||||||||||
[X], Legal Representative | Date |
Exhibit 10.12
RIGHT OF FIRST REFUSAL AGREEMENT
This Right of First Refusal Agreement (this Agreement ), dated as of January 7, 2011 by and between VTB Holdings, Inc., a Delaware corporation (the Company ) and the holders of the Companys Series B Preferred Stock (each, a Series B Preferred Stockholder and together with any transferees or additional holders of the Series B Preferred Stock, the Series B Preferred Stockholders ).
RECITALS
A. This Agreement is being entered into in connection with the consummation of the reorganization transactions contemplated by that certain Contribution Agreement (the Contribution Agreement ) dated January 7, 2011 by and among Voyetra Turtle Beach, Inc., the Company, and the other signatories thereto.
B. The parties hereto desire to enter into this Agreement to govern certain of their rights, duties and obligations with respect to the Companys Series B Preferred Shares.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants herein, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1. Defined Terms . As used in this Agreement, the following terms shall have the following respective meanings:
Affiliate means, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, ten percent (10%) or more of the stock having ordinary voting power in the election of directors of such Person, (ii) each Person that controls, is controlled by or is under common control with such Person, and (iii) each of such Persons officers, directors, managers (in the case of any Person that is a manager-managed limited liability company), and general partners. For the purpose of this definition, control of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. With respect to any natural person, Affiliates shall also include, without limitation, such persons spouse, issue, parents, siblings, and any trust the beneficiaries or grantor of which are limited solely to such person and/or such other persons.
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Authority means the United States of America or any other nation, any state or other political subdivision thereof, or any entity, agency or authority (foreign, federal, state or local) exercising executive, legislative, judicial, regulatory or administrative functions of government or any court, tribunal or arbitrator, and any self-regulatory organization.
Board of Directors means the Board of Directors of the Company.
Business Day means any day other than a Saturday, Sunday or day on which banks are permitted or required to close in the State of New York.
Permitted Transferee means in the case of any Series B Preferred Stockholder that is or becomes a party to this Agreement and its Permitted Transferees, (A) such Series B Preferred Stockholder, or (B) the spouse or lineal descendants, heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of such Series B Preferred Stockholder, or (C) any trust, the beneficiaries of which, any charitable trust, the grantor of which, or any corporation, limited liability company, partnership or other entity, the stockholders, members, general or limited partners or owners of which include only such Series B Preferred Stockholder or its Permitted Transferees.
Person means an individual, a general or limited partnership, a corporation, a limited liability company, an association, a joint stock company, a business or other trust, a joint venture, a company, an unincorporated organization, an Authority or any other legal entity.
SEC means the Securities and Exchange Commission.
Series B Preferred Shares means shares of the Companys Series B Preferred Stock.
Series B Preferred Stock means the Companys Series B Preferred Stock, par value $.01.
Stripes Group means SG VTB Holdings, LLC and its transferees and assigns.
Transfer means the making of any sale, exchange, assignment, hypothecation, gift, security interest, pledge or other encumbrance, or any contract therefor, any voting trust or other agreement or arrangement with respect to the transfer or grant of voting rights or any other beneficial interest in any of the Series B Preferred Shares, the creation of any other claim thereto or any other transfer or disposition whatsoever, whether voluntary or involuntary, affecting the right, title, interest or possession in or to such Series B Preferred Shares.
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ARTICLE II
RESTRICTIONS ON TRANSFERABILITY
2.1. Restrictions on Transfer . Each Series B Preferred Stockholder agrees not to Transfer any Series B Preferred Shares (or solicit any offers in respect of any Transfer of any Series B Preferred Shares) other than upon the conditions specified under Sections 2.2 , 3.1 or 3.2 of this Agreement.
2.2. Permitted Transferees . Notwithstanding anything in this Agreement to the contrary, any Series B Preferred Stockholder may at any time Transfer any or all of its Series B Preferred Shares to one or more of its Permitted Transferees without compliance with Sections 3 so long as (i) Series B Preferred Stockholder provides the Company notice of the proposed Transfer to its Permitted Transferee at least fifteen (15) days in advance of such Transfer, (ii) such Permitted Transferee shall have agreed in writing to be bound by the terms of this Agreement and (iii) the Transfer to such Permitted Transferee is not in violation of applicable federal or state securities laws, as reasonably determined by the Company.
2.3. Effect of Prohibited Transfers . If any Transfer is made or attempted contrary to the provisions of this Agreement, such purported Transfer shall be void ab initio and the Company shall not register such attempted Transfer on its books. In such event, the Company and the other parties hereto shall have, in addition to any other legal or equitable remedies that they may have, the right to enforce the provisions of this Agreement by actions for specific performance (to the extent permitted by law), and the Company shall have the right to refuse to recognize any transferee for any purpose.
ARTICLE III
RIGHTS OF REFUSAL
3.1. Stockholder Right of First Refusal .
(a) In the event that any Series B Preferred Stockholder proposes to sell any or all of such Series B Preferred Stockholders Series B Preferred Shares pursuant to a bona fide written offer from an unaffiliated third party, prior to accepting such offer, such Series B Preferred Stockholder (the Selling Stockholder ) will first offer to sell such Series B Preferred Shares to the Company pursuant to this Article III .
(b) The Selling Stockholder shall deliver a written notice of any such bona fide offer (a Sale Notice ) to the Company, describing in reasonable detail the Series B Preferred Shares proposed to be sold, the name of the transferee, the purchase price and all other material terms of the proposed Transfer. Upon receipt of a Sale Notice, the Company shall have the right and option, for fifteen (15) days from the date of the Sale Notice, to notify the Selling Stockholder of an intent to purchase all or any part of the Series B Preferred Shares proposed to be sold by the Selling Stockholder at the price per share and on the terms of the proposed
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Transfer set forth in the Sale Notice. Within fifteen (15) days after receipt of the Sale Notice, the Company shall deliver a written notice to the Selling Stockholder (a Stockholder Response Notice ) stating whether or not the Company wishes to purchase all or any part of such offered Series B Preferred Shares. Absent the delivery of a Stockholder Response Notice to the Selling Stockholder within the fifteen (15) day period following receipt of the Sale Notice, the Company shall be deemed to have waived its right of first refusal under this Section 3.1(b). If the Company elects to purchase all or any part of the offered Series B Preferred Shares, the closing of the purchase and sale of such Series B Preferred Shares shall be held at the place and on the date established in the Stockholder Response Notice, which in no event shall be less than ten (10) or more than forty-five (45) days from the date of such Stockholder Response Notice. In any case where non-fungible property such as real estate constitutes part of the purchase price included in the bona fide offer or where any aspect of the terms of such offer depends on the unique attributes of the proposed transferee or otherwise cannot be precisely and reasonably duplicated by someone other than such transferee, purchases by the Company shall be made on terms that constitute the reasonable economic equivalent of the price and terms of such bona fide offer, as determined by the Board of Directors in good faith.
(c) In the event that the Company does not elect to purchase all of the offered Series B Preferred Shares, the Selling Stockholder may, subject to the other provisions of this Agreement, sell the portion of the offered Series B Preferred Shares not purchased by the Company to the transferee specified in the Sale Notice at a price no less than the price specified in the Sale Notice and on other terms no more favorable to the transferee(s) thereof than specified in the Sale Notice during the forty-five (45)-day period immediately following the last date on which the Company could have elected to purchase the offered Series B Preferred Shares; provided , however , that no such sale shall be made unless the transferee executes and delivers a joinder to this Agreement in accordance with Section 5.2 hereof. Any such Series B Preferred Shares not transferred within such forty-five (45)-day period will be subject to the provisions of this Article III upon subsequent Transfer.
ARTICLE IV
CONFIDENTIALITY
4.1. Confidentiality . Each Series B Preferred Stockholder agrees that it will keep confidential and will not disclose, divulge or use for any purpose, other than to monitor its investment in the Company, any confidential information or data obtained from the Company or any of its subsidiaries (other than information or data that is or becomes available to the public other than as a result of a breach of this Article IV ); provided , however , that each Series B Preferred Stockholder may disclose confidential information (a) to such Series B Preferred Stockholders Affiliates and officers, directors, principals, employees, advisors, auditors, agents, bankers and other representatives if the Series B Preferred Stockholder informs such Persons of the confidential nature of such information and takes reasonable steps to ensure that such Persons treat such information as confidential or (b) as may otherwise be required by applicable law. Nothing in this Article IV shall limit the confidentiality obligations of the Series B Preferred Stockholders under applicable law or any other agreements to which they may be party.
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ARTICLE V
MISCELLANEOUS
5.1. Termination of Prior Agreement . The parties hereto agree that that certain Right of First Refusal Agreement between Voyetra Turtle Beach, Inc. and the holder specified therein, dated October 12, 2010, is hereby terminated and of no further force or effect.
5.2. Legend . Each certificate evidencing Series B Preferred Shares, if any, shall bear the following legend (in addition to any other legend required under applicable law):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF WITHOUT REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OR THE DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE TERMS AND CONDITIONS OF A RIGHT OF FIRST REFUSAL AGREEMENT BY AND BETWEEN THE COMPANY AND THE HOLDERS SPECIFIED THEREIN, AS AMENDED FROM TIME TO TIME (THE RIGHT OF FIRST REFUSAL AGREEMENT), A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE, TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF THE SECURITIES IS SUBJECT TO THE TERMS OF SUCH AGREEMENT AND THE SECURITIES ARE TRANSFERABLE OR OTHERWISE DISPOSABLE ONLY UPON PROOF OF COMPLIANCE THEREWITH.
5.3. Additional Stockholders . The issuance to, or transfer of any Series B Preferred Shares by, any Series B Preferred Stockholder (including via the exercise of any option to purchase the Companys Common Stock) shall be contingent upon the holder becoming a party to this Agreement by executing and delivering a joinder to this Agreement satisfactory in form and substance to the Company which joinder provides that such transferee agrees to be fully bound by this Agreement.
5.4. Amendment; Waiver . This Agreement may be amended or modified, or any provision hereof may be waived; provided that such amendment, modification or waiver is set forth in a writing executed by the Company and the Series B Preferred Stockholders that own among them more than 50% of the Series B Preferred Shares. Any amendment or waiver effected in accordance with this Section shall be binding upon the each of the Series B Preferred Stockholders and each future holder of any of such Series B Preferred Shares, and the Company.
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5.5. Termination . This Agreement shall terminate immediately upon the redemption of all of the Series B Preferred Shares.
5.6. Severability . The invalidity or unenforceability of any particular provision, or part of any provision, of this Agreement shall not affect the other provisions or parts hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions or parts were omitted. Upon any such determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
5.7. Governing Law; Submission to Jurisdiction; Trial by Jury . This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of the State of New York (and United States federal law, to the extent applicable), irrespective of the principal place of business, residence or domicile of the parties hereto, and without giving effect to otherwise applicable principles of conflicts of law. Nothing contained herein shall prevent or delay any party hereto from seeking, in any court of competent jurisdiction, specific performance or other equitable remedies in the event of any breach or intended breach by any other party hereto of any of its obligations hereunder. Each of the parties hereto hereby irrevocably submit to the jurisdiction of the courts of the State of New York and the federal courts of the United States of America located in the United States District Court for the Southern District of New York solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby and thereby. Each of the parties hereto irrevocably agrees that all claims in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby and thereby, or with respect to any such action or proceeding, shall be heard and determined in such a New York State or federal court, and that such jurisdiction of such courts with respect thereto shall be exclusive, except solely to the extent that all such courts shall lawfully decline to exercise such jurisdiction. Each of the parties hereto hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document or in respect of any such transaction, that it is not subject to such jurisdiction. Each of the parties hereto hereby waives, and agrees not to assert, to the maximum extent permitted by law, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document or in respect of any such transaction, that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. The parties hereto hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 5.8 or in such other manner as may be
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permitted by law, shall be valid and sufficient service thereof. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
5.8. Entire Agreement . This Agreement constitutes the entire agreement among all the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings.
5.9. Notices . All notices or other communications permitted or required under this Agreement shall be in writing and shall be sufficiently given if and when hand delivered to the Persons set forth below or if sent by documented overnight delivery service or registered or certified mail, postage prepaid, return receipt requested, or by facsimile, receipt acknowledged, addressed as set forth below or to such other Person or Persons and/or at such other address or addresses as shall be furnished in writing by any party hereto to the others. Any such notice or communication shall be deemed to have been given as of the date received, in the case of personal delivery, on the Business Day following delivery to a overnight courier service in the case of overnight delivery, three Business Days following deposit by regular U.S. mail in the case of a mailing, or on the date shown on the receipt or confirmation therefor in all other cases (including electronic confirmation of facsimile delivery)
(a) | if to the Company, to: |
VTB Holdings, Inc.
150 Clearbrook Rd. Suite 162
Elmsford, NY 10523
Facsimile: (914) 345-2252
Attention: Carmine Bonanno
with a copy to:
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, PA 19102
Facsimile: (215) 994-2222
Attention: Henry N. Nassau, Esq. and David S. Denious, Esq.
(b) If to any of the Series B Preferred Stockholders, to such Series B Preferred Stockholders address as set forth in Exhibit A hereto.
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5.10. Construction . Within this Agreement, the singular shall include the plural and the plural shall include the singular, and any gender shall include all other genders, all as the meaning and the context of this Agreement shall require. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word including shall mean including without limitation.
5.11. Section Headings and Defined Terms . The section headings contained herein are for reference purposes only and shall not in any way affect the meaning and interpretation of this Agreement. The terms defined herein and in any agreement executed in connection herewith include the plural as well as the singular and the singular as well as the plural, and the use of masculine pronouns shall include the feminine and neuter. Except as otherwise indicated, all agreements defined herein refer to the same as from time to time amended or supplemented or the terms thereof waived or modified in accordance herewith and therewith.
5.12. Party No Longer Owning Securities . If a party hereto ceases to own any securities of the Company, such party will no longer be deemed to be a Stockholder for purposes of this Agreement.
5.13. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original (including facsimile or pdf signatures); and any Person may become a party hereto by executing a counterpart hereof, but all of such counterparts together shall be deemed to be one and the same instrument. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. The parties hereto may deliver this Agreement by facsimile or pdf signature, and each party shall be permitted to rely upon the signatures so transmitted to the same extent and effect as if they were original signatures.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this Right of First Refusal Agreement as of the date first set forth above.
VTB HOLDINGS, INC. | ||
By |
/s/ Kenneth A. Fox |
|
Name: | Kenneth A. Fox | |
Title: | President | |
SERIES B PREFERRED STOCKHOLDERS | ||
By |
/s/ John Bonanno |
|
John Bonanno |
[Signature Page to Right of First Refusal Agreement]
EXHIBIT A
(To the Right of First Refusal Agreement)
SCHEDULE OF STOCKHOLDERS
Shares of | ||||||
Series B | ||||||
Preferred | ||||||
Stock | ||||||
Name |
Address |
Owned |
||||
John Bonanno |
215 E. 77th Street New York, NY 10021 USA |
1,000,000 | ||||
TOTAL: | 1,000,000 |
Exhibit 10.13
EXECUTION COPY
VTB HOLDINGS, INC.
2011 PHANTOM EQUITY APPRECIATION PLAN
VTB Holdings, Inc., a Delaware corporation (the Company), wishes to attract employees, directors and consultants to the Company and its Affiliates, to induce employees, directors and consultants to remain with the Company and its Affiliates, to encourage them to increase their efforts to make the Companys business more successful and to enhance equity holder value. In furtherance thereof, the VTB Holdings, Inc. 2011 Phantom Equity Appreciation Plan (the Plan) is designed to provide employees, directors and consultants of the Company and its Affiliates with an additional incentive through the grant of Phantom Units.
ARTICLE I.
DEFINITIONS.
Whenever used herein and unless otherwise provided in a Participants Award Agreement, the following terms shall have the meanings set forth below:
1.1. Affiliate means, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, ten percent (10%) or more of the stock having ordinary voting power in the election of directors of such Person, (ii) each Person that controls, is controlled by or is under common control with such Person, and (iii) each of such Persons officers, directors, managers (in the case of any Person that is a manager-managed limited liability company), and general partners. For the purpose of this definition, control of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise. With respect to any natural person, Affiliates shall also include, without limitation, such persons spouse, issue, parents, siblings, and any trust the beneficiaries or grantor of which are limited solely to such person and/or such other persons.
1.2. Authority means the United States of America or any other nation, any state or other political subdivision thereof, or any entity, agency or authority (foreign, federal, state or local) exercising executive, legislative, judicial, regulatory or administrative functions of government or any court, tribunal or arbitrator, and any self-regulatory organization.
1.3. Approved Sale shall have the meaning given such term in the Stockholders Agreement; provided, however, that an Approved Sale will not be deemed to have occurred unless such event would also be a change in control under Code Section 409A or would otherwise be a permitted distribution event under Code Section 409A.
1.4. Award means a grant of Phantom Units under the Plan.
1.5. Award Agreement means the written agreement between the Company and a Participant pursuant to which an Award is granted and which specifies the terms and conditions of that Award, including the vesting requirements applicable to that Award. All Awards shall be evidenced by an Award Agreement.
1.6. Board means the Board of Directors of the Company.
1.7. Cause shall have the meaning ascribed to it in the Participants employment or consulting agreement or, if no employment or consulting agreement is in effect or if cause is not defined therein, Cause shall mean:
(a) the Participants conviction of or plea of guilty or nolo contendere to a felony;
(b) a determination by the Board that the Participant committed fraud, misappropriation or embezzlement against any Person;
(c) the Participants material breach of the terms of any material written agreement with the Company or any Affiliate to which Employee is a party;
(d) the Participants willful misconduct or gross neglect in performance of Participants duties; or
(e) the Participants failure or refusal to carry out material responsibilities reasonably assigned by the Board or the Companys Chief Executive Officer to the Participant;
provided , however , that with respect to subsections (c), (d) and (e) above, Cause will only be deemed to occur after written notice to the Participant of such action or inaction giving rise to Cause and the failure by the Participant to cure such action or inaction (which is capable of cure) within 30 days after written notice.
1.8. Code means the Internal Revenue Code of 1986, as amended.
1.9. Committee means the committee appointed by the Board to administer the Plan, or if no such committee is appointed, the Board.
1.10. Common Shares means shares of Common Stock.
1.11. Common Stock means the Companys Common Stock, par value $.01.
1.12. Common Stockholder means holders of the Companys Common Stock.
1.13. Effective Date means November 9, 2011.
1.14. Grant Date means the effective date on which the Committee grants Phantom Units to a Participant.
1.15. Grant Date Value means the initial value of each Phantom Unit as determined in the sole discretion of the Committee on the Grant Date and as set forth in the Participants Award Agreement and relative to which the Unit Appreciation Value shall be calculated.
1.16. Participant means any employee, director or consultant of the Company or any of its Affiliates to whom an Award is made.
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1.17. Payment Date Value means upon an Approved Sale, the consideration to be paid to the Common Stockholders of the Company with respect to each outstanding share of Common Stock (on a fully diluted basis).
1.18. Person means an individual, a general or limited partnership, a corporation, a limited liability company, an association, a joint stock company, a business or other trust, a joint venture, a company, an unincorporated organization, an Authority or any other legal entity.
1.19. Phantom Unit means a hypothetical unit designated by the Company as a metric for measuring future payments. Phantom Units do not represent Common Shares or any other equity security of the Company or its Affiliates, nor does a Phantom Unit provide any rights to obtain ownership of any Common Shares or any other equity security of the Company of its Affiliates.
1.20. Stockholders Agreement means the VTB Holdings, Inc. Stockholders Agreement dated January 7, 2011 entered into in connection with the consummation of the transactions contemplated by that certain Stock Purchase Agreement dated September 28, 2010.
1.21. Termination of Service means a Participants termination of employment or other service, as applicable, with the Company and all of its Affiliates for any reason, including without limitation, death, disability, termination by the Company or any of its Affiliates with or without Cause and resignation by the Participant. For purposes of the Plan, unless otherwise determined by the Committee in its sole discretion, a change in the capacity in which a Participant is employed by, or otherwise providing services to, the Company and/or its Affiliates or a change in the entity employing the Participant or to which the Participant otherwise provides services will not be deemed a Termination of Service so long as the Participant continues providing services as an employee, director or consultant to the Company or an Affiliate of the Company. If a Participants employment or other service relationship is with an Affiliate of the Company and that entity ceases to be an Affiliate of the Company, the Participant will be deemed to have incurred a Termination of Service when the entity ceases to be an Affiliate of the Company unless the Participant transfers employment or other service to the Company or its remaining Affiliates.
1.22. Unit Appreciation Value means with respect to each Phantom Unit, the amount, if any, by which the Payment Date Value exceeds the Grant Date Value.
ARTICLE II.
EFFECTIVE DATE AND TERMINATION OF THE PLAN.
The Plan shall become effective on the Effective Date and shall terminate on the tenth anniversary of the Effective Date; provided, however, that the Committee may at any time prior to the tenth anniversary of the Effective Date terminate the Plan; provided further, however, that the termination of the Plan shall not impact any Awards that are outstanding as of the date of such termination.
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ARTICLE III.
ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee, who shall have full responsibility and authority to administer the Plan. The Committee shall have full authority to (i) determine to whom Awards will be granted, (ii) determine the amount of Awards to be granted, (iii) determine the terms and conditions of Awards (including, but not limited to, restrictions as to vesting, transferability or forfeiture, settlement of an Award and waivers or accelerations thereof, based in each case on such considerations as the Committee shall determine) and all other matters to be determined in connection with an Award and (iv) otherwise do all things it deems appropriate to carry out the purposes of the Plan. Any interpretation by the Committee of the terms and provisions of the Plan and Award Agreements and the administration thereof, and all actions taken by the Committee, shall be final and binding on Participants and all other Persons.
ARTICLE IV.
ELIGIBILITY, GRANT AND VESTING.
4.1. Eligibility . Any employee, director and consultant of the Company or its Affiliates who is designated by the Committee as eligible to participate in the Plan shall be eligible to receive an Award under the Plan.
4.2. Phantom Units . The maximum number of Phantom Units available for grant under the Plan shall be 991,692.
4.3. Grant of Phantom Units . Subject to the other terms of the Plan, the Committee shall, in its sole discretion as reflected by the terms of the applicable Award Agreement: (i) determine and designate from time to time those Participants to whom Phantom Units are to be granted and the number of Phantom Units to be granted to each such Participant, considering the position and responsibilities of the Participant, the nature and value to the Company of the Participants present and potential contribution to the success of the Company, whether directly or through an Affiliate, and such other factors as the Committee may deem relevant; (ii) determine the Grant Date Value of each Phantom Unit; (iii) determine the time or times when, and the manner and conditions under which, each Phantom Unit shall be vested and paid-out; and (iv) determine or impose other conditions to the grant of Phantom Units under the Plan as it may deem appropriate.
4.4. Vesting . The Committee may condition the vesting upon: (i) the Participants continued employment or other service with the Company or any of its Affiliates over a period of time; (ii) the Companys or any of its Affiliates attainment of specified financial targets; (iii) the achievement by the Participant, the Company or any of its Affiliates of any other performance goals set by the Committee; or (iv) any combination of the above conditions, as specified in the relevant Award Agreement. In addition, upon an Approved Sale, the Committee may condition vesting and payment of the Unit Appreciation Value upon the Participants continuation of employment with the Company or a successor entity or such other conditions as the Committee shall determine. The Committee may, in its sole discretion and at any time, accelerate the vesting of all or part of any Award.
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ARTICLE V.
PAYMENT OF VESTED UNIT APPRECIATION VALUE
5.1. Subject to Section 5.3 below, upon an Approved Sale, the Unit Appreciation Value with respect to each vested Phantom Unit shall be payable in the same manner, according to the same schedule and at the same time as payments are made to Common Stockholders of the Company in connection with such Approved Sale (and as such, each Participant recognizes that his or her payment of the Unit Appreciation Value may not be made in full until the expiration of any escrow, holdback, earnout, indemnification or similar condition); provided, however, that unless otherwise permitted by Code Section 409A, no payments of the Unit Appreciation Value shall be made in respect of an Approved Sale after the fifth anniversary thereof.
5.2. Upon payment of the Unit Appreciation Value pursuant to this Article V: (i) the vested Phantom Units with respect to which such payments were made shall be cancelled; and (ii) any unvested Phantom Units shall be cancelled for no consideration; and in both cases, no further payments shall be made from the Plan in relation to such Phantom Units.
5.3. In accordance with Code Section 409A, with respect to an Approved Sale, the Committee, in its sole discretion, may condition payment of the Unit Appreciation Value upon the Participants continuation of employment with the Company or a successor entity or such other conditions as the Committee shall determine.
ARTICLE VI.
TERMINATION OF SERVICE
6.1. Unless specifically provided otherwise in an Award Agreement or as otherwise provided by the Committee in its sole discretion, in the event that a Participant incurs a Termination of Service for any reason (excluding a termination for Cause), (i) the Participants unvested Phantom Units shall immediately terminate and be cancelled for no consideration and (ii) the Participants vested Phantom Units shall remain outstanding until an Approved Sale.
6.2. If a Participant is terminated for Cause, the Participant shall forfeit his or her entire Award, including all vested and unvested Phantom Units.
ARTICLE VII.
LIMITS ON TRANSFERABILIY OF AWARDS.
No Award or other right or interest of a Participant under the Plan shall be pledged, assigned or transferred for any reason during the Participants lifetime, and any attempt to do so shall be void and the relevant Award shall be forfeited.
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ARTICLE VIII.
TAX WITHHOLDING.
The Company and its Affiliates shall be entitled to withhold from any payments under the Plan any amount of tax withholding determined by the Committee to be due in respect of an Award.
ARTICLE IX.
INTERPRETATION AND AMENDMENTS, OTHER RULES.
The Committee may make such rules and regulations and establish such procedures for the administration of the Plan as it deems appropriate. Without limiting the generality of the foregoing and subject to the other terms of the Plan, the Committee may (i) at the time of grant, determine the extent, if any, to which Awards shall be forfeited (whether or not such forfeiture is expressly contemplated hereunder); (ii) interpret the Plan and the Award Agreements hereunder, with such interpretations to be conclusive and binding on all Persons and otherwise accorded the maximum deference permitted by law; and (iii) take any other actions and make any other determinations or decisions that it deems necessary or appropriate in connection with the Plan or Award Agreements or the administration or interpretation thereof. Unless otherwise expressly provided hereunder or under an Award Agreement, the Committee, with respect to any Award, may exercise its discretion hereunder at the time of grant or thereafter. In the event of any dispute or disagreement as to the interpretation of the Plan, any Award Agreement or any rule, regulation or procedure, or as to any question, right or obligation arising from or related to the Plan or any Award Agreement, the decision of the Committee shall be final and binding upon all Persons. The Committee may amend the Plan and Award Agreements as it shall deem advisable.
ARTICLE X.
CHANGES IN CAPITAL STRUCTURE
In the event of any stock dividend, recapitalization, forward split or reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange, extraordinary or unusual cash distribution or other similar corporate transaction or event, the Committee shall make such changes to the Plan or Awards as it deems appropriate and its determination shall be final, binding and conclusive. The Plan shall not affect, in any way, the right or power of the Company to make adjustments, re-classifications, reorganizations or changes of its capital or business structure, to make distributions to its Common Stockholders, or to merge or to consolidate or to dissolve, liquidate or sell, or transfer all or part of its business or assets.
ARTICLE XI.
MISCELLANEOUS.
11.1. Section 409A Compliance . The Plan and all Awards are intended to comply with, or be exempt from, Code Section 409A and all regulations, guidance, compliance programs and other interpretative authority thereunder, and shall be interpreted in a manner consistent therewith; provided, however, that neither the Company, any of its Affiliates or any member of the Committee, shall have any liability to Participants or any other Person if any Award is not
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exempt from or compliant with Code Section 409A. Notwithstanding anything contained herein to the contrary, in the event any Award is subject to Code Section 409A, the Committee may, in its sole discretion and without a Participants prior consent, amend the Plan and/or Awards, adopt policies and procedures, or take any other actions as deemed appropriate by the Committee to (i) exempt the Plan and/or any Award from the application of Code Section 409A, (ii) preserve the intended tax treatment of any such Award or (iii) comply with the requirements of Code Section 409A.
11.2. No Rights to Employment or Other Service . Nothing in the Plan or in any Award Agreement shall confer on any Participant any right to continue in the employ or other service of the Company or its Affiliates or interfere in any way with the right of the Company or its Affiliates to terminate a Participants employment or other service at any time and for any reason.
11.3. No Right to an Award . Neither the adoption of the Plan nor any action of the Board or of the Committee shall be deemed to give any individual any right to be granted an Award under the Plans terms, except as may be evidenced by an Award Agreement duly executed on behalf of the Company or its Affiliate, and then only to the extent and on the terms and conditions set forth therein. The Plan shall be unfunded. The Company shall not be required to establish any special or separate fund or to make any other segregation of funds or assets to assure the performance of its obligations under any Award.
11.4. Additional Obligations . Participants shall take whatever actions and execute whatever documents the Committee deems necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Participant pursuant to the provisions of the Plan and the relevant Award Agreement. In connection with an Approved Sale, each Participant shall be subject to and shall comply with any escrow and/or indemnification requirements imposed upon the Common Stockholders of the Company.
11.5. No Fiduciary Relationship . Nothing contained in the Plan, and no action taken pursuant to the provisions of the Plan, shall create or shall be construed to create a trust of any kind, or a fiduciary relationship between the Company, its Affiliates, the officers of the Company or its Affiliates or the Committee, on the one hand, and the Participant or any Person claiming rights by or through the Participant, on the other.
11.6. Notices . All notices under the Plan shall be in writing, and if to the Company, shall be delivered to the Committee or mailed to its principal office, addressed to the attention of the Committee; and if to the Participant, shall be delivered personally, sent by facsimile transmission or mailed to the Participant at the address appearing in the records of the Company or its Affiliates. Such addresses may be changed at any time by written notice to the other party given in accordance with this Section.
11.7. Exculpation and Indemnification . The Company shall indemnify and hold harmless any member of the Committee from and against any and all liabilities, costs and expenses incurred by such members as a result of any act or omission to act in connection with the performance of such Persons duties, responsibilities and obligations under the Plan.
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11.8. Captions . The use of captions in this Plan is for convenience. The captions are not intended to provide substantive rights.
11.9. Governing Law . All questions concerning the construction, validity and interpretation of the Plan shall be governed by the internal law, not the law of conflicts, of the State of New York.
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Exhibit 10.14
PERSONAL AND CONFIDENTIAL
August 13, 2012
Mr. Juergen Stark
8324 Santaluz Pointe
San Diego, California
92127
Dear Juergen,
Voyetra Turtle Beach, Inc. ( VTB ) is pleased to offer you a position with VTB as its Chief Executive Officer. The effective start date of your employment is September 4, 2012 (the Effective Date ). You will report directly to the Board of Directors of VTB (the Board ) and perform such duties consistent with your title as may, from time to time, be determined and assigned by the Board or any of its designees. Additionally, you will be appointed to serve on the Board during your tenure at VTB. As discussed, you will be leading an effort to relocate the Companys headquarters to the San Diego, Los Angeles, or San Francisco area with a goal to have that substantially completed by June 2013.
Your annual base salary will be $500,000.00 and you will be eligible to participate in VTBs bonus plan with a target bonus of $300,000.00, provided, that if you remain employed with VTB through December 31, 2012, your bonus for 2012 shall be no less than $97,808 and shall be paid to you no later than March 15, 2013. The bonus targets for each fiscal year (or portion thereof) will be based on mutually agreed upon performance goals, currently contemplated to be comprised of EBITDA and other management objectives. You will be eligible to participate in the medical, prescription drug, dental, long-term disability, life insurance and retirement plans that VTB sponsors for the benefit of its employees, on the same terms as other VTB senior executives, all subject to the terms and conditions of those plans as in effect from time to time, some of which may require employee contribution. During the term of your employment, VTB will reimburse you for any and all reasonable business expenses (including travel and housing) incurred by you in the course of performing your duties, subject to VTBs requirements with respect to reporting and documentation of such expenses. You will be entitled to two weeks of paid vacation during the remainder of 2012 and four weeks in subsequent calendar years and you will accrue sick days, all in accordance with VTB policy.
In terms of equity, you will be entitled to a stock option grant of VTB common stock representing a 7% ownership interest (as of the Effective Date) on a fully diluted basis with an exercise price equal to the grant date fair market value of the common stock (anticipated to be approximately $2.13/share as of the Effective Date). Such options will vest 25% on the first anniversary of the Effective Date, with the remainder vesting ratably each month over the following three year period (subject to accelerated vesting as provided in the Grant Agreement (as defined below)) and will be subject to the terms and conditions set forth under the 2011 VTB Equity Incentive Plan and your grant agreement thereunder which grant agreement, subject to the terms of this agreement, shall be substantially in the form attached hereto as Exhibit A (the Grant Agreement ).
Your employment with VTB will be on an at-will basis and either you or VTB may terminate your employment at any time with or without cause or notice. However, in the event that your employment is terminated by VTB without cause or by you for good reason, in either case, (i) on or prior to the first anniversary of the Effective Date and/or following an Approved Sale, you will be entitled (A) to continue to receive your then-current base salary and to receive VTB-paid healthcare continuation benefits for you and your dependents at the levels in effect immediately prior to such termination (it being understood that if such benefits cannot be provided directly by the Company because they are prohibited by law or would
result in the imposition of tax penalties, then the Company shall pay the cash value of the premiums to you as and when they would otherwise have been paid to the plans for purposes of procuring your own health insurance) (in any event, such healthcare benefits or payments, the Continuation Benefits ), in each case, for a period of one year following the effective date of such termination, except that if the termination occurs following an Approved Sale, the salary payments shall be paid as a single lump sum on the First Payroll Date (as defined below), (B) to payment on the First Payroll Date of a pro rata bonus equal to your target bonus (as may be increased in the future) multiplied by a fraction, the numerator of which equals the number of days you are employed by VTB in the calendar year through the date of termination and the denominator of which equals 365 (a Pro-Rated Bonus ), and (ii) after the first anniversary of the Effective Date (and not following an Approved Sale), you will be entitled (A) to continue to receive your then-current base salary and to receive Continuation Benefits, in each case, for a period of six months following the effective date of such termination, and (B) to payment on the First Payroll Date of a Pro-Rated Bonus. In addition, upon your termination by VTB without cause or by you for good reason, in either case, on or prior to the first anniversary of the Effective Date, you will vest in a pro-rata portion of the stock options that would have vested on the first anniversary of the Effective Date (had you remained employed), determined by multiplying such number of stock options by a fraction, the numerator of which equals the number of days from the Effective Date through the date of such termination and the denominator of which equals 365. The receipt of such severance benefits shall be conditioned upon your execution and non-revocation of a release of claims in the form attached hereto as Exhibit B , as well as your continued compliance with the covenants set forth in the VTB employee restrictive covenant agreement executed concurrently herewith (the Employee Agreement ) and, notwithstanding anything herein to the contrary, no cash severance payments shall be paid to you prior to VTBs first regularly scheduled payroll date occurring 30 days or more after your date of termination (such date, the First Payroll Date ), and any amounts otherwise payable prior to the First Payroll Date shall instead be paid on the First Payroll Date. For the purposes of this letter, Approved Sale shall have the meaning set forth in the Stockholders Agreement, dated January 7, 2011, by and among VTB Holdings, Inc. and certain of its stockholders.
For purposes of this letter, cause shall mean (a) your conviction of or plea of guilty or nolo contendere to a felony; (b) your commission of fraud, misappropriation or embezzlement; (c) your material breach of the terms of this offer or the Employee Agreement; (d) your willful misconduct or gross neglect in performance of your duties; or (e) your willful failure or refusal to carry out material responsibilities consistent with your title that are reasonably assigned to you by the Board, in the case of sections (c), (d) and (e) above, after written notice thereof and your failure to cure such action or inaction (which is capable of cure) within 30 days thereafter and good reason shall mean (i) a material diminution, without your consent, in your title, duties or responsibilities as in effect immediately before such diminution, (ii) a material breach of by VTB of this or any other written agreement between you and VTB, including without limitation, a failure by VTB to relocate its headquarters as discussed above, (iii) a material reduction in your base salary or target bonus opportunity by VTB, in any case, after written notice to VTB thereof and VTBs failure to remedy such diminution, breach or reduction within 30 days thereafter, provided that you actually terminate employment within 60 days after the expiration of such cure period.
In addition, VTB will promptly reimburse you for your legal and due diligence costs actually incurred in connection with the negotiation and drafting of this agreement (and any ancillary agreements contemplated hereby), not to exceed $10,000. As a VTB employee, you will be expected to abide by VTBs published rules and regulations generally applicable to other VTB senior executives and to sign and comply with the Employee Agreement. By executing this letter, you represent that you will not be prevented from performing any of your duties for VTB as a result of any agreement with or other contractual or statutory obligation to (including, without limitation, any non-competition, proprietary information or confidentiality agreement) any prior employer and there is no criminal or fraudulent conduct in your past. As required by law, this offer is subject to satisfactory proof of your right to work in the United States.
100 Summit Lake Drive Ste 100, Valhalla, NY 10595 Tel: 914.345.2255 Fax: 914.345.2266 www.turtlebeach.com
We are thrilled about the opportunity to work with you and have you as part of our team. If you have any questions regarding this offer, please call me. If this offer is acceptable, please countersign and date this letter and return the original to me.
Sincerely, |
/s/ Ron Doornink |
Ron Doornink |
Executive Chairman, Voyetra Turtle Beach, Inc. |
I have read and understand the terms of this employment offer and I accept this offer as presented:
/s/ Juergen Stark | 8/13/2012 | |||
Juergen Stark | Date |
100 Summit Lake Drive Ste 100, Valhalla, NY 10595 Tel: 914.345.2255 Fax: 914.345.2266 www.turtlebeach.com
Voyetra Turtle Beach, Inc. Proprietary Information and Employment Agreement
I, Juergen Stark, (hereinafter Employee ), residing at 8324 Santaluz Pointe, San Diego, California 92127 recognize that Voyetra Turtle Beach, Inc. (hereinafter VTB ) is engaged in a continuous program of research, development, production, and distribution of computer products, and that it is part of my responsibility as an employee to assist VTB in such endeavors.
In consideration of my employment by VTB (hereinafter Employment ). I agree to the terms and conditions in this Agreement. I understand that the faithful observance of this Agreement is, and shall remain, a condition of Employment.
The capitalized terms in this Agreement shall have the following meanings:
1.1 | Confidential Information means any of VTBs proprietary information and trade secrets, including but not limited to, methods of doing business, data, know-how, research, product plans, products, services, software, developments, inventions, processes, formulas, technology, designs, drawings, marketing, lists of actual or potential customers or suppliers, financial or other business information disclosed to me, either directly or indirectly in writing, orally or by drawings or observation of parts or equipment. Confidential Information shall not include (a.) information disclosed publicly in published materials; (b.) information generally known in the industry; or (c.) information that has become publicly known and made publicly available through no wrongful act on behalf of myself or others who were under confidentiality obligations as to the item or items involved. |
1.2 | Work Product means all items created or made, discoveries, concepts, ideas and fixed expressions thereof, whether or not patent-able or register-able under copyright or other statutes, including but not limited to software, source and object code, hardware, technology, products, machines, programs, process developments, formulae, methods, techniques, know-how, data and improvements, which: (a.) I make or conceive or reduce to practice or learn alone or jointly with others who are retained, employed or acting on behalf of VTB; (b.) occur during the period of, as a consequence of, or in connection with Employment; (c.) result from tasks assigned to me by VTB; or (d.) result from use of property, premises or facilities owned, leased or contracted for by VTB. This paragraph shall not apply to any development, which meets all of the following three conditions: (1.) I do the work entirely by myself without use of VTBs facilities, property, resources or Confidential Information, (2.) I do the work entirely on my own time, and (3.) the development does not relate in any way to VTBs current, previous or planned business or research. |
2. Project Maintenance
2.1 | I agree to disclose promptly to VTB or its authorized agent all Information regarding Work Products as soon as is possible. I agree to maintain thorough documentation of all Work Products and of any projects that I undertake as part of Employment so that any knowledgeable person with qualifications similar to mine will be capable of understanding or continuing such projects with reasonably minimal effort. After termination of Employment, I agree to make myself reasonably available to assist VTB in completing or maintaining projects I was involved in during Employment. My compensation for providing such assistance will be equal to the higher of my equivalent hourly wage at the time of termination of Employment with VTB or my equivalent hourly wage at my current employment. |
3. Confidentiality and Conflicting Obligations
3.1 | I represent to VTB that I am free to enter into Employment with VTB and I have no interest, obligation or agreement, written or oral, which is inconsistent with or conflicts with this Agreement or any other agreement I have entered into with VTB, or which would prevent, limit or impair my performance of any part of this Agreement or any other agreement I have entered into with VTB. I agree to notify VTB immediately if any such interest or obligation arises. I represent to VTB that the accuracy of the statements I have made in my resume and in my Employment application are true and complete and I understand that any false or incomplete statements in my resume or Employment applications will be grounds for immediate discharge. |
3.2 | It is VTBs policy to respect trade secrets of others. This applies especially to knowledge employees may have of trade secrets of a former employer. I understand that it is VTBs policy to refuse to receive or consider any trade secret information (i.e. non-disclosed ideas, inventions, patent applications, etc.) submitted from companies or person outside or VTB without the prior written approval of the Chief Executive Officer of VTB . I represent to VTB that my performance of the terms in this Agreement do not and will not breach any agreement to keep in confidence proprietary information of a third party. During Employment, I agree not to improperly use or disclose any confidential information of any former or concurrent employer or of any other person or entity and I further agree to not bring onto VTBs premises any confidential information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity. I will not give any person at VTB any information is a trade secret of a former employer or any other third party. If I have signed a confidentially or non-competition agreement that might affect Employment with VTB, I will immediately inform my supervisor. |
3.3 | I recognize that VTB has received and in the future may receive confidential or proprietary information from third parties (such as, but not limited to, software programs provided under license and unannounced hardware under development) subject to a duty on VTBs part to maintain the confidentially of such information and to use it only for certain limited purposes. I agree to hold all such confidential and proprietary information in the strictest confidence and not to disclose it to any person, firm or entity or use it except as necessary in carrying out my work for VTB consistent with VTBs agreement with such third party. I agree to comply with VTBs policies and procedures with respect to such information and at no time during or after Employment will I breach any such obligation of confidentiality that VTB has with third parties. |
3.4 | At all times during and subsequent to Employment. I agree to keep in strictest confidence and trust VTBs Confidential Information. I understand that my obligations regarding Confidential Information are as follows: (a.) Not to disclose Confidential Information to persons outside of VTB in conversations with visitors, suppliers, family, or anyone else; (b.) Not to use Confidential Information for my own benefit or for the profit or benefit of persons outside of VTB; (c.) To disclose this information to other VTB employees only on a need to know basis and then only to employees who have been informed that the information is Confidential Information: and (d.) To place appropriate Confidential Information notices on all materials and in all software files prepared by me that contain Confidential Information. Notwithstanding the foregoing, the Employee may disclose Confidential Information in accordance with judicial or other government order, provided that the Employee gives VTB prompt notice upon learning of such order in order to permit VTB to seek an appropriate protective order. |
3.5 |
I understand and agree that a person leaving the employ of VTB has an obligation to protect VTBs Confidential Information until the information becomes publicly available or until VTB no longer considers it trade secret or proprietary. I understand that after termination of Employment, all correspondence, printed matter, software files and programs, documents, or records of any kind are all property of VTB and must remain at VTBs premises. Of course, skills and general knowledge acquired or improved on the job are personal assets of the employee. |
3.6 | I understand that it is VTBs policy that software licensed by VTB may not be duplicated or used in any manner inconsistent with VTBs rights and vendors rights as spelled out in licensing agreements. When VTB licenses to others any software products that contain computer code supplied by other companies, if I am involved in the development of such code, I will be sure that VTB has a valid license that authorizes our use and distribution of the code. |
3.7 | I understand and agree that I will notify VTB immediately upon discovery of any unauthorized sale, distribution, disclosure, publication or other unauthorized use of Confidential Information and/or materials and will cooperate with VTB in every reasonable way to assist in regaining possession of the Confidential Information and/or materials and to prevent the further unauthorized use or disclosure of such Confidential Information and/or materials. |
4. Disclosure and Assignment of Work Product
4.1 | I hereby assign to VTB any rights I now have or may hereafter acquire in VTBs Confidential Information. Upon termination of Employment, for whatever reason, I will promptly surrender to VTB all copies, in whatever form, of VTBs Confidential Information in my possession, custody or control, and I will not take with me any Confidential Information embodied in a tangible medium of expression. |
4.2 | I agree and understand that my Work Products are works made for hire and shall be the sole property of VTB and its assigns. As such, I hereby assign to VTB any and all intellectual property rights I now have or may hereafter acquire in such Work Products and irrevocably relinquish for the benefit of VTB and its assigns any moral rights in my Wok Products. During Employment, I shall promptly and fully disclose to VTB the existence of any Work Products generated, conceived or learned by me, either alone or jointly with others. |
4.3 | It any of my Work Products may not, by operation of law, be considered work made for hire by me for VTB, or if ownership of all right, title, and interest of the intellectual property rights therein shall not otherwise vest exclusively in VTB, I agree to assign, without further consideration, the ownership of all Trade Secrets, U.S. and international copyrights, patent-able inventions, and other intellectual property rights therein to VTB, its successors, and assigns. I agree to perform, upon the reasonable request of VTB, during or after Employment, such further acts as may be necessary or desirable to transfer, perfect, and defend VTBs ownership of my Work Products. |
4.4 | During and subsequent to Employment, I agree to assist VTB, at VTBs expense, in obtaining any Protections relating my Work Products, whereby Protections means methods of protecting intellectual property and collectively includes as a matter of example: patents, copyrights, trademarks, and trade secrets. To that end, I will furnish to VTB, upon its request and at its expense, all written assignments, transfers, affidavits, certifications and other documents VTB may request in order to confirm the fact of VTBs ownership of any of its property and I will execute all documents for use in applying for and obtaining such Protections as VTB may reasonably request, together with any assignments thereof to VTB or persons designated by it. I agree to assist VTB in obtaining and enforcing Protections relating to my Work Products beyond the termination of Employment if VTB compensates me for time actually spent by me at VTBs request on such assistance. My compensation for providing such assistance will be equal to the higher of my equivalent hourly wage at the time of termination of Employment with VTB or my equivalent hourly wage at my current employment. |
5. Prohibition Against Unfair Business Practices
5.1 | During Employment I will refrain from engaging in any action that would reasonably be expected to be harmful to VTB and I shall responsibly promote and support VTBs business activities to prevent VTB from suffering injury or hardship, if it can reasonably be avoided. |
5.2 | During Employment, and for a period of one (1) year following termination of Employment, I shall not, either directly or indirectly, (a.) use Confidential Information for any purpose (other than the proper performance of employment duties), including to design, develop, produce, promote or sell products or services competitive with those of VTB; or (b.) solicit or accept business from any of VTBs customers for products or services competitive with those of VTB. Should any court of law subsequently determine that I have violated this section, I agree that I will not engage in the foregoing activities for one year following that judicial determination. |
5.3 | During Employment and for a period of one (1) year subsequent to termination of Employment, I will not, directly or indirectly, solicit for hire or cause to be solicited for hire by others, or otherwise induce any person employed by VTB or a VTB subsidiary to terminate his or her employment or contract with VTB or a VTB subsidiary. |
5.4 | I understand that as an employee of VTB I should avoid outside activity that may raise an actual or potential conflict with my job responsibilities at VTB. I acknowledge that, where reasonably identifiable and avoidable, even the appearance of a conflict with my employment duties should be avoided. |
5.5 | I understand that as an employee of VTB, I may not solicit a gift from any company or persons with whom VTB does business and that any gift is inappropriate if the value of the gift is intended to influence VTBs business decisions. I understand that as an employee of VTB I may not give a gift of value that i s calculated to influence a business decision. |
6. Return of Materials
6.1 | I understand that during Employment, I may have access to software, hardware, documentation, equipment, tools, materials, and supplies belonging to VTB and other items either licensed or owned by VTB and I agree not to remove such items from VTBs premises except as required by the proper performance of my employment duties. |
6.2 | Upon VTBs request or upon the termination of Employment, I agree to return to VTB and leave at its disposal all memoranda, notes, records, drawings, manuals, computer programs, documentation, diskettes, computer tapes, and other documents or media pertaining to VTBs business activities or my specific duties at VTB, including all copies of such materials in my possession. I will also return to VTB and leave at its disposal all materials containing any Confidential Information. I will not keep any copies of such materials. This section shall apply to all materials made or compiled by me, as well as to all materials furnished to me by anyone else in connection with Employment. |
7. General Terms and Conditions
7.1 | I agree that because of the nature of VTBs business, the restrictions contained in this Agreement are reasonable and necessary in order to protect the legitimate interests of VTB. |
Page 5 | Confidential Information |
7.2 | I understand that in the event that any term, clause or provision of this Agreement shall be construed to be or adjudged invalid, void or unenforceable, such term, clause or provision shall be construed as severed from this Agreement, and the remaining terms, clauses and provisions shall remain in effect. |
7.3 | I acknowledge that VTBs waiver of any provision of this Agreement shall not constitute a waiver of any succeeding breach of the same or other provision; nor shall any delay or omission by VTB to exercise or avail itself of any right, power or privilege that it has hereunder, operate as a waiver of any such right, power or privilege. |
7.4 | I understand that if I violate any provision of this agreement relating to Confidential Information, Work Product, non-solicitation, or my duty to cooperate in matters relating to protection of intellectual property, VTB will suffer immediate and irreparable injury. If I violate any of such provisions. I agree that in addition to any other remedies that may apply, my strict compliance with this Agreement should be ordered by a court of competent jurisdiction, and VTB is therefore entitled to preliminary and final injunctive relief to enforce this Agreement. |
7.5 | This Agreement may not be amended or altered except by a writing signed by both parties. |
7.6 | This Agreement shall inure to the benefit of and be binding upon VTB, its successors and assigns, and on me, my successors, assigns, heirs, executors, administrators and legal representatives. |
7.7 | This Agreement shall be governed by, subject to and construed under the laws of the State of California. In any action by VTB to enforce this Agreement, I agree to submit to the jurisdiction and venue of any court of competent jurisdiction in San Diego County in the State of California. |
I HAVE READ THIS AGREEMENT, UNDERSTAND IT, AND AGREE TO ITS TERMS.
By:
|
Juergen Stark |
|
8/13/2012 |
|||||||
Employee Printed Name | Employee Signature | Date |
Page 6 | Confidential Information |
Exhibit 10.15
VTB HOLDINGS, INC.
STOCK OPTION AWARD AGREEMENT
This Stock Option Award Agreement (this Agreement), dated as of September 4, 2012 evidencing the Option (as defined below), is made by and between VTB Holdings, Inc., a Delaware corporation (the Company), and Juergen Stark (the Optionee).
WITNESSETH:
WHEREAS, the Company has adopted the VTB Holdings, Inc. 2011 Equity Incentive Plan (the Plan), a copy of which is attached hereto as Exhibit A , pursuant to which options may be granted to the Optionee to purchase shares of the Companys Common Stock; and
WHEREAS, the committee of the Board of Directors of the Company responsible for administering the Plan (the Committee) has determined that it is in the best interests of the Company and its stockholders to grant to the Optionee a Stock Option to purchase the number of shares of the Companys Common Stock set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein set forth, and in reliance on the representations and warranties contained herein, the parties hereby agree as follows:
1. Grant of Option . The Company hereby grants to the Optionee an option (the Option) to purchase 6,730,448 shares of Common Stock (such shares of Common Stock, the Common Shares) with a grant date (the Grant Date) of September 4, 2012 on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan (this Award). The Option is not intended to qualify as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the Code).
2. The provisions of the Plan are hereby incorporated herein by reference. Except as otherwise expressly set forth herein (including without limitation, the preceding sentence), the Award and this Agreement shall be subject to and construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Committee shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, consistent with their terms, and its decision shall be binding and conclusive upon the Optionee and his or her legal representative in respect of any questions arising under the Plan or this Agreement. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Plan (except where the Plan is expressly superseded by this Agreement), the terms of the Plan shall govern and control.
3. Purchase Price . The Option price of the Common Shares covered by the Option shall be $2.01 per share.
4. Vesting . The Option shall be eligible to vest based on the Optionees continued employment with the Company. Provided the Optionee does not incur a Termination of Service prior to the applicable vesting date, the Option shall vest with respect to 25% of the Common Shares subject thereto on the first anniversary of the Grant Date and ratably each month thereafter (i.e., 2.0833% per month) as of the first day of each month until the fourth anniversary of the Grant Date; provided, that, immediately prior to the consummation of an Approved Sale, 50% of the then-unvested portion of the Option shall vest; provided, further, that the other 50% of the then-unvested portion of the Option (the Unvested CIC Options) shall also vest immediately prior to the consummation of an Approved Sale unless the successor company or its direct or indirect parent agrees to assume the Unvested CIC Options or replace them with options that maintain the existing aggregate option spread of the Unvested CIC Options, provide for vesting that is not less favorable to Optionee than the Unvested CIC Options and are otherwise substantially similar to the Unvested CIC Options in connection with the Approved Sale.
5. Option Term and Expiration . Once a portion of the Option becomes vested, subject to the terms of the Plan, it will remain exercisable until it is exercised or until it expires. The Option shall expire at the end of the period commencing on the Grant Date and ending at 11:59 p.m. on the day preceding the tenth anniversary of the Grant Date (the Expiration Date). The Option shall not be exercisable after the Expiration Date.
6. Method of Exercising Option .
(a) Subject to the terms and conditions of this Agreement and the Plan, the Option may be exercised by written notice to:
Attention: Director of Human Resources
Voyetra Turtle Beach, Inc.
100 Summit Lake Blvd, Suite 100
Valhalla, New York 10595
Such notice (substantially in the form attached hereto as Exhibit B ) shall:
(i) state the election to exercise the Option and the number of Common Shares with respect to which it is being exercised;
(ii) be signed by the person or persons exercising the Option;
(iii) be accompanied by an Investment Representation Statement (substantially in the form attached hereto as Exhibit C );
(iv) be accompanied by a joinder (substantially in the form attached hereto as Exhibit D ) to the Companys Stockholders Agreement, dated January 7, 2011 (the Stockholders Agreement); and
(v) be accompanied by payment of the full Option Price of such Common Shares.
(b) The Option Price shall be paid to the Company in cash or its equivalent.
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(c) Upon receipt of notice of exercise and payment by the Optionee, the Company shall record the Common Shares (and fractions thereof) with respect to which the Option is so exercised.
(d) Such Common Shares shall be recorded in the Companys books and records in the name of the person or persons so exercising the Option. In the event the Option is exercised by any person or persons after the death or disability of the Optionee, the notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Option. All Common Shares that are purchased upon the exercise of the Option as provided herein shall be fully paid and nonassessable.
7. Common Shares to be Purchased for Investment . Unless waived by the Company in writing, it shall be a condition to any exercise of the Option that the Common Shares acquired upon such exercise be acquired for investment and not with a view to distribution, and the person effecting such exercise shall submit to the Company a certificate of such investment intent substantially in the form attached hereto as Exhibit C , together with such other evidence supporting the same as the Company may request. The Company shall be entitled to restrict the transferability of the Common Shares issued upon any such exercise to the extent necessary to avoid a risk of violation of the Securities Act or of any federal or state laws or regulations.
8. Transferability of Option . The Option is not assignable or transferable, in whole or in part, by the Optionee other than as set forth in the Plan.
9. Rights as an Interest Holder; Restrictions; Repurchase .
(a) The Optionee shall not be deemed for any purpose to be the owner of any Common Shares subject to this Option unless, until and to the extent that (i) this Option shall have been exercised pursuant to its terms; (ii) the Company shall have issued and delivered to the Optionee such Common Shares; and (iii) the Optionees name shall have been entered as a stockholder of record with respect to such Common Shares on the books of the Company.
(b) Upon exercise of the Options, the Optionee hereby agrees to be bound by all of the terms of the Stockholders Agreement, including, without limitation the right of first refusal, drag-along rights, tag-along rights and other transfer restrictions contained therein.
(c) Optionee further acknowledges that upon exercise of his Option, he is a Stockholder, within the meaning of the Stockholders Agreement, and shall be required to execute a counterpart signature page joining the Stockholders Agreement prior to receiving any Common Shares, such joinder is attached hereto as Exhibit D . The provisions of the Stockholders Agreement shall be in addition to any provisions contained in the Plan and this Agreement. The Optionee hereby acknowledges and consents to be bound by any amendments to the Stockholders Agreement generally applicable to holders of common stock of the Company.
(d) If Optionee experiences a Termination of Service, for any reason other than for Cause, Optionee shall be entitled to exercise any vested Options for 60 days after such termination. In the event of Optionees death, Optionees Permitted Transferee shall be entitled to exercise Optionees vested Options for 180 days after Optionees death. Notwithstanding the foregoing, in no event shall the Options be exercisable on or after the tenth anniversary of the Grant Date.
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(e) This Option and any Common Shares acquired pursuant hereto are subject to the Companys right of repurchase as provided in Article VIII of the Plan; provided, that, any payment of Repurchase Price (as defined in the Plan) made on or after the 548 th day following the Grant Date (the Maturity Date) shall be made in cash, notwithstanding the last three sentences of Section 8.4 of the Plan; provided, further, that if the Company issues a promissory note to the Optionee pursuant to Section 8.4 of the Plan prior to the Maturity Date, such promissory note shall be due and payable on earliest to occur of the Maturity Date, an Approved Sale and the consummation of an underwritten public offering of Common Shares pursuant to an effective registration statement under the Securities Act.
10. Restrictive Covenants . Optionee hereby agrees that Optionee is subject to the covenants set forth in the Proprietary Information and Employment Agreement entered into between Optionee and the Company, dated August 13, 2012.
11. Governing Law . To the extent that federal laws do not otherwise control, the Plan and this Agreement and all determinations made and actions taken pursuant hereto shall be governed by the substantive laws of the State of New York, irrespective of the principal place of business, residence or domicile of the parties hereto, and without giving effect to otherwise applicable principles of conflicts of law that would require the application of any other state law.
12. Withholding of Taxes . The Common Shares awarded upon exercise of the Option shall be subject to applicable federal, state, and local tax withholding requirement.
13. Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.
14. No Rights to Continue Service . Nothing contained in this Agreement shall be construed as giving the Optionee any right to be retained, in any position, as an employee, consultant or director of the Company or its affiliates nor shall it interfere with or restrict in any way the right of the Company or its affiliates, which right is hereby expressly reserved, to remove, terminate or discharge the Optionee at any time for any reason whatsoever.
15. Successors . The terms of this Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and of the Optionee and the beneficiaries, executors, administrators, heirs and successors of the Optionee.
16. Amendment of Award . The Committee may amend the terms of this Agreement; provided, that, the Committee may not effect any amendment which would otherwise constitute an impairment of the Optionees rights under this Award unless the Company requests the Optionees consent and the Optionee consents in writing.
17. Headings . The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.
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18. Signature in Counterparts . This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
19. Entire Agreement . This Agreement and the Plan (including all exhibits hereto and thereto) sets forth the entire understanding of the parties hereto and supersedes all prior agreements, arrangements, and communications, whether oral or written, pertaining to the subject matter hereof.
[Remainder of page intentionally left blank; signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day first written above.
VTB HOLDINGS, INC. | ||||||
/s/ Bruce Murphy | By: | /s/ Ron Doornink | ||||
Witness | Name: | Ron Doornink | ||||
Title: | Exec. Chairman | |||||
JUERGEN STARK | ||||||
/s/ Sara Weiss | /s/ Juergen Stark | |||||
Witness Sara Weiss | Optionees Signature | |||||
Juergen Stark |
[Signature Page to Stock Option Award Agreement]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day first written above.
VTB HOLDINGS, INC. | ||||||
/s/ Bruce Murphy | By: | /s/ Ronald Doornink | ||||
Witness | Name: | Ronald Doornink | ||||
Title: | Executive Chairman | |||||
JUERGEN STARK | ||||||
Witness | Optionees Signature | |||||
[Signature Page to Stock Option Award Agreement]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day first written above.
VTB HOLDINGS, INC. | ||||||
By: | ||||||
Witness | Name: | |||||
Title: | ||||||
JUERGEN STARK | ||||||
/s/ Bruce Murphy | /s/ Juergen Stark | |||||
Witness | Optionees Signature | |||||
[Signature Page to Stock Option Award Agreement]
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day first written above.
VTB HOLDINGS, INC. | ||||||
By: | ||||||
Witness | Name: | |||||
Title: | ||||||
JUERGEN STARK | ||||||
Witness | Optionees Signature | |||||
[Signature Page to Stock Option Award Agreement]
9
EXHIBIT A
VTB HOLDINGS, INC.
2011 EQUITY INCENTIVE PLAN
COPY OF 2011 EQUITY INCENTIVE PLAN
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EXHIBIT B
VTB HOLDINGS, INC.
2011 EQUITY INCENTIVE PLAN
NOTICE OF EXERCISE OF OPTION
I hereby exercise the nonqualified option granted to me pursuant to that certain VTB Holdings, Inc. Stock Option Agreement (Stock Option Agreement) dated as of October , 2012, by VTB Holdings, Inc. (the Company), with respect to the following number of Common Shares covered by such option:
Number of Common Shares to be purchased | ||||||
Purchase price per Common Share | $ | |||||
Total purchase price | $ | |||||
Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $ in full/partial (circle one) payment for the Common Shares being purchased; and/or | ||||||
Please reduce the number of Common Shares to be issued with a total Fair Market Value, determined in accordance with the VTB Holdings, Inc. 2011 Equity Incentive Plan, of $ in full/partial (circle one) payment for the Common Shares being purchased. |
Unless the Company has waived the condition in Section 7 (Common Shares to be Purchased for Investment) of the Stock Option Agreement related to the Common Shares purchased hereby, the undersigned hereby certifies that the Common Shares purchased hereby are being acquired for investment and not with a view to or for sale in connection with any distribution of such Common Shares.
DATED: , | ||||
Optionees Signature |
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EXHIBIT C
VTB HOLDINGS, INC.
2011 EQUITY INCENTIVE PLAN
INVESTMENT REPRESENTATION STATEMENT
Optionee: | ||
Common Shares: | Common Shares of VTB Holdings, Inc. (the Company) | |
Amount Paid: | ||
Date: |
In connection with the purchase of the above-listed Common Shares, the undersigned Optionee represents to the Company the following:
Optionee is aware of the Companys business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Common Shares. Optionee is acquiring these Common Shares for investment for Optionees own account only and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933, as amended (the Securities Act).
Optionee understands that the Common Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Common Shares. Optionee understands that no certificate evidencing the Common Shares will be issued and that Common Shares are nontransferable except as provided in the Stockholders Agreement.
Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of restricted securities acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Common Shares exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (a) the resale being made through a broker in an unsolicited brokers transaction or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (b) the availability of certain public information about the Company; (c) the amount of Common Snares being sold during any three month period not exceeding the limitations specified in Rule 144(e); and (d) the timely filing of a Form 144, if applicable.
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In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Common Shares may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Common Shares were sold by the Company or the date the Common Shares were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Common Shares by an affiliate, or by a non-affiliate who subsequently holds the Common Shares less than two years, the satisfaction of the conditions set forth in sections (a), (b), (c) and (d) of the paragraph immediately above.
Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 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 their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.
Date: | Signature of Optionee: | |||
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EXHIBIT D
VTB HOLDINGS, INC.
2011 EQUITY INCENTIVE PLAN
JOINDER TO STOCKHOLDERS AGREEMENT
THIS JOINDER to the Stockholders Agreement, dated as of January 7, 2011, by and among the signatories thereto (as amended from time to time, the Agreement), is made and entered into as of , by and between the VTB, Holdings, Inc. (the Company) and [ ] (the Holder). Capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Agreement.
WHEREAS, the Holder has acquired certain Common Shares and the Company requires the Holder, as a holder of Common Shares, to become bound by and/or a party to the Agreement, and the Holder agrees to do so in accordance with the terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this joinder hereby agree as follows:
1. Agreement to be Bound . The Holder hereby agrees that upon execution of this Joinder, it shall become bound by and/or a party to the Agreement and shall be fully bound by, and subject to, all of the covenants, terms and conditions of the Agreement as though an original party thereto and shall be deemed a Stockholder for the purposes of being bound thereby. In addition, Holder hereby agrees that each class of Common Shares held by Holder shall be deemed Common Shares for the purposes of being bound thereby and shall be subject to all limitations and requirements provided in the Agreement.
2. Successors and Assigns . Except as otherwise provided herein, this Joinder shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and Holder (only as provided in the Agreement) and any subsequent holders of Common Shares and the respective successors and assigns of each of them, so long as they hold any Common Shares.
3. Counterparts . This Joinder may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement.
4. Notices . For purposes of Section 9.9 of the Agreement, all notice, demand, consent, election, offer, approval, request or other communication to the Holder shall be directed to:
Mr. Juergen Stark
8324 Santaluz Pointe
San Diego, California 92127
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5. Governing Law . All questions concerning the construction, validity and interpretation of this Agreement and the performance of the obligations imposed by this joinder shall be governed by the internal law, not the law of conflicts, of the State of New York.
6. Descriptive Headings . The descriptive headings of this Joinder are inserted for convenience only and do not constitute a part of this Joinder.
IN WITNESS WHEREOF, the undersigned have executed this Joinder as of the date first above written.
[ ] | ||
By: | ||
Name: | ||
Title: |
Acknowledged and Agreed: | ||
VTB HOLDINGS, INC. | ||
By: | ||
Name: | ||
Title: |
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Exhibit 10.16
EXECUTION COPY
VTB HOLDINGS, INC.
STOCK AWARD AGREEMENT
This Stock Award Agreement (this Agreement), dated as of the 21 st day of June, 2011 (the Grant Date), is made by and between VTB Holdings, Inc., a Delaware corporation (the Company), and Ron Doornink (the Grantee),
WITNESSETH:
WHEREAS, the Company has adopted the VTB Holdings, Inc. 2011 Equity Incentive Plan (the Plan), a copy of which is attached hereto as Exhibit A , pursuant to which shares of the Companys Common Stock may be granted to the Grantee; and
WHEREAS, the Committee has determined that it is in the best interests of the Company and its stockholders to grant to the Grantee Common Stock, subject to the Companys right of repurchase, as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein set forth, and in reliance on the representations and warranties contained herein, the parties intending to be legally bound hereby agree as follows:
1. Grant of Common Stock . The Company hereby grants to the Grantee on the Grant Date 1,411,291 shares of Common Stock for his role as a member of the board of directors of the Company (the Director Shares) and 1,411,291 shares of Common Stock for his role as a consultant for the Company (the Consulting Shares, and collectively the Shares) on the terms and conditions set forth in this Agreement and as otherwise provided in the Plan (the Award).
2. 83(b) Election . As a further condition to receiving the Award, the Grantee shall make a valid election under Section 83(b) of the Code, substantially in the form attached hereto as Exhibit B, to include the value of the Award in the Grantees taxable income upon receipt. The Grantee acknowledges that it is the Grantees sole responsibility, and not the Companys, to file timely the election under Code Section 83(b).
3. Vesting . The Shares shall not be subject to vesting.
4. Shares to be Retained for Investment . The Grantee agrees that the Shares have been acquired by Grantee for investment and not with a view to distribution. Grantee further agrees to provide the Company with an Investment Representation Statement (substantially in the form attached hereto as Exhibit C ). The Company shall be entitled to restrict the transferability of the Shares to the extent necessary to avoid a risk of violation of the Securities Act or of any federal or state laws or regulations.
5. Stockholders Agreement . The Grantee hereby acknowledges that he is a stockholder of the Company and hereby agrees (a) to be bound by all of the terms of the Stockholders Agreement, as amended from time to time, (a current copy of which is attached hereto as Exhibit D ), applicable with respect to the Shares, including, without limitation the right of first refusal, drag-along rights, tag-along rights and other transfer restrictions contained therein and (b) that Exhibit A of the Stockholders Agreement shall be updated to reflect the Shares.
6. Companys Repurchase Rights . Grantee agrees that the Shares granted hereunder are subject to the following repurchase rights of the Company or its designee:
a. | In the event that prior to October 12, 2014, the Grantee voluntarily (i) terminates his position as a member of the board of directors of the Company or otherwise attempts to dispose of, transfer, or sell the Director Shares, or (ii) ceases providing consulting services to the Company or otherwise attempts to dispose of, transfer, or sell the Consulting Shares, the Company or its designee shall have the right (but not the obligation) to repurchase the Director Shares and/or the Consulting Shares, as applicable, for a repurchase price equal to Grantees per share federal and state income tax liability on the applicable Shares as evidenced by the Grantees Section 83(b) election filed pursuant to Section 2 above and assuming an applicable combined tax rate of 50.6% 1 (the Repurchase Right). |
b. | The Repurchase Right will lapse (i) with respect to 2.0833% of the Shares on June 12, 2011 and on the 12 th day of every month thereafter and (ii) with respect to all of the Director Shares, if Grantee remains on the board of directors of the Company, and all of the Consulting Shares, if Grantee remains a consultant for the Company, through the consummation of an Approved Sale. |
c. | Grantee and the Company agree that on the Grant Date, the Repurchase Right is not applicable as to 14.58% of the Shares. |
d. | The Grantee agrees that the terms and conditions set forth in this Section 6 will supersede any contrary provisions set forth in Article VIII of the Plan. |
7. Plan Terms . The provisions of the Plan are incorporated herein by reference. Except as otherwise expressly set forth herein, the Award and this Agreement shall be subject to and construed in accordance with the provisions of the Plan and any capitalized terms not otherwise defined in this Agreement shall have the definitions set forth in the Plan. The Committee shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its decision shall be binding and conclusive upon the Grantee and his legal representative in respect of any questions arising under the Plan or this Agreement. Except as provided in Section 6(d), in the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall govern and control.
1 | This represents a federal rate of 39.6% and a maximum California rate of 11%. |
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8. Governing Law . To the extent that federal laws do not otherwise control, the Plan and this Agreement and all determinations made and actions taken pursuant hereto shall be governed by the substantive laws of the State of New York, irrespective of the principal place of business, residence or domicile of the parties hereto, and without giving effect to otherwise applicable principles of conflicts of law that would require the application of any other state law.
9. Withholding of Taxes . The Award shall be subject to applicable federal, state, and local tax withholding requirement.
10. Severability . The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.
11. No Rights to Continue Service . Nothing contained in this Agreement shall be construed as giving the Grantee any right to be retained, in any position, as an employee, consultant or director of the Company or its affiliates nor shall it interfere with or restrict in any way the right of the Company or its affiliates, which right is hereby expressly reserved, to remove, terminate or discharge the Grantee at any time for any reason whatsoever.
12. Successors . The terms of this Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns, and of the Grantee and the beneficiaries, executors, administrators, heirs and successors of the Grantee.
13. Amendment of Award . The Committee may amend the terms of this Agreement; provided, that, the Committee may not effect any amendment which would otherwise constitute an impairment of the Grantees rights under this Award unless such amendment is: (i) pursuant to the Stockholders Agreement; or (ii) the Company requests the Grantees consent and the Grantee consents in writing.
14. Headings . The headings of the Sections hereof are provided for convenience only and are not to serve as a basis for interpretation or construction, and shall not constitute a part, of this Agreement.
15. Signature in Counterparts . This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
16. Entire Agreement . This Agreement and the Plan (including all exhibits hereto and thereto) sets forth the entire understanding of the parties hereto and supersedes all prior agreements, arrangements, and communications, whether oral or written, pertaining to the subject matter hereof.
[Remainder of page intentionally left blank; signature page to follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day first written above.
VTB HOLDINGS, INC. | ||||||||
[ILLEGIBLE] | By: | /s/ Carmine J. Bonanno | ||||||
Witness | Name: | Carmine J. Bonanno | ||||||
Title: | PRES/CEO | |||||||
RON DOORNINK | ||||||||
/s/ Bruce Murphy | /s/ Ron Doornink | |||||||
Witness | Grantees Signature |
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EXHIBIT A
VTB HOLDINGS. INC.
2011 EQUITY INCENTIVE PLAN
COPY OF 2011 EQUITY INCENTIVE PLAN
EXHIBIT B
ELECTION TO INCLUDE
IN GROSS INCOME
IN YEAR OF TRANSFER OF PROPERTY
PURSUANT TO SECTION 83(b) OF
THE INTERNAL REVENUE CODE
The undersigned hereby elects under Section 83(b) of the Internal Revenue Code of 1986, as amended, with respect to the property described below to include in gross income the excess (if any) of the fair market value of the property at the time of transfer (determined without regard to any lapse restriction) over the amount paid for such property (if any), as compensation for services, and supplies the following information in accordance with Treasury Regulation Section 1.83-2(e):
1. | Name, address and social security number of the undersigned: |
Name: |
Ron Dooraink | |
Address: |
872 6 th Str. |
|
Manhattan Beach |
||
CA 90266 |
Social Security Number: |
111- 62- 9976 |
2. | Description of property with respect to which the election is being made: |
The property with respect to which this election is being made is 2,822,582 shares of Common Stock (Common Stock) of VTB Holdings, Inc., a Delaware corporation (the Company).
3. | Date on which the property was transferred: June 21, 2011. |
4. | Taxable year to which this election relates: 2011. |
5. | Nature of the restrictions to which the property is subject: |
The Common Stock is fully vested; however, it is subject to a four year right of repurchase by the Company. The Companys repurchase right is triggered upon the taxpayers voluntary termination of service or attempt to transfer the Common Stock prior to the end of the four year repurchase period. The Companys repurchase right lapses in monthly installments.
6. | Fair market value of the property: |
The total fair market value at the time of transfer (determined without regard to any restrictions other than restrictions that by their terms will never lapse) of the Common Stock was $1,411,291.00 .
7. | Amount paid for the property: |
The amount paid by the taxpayer for the Common Stock is $0.00.
8. | Furnishing statement to service recipient: |
A copy of this statement has been furnished to the Company.
Dated: |
6/21/2011 | |
Signed: |
/s/ Ronald Doornink |
EXHIBIT C
VTB HOLDINGS. INC.
2011 EQUITY INCENTIVE PLAN
INVESTMENT REPRESENTATION STATEMENT
Grantee: | Ron Doornink |
Common Stock: 2,822,582 shares of Common Stock of VTB Holdings, Inc. (the Company)
Amount Paid: $0.00
Date: | June 21, 2011 |
In connection with the grant of the above-listed Common Stock, the undersigned Grantee represents to the Company the following:
Grantee is aware of the Companys business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision regarding the Common Stock. Grantee is acquiring these shares of Common Stock for investment for Grantees own account only and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933, as amended (the Securities Act).
Grantee understands that the Common Stock must be held indefinitely unless such Common Stock is subsequently registered under the Securities Act or an exemption from such registration is available. Grantee further acknowledges and understands that the Company is under no obligation to register the Common Stock. Grantee understands that no certificate evidencing the Common Stock will be issued and that the shares of Common Stock are nontransferable except as provided in the Stockholders Agreement.
Grantee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of restricted securities acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant to Grantee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Common Stock exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (a) the resale being made through a broker in an unsolicited brokers transaction or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (b) the availability of certain public information about the Company; (c) the amount of Common Stock being sold during any three month period not exceeding the limitations specified in Rule 144(e); and (d) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time of grant to the Grantee, then the shares of Common Stock may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the shares of Common Stock were sold by the Company or the date the shares of Common Stock were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Common Stock by an affiliate, or by a non-affiliate who subsequently holds the Common Stock less than two years, the satisfaction of the conditions set forth in sections (a), (b), (c) and (d) of the paragraph immediately above.
Grantee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 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 their respective brokers who participate in such transactions do so at their own risk. Grantee understands that no assurances can be given that any such other registration exemption will be available in such event.
Date: 6/21/2011
Signature of Grantee: /s/ Ronald Doornink
EXHIBIT D
VTB HOLDINGS, INC.
2011 EQUITY INCENTIVE PLAN
COPY OF THE STOCKHOLDERS AGREEMENT
JOINDER AGREEMENT
THIS IS A JOINDER AGREEMENT, dated as of June 21, 2011 (the Agreement), by and between VTB Holdings, Inc., a Delaware corporation (the Company), and Martha M. Doornink (the Spouse). Capitalized terms used herein but not otherwise defined shall have the meanings set forth in the Stock Award Agreement between the Company and Ron Doornink (the Grantee) dated June 21, 2011 (Award Agreement).
WHEREAS, under the Award Agreement, the Grantee was granted a total of 2,822,582 shares of Common Stock for his role as a consultant and as a member of the Board of Directors of the Company (collectively, the Shares);
WHEREAS, the Award Agreement provides the Company with Repurchase Rights with respect to the Shares upon the occurrence of certain events;
WHEREAS, the Grantee and the Spouse are residents of the state of California and are therefore subject to the community property laws of such state;
WHEREAS, under the community property laws of California the Spouse may be deemed to have a community property interest in the Shares when granted to the Grantee;
WHEREAS, as a result of the Spouses potential community property interest in the Shares, the Company desires to have the Spouse join and become a party to the Award Agreement, attached hereto as Schedule A, and thereby bound by the terms of the Repurchase Rights contained therein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement intending to be legally bound hereby agree as follows:
1. Agreement to be Bound . The Spouse hereby joins in and becomes a party to the Award Agreement and agrees to be fully bound by, and subject to, all of the covenants, terms and conditions of the Award Agreement, including, without limitation, the Repurchase Rights contained therein as though she was an original party thereto.
2. Successors and Assigns . Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Company and the Spouse and the respective successors and assigns of each of them.
3. Counterparts . This Agreement may be executed in separate counterparts each of which shall be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by electronic means, such as facsimile or portable document format, shall be as effective as delivery of a manually executed counterpart of this Agreement.
4. Governing Law . To the extent federal laws do not otherwise control, this Agreement and all determinations made and actions taken pursuant hereto shall be governed by the substantive laws of the State of New York, irrespective of the principal place of business, residence or domicile of the parties hereto, and without giving effect to otherwise applicable principles of conflicts of law that would require the application of any other state law.
5. Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
By: |
/s/ Bruce Murphy | |
Name: Bruce Murphy |
||
Title: CFO |
||
/s/ Martha M. Doornink |
||
Martha M. Doornink |
Schedule A
[Stock Grant Agreement]
June 21, 2011
VTB Holdings, Inc.
150 Clearbrook Rd. Suite 162
Elmsford, NY 10523
Re: | Transfer of Shares under the VTB Holdings, Inc. 2011 Equity Incentive Plan |
To Whom It May Concern:
I, Ronald Doornink, have been granted 2,822,582 shares of Common Stock under the VTB Holdings, Inc. 2011 Equity Incentive Plan on June 21, 2011. I, together with my spouse, Martha Doornink, hereby direct VTB Holdings, Inc. to transfer such shares to the Doornink Revocable Living Trust dated December 17, 1996, as amended (the Trust), effective immediately.
The Trust is already a party to the VTB Holdings, Inc. Stockholders Agreement and, therefore, we have not provided a joinder to such Agreement. As trustees of the Trust, we agree to cause the Trust to continue to abide by the terms of the 2011 VTB Holdings, Inc. Equity Incentive Plan.
Sincerely, | ||
/s/ Ronald Doornink | ||
Ronald Doornink | ||
/s/ Martha Doornink | ||
Martha Doornink |
Exhibit 10.17
FIRST AMENDMENT TO RONALD DOORNINKS
VTB HOLDINGS, INC. STOCK AWARD AGREEMENT
WHEREAS, pursuant to the VTB Holdings, Inc. 2011 Equity Incentive Plan (the Plan), VTB Holdings, Inc. (the Company ) granted Ronald Doornink (the Grantee ) 2,822582 shares of Common Stock (as defined in the Plan) pursuant to the VTB Holdings, Inc. Stock Award Agreement, dated June 21, 2011 (the Stock Award Agreement );
WHEREAS, the shares of Common Stock granted to the Grantee were equally divided into Director Shares (as defined in the Stock Award Agreement) and Consulting Shares (as defined in the Stock Award Agreement);
WHEREAS, effective April 12, 2013, the Grantee will no longer provide consulting services to the Company; however, the Grantee will continue to serve as a Director of the Company;
WHEREAS, the Company and the Grantee agree to amend the Stock Award Agreement to eliminate the Companys rights to repurchase the Consulting Shares triggered upon the Grantees termination of consulting services to the Company and the Company and the Grantee agree that the Consulting Shares will be subject to the same repurchase provisions as are applicable to the Grantees Director Shares.
NOW THEREFORE, pursuant to Section 13 of the Stock Award Agreement, and intending to be legally bound hereby, the parties hereto agree to amend the Stock Award Agreement, effective as of April 12, 2013, as follows:
1. | Section 6.a. of the Stock Award Agreement is hereby amended and restated in its entirety to read as follows: |
a. In the event that prior to October 12, 2014, the Grantee voluntarily terminates his position as a member of the board of directors of the Company, or otherwise attempts to dispose of, transfer, or sell the Shares subject to this Agreement, the Company or its designee shall have the right (but not the obligation) to repurchase such Shares for a repurchase price equal to the Grantees per share federal and state income tax liability on the applicable Shares as evidenced by the Grantees Section 83(b) election filed pursuant to Section 2 above and assuming an applicable combined tax rate of 50.6% (the Repurchase Right).
1
2. | Section 6(b) of the Stock Award Agreement is hereby amended and restated in its entirety to read as follows: |
b. The Repurchase Right will lapse (i) with respect to 2.0833% of the Shares on July 12, 2011 and on the 12 th day of every month thereafter through October 12, 2014 or (ii) with respect to all of the Shares, if the Grantee remains on the board of directors of the Company through the consummation of an Approved Sale prior to October 12, 2014.
3. | Section 6(c) of the Stock Award Agreement is hereby amended and restated in its entirety to read as follows: |
c. Grantee and the Company agree that on the Grant Date, the Repurchase Right is not applicable as to 16.67% of the Shares.
2
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment to the Stock Award Agreement this 26 t h day of February, 2013.
VTB HOLDINGS, INC. | ||
By: | /s/ Kenneth A. Fox | |
Name: | Kenneth A. Fox | |
Title: | President | |
/s/ Ronald Doornink | ||
Ronald Doornink |
3
Exhibit 10.18
CONSULTING AGREEMENT
This Consulting Agreement (this Agreement ) dated as of October 12, 2010 (the Effective Date ) is by and between Voyetra Turtle Beach, Inc. a Delaware corporation (the Company ) and Ronald Doornink (the Consultant ).
WHEREAS, the Company desires to hire the Consultant pursuant to the terms and conditions set forth herein; and
WHEREAS, the Consultant desires to provide services to the Company on the terms and conditions set forth herein; and
WHEREAS, in connection with the consummation of the transactions contemplated by that certain Stock Purchase Agreement, dated as of the date hereof, by and among the Company, SG VTB Merger Sub, Inc. and the other signatories thereto (the Stock Purchase Agreement ), the Consultant has been given the opportunity to invest $2,800,000.00 in shares of the Companys Series A Preferred Stock and has joined and agrees to be bound by the Stockholders Agreement among the Company and the stockholders named therein, dated as of the date hereof, as such agreement may be amended from time to time.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants and conditions set forth herein, and the performance of each, the parties, intending to be legally bound, hereby agree as follows:
AGREEMENTS
Section 1 . Definitions . For purposes of this Agreement, the following terms have the meanings set forth below:
Board means the Board of Directors of the Company as the same is constituted from time to time.
Companys Business includes, but is not limited to, the business of designing, marketing, selling, manufacturing and distributing peripherals and related software for video game consoles, mobile devices, audio devices and personal computers.
Cause means: (A) Consultants conviction of or plea of guilty or nolo contendere to a felony; (B) a determination by the Board that Consultant committed fraud, misappropriation or embezzlement against any Person; (C) Consultants material breach of the terms of this Agreement or Consultants material breach of any other material written agreement with the Company or any of its affiliates (excluding the Seller Transaction Documents or Company Transaction documents, as those terms are defined in the Stock Purchase Agreement) to which Consultant is a party other than this Agreement; (D) Consultants willful misconduct or gross
Consulting Agreement |
neglect in performance of Consultants duties; or (E) Consultants failure or refusal to carry out material responsibilities reasonably assigned by the Board to the Consultant; provided , however , that with respect to subsections (C), (D) and (E) above, Cause will only be deemed to occur after written notice to Consultant of such action or inaction giving rise to Cause and the failure by Consultant to cure such action or inaction (which is capable of cure) within 30 days after written notice.
Confidential Information shall mean all information respecting the business and activities of the Company or any affiliate of the Company, including, without limitation, the clients, customers, suppliers, employees, consultants, computer or other files, projects, products, computer disks or other media, computer hardware or computer software programs, marketing plans, financial information, methodologies, know-how, processes, practices, approaches, projections, forecasts, formats, systems, trade secrets, data gathering methods and/or strategies of the Company or any affiliate of the Company. Notwithstanding the immediately preceding sentence, Confidential Information shall not include any information that is, or becomes, generally available to the public (unless such availability occurs as a result of Consultants breach of any portion of this Agreement).
Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
Section 2 . Consulting Period . The Company hereby agrees to retain the Consultant to provide Consulting Services, and the Consultant hereby agrees to provide such Consulting Services to the Company upon the terms and conditions set forth in this Agreement for the period beginning on the Effective Date and ending on the termination of the Consultants services for any reason (the Consulting Period ). Notwithstanding anything in this Agreement to the contrary, the Company or the Consultant may terminate this Agreement and the Consulting Period for any reason or no reason at any time upon 30 days advance written notice and the Company may immediately terminate this Agreement and the Consulting Period at any time for Cause.
Section 3 . Consulting Services . During the Consulting Period, the Consultant shall provide the services requested by the Board of Directors (the Consulting Services ). During the Consulting Period, the Consultant shall report directly to the Board. During the Consulting Period, the Consultant shall devote his best efforts and as much of his time and attention as necessary to provide the Consulting Services.
Section 4 . Fees and Expense Reimbursements .
4.1 Consulting Fee . During the Consulting Period, the Company agrees to pay the Consultant an annual fee equal to $100,000 (the Consulting Fee ), which Consulting Fee will be payable by the Company in quarterly installments payable in arrears.
2 | Consulting Agreement |
4.2 Consulting Bonus . During the Consulting Period, the Consultant shall be eligible to receive an annual bonus in an amount up to $100,000 based upon the attainment of an annual EBITDA target as determined by the Board (the Consulting Bonus ).
4.3 Director Fee . During the period which the Consultant serves as the chairman of the Board (the Board Membership Period ), the Company agrees to pay the Consultant an annual fee equal to $100,000 (the Director Fee ), which Director Fee will be payable by the Company in quarterly installments payable in arrears.
4.4 Director Bonus . During the Board Membership Period, the Consultant shall be eligible to receive an annual bonus in an amount up to $100,000 based upon the attainment of an annual EBITDA target as determined by the Board (the Consulting Bonus ).
4.5 Business Expense Reimbursement . The Company shall reimburse the Consultant for any and all reasonable expenses (a) incurred by him in the course of performing his duties under this Agreement during the Consulting Period and (b) his service as a member of the Board during the Board Membership Period, in each case, which are consistent with the Companys policies in effect from time to time with respect to travel, entertainment and other business expenses ( Reimbursable Expenses ), subject to the Companys requirements with respect to reporting and documentation of expenses. All reimbursements shall be made as soon as reasonably practicable, but in no event later than the last day of the calendar year following the calendar year in which such expenses were incurred. In addition, no reimbursement shall be subject to liquidation or exchange for another benefit and the amount available for reimbursement during any calendar year shall not affect the amount available for reimbursement in a subsequent calendar year.
4.6 Office Expenses . The Company shall pay to the Consultant $50,000 a year quarterly in arrears for office and related expenses during the Consulting Period.
Section 5 . Company Options .
5.1 Consulting Options . The Company shall grant the Consultant options to purchase shares of the Company representing one and six-tenths of a percent (1.6%) of the Companys common equity on a fully-diluted as-converted basis common stock (the Consulting Options ) with a per share exercise price equal to the fair market value of the common stock at the time of the grant, subject to the terms and conditions of the Companys Stock Option Plan (the Option Plan ). Subject to the Consultant continuing to provide Consulting Services, the Consulting Options shall vest and shall become exercisable as follows: (a) the Consulting Options will vest and become exercisable in substantially equal monthly installments over the forty-eight (48) months immediately the date of grant of the Consulting Options (the Consulting Option Grant Date ) and (b) all Consulting Options will vest in full and become exercisable upon a Change of Control (as such term is defined in Option Plan). The Options, to the extent vested and exercisable, shall remain exercisable until the tenth anniversary the date of the Consulting Option Grant Date. Unless otherwise provided at the time of the grant of the Consulting Options, any of the Consulting Options that are not fully vested and exercisable as of the date the Consultant ceases to provide the Consulting Services shall be immediately cancelled without any payment or compensation to the Consultant.
3 | Consulting Agreement |
5.2 Board Membership Options . The Company shall grant the Consultant options to purchase shares of the Company representing one and six-tenths of a percent (1.6%) of the Companys common equity on a fully-diluted as-converted basis common stock (the Board Membership Options ) with a per share exercise price equal to the fair market value of the common stock at the time of the grant, subject to the terms and conditions of the Option Plan. Subject to the Consultant continuing to serve as a member of the Board, the Board Membership Options shall vest and shall become exercisable as follows: (a) the Board Membership Options will vest and become exercisable in substantially equal monthly installments over the forty-eight (48) months immediately the date of grant of the Board Membership Options (the Board Membership Option Grant Date ) and (b) all Board Membership Options will vest in full and become exercisable upon a Change of Control (as such term is defined in Option Plan). The Board Membership Options, to the extent vested and exercisable, shall remain exercisable until the tenth anniversary the date of the Board Membership Option Grant Date. Unless otherwise provided at the time of the grant of the Board Membership Options, any of the Board Membership Options that are not fully vested and exercisable as of the date the Consultant ceases to serve as a member of the Board shall be immediately cancelled without any payment or compensation to the Consultant.
Section 6 . Confidential Information . Consultant shall not, during or after the Consulting Period, without the prior express written consent of the Board, directly or indirectly use or divulge, disclose or make available or accessible any Confidential Information to any Person (other than when required to do so in good faith to perform Consultants duties and responsibilities under this Agreement or when required to do so by a lawful order of a court of competent jurisdiction, any governmental authority or agency, or any recognized subpoena power). In the event that Consultant becomes legally compelled (by oral questions, interrogatories, request for information or documents, subpoena, criminal or civil investigative demand or similar process) to disclose any of the Confidential Information, then prior to such disclosure, Consultant will provide the Company with prompt written notice so that the Company may seek (with Consultants cooperation) a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, then Consultant will furnish only that portion of the Confidential Information which he is advised by counsel is legally required, and will cooperate with the Company in the Companys efforts to obtain reliable assurance that confidential treatment will be accorded to the Confidential Information.
Section 7 . Ownership of Intellectual Property . Consultant acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports, patent applications, copyrightable work, and mask work (whether or not including any Confidential Information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) that relate to the Companys or any affiliates actual or anticipated business, research and development, or existing or future products or services and that are conceived, developed, contributed to, made, or reduced to practice by
4 | Consulting Agreement |
Consultant (either solely or jointly with others) while providing services to the Company (including any of the foregoing that constitutes any proprietary information or records) (collectively, Intellectual Property ) belong to the Company or any affiliate, and Consultant hereby assigns, and agrees to assign, all of the above Intellectual Property to the Company. Any copyrightable work prepared in whole or in part by Consultant in the course of Consultants work for any of the foregoing entities shall be deemed a work made for hire under the copyright laws, and the Company or such affiliate of the Company shall own all rights therein. To the extent that any such copyrightable work is not a work made for hire, Consultant hereby assigns and agrees to assign to the Company or such affiliate of the Company all right, title, and interest, including without limitation, copyright in and to such copyrightable work. Consultant shall promptly disclose such Intellectual Property and copyrightable work to the Board and perform all actions reasonably requested by the Board (whether during or after the Consulting Period) to establish and confirm the ownership of the Company or such affiliate of the Company (including, without limitation, assignments, consents, powers of attorney and other instruments.
Section 8 . Delivery of Materials upon Termination of Consulting Services . As requested by the Company from time to time and upon the termination of the Consulting Period for any reason, the Consultant will promptly deliver to the Company all copies and embodiments, in whatever form or medium, of all Confidential Information or Intellectual Property in the Consultants possession or within his control (including, without limitation, any written records, notes, photographs, manuals, notebooks, documentation, program listings, flow charts, projections, customer or supplier lists, magnetic media, disks, diskettes, tapes and all other materials containing any Confidential Information or Intellectual Property) irrespective of the location or form of such material and, if requested by the Company, will provide the Company with written confirmation that all such materials have been delivered to the Company.
Section 9 . Non-Competition . The Consultant covenants and agrees that while providing Consulting Services for the Company, and for a period of eighteen (18) months following the termination of the Consulting Period, for any reason, Consultant shall not, either directly or indirectly, without the prior written consent of the Company, on his own behalf or in the service or on behalf of others serve anywhere in the United States as an owner, manager, stockholder (except as a holder of no more than l% of the issued and outstanding stock of a publicly traded company or in his capacity as Special Advisor to the Board of Directors of Activision-Blizzard, Inc. or any successors in interest), consultant, director, officer or employee of any business entity that provides services that are similar to or competitive to those provided, offered or sold by the Company; and for a period of eighteen (18) months following the termination of the Consulting Period for any reason, the Consultant shall not, either directly or indirectly (i) solicit or divert or appropriate to or for any competing business, or (ii) attempt to solicit, divert or appropriate to or for any competing business, any services offered, sold or provided by the Company to or from those entities who are clients of the Company, joint venturers, or partners with the Company or parties to which Company has submitted a proposal to offer any products or services within six (6) months prior to such termination.
5 | Consulting Agreement |
Section 10 . Agreement Not to Solicit Employees . The Consultant covenants and agrees that while providing Consulting Services for the Company, and for a period of three (3) years following termination, for any reason, of the Consulting Period, he will not directly on his own behalf or in the service or on behalf of others, solicit, divert or hire away, or attempt to solicit, divert or hire away, to any competing business any person employed by the Company, whether or not such employee is a full-time employee or a temporary employee of the Company, and whether or not such employment is pursuant to written agreement and whether or not such employment is for a determined period or is at will.
Section 11 . Non-Disparagement . Except as required by applicable law, rule or regulation or any recognized subpoena power, during and after the Consulting Period, each of the Consultant and the Company agrees not to, at any time, make any statement or representation, written or oral, which such party knows or should know will, or which such party knows or should know is reasonably likely to, impair or adversely affect in any way the reputation, goodwill, business, customer or supplier relationships, or public relations of the other party and/or any of its affiliates, and/or any of their respective partners, directors, employees or officers. In the event that either party becomes legally compelled (by oral questions, interrogatories, request for information or documents, subpoena, criminal or civil investigative demand or similar process) to make any such statements or representations, then prior thereto, such party will provide the other party with prompt written notice so that the other party may seek (with the reasonable cooperation of the first party) a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, then the first party will only make such statements or representations which he or it is advised by counsel is legally required, and will cooperate with the other party in the other partys efforts to obtain reliable assurance that confidential treatment will be accorded to any such statements or representations.
Section 12 . The time periods for Consultants obligations contained in Section 9 and 10 hereof will be extended beyond the time periods specified therein by the length of time during which Consultant will have been in breach (as determined by a court of competent jurisdiction in a final nonappealable judgment, ruling or order or by an arbitration) of any of the provisions of such Sections 9 and 10.
Section 13 . Affiliates; Equitable Relief . It is expressly understood that the provisions and limitations of Sections 6, 7, 8, 9, 10, 11 and 12 above shall apply to and with respect to any and all Confidential Information, Intellectual Property, employees and businesses of the Company and any of its affiliates, as if such Persons and their Confidential Information, Intellectual Property, employees and businesses were expressly named and described herein. The Consultant acknowledges that a breach or threatened breach by him of any of his covenants contained in Sections 6, 7, 8, 9, 10, 11 and 12 of this Agreement could cause irreparable harm to the Company and their respective affiliates, for which it or they would have no adequate remedy at law. Accordingly, and in addition to any remedies which the Company or their affiliates may have at law, in the event of an actual or threatened breach by the Consultant of his covenants contained in Sections 6, 7, 8, 9, 10, 11 and 12 of this Agreement, the Company and their affiliates shall have the absolute right to apply to any court of competent jurisdiction for such injunctive or other equitable relief as such court may deem necessary or appropriate in the circumstances.
6 | Consulting Agreement |
Section 14 . No Prior Agreements . The Consultant hereby represents and warrants to the Company that the execution of this Agreement by the Consultant and the performance of his Consulting Services hereunder will not violate or be a breach of any agreement with a former employer, client, or any other Person. Further, Consultant agrees to indemnify and hold harmless the Company and its officers, directors, and representatives for any claim, including, but not limited to, reasonable attorneys fees and expenses of investigation, of any such third party that such third party may now have or may hereafter come to have against the Company or such other persons, based upon or arising out of any non-competition agreement, invention, secrecy, or other agreement between Consultant and such third party that was in existence as of the date of this Agreement.
Section 15 . Miscellaneous .
15.1 Independent Contractor . This Agreement does not establish an employer-employee relationship with the Company. Consultant is for all purposes an independent contractor. Consultant will not, as an independent contractor, be entitled to any benefits available to the Companys employees including, but not limited to, medical, unemployment, vacation and retirement benefits. Consultant is solely responsible for obtaining his own workers compensation coverage. Consultant shall be responsible for all employment-related taxes pursuant to the requirements of applicable local, state, and federal regulation.
15.2 Insurance . Consultant understands and agrees that as an independent contractor, Consultant is responsible for any insurance coverage he deems appropriate.
15.3 Remedies . The Company will have all rights and remedies set forth in this Agreement, all rights and remedies which the Company has been granted at any time under any other agreement or contract and all of the rights which the Company has under any law. The Company will be entitled to enforce such rights specifically, without posting a bond or other security, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or available in equity.
15.4 Waivers and Amendments . The provisions of this Agreement may be amended or waived only by a written agreement executed and delivered by the Company and the Consultant. No other course of dealing between the parties to this Agreement or any delay in exercising any rights hereunder will operate as a waiver of any rights of any such parties.
15.5 Successors and Assigns . All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of any of the parties hereto will bind and inure to the benefit of the parties and their respective heirs, executors, administrators, personal representatives, successors and assigns, whether so expressed or not; provided that the Consultant may not assign his rights or delegate his obligations under this Agreement without the written consent of the Company.
15.6 Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
7 | Consulting Agreement |
15.7 Counterparts . This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all of which counterparts taken together will constitute one and the same agreement.
15.8 Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.
15.9 Notices . All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally to the recipient, two business days after the date when sent to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands, and other communications will be sent to the Consultant and to the Company at the addresses set forth below.
If to the Consultant:
Ron Doornink
872 6th Street
Manhattan Beach, CA 90266
Telephone: (949) 636-0817
Facsimile: (310) 374-8534
If to the Company:
Voyetra Turtle Beach, Inc.
150 Clearbrook Rd. Suite 162
Elmsford, NY 10523
Attention: Carmine Bonanno
Fax: (914) 345-2252
With Copy To (which shall not constitute notice):
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, PA 19102
Facsimile: (215) 994-2222
Attention: Henry N. Nassau, Esq. and David S. Denious, Esq.
Or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.
8 | Consulting Agreement |
15.10 409A . This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended and the parties hereto agree to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply therewith and without resulting in any increase in the amounts owed hereunder by the Company.
15.11 No Third Party Beneficiary . This Agreement will not confer any rights or remedies upon any person other than the Company, the Consultant and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns.
15.12 Entire Agreement . This Agreement constitutes the entire agreement between the parties and supersedes any prior understandings, agreements or representations by or between the parties, written or oral, that may have related in any way to the subject matter hereof.
15.13 Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. Any reference to any federal, state, local or foreign statute or law will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The use of the word including in this Agreement means including without limitation and is intended by the parties to be by way of example rather than limitation.
15.14 Survival . Sections 6, 7, 8, 9, 10, 11 and 12 of this Agreement will survive and continue in full force in accordance with their terms notwithstanding any termination of the Consulting Period.
15.15 Governing Law . All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal law, and not the law of conflicts, of the state of New York.
15.16 Waiver of Trial by Jury . The Company and consultant waive trial by jury in any proceeding.
9 | Consulting Agreement |
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
Voyetra Turtle Beach, Inc. | ||
By: |
/s/ Kenneth A. Fox |
|
Name: | Kenneth A. Fox | |
Title: | Authorized Signatory | |
Ronald Doornink | ||
By: |
/s/ Ronald Doornink |
10 | Consulting Agreement |
Exhibit 10.19
February 26, 2013
Mr. Ron Doornink
872 6th Street
Manhattan Beach, CA 90266
Re: | Termination of Consulting Agreement and Continued Service on the Board of Directors |
Dear Ron:
We would like to thank you for your services as a consultant and member of the Board of Directors of VTB Holdings, Inc. (the Company ). This letter agreement is to memorialize the agreement between you and the Company regarding the termination of your consulting services under the Consulting Agreement, dated October 12, 2010, between you and the Company (the Consulting Agreement ).
Pursuant to our mutual agreement, the Consulting Agreement shall be terminated effective April 12, 2013, other than with respect to Sections 6 through 15 thereof, which shall survive and continue in full force and effect in accordance with their terms. Upon termination of the Consulting Agreement, you shall receive a final payment of $71,500 with respect to your services under the Consulting Agreement through April 12, 2013 and thereafter you shall be entitled to no further compensation thereunder. Notwithstanding the termination of the Consulting Agreement, the Company wishes to have you continue to serve as the Chairman of the Companys Board of Directors. Therefore, effective April 13, 2013, and in connection with your service as Chairman of the Board of Directors, you will be entitled to receive the following:
| Annual compensation of $150,000, payable quarterly in arrears; and |
| Reimbursement of reasonable expenses incurred in connection with your duties as a member of the Board of Directors, in accordance with the Companys reimbursement policy. Notwithstanding the foregoing, you will be entitled to reimbursement for the lowest available cost business class travel arrangements for both intercontinental and transcontinental travel. |
In addition, we have agreed to amend certain provisions of the Stock Award Agreement, dated June 21, 2011 between you and the Company (the Stock Award Agreement ), in accordance with the amendment attached hereto as Exhibit A .
Please indicate your acceptance of the terms of this letter agreement by countersigning below and by signing the First Amendment to the Stock Award Agreement attached as Exhibit A. Please return signed copies of this letter agreement and the amendment to Bruce Murphy at 100 Summit Lake Blvd, Suite 100, Valhalla, New York 10595.
Sincerely, | ||
VTB Holdings, Inc. | ||
By: | /s/ Kenneth A. Fox | |
Name: | Kenneth A. Fox | |
Title: | President |
Accepted and Agreed: | ||
/s/ Ronald Doornink | ||
Ronald Doornink |
EXHIBIT A
FIRST AMENDMENT TO RONALD DOORNINKS
VTB HOLDINGS, INC. STOCK AWARD AGREEMENT
WHEREAS, pursuant to the VTB Holdings, Inc. 2011 Equity Incentive Plan (the Plan), VTB Holdings, Inc. (the Company ) granted Ronald Doornink (the Grantee ) 2,822582 shares of Common Stock (as defined in the Plan) pursuant to the VTB Holdings, Inc. Stock Award Agreement, dated June 21, 2011 (the Stock Award Agreement );
WHEREAS, the shares of Common Stock granted to the Grantee were equally divided into Director Shares (as defined in the Stock Award Agreement) and Consulting Shares (as defined in the Stock Award Agreement);
WHEREAS, effective April 12, 2013, the Grantee will no longer provide consulting services to the Company; however, the Grantee will continue to serve as a Director of the Company;
WHEREAS, the Company and the Grantee agree to amend the Stock Award Agreement to eliminate the Companys rights to repurchase the Consulting Shares triggered upon the Grantees termination of consulting services to the Company and the Company and the Grantee agree that the Consulting Shares will be subject to the same repurchase provisions as are applicable to the Grantees Director Shares.
NOW THEREFORE, pursuant to Section 13 of the Stock Award Agreement, and intending to be legally bound hereby, the parties hereto agree to amend the Stock Award Agreement, effective as of April 12, 2013, as follows:
1. | Section 6.a. of the Stock Award Agreement is hereby amended and restated in its entirety to read as follows: |
a. In the event that prior to October 12, 2014, the Grantee voluntarily terminates his position as a member of the board of directors of the Company, or otherwise attempts to dispose of, transfer, or sell the Shares subject to this Agreement, the Company or its designee shall have the right (but not the obligation) to repurchase such Shares for a repurchase price equal to the Grantees per share federal and state income tax liability on the applicable Shares as evidenced by the Grantees Section 83(b) election filed pursuant to Section 2 above and assuming an applicable combined tax rate of 50.6% (the Repurchase Right).
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2. | Section 6(b) of the Stock Award Agreement is hereby amended and restated in its entirety to read as follows: |
b. The Repurchase Right will lapse (i) with respect to 2.0833% of the Shares on July 12, 2011 and on the 12 th day of every month thereafter through October 12, 2014 or (ii) with respect to all of the Shares, if the Grantee remains on the board of directors of the Company through the consummation of an Approved Sale prior to October 12, 2014.
3. | Section 6(c) of the Stock Award Agreement is hereby amended and restated in its entirety to read as follows: |
c. Grantee and the Company agree that on the Grant Date, the Repurchase Right is not applicable as to 16.67% of the Shares.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment to the Stock Award Agreement this 26 th day of February, 2013.
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Exhibit 10.20
PERFORMANCE BONUS AGREEMENT
THIS PERFORMANCE BONUS AGREEMENT (this Agreement ) is dated as of October 12, 2010, by and among Voyetra Turtle Beach, Inc., a Delaware corporation (the Company ), Carmine J. Bonanno and Frederick J. Romano (each, a Founder and collectively, the Founders ).
RECITALS
This Agreement is being entered into in connection with the consummation of the transactions contemplated by that certain Stock Purchase Agreement, dated as September 28, 2010, by and among the Company, the stockholders of the Company (including the Founders), SG VTB Merger Sub, Inc. (the Buyer ) and the other signatories thereto (the Purchase Agreement ), and shall be effective upon the Effective Time of the Merger, as each of those terms is defined in the Agreement and Plan of Merger dated as of the date hereof between the Company and the Buyer.
AGREEMENT
NOW THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants, and agreements herein contained, the parties hereto, intending to be legally bound, hereby agree as follows:
1. DEFINITIONS . Whenever used in this Agreement, the following terms and phrases shall have the following respective meanings:
1.1. Affiliate means, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, ten percent (10%) or more of the stock having ordinary voting power in the election of directors of such Person, (ii) each Person that controls, is controlled by or is under common control with such Person, and (iii) each of such Persons officers, directors, managers (in the case of any Person that is a manager-managed limited liability company) and general partners. For the purpose of this definition, control of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.
1.2. Business Day means any day other than a Saturday, Sunday or day on which banks are permitted or required to close in the State of New York.
1.3. EBITDA means with respect to any period, earnings of the Company (excluding any one-time or non-recurring items of income or expense, including without limitation any Bonus, Transaction Expenses (as defined in the Purchase Agreement) Buyer Transaction Expenses (as defined in the Purchase Agreement) and Financing Expenses (as defined in the Purchase Agreement)) before the deduction of (i) interest, (ii) taxes based upon the income of the Company and (iii) depreciation and amortization, all as determined in accordance with GAAP Consistently Applied.
1.4. Final 2010 EBITDA means (x) the 2010 EBITDA contained in the respective Statement if no Notice of Disagreement with respect thereto is duly and timely delivered pursuant to Section 2.1 or (y) if such an Notice of Disagreement is so delivered, the 2010 EBITDA contained in the Statement as agreed by the Founders and the Company pursuant to Section 2.1 or (z) if such Notice of Disagreement is so delivered and in the absence of such agreement, the 2010 EBITDA contained in Statement as prepared by the Nonpartisan Accountants pursuant to Section 2.1 .
1.5. Final 2011 EBITDA means (x) the 2011 EBITDA contained in the respective Statement if no Notice of Disagreement with respect thereto is duly and timely delivered pursuant to Section 2.1 or (y) if such a Notice of Disagreement is so delivered, the 2011 EBITDA contained in the Statement as agreed by the Founders and the Company pursuant to Section 2.1 or (z) if such Notice of Disagreement is so delivered and in the absence of such agreement, the 2011 EBITDA contained in Statement as prepared by the Nonpartisan Accountants pursuant to Section 2.1 .
1.6. Final 2011 Revenue means (x) the 2011 Revenue contained in the respective Statement if no Notice of Disagreement with respect thereto is duly and timely delivered pursuant to Section 2.1 or (y) if such an Notice of Disagreement is so delivered, the 2011 Revenue contained in the Statement as agreed by the Founders and the Company pursuant to Section 2.1 or (z) if such Notice of Disagreement is so delivered and in the absence of such agreement, the 2011 Revenue contained in Statement as prepared by the Nonpartisan Accountants pursuant to Section 2.1 .
1.7. Financial Statements means (i) the unaudited consolidated balance sheets of the Company as at December 31, 2008 and December 31, 2007 and the audited consolidated balance sheets of the Company as at December 31, 2009, including the notes thereto, and (ii) the unaudited consolidated statements of income, stockholders equity and cash flow for the fiscal years ended December 31, 2007 and 2008 and the audited consolidated statements of income, stockholders equity and cash flow for the fiscal year ended December 31, 2009, together with the report thereon of Fried and Kowgios Partners CPAs LLP, independent accountants.
1.8. GAAP means generally accepted accounting principles in the United States as in effect from time to time.
1.9. GAAP Consistently Applied means GAAP using the same accounting methods, policies, practices, and procedures, with consistent classification, judgments, and estimation methodology, as were used by the Company in preparing the Financial Statements.
1.10. Nonpartisan Accountants means an independent accounting firm mutually agreed upon by the Company and the Founders.
1.11. Revenue for any relevant period means the Companys net revenues for such period as determined in accordance with GAAP Consistently Applied.
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2. DISTRIBUTIONS
2.1. Statements .
(a) Within thirty (30) days after the delivery to the Founders of the Companys audited financial statements for the fiscal year ended December 31, 2010 and within thirty (30) days after the delivery to the Founders of the Companys audited financial statements for the fiscal year ended December 31, 2011 (which audited financial statements shall be delivered within 90 days after the end of each such fiscal year), the Company shall cause to be prepared and shall deliver to the Founders a statement (the Statement ), which shall include (i) a statement which sets forth in reasonable detail a calculation of the Companys EBITDA for the fiscal year ended December 31, 2010 ( 2010 EBITDA ) or Revenue for the fiscal year ended December 31, 2011 ( 2011 Revenue ) and EBITDA for the fiscal year ended December 31, 2011 ( 2011 EBITDA ), as applicable, and (ii) the amount, if any, of the Bonus to which the Founders may be entitled under Section 2.2 or Section 2.3 based on the 2010 EBITDA or 2011 Revenue or 2011 EBITDA, as applicable.
(b) During the thirty (30)-day period following the Founders receipt of each Statement, the Founders and their independent accountants shall be permitted to review at their expense, and the Company shall, and shall cause the Companys independent accountants to, make available to the Founders, the supporting schedules, analyses, working papers, records, data and other documentation of the Company or the Companys independent accountants relating to such Statement, and to ask questions of, promptly receive answers from and request such other data and information from each of the Company and the Companys independent accountants as shall be reasonable under the circumstances, but subject to the execution of any release, waiver, non-reliance or indemnification agreements that the Companys independent accountants may reasonably request from the Founders. The Statement shall become final and binding upon the parties on the Business Day following the 30th day following delivery thereof (and the 2010 EBITDA or 2011 Revenue and 2011 EBITDA, as applicable, therein shall be deemed to be the Final 2010 EBITDA or Final 2011 Revenue and Final 2011 EBITDA, as applicable), unless the Founders give written notice of their disagreement with such Statement ( Notice of Disagreement ) to the Company prior to such date.
(c) During the fifteen (15) day period following the delivery of an Notice of Disagreement or such longer period as the Founders and the Company may mutually agree, the Founders and the Company shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and in the event the Founders and the Company are able to reach such resolution then the amount so agreed by them in writing shall be deemed to be the Final 2010 EBITDA, Final 2011 Revenue or Final 2011 EBITDA, as applicable. If, at the end of such fifteen (15) day period (or such longer period as mutually agreed between the Founders and the Company), the Founders and the Company have not so resolved such differences, the remaining disputed items properly included in the Notice of Disagreement shall be submitted to the Nonpartisan Accountants for final resolution. After affording the Company and its representatives and the Founders and their representatives the opportunity to present their positions as to the disputed items (which opportunity shall not extend for more than thirty (30) days after the submission of such dispute to the Nonpartisan Accountants), the Nonpartisan Accountants shall resolve all disputed items in writing. Such resolution shall be final and binding upon the parties and shall be reflected in any necessary
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revisions to the Statement; provided, however, that the scope of the disputes to be resolved by the Nonpartisan Accountants is limited to only such items included in the Statement that the Founders have disputed in the Notice of Disagreement based upon mathematical errors in the Statement or based upon 2010 EBITDA, 2011 Revenue or 2011 EBITDA, as applicable, not having been calculated in accordance with relevant provisions of this Agreement (including the definitions of defined terms used in this Agreement). The Nonpartisan Accountants shall determine, based solely on presentations by the Company and the Founders and their respective representatives, only those issues in dispute specifically set forth on the Notice of Disagreement and shall prepare a written report as to the disputes and the resulting calculation of 2010 EBITDA, 2011 Revenue or 2011 EBITDA, as applicable. In resolving any disputed item, the Nonpartisan Accountants: (w) shall be bound by the principles set forth in this Section 2 , (x) shall limit its review to matters specifically set forth in the Notice of Disagreement, (y) shall further limit its review to whether the Statement contained mathematical errors or whether 2010 EBITDA, 2011 Revenue or 2011 EBITDA, as applicable, was calculated in accordance with the relevant provisions of this Agreement (including the definitions of defined terms used in this Agreement) and (z) shall not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. The fees, costs and expenses of the Nonpartisan Accountants in connection with any such determination shall be borne by (x) the Company in the proportion that the aggregate dollar amount of such disputed items so submitted that are successfully disputed by the Founders bear to the aggregate dollar amount of such items so submitted and (y) by the Founders in the proportion that the aggregate dollar amount of such disputed items so submitted that are unsuccessfully disputed by the Founders bear to the aggregate dollar amount of such items so submitted. The Founders and the Company shall bear their own costs in connection with this Section 2 , including the fees and expenses of their respective attorneys and accountants, if any.
2.2. Determination of 2010 Bonus . Subject to and in accordance with the provisions of this Section 2 , the Founders shall be entitled to the following payment to this Agreement (the 2010 Bonus ):
(a) If the Final 2010 EBITDA is less than $16,200,000, then the 2010 Bonus payable to the Founders shall be zero ; or
(b) If the Final 2010 EBITDA equal to or greater than $16,200,000, the 2010 Bonus shall be calculated as set forth in the table provided below for the applicable Final 2010 EBITDA (in an amount not to exceed $7,500,000 ):
Final 2010 EBITDA |
2010 Bonus | |||||||||||
$ | 18,000,000 | and | Over | $ | 7,500,000 | |||||||
$ | 17,820,000 | to | $ | 17,999,999 | $ | 7,350,000 | ||||||
$ | 17,640,000 | to | $ | 17,819,999 | $ | 7,200,000 | ||||||
$ | 17,460,000 | to | $ | 17,639,999 | $ | 7,050,000 | ||||||
$ | 17,280,000 | to | $ | 17,459,999 | $ | 6,900,000 | ||||||
$ | 17,100,000 | to | $ | 17,279,999 | $ | 6,750,000 | ||||||
$ | 16,920,000 | to | $ | 17,099,999 | $ | 6,600,000 | ||||||
$ | 16,740,000 | to | $ | 16,919,999 | $ | 6,450,000 | ||||||
$ | 16,560,000 | to | $ | 16,739,999 | $ | 6,300,000 | ||||||
$ | 16,380,000 | to | $ | 16,559,999 | $ | 6,150,000 | ||||||
$ | 16,200,000 | to | $ | 16,379,999 | $ | 6,000,000 | ||||||
Less than | $ | 16,200,000 | $ | 0 |
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2.3. Determination of 2011 Bonus . Subject to and in accordance with the provisions of this Section 2 , the Founders shall be entitled to the following payment pursuant to this Agreement ( 2011 Bonus , and together with the 2010 Bonus, the Bonus ):
(a) If (a) the Final 2011 EBITDA is less than $18,900,000, and (b) the Final 2011 Revenue is less than $89,100,000, then the 2011 Bonus payable to the Founders shall be zero ;
(b) If the Final 2011 Revenue is equal to or greater than $89,100,000, then the aggregate amount of 2011 Bonus payable to the Founders under this Section 2.3 shall be $7,500,000 ; or
(c) If (a) the Final 2011 Revenue is less than $89,100,000, and (b) the Final 2011 EBITDA is greater than $18,900,000, the 2011 Bonus shall be calculated as set forth in the table provided below for the applicable Final 2011 EBITDA (in an amount not to exceed $7,500,000 ):
Final 2011 EBITDA |
2011 Bonus | |||||||||||
$ | 21,000,000 | and | Over | $ | 7,500,000 | |||||||
$ | 20,790,000 | to | $ | 20,999,999 | $ | 7,350,000 | ||||||
$ | 20,580,000 | to | $ | 20,789,999 | $ | 7,200,000 | ||||||
$ | 20,370,000 | to | $ | 20,579,999 | $ | 7,050,000 | ||||||
$ | 20,160,000 | to | $ | 20,369,999 | $ | 6,900,000 | ||||||
$ | 19,950,000 | to | $ | 20,159,999 | $ | 6,750,000 | ||||||
$ | 19,740,000 | to | $ | 19,949,999 | $ | 6,600,000 | ||||||
$ | 19,530,000 | to | $ | 19,739,999 | $ | 6,450,000 | ||||||
$ | 19,320,000 | to | $ | 19,529,999 | $ | 6,300,000 | ||||||
$ | 19,110,000 | to | $ | 19,319,999 | $ | 6,150,000 | ||||||
$ | 18,900,000 | to | $ | 19,109,999 | $ | 6,000,000 | ||||||
Less than | $ | 18,900,000 | $ | 0 |
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2.4. Payment of Bonus .
(a) If the Founders are eligible to receive the 2010 Bonus pursuant to this Section 2 , the Company shall pay the 2010 Bonus to the Founders on December 31, 2011 (the 2010 Bonus Payment ). Each Founder shall be entitled to one-half of the 2010 Bonus Payment.
(b) If the Founders are eligible to receive the 2011 Bonus pursuant to this Section 2 , the Company shall pay the 2011 Bonus to the Founders in the following manner: (a) one third (1/3rd) of the 2011 Bonus shall be paid on July 31, 2012 (the First 2011 Bonus Payment ); and (b) one third (1/3rd) of the 2011 Bonus shall be paid on July 31st of each year following the First 2011 Bonus Payment for each of the next two (2) years (the Other 2011 Bonus Payments and collectively with the First 2011 Bonus Payment, the 2011 Bonus Payments , and collectively with the 2010 Bonus Payment, the Bonus Payments ). For the avoidance of doubt, the final 2011 Bonus Payment shall be made by no later than July 31, 2014. Each Founder shall be entitled to one-half of each 2011 Bonus Payment.
(c) Notwithstanding the foregoing, if the Founders are eligible to receive any of the Bonus Payments and such Bonus Payments have not been paid (the Unpaid Bonus Payments ) as of the date of a Change in Control, the Founders shall be entitled to and shall be paid the Unpaid Bonus Payments on the date of the Change in Control. Change in Control means any one person, or more than one person acting as a group (other than Stripes Group LLC or any Affiliate of Stripes Group, LLC) (i) acquires (whether by merger, consolidation, purchase of stock or otherwise) ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company or (ii) acquires assets of the Company (other than inventory) that constitute more than 50 percent of the total gross fair market value of the assets of the Company. For this purpose, gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
(d) Notwithstanding the foregoing, if a Change in Control occurs prior to December 31, 2011 and the aggregate proceeds received by the holders of the Series A Preferred Stock and the Common Stock (after giving effect to the payment of the Maximum 2011 Bonus, as defined below) are greater than an amount (the 2011 Bonus Payment Acceleration Threshold ) equal to the higher of (i) $40,672,389 and (ii) the aggregate liquidation preference of all then outstanding shares of Series A Preferred Stock, then the Founders shall be entitled to and shall be paid the 2011 Bonus on the date of the Change in Control as calculated in the table provided in Section 2.3(c) based on a Final 2011 EBITDA that is equal to $21,000,000 (the Maximum 2011 Bonus ), but if a Change in Control occurs prior to December 31, 2011 and the aggregate proceeds received by the holders of the Series A Preferred Stock and the Common Stock are less than the 2011 Bonus Payment Acceleration Threshold, then this Agreement shall continue in effect after such Change in Control as though such Change in Control had not occurred.
2.5. Further Assurances . For purposes of complying with the terms set forth in this Section 2 , each party shall cooperate with and make available to the other parties and their respective representatives all information, records, data and working papers (subject to the entry into such agreements as the Companys accountants may request in connection therewith), and
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shall permit access to its facilities and personnel, as may be reasonably required in connection with the preparation or analysis of the Statement and the resolution of any disputes with respect to the Statement.
2.6. No Guaranty of Payment . The Company shall have complete discretion with respect to the manufacture, marketing, pricing and distribution of all of the Companys products and services after the Closing and the Company may eliminate or otherwise alter at any time or from time to time any or all of such products or services and shall have the right to operate the business of the Company as it sees fit and shall have no obligation (fiduciary or otherwise) to sell or promote products or to act in any manner in an attempt to protect or maximize the Bonus; provided, however, that the Company shall not take or omit to take any action for the sole purpose of reducing the amount of Bonus. Neither the Founders nor any other party shall have any claim against the Company in connection with the Bonus, except the extent unpaid when due under this Section 2 . It is expressly acknowledged and agreed that the potential Bonus is contingent on the performance of the business of the Company and there is no guarantee of any Bonus under this Agreement.
2.7. Tax Gross-Up . Upon the payment to the Founders of each Bonus Payment due hereunder, the Company shall pay the Founders an additional amount sufficient to cover the excess difference between (i) all Federal, state, local and employment taxes (assuming the highest applicable tax rates) payable on the Bonus Payment and such additional amount, and (ii) the amount of tax that would have been payable on the Bonus Payment had it been subject to the long-term capital gains rate of tax (including Federal and any such state or local rates) (such additional amount, the Gross-Up Amount ), provided that if the difference between the combined rates of tax in (i) and (ii) is greater than 20 percent, the Gross-Up Amount shall be calculated as if the difference between such rates was 20 percent. For purposes of calculating the Gross-Up Amount, all tax rates shall be as set forth in the Internal Revenue Code (or applicable state or local law) for the year in which the Bonus Payment is made. The Gross-Up Amount shall be paid to the Founders at the same time as the related Bonus Payment.
3. MISCELLANEOUS .
3.1. Construction . Within this Agreement, the singular shall include the plural and the plural shall include the singular, and any gender shall include all other genders, all as the meaning and the context of this Agreement shall require. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word including shall mean including without limitation.
3.2. Costs of Enforcement . Except as set forth in the last sentence of Section 2.1(c), if any party hereto incurs any costs or expenses in connection with any controversy, disagreement or dispute arising under this Agreement, the prevailing party shall be entitled to recover from the non-prevailing party such prevailing partys reasonable costs and expenses, including, without limitation, reasonable attorneys fees and costs, incurred in prosecuting or defending such controversy, disagreement or dispute, as the case may be.
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3.3. Notices . All notices or other communications permitted or required under this Agreement shall be in writing and shall be sufficiently given if and when hand delivered to the persons set forth below or if sent by documented overnight delivery service or registered or certified mail, postage prepaid, return receipt requested, or by facsimile, receipt acknowledged, addressed as set forth below or to such other person or persons and/or at such other address or addresses as shall be furnished in writing in accordance with this Section 3.3 by any party hereto to the others. Any such notice or communication shall be deemed to have been given as of the date received, in the case of personal delivery, on the Business Day following delivery to a overnight courier service in the case of overnight delivery, three Business Days following deposit by regular U.S. mail in the case of a mailing, or on the date shown on the receipt or confirmation therefor in all other cases (including electronic confirmation of facsimile delivery).
To the Company :
Voyetra Turtle Beach, Inc.
150 Clearbrook Rd. Suite 162
Elmsford, NY 10523
Facsimile: (914) 345-2266
Attention: Chief Executive Officer
with a copy to (which shall not constitute notice) :
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, PA 19102
Facsimile: (215) 994-2222
Attention: Henry N. Nassau, Esq. and David S. Denious, Esq.
To the Founders :
Carmine J. Bonanno
39 Albemarle Road
White Plains, NY 10605
Facsimile: (914) 345-2266
Frederick J. Romano
3176 Arbour Lane
Yorktown Heights, NY 10598
Facsimile: (914) 345-2266
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3.4. Assignment . Neither the Company nor the Founders shall assign this Agreement or any rights hereunder, or delegate any obligations hereunder, without the prior written consent of the other parties. Subject to the foregoing, this Agreement and the rights and obligations set forth herein shall inure to the benefit of, and be binding upon, the parties hereto, and each of their respective successors, heirs and assigns.
3.5. Amendment, Modification and Waiver . The parties may amend or modify this Agreement in any respect. Any such amendment or modification shall be in writing and signed by the Company and the Founders. The waiver by a party of any breach of any provision of this Agreement shall not constitute or operate as a waiver of any other breach of such provision or of any other provision hereof, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof.
3.6. Governing Law; Submission to Jurisdiction; Trial by Jury . This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the laws of the State of New York (and United States federal law, to the extent applicable), irrespective of the principal place of business, residence or domicile of the parties hereto, and without giving effect to otherwise applicable principles of conflicts of law. Each of the parties hereto hereby irrevocably submit to the jurisdiction of the courts of the State of New York and the federal courts of the United States of America located in the United States District Court for the Southern District of New York solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby and thereby. Each of the parties hereto irrevocably agrees that all claims in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby and thereby, or with respect to any such action or proceeding, shall be heard and determined in such a New York State or federal court, and that such jurisdiction of such courts with respect thereto shall be exclusive, except solely to the extent that all such courts shall lawfully decline to exercise such jurisdiction. Each of the parties hereto hereby waives, and agrees not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document or in respect of any such transaction, that it is not subject to such jurisdiction. Each of the parties hereto hereby waives, and agrees not to assert, to the maximum extent permitted by law, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document or in respect of any such transaction, that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. The parties hereto hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 3.3 or in such other manner as may be permitted by law, shall be valid and sufficient service thereof. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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3.7. Section Headings and Defined Terms . The section headings contained herein are for reference purposes only and shall not in any way affect the meaning and interpretation of this Agreement. The terms defined herein and in any agreement executed in connection herewith include the plural as well as the singular and the singular as well as the plural, and the use of masculine pronouns shall include the feminine and neuter. Except as otherwise indicated, all agreements defined herein refer to the same as from time to time amended or supplemented or the terms thereof waived or modified in accordance herewith and therewith.
3.8. Section 409A . This Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amend and the parties hereto agree to interpret, apply and administer this Agreement in the least restrictive manner necessary to comply therewith and without resulting in any increase in the amounts owed hereunder by the Company.
3.9. Severability . The invalidity or unenforceability of any particular provision, or part of any provision, of this Agreement shall not affect the other provisions or parts hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions or parts were omitted. Upon any such determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.
3.10. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed an original (including facsimile or pdf signatures); and any Person may become a party hereto by executing a counterpart hereof, but all of such counterparts together shall be deemed to be one and the same instrument. It shall not be necessary in making proof of this Agreement or any counterpart hereof to produce or account for any of the other counterparts. The parties hereto may deliver this Agreement by facsimile or pdf signature, and each party shall be permitted to rely upon the signatures so transmitted to the same extent and effect as if they were original signatures.
3.11. No Third Party Beneficiaries . No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.
3.12. Entire Agreement . This Agreement constitutes the entire agreement between the parties hereto with respect to the matters discussed herein and supersedes all prior agreements and understandings.
[Signature Page Follows]
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IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement as of the date first above written.
THE COMPANY: | ||
VOYETRA TURTLE BEACH, INC. | ||
By: |
/s/ Carmine J. Bonanno |
|
Name: | Carmine J. Bonanno | |
Title: | PRES/CEO | |
FOUNDERS: | ||
/s/ Carmine J. Bonanno |
||
Carmine J. Bonanno | ||
/s/ Frederick J. Romano |
||
Frederick J. Romano |
P ERFORMANCE B ONUS A GREEMENT
Exhibit 10.21
EMPLOYMENT AGREEMENT
This Employment Agreement (this Agreement ) dated as of October 12, 2010, (the Effective Date ) is by and between Voyetra Turtle Beach, Inc., a Delaware corporation (the Company ), and Carmine J. Bonanno (the Employee ).
WHEREAS, Voyetra Technologies, Inc. and the Employee entered into an Executive Employment Agreement dated November 27, 1996 and Voyetra Technologies, Inc. subsequently merged with its subsidiaries forming the Company;
WHEREAS, the Company, its stockholders, SG VTB Merger Sub, Inc. (the Buyer ) and SG VTB Holdings, LLC have entered into a Stock Purchase Agreement dated September 28, 2010 (the Stock Purchase Agreement ), pursuant to which the stockholders have agreed to sell to the Buyer, and the Buyer has agreed to purchase from the stockholders, outstanding shares of common stock of the Company;
WHEREAS, in connection with the closing of the transactions contemplated by the Stock Purchase Agreement, the Company and the Employee desire to enter into a new agreement intended to supersede, replace and cancel the agreement dated November 27, 1996 and all prior or subsequent agreements entered into prior to the Effective Date herein, which shall have no further force or effect on the terms of the Employees future employment with the Company;
WHEREAS, the Company desires to continue the employment relationship with the Employee pursuant to the terms and conditions set forth herein; and
WHEREAS, the Employee desires to continue employment with the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants and conditions set forth herein, and the performance of each, the parties, intending to be legally bound, hereby agree as follows:
AGREEMENTS
Section 1 . Definitions . For purposes of this Agreement, the following terms have the meanings set forth below:
Affiliate means, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, ten percent (10%) or more of the stock having ordinary voting power in the election of directors of such Person, (ii) each Person that controls, is controlled by or is under common control with such Person, and (iii) each of such Persons officers, directors, managers (in the case of any Person that is a manager-managed limited liability company) and general partners. For the purpose of this definition, control of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.
Base Salary has the meaning set forth in Section 4.1.
Board means the Board of Directors of the Company as the same is constituted from time to time.
Cause means: (A) Employees conviction of or plea of guilty or nolo contendere to a felony; (B) a determination by the Board that Employee committed fraud, misappropriation or embezzlement against any Person; (C) Employees material breach of the terms of this Agreement or Employees material breach of any other material written agreement with the Company or any Subsidiary (excluding the Seller Transaction Documents or Company Transaction documents, as those terms are defined in the Stock Purchase Agreement) to which Employee is a party other than this Agreement; (D) Employees willful misconduct or gross neglect in performance of Employees duties; or (E) Employees failure or refusal to carry out material responsibilities reasonably assigned by the Board to the Employee; provided , however , that with respect to subsections (C), (D) and (E) above, Cause will only be deemed to occur after written notice to Employee of such action or inaction giving rise to Cause and the failure by Employee to cure such action or inaction (which is capable of cure) within 30 days after written notice.
Confidential Information shall mean all information respecting the business and activities of the Company or any Subsidiary, including, without limitation, the clients, customers, suppliers, employees, consultants, computer or other files, projects, products, computer disks or other media, computer hardware or computer software programs, marketing plans, financial information, methodologies, know-how, processes, practices, approaches, projections, forecasts, formats, systems, trade secrets, data gathering methods and/or strategies of the Company or any Subsidiary. Notwithstanding the immediately preceding sentence, Confidential Information shall not include any information that is, or becomes, generally available to the public (unless such availability occurs as a result of Employees breach of any portion of this Agreement).
Employment Period has the meaning set forth in Section 2.
Good Reason shall mean a material diminution, without Employees consent (which consent shall not be withheld unreasonably), in Employees duties or responsibilities as in effect immediately before such diminution.
Intellectual Property has the meaning set forth in Section 7.
Non-Compete Period means a period of eighteen (18) months following termination of Employees employment with the Company.
Performance Bonus Agreement shall mean the Performance Bonus Agreement of even date herewith between the Company, Employee and Frederick J. Romano.
Permanent Disability shall mean that the Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
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Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
Reimbursable Expenses has the meaning set forth in Section 4.5.
Subsidiary shall mean any corporation, partnership, joint venture, limited liability company, business trust, or other entity of which (or in which) more than 50% of (a) the issued and outstanding capital stock or other equity interests having ordinary voting power to elect a majority of the board of directors of such entity or Persons performing similar functions with respect to such entity (irrespective of whether at the time capital stock or other equity interests of any other class or classes of such entity shall or might have voting power upon the occurrence of any contingency), or (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or other entity is at the time directly or indirectly owned or controlled by the Company and one or more of its other Subsidiaries or by one or more of the Companys other Subsidiaries.
Termination Notice has the meaning set forth in Section 2.2.
Section 2 . Employment .
2.1 Employment Period . The Employees employment hereunder shall commence on the Effective Date and shall continue in full force and effect until terminated as set forth in Section 2.2 (the Employment Period ).
2.2 At Will Employment . The Employees employment under this Agreement is at will. Therefore, in accordance with Section 5, (a) either the Company, upon 60 days advance written notice, or the Employee upon 60 days (or such lesser time as determined by the Company) advance written notice to the Company, may terminate Employees employment with the Company and/or its Subsidiaries ( Termination Notice ) and (b) the Company may immediately terminate Employees employment with the Company and/or its Subsidiaries for Cause.
2.2.1 Subject to the terms and conditions of this Agreement, to the extent that there is a period of time elapsing between the date of delivery of a Termination Notice and the termination date, the Employee shall continue to perform his duties as set forth in this Agreement during such period, and shall also perform such services for the Company as are necessary and appropriate for a smooth transition to the Employees successor, if any. Notwithstanding the foregoing provisions of this Section 2, the Company may suspend the Employee from performing his duties under this Agreement following the delivery of a Termination Notice; provided, however, that during the period of suspension, the Employee shall continue to be treated as employed by the Company for other purposes, and his rights to compensation or benefits shall not be reduced by reason of the suspension.
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Section 3. Position and Duties .
3.1 Position . During the Employment Period, the Employee will serve in such position or capacity and will perform such duties and functions as shall from time to time be determined by the Board or its designee(s).
3.2 Performance of Duties; Other Activities . During the Employment Period, the Employee will devote substantially all of his business time and best efforts to the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict with the rendition of such services, without the prior written consent of the Board; provided, however, the Employee, subject to Employees obligations under this Agreement, shall be permitted to make personal investments, perform reasonable volunteer services, and serve on the boards of directors of nonprofit organizations.
Section 4 . Base Salary and Benefits.
4.1 Base Salary . From the Effective Date until December 31, 2010, the Employees monthly compensation will be $41,666.67 or a prorated portion thereof. Effective January 1, 2011, the Employees base salary will be at the rate of $355,000 per annum (the Base Salary ), plus an annual percentage increase effective January 1, 2012 at least equal to the cost-of-living adjustment (as defined in the Social Security Act) for the immediately preceding year or such greater increase as the Board approves in its sole discretion from time to time. Base Salary will be payable by the Company in regular installments in accordance with the general payroll practices of the Company as in effect from time to time. The term Base Salary used in this Agreement shall refer to the Base Salary as it may be so increased from time to time.
4.2 Employee Benefits and Perquisites . During the Employment Period, the Employee shall be eligible to participate in the Companys employee benefit plans on the same basis as those benefits are made available to other executives of the Company.
4.3 Vacation . During the Employment Period, the Employee shall be entitled to six weeks of paid vacation per calendar year. Employee shall not be entitled to carry over unused vacation to future years.
4.4 Bonus . Prior to the Effective Date, the Company awarded Employee a performance bonus for 2010 in the amount of $500,000 (the 2010 Bonus ). The Company shall pay the 2010 Bonus on March 31, 2011. In addition to the 2010 Bonus and the compensation payable under the Performance Bonus Agreement, beginning each year during the Employment Period after December 31, 2010, Employee shall also participate in an annual incentive bonus plan that will provide Employee the opportunity to earn additional compensation of up to fifty percent (50%) of Employees Base Salary for such year (or such higher percentage as may be required pursuant to the immediately following sentence), contingent upon the achievement of performance goals set by the Board for each such year. The material terms (including performance goals), conditions and percentage payout of such
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incentive bonus hereunder shall be no less favorable to the Employee than the incentive bonuses established for C level executives as such term is defined in the sole discretion of the Board. All incentive bonus payments will be paid no later than the 15th day of the second month after the end of the calendar year in which such incentive bonus payment was earned. Notwithstanding anything to the contrary herein, the Employee shall not be eligible for an incentive bonus payment with respect to (a) 2010 if it is determined that he is eligible to receive his portion of the 2010 Bonus pursuant to the Performance Bonus Agreement (in which case, the Employee shall instead receive a bonus of $75,000 payable on July 31, 2011) or (b) 2011 if it is determined that he is eligible to receive his portion of the 2011 Bonus pursuant to the Performance Bonus Agreement and any incentive bonus payment shall not be payable with respect to 2010 or 2011 prior to the final determination of such eligibility.
4.5 Expenses . The Company shall reimburse the Employee for any and all reasonable expenses incurred by him in the course of performing his duties under this Agreement which are consistent with the Companys policies in effect from time to time with respect to travel, entertainment and other business expenses ( Reimbursable Expenses ), subject to the Companys requirements with respect to reporting and documentation of expenses. All reimbursements shall be made as soon as reasonably practicable, but at least by the earlier of ninety (90) days following the date on which such Reimbursable Expenses were submitted for reimbursement or the last day of the calendar year following the calendar year in which such Reimbursable Expenses were incurred. In addition, no reimbursement shall be subject to liquidation or exchange for another benefit and the amount available for reimbursement during any calendar year shall not affect the amount available for reimbursement in a subsequent calendar year. Termination of Employees employment hereunder shall not affect Employees right to be reimbursed for any Reimbursable Expenses incurred by Employee before such termination.
4.6 Other Incentive Compensation . The Employee shall be entitled to the following additional compensation:
4.6.1 In the event that, after the Effective Date, the Board directs the Company to file, and the Company files a utility patent application in the United States naming Employee as an inventor (other than a provisional patent application, and expressly excluding continuation, continuation in part, divisional, foreign or other applications claiming priority to such utility patent application ) with respect to any invention that is subject to Section 7 of this Agreement (each, an Eligible Application ), the Company shall pay the Employee a bonus of $10,000 within 30 days after such application is filed.
4.6.2 In the event that a patent issues in the United States on an Eligible Application (each, a Company Patent ), the Company shall pay the Employee a bonus of $10,000 within 30 days after the Company receives notice that such Company Patent has issued. It is acknowledged and understood that a patent may not issue in the United States on an Eligible Application, but that the Company may obtain a patent or patents with respect to patent application(s) filed by the Company, with Employee as a named inventor, that claim priority to the Eligible Application, including continuation, continuation in part or divisional filings. Where a United States patent does not issue on an Eligible Application, but does issue
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on a continuation, continuation in part or divisional filing claiming priority to an Eligible Application, such issued patent shall be deemed a Company Patent for purposes herein, but the $10,000 bonus shall be paid only upon the issuance of the first Company Patent to issue in the United States based on a continuation, continuation in part or divisional filing claiming priority to such Eligible Application.
4.6.3 No bonus shall be payable in respect of any foreign patent application (including any international application) or issued foreign patent, whether or not claiming priority to an Eligible Application, filed by the Company after the Effective Date with Employee as a named inventor, but any such issued foreign patent shall, for purposes of the payment obligations described in Section 4.6.4, be deemed a Company Patent.
4.6.4 The Company shall pay to Employee, annually within 90 days of the end of the Companys fiscal year, a royalty equal to 0.5% of the net revenues realized by the Company on the sale of Company products where the manufacture, marketing or distribution of such products involves the practice of any inventions claimed in a Company Patent (the Royalty ). Such Royalty shall be calculated and paid based on sales of Company products on a country-by-country basis during the term of the Company Patent(s) embodied in the applicable Company product, or in the manufacture thereof, sold in such country. The 0.5% Royalty shall be calculated on a product/SKU basis, irrespective of the number of Company Patents embodied in such Company product/SKU or its manufacture, and calculated on such eligible Company product until the last to expire of any Company Patent(s) embodied in such product or its manufacture. For the avoidance of doubt, no Royalty shall be incurred (a) with respect to a Company Patent until after the issuance of such Company Patent or (b) in a particular country on sales of Company products in such country following the date of expiration (or invalidation) of the last to expire (or to be invalidated) of the Company Patent(s) embodied in such Company product, or its manufacture in such country. The payment obligation under this Section 4.6.4 shall terminate upon a Change in Control; provided that the amount of any unpaid Royalty earned through the date of the Change of Control shall be paid on or prior to the consummation thereof. The Company agrees to afford the Employee and his professional representatives (subject to entry into reasonable and customary confidentiality restrictions if requested by the Company) reasonable access to the Companys financial statements, product designs and other technical information, and other books and records that are relevant to this Section 4.6.4, to determine whether the Company has complied with the provisions of this Section 4.6.4. Change in Control means any one person, or more than one person acting as a group (other than Stripes Group LLC or any Affiliate of Stripes Group, LLC) acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the total fair market value or total voting power of the stock of the Company. For the avoidance of doubt, the Employees right to receive the Royalty payable under this Section 4.6.4 shall not be affected by the termination of the Employees employment with the Company.]
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Section 5 . Termination .
5.1 Death . The Employees employment under this Agreement shall terminate immediately upon the Employees death, and neither the Company nor any of its Affiliates shall have any further obligations under this Agreement, except to pay to the Employees estate (or his beneficiary, as may be appropriate) (a) any Base Salary earned through his date of death, to the extent theretofore unpaid and (b) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his death under any employee benefit plan of the Company in which the Employee participates, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements.
5.2 Disability . If the Employee is unable to perform his duties under this Agreement because of Permanent Disability, the Company may terminate the Employees employment by giving written notice to the Employee. Such termination shall be effective as of the date of such notice and neither the Company nor any of its Affiliates shall have any further obligations under this Agreement, except to pay to the Employee (a) any Base Salary earned through the date of such termination, to the extent theretofore unpaid and (b) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination under any employee benefit plan of the Company in which the Employee participates, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements.
5.3 Unjustified Termination .
5.3.1 Except as otherwise provided in Sections 5.1, 5.2, 5.4, and 5.5, if the Employees employment shall be terminated by the Company other than for Cause, the Employee shall be entitled to (a) (i) any Base Salary earned through the date of such termination, to the extent theretofore unpaid and (ii) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination under any employee benefit plan of the Company in which the Employee participates, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements, and (b) so long as the Employee has not breached and does not breach the provisions of Sections 6, 7, 8, 9, or 10 of this Agreement a lump sum payment in an amount equal to (i) eighteen (18) months of the Employees then current Base Salary and (ii) an amount equal to eighteen (18) months of COBRA premiums at the rate in effect under the Companys medical plan in which the Employee is participating immediately prior to the date of his termination, payable in accordance with Section 14.8.1 following the date of such termination.
5.3.2 Subject to the requirements of this Section 5.3.2, if the Employee terminates his employment for Good Reason during the period commencing on the Effective Date and ending on the second anniversary thereof, the Employee shall be entitled to (a) (i) any Base Salary earned through the date of such termination, to the extent theretofore unpaid and (ii) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination under any employee benefit plan of the Company in which the Employee participates, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms
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of the applicable plans, policies and arrangements, and (b) so long as the Employee has not breached and does not breach the provisions of Sections 6, 7, 8, 9, or 10 of this Agreement, a lump sum payment in an amount equal to (i) twelve (12) months of the Employees then current Base Salary and (ii) an amount equal to twelve (12) months of COBRA premiums at the rate in effect under the Companys medical plan in which the Employee is participating immediately prior to the date of his termination, payable in accordance with Section 14.8.1 following the date of such termination. Notwithstanding the foregoing, the Employee shall be entitled to the severance benefits provided under (b)(i) and (ii) of this Section 5.3.2 only if the Employee notifies the Company of the occurrence of the event alleged to constitute Good Reason within 30 days of the occurrence of such event, the Company fails to remedy such event within 30 days after receiving such notice from the Employee, and the Employee actually terminates employment within 15 days after the expiration of the 30-day remedial period.
5.4 Justified Termination . If the Company terminates Employees employment for Cause (a Justified Termination ), the Employee shall be entitled to receive (a) any Base Salary earned through the date of termination, to the extent theretofore unpaid, and (b) such accrued but unused vacation, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements. A Justified Termination shall become effective on the date designated by the Company and the Employee shall not be eligible to receive, and the Company shall not be required to pay, any severance pursuant to Section 5.3 hereof.
5.5 Voluntary Resignation . If the Employee resigns for any reason (other than for Good Reason, which shall be covered by Section 5.3.2) (a Voluntary Resignation), the Employee shall be entitled to receive (a) any Base Salary earned through the date of termination, to the extent theretofore unpaid and (b) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements. A Voluntary Resignation will be effective upon the conclusion of the 60 day written notice period pursuant to Section 2.2, unless an earlier date is approved by the Board. If the Board approves an earlier termination date, the Employee will not be entitled to payments under Sections 5.5(a) and (b) (above) after such date. In the case of a Voluntary Resignation, Employee shall not be eligible to receive, and the Company shall not be required to pay, any severance pursuant to Section 5.3 hereof.
5.6 Performance Bonus Agreement . For the avoidance of doubt, the termination of the Employees employment for any reason shall not affect the Employees right to any bonus otherwise payable under the terms of the Performance Bonus Agreement.
Section 6 . Confidential Information . Employee shall not, during or after the Employment Period, without the prior express written consent of the Board, directly or indirectly use or divulge, disclose or make available or accessible any Confidential Information to any Person (other than when required to do so in good faith to perform
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Employees duties and responsibilities under this Agreement or when required to do so by a lawful order of a court of competent jurisdiction, any governmental authority or agency, or any recognized subpoena power). In the event that Employee becomes legally compelled (by oral questions, interrogatories, request for information or documents, subpoena, criminal or civil investigative demand or similar process) to disclose any of the Confidential Information, then prior to such disclosure, Employee will provide the Company with prompt written notice so that the Company may seek (with Employees cooperation) a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, then Employee will furnish only that portion of the Confidential Information which he is advised by counsel is legally required, and will cooperate with the Company in the Companys efforts to obtain reliable assurance that confidential treatment will be accorded to the Confidential Information.
Section 7 . Ownership of Intellectual Property . Employee acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports, patent applications, copyrightable work, and mask work (whether or not including any Confidential Information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) that relate to the Companys or any Subsidiarys actual or anticipated business, research and development, or existing or future products or services and that are conceived, developed, contributed to, made, or reduced to practice by Employee (either solely or jointly with others) while employed by the Company (including any of the foregoing that constitutes any proprietary information or records) (collectively, Intellectual Property ) belong to the Company or such Subsidiary, and Employee hereby assigns, and agrees to assign, all of the above Intellectual Property to the Company or such Subsidiary. Any copyrightable work prepared in whole or in part by Employee in the course of Employees work for any of the foregoing entities shall be deemed a work made for hire under the copyright laws, and the Company or such Subsidiary shall own all rights therein. To the extent that any such copyrightable work is not a work made for hire, Employee hereby assigns and agrees to assign to the Company or such Subsidiary all right, title, and interest, including without limitation, copyright in and to such copyrightable work. Employee shall promptly disclose such Intellectual Property and copyrightable work to the Company and perform all actions reasonably requested by the Company or the Board (whether during or after the Employment Period) to establish and confirm the ownership of the Company or such Subsidiary (including, without limitation, assignments, consents, powers of attorney and other instruments).
Section 8 . Non-Competition . The Employee covenants and agrees that during his employment with the Company, and during the Non-Compete Period , he shall not, either directly or indirectly, without the prior written consent of the Company, on his own behalf or in the service or on behalf of others serve anywhere in the United States as an owner, manager, stockholder (except as a holder of no more than l% of the issued and outstanding stock of a publicly traded company), consultant, director, officer or employee of any business entity that provides services that are similar to or competitive to those provided, offered or sold by the Company; and during the Non-Compete Period the Employee shall not, either directly or indirectly (i) solicit or divert or appropriate to or for any competing business, or (ii)
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attempt to solicit, divert or appropriate to or for any competing business, any products or services offered, sold or provided by the Company to or from those entities who are clients of the Company or a Subsidiary or who are parties to which Company has submitted a proposal to offer any products or services within six (6) months prior to the termination of Employees employment hereunder. The Employee acknowledges that the provisions of this Section 8 shall apply regardless of the circumstances under which Employees employment with the Company terminates.
Section 9 . Agreement Not to Solicit Employees . The Employee covenants and agrees that during his employment by the Company, and the Non-Compete Period, he will not directly on his own behalf or in the service or on behalf of others, solicit, divert or hire away, or attempt to solicit, divert or hire away, to any competing business any person employed by the Company, whether or not such employee is a full-time employee or a temporary employee of the Company, and whether or not such employment is pursuant to written agreement and whether or not such employment is for a determined period or is at will. The Employee acknowledges that the provisions of this Section 9 shall apply regardless of the circumstances under which Employees employment with the Company terminates.
Section 10 . Non-Disparagement . Except as required by applicable law, rule or regulation or any recognized subpoena power, following termination of the Employees employment, each of the Company and Employee agrees to refrain from making any derogatory comment to the press or to any individual or entity regarding the other (or its or his affiliates) that relates to their activities or relationship prior to the date of termination, which comment would be reasonably likely to cause material damage or harm to the business interests or reputation of the Company or the Employee, as the case may be, or its or his affiliates, as the case may be. In the event that either party becomes legally compelled (by oral questions, interrogatories, request for information or documents, subpoena, criminal or civil investigative demand or similar process) to make any such statements or representations, then prior thereto, such party will provide the other party with prompt written notice so that the other party may seek (with the reasonable cooperation of the first party) a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, then the first party will only make such statements or representations which he or it is advised by counsel is legally required, and will cooperate with the other party in the other partys efforts to obtain reliable assurance that confidential treatment will be accorded to any such statements or representations.
Section 11 . The time periods for Employees obligations contained in Section 8 and 9 hereof will be extended beyond the time periods specified therein by the length of time during which Employee will have been in breach (as determined by a court of competent jurisdiction in a final nonappealable judgment, ruling or order or by an arbitration) of any of the provisions of such Sections 8 and 9.
Section 12 . Equitable Relief . The Employee acknowledges that a breach or threatened breach by him of any of his covenants contained in Sections 6, 7, 8, 9, 10 and 11 of this Agreement could cause irreparable harm to the Company, its affiliates and Subsidiaries,
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for which it or they would have no adequate remedy at law. Accordingly, and in addition to any remedies which the Company, its affiliates or Subsidiaries may have at law, in the event of an actual or threatened breach by the Employee of his covenants contained in Sections 6, 7, 8, 9, 10 and 11 of this Agreement, the Company, its affiliates and Subsidiaries shall have the right to apply to any court of competent jurisdiction for such injunctive or other equitable relief as such court may deem necessary or appropriate in the circumstances.
Section 13 . No Prior Agreements . The Employee hereby represents and warrants to the Company that the execution of this Agreement by Employee, his employment by the Company, and the performance of his duties hereunder will not violate or be a breach of any agreement with a former employer, client, or any other Person. Further, Employee agrees to indemnify and hold harmless the Company and its officers, directors, and representatives for any claim, including, but not limited to, reasonable attorneys fees and expenses of investigation, of any such third party that such third party may now have or may hereafter come to have against the Company or such other persons, based upon or arising out of any non-competition agreement, invention, secrecy, or other agreement between Employee and such third party that was in existence as of the date of this Agreement.
Section 14 . Miscellaneous .
14.1 Remedies . The Company will have all rights and remedies set forth in this Agreement, all rights and remedies which the Company has been granted at any time under any other agreement or contract and all of the rights which the Company has under any law. The Company will be entitled to enforce such rights specifically, without posting a bond or other security, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or available in equity.
14.2 Waivers and Amendments . The provisions of this Agreement may be amended or waived only by a written agreement executed and delivered by the Company and the Employee. No other course of dealing between the parties to this Agreement or any delay in exercising any rights hereunder will operate as a waiver of any rights of any such parties.
14.3 Successors and Assigns . All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of any of the parties hereto will bind and inure to the benefit of the parties and their respective heirs, executors, administrators, personal representatives, successors and assigns, whether so expressed or not; provided that the Employee may not assign his rights or delegate his obligations under this Agreement without the written consent of the Company.
14.4 Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
14.5 Counterparts . This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all of which counterparts taken together will constitute one and the same agreement.
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14.6 Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.
14.7 Notices . All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally to the recipient, two business days after the date when sent to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands, and other communications will be sent to the Employee and to the Company at the addresses set forth below.
If to the Employee:
Carmine J. Bonanno
39 Albemarle Road
White Plains, NY 10605
Facsimile: (914) 345-2266
If to the Company:
Voyetra Turtle Beach, Inc.
150 Clearbrook Rd. Suite 162
Elmsford, NY 10523
Attn: Chief Financial Officer
With a copy to (which shall not constitute notice):
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, PA 19102
Facsimile: (215) 994-2222
Attention: Henry N. Nassau, Esq. and David S. Denious, Esq.
Or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.
14.8 409A . The parties intend that this Agreement (and all payments and other benefits provided under this Agreement) be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended ( Code Section 409A ) to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Code Section
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409A is applicable to such payments and benefits, the parties intend that this Agreement (and such payments and benefits) comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A. Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions.
14.8.1 Notwithstanding anything to the contrary contained herein, the Employees receipt of any of the severance benefits set forth in Section 5 (other than any unpaid accrued benefits) shall be conditioned on the Employees execution of a release of claims in form and substance satisfactory to the Company (which release shall be provided to the Employee at the time of Employees termination of employment), such that such release is effective (with all revocation periods having expired unexercised) within sixty (60) days following the Employees termination of employment. Any severance payments (other than unpaid accrued benefits) shall be paid to the Executive in a lump sum on the seventieth (70 th ) day following the Employees termination of employment.
14.8.2 Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary: (a) if at the time of the Employees termination of employment, the Employee is a specified employee, as defined in Treasury Regulation Section 1.409A-1(i) and determined using the identification methodology selected by the Company from time to time, or if none, the default methodology, and a payment or benefit provided for in this Agreement would be subject to additional tax under Code Section 409A if such payment or benefit is paid within 6 months after the Employees termination, then such payment or benefit required under this Agreement shall not be paid (or commence to be paid) during the 6 month period immediately following the Employees termination (except as specifically provided otherwise in this clause (a)), but shall instead be paid in a lump sum on the first day of the seventh month following the Employees termination of employment or, if earlier, on the tenth business day following the Employees death (even if such business day is less than six months following the Employees termination); (b) a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a separation from service, as defined in Treasury Regulation Section 1.409A-1(h) after giving effect to the presumptions contained therein, and, for purposes of any such provision of this Agreement, references to a termination, termination of employment and like terms shall mean separation from service; (c) each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments; and (d) with regard to any provision in this Agreement, including, without limitation, Section 4.5, that provides for reimbursement of expenses or in-kind benefits, except for any reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute taxable compensation to the Employee, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (iii) such payments shall be made on or before the last day of the Employees taxable year following the taxable year in which the expense occurred.
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14.9 No Third Party Beneficiary . This Agreement will not confer any rights or remedies upon any person other than the Company, the Employee and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns.
14.10 Entire Agreement . This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes, cancels and replaces any prior understandings, agreements or representations by or between the parties, written or oral, that may have related in any way to the subject matter hereof. Without limiting the foregoing, the Executive Employment Agreement dated as of November 27, 1996 between the Company and the Employee is superseded in its entirety by this Agreement and is terminated effective as of the Effective Date.
14.11 Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. Any reference to any federal, state, local or foreign statute or law will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The use of the word including in this Agreement means including without limitation and is intended by the parties to be by way of example rather than limitation.
14.12 Survival . Sections 4.5, 4.6, 5, 6, 7, 8, 9, 10, and 11 of this Agreement will survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period.
14.13 Governing Law . All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal law, and not the law of conflicts, of the state of New York.
14.14 Waiver of Trial by Jury . The Company and Employee waive trial by jury in any proceeding.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first above written.
VOYETRA TURTLE BEACH, INC. | ||
By: |
/s/ Frederick J. Romano |
|
Name: | Frederick J. Romano | |
Title: | EVP/COO | |
CARMINE BONANNO | ||
/s/ Carmine Bonanno |
Exhibit 10.22
August 2, 2012
Carmine Bonanno
39 Albemarle Road
White Plains, NY 10605
Dear Carmine:
As discussed, this letter agreement confirms your retirement as Chief Executive Officer at Voyetra Turtle Beach, Inc. (VTB) effective August 31, 2012 (the Retirement Date ). In connection with such retirement, if you return a signed copy of this letter agreement prior to August 7, 2012, then VTB will treat your retirement as a termination for Good Reason pursuant to Section 5.3.2 of that certain employment agreement, dated October 12, 2010 (the Employment Agreement ), between you and VTB, and you will be entitled to the following: (a) all unpaid base salary earned through the Retirement Date, (b) all accrued but unused vacation, retirement, incentive, bonus and other benefits to the extent earned and vested as of the Retirement Date and (c) a lump sum severance payment of $515,936 in each case, subject to tax withholdings and deductions (collectively, the Retirement Payments ). You agree that such Retirement Payments shall be in full satisfaction of any liabilities or obligations VTB may have to you in connection with your employment by VTB (including the ending thereof) or the Employment Agreement, including under Section 5 thereof, other than: (i) any amounts payable to you under the Performance Bonus Agreement dated as of October 12, 2010, (ii) reimbursement of any business expenses incurred by you prior to the Retirement Date in accordance with the Companys normal reimbursement policies, (iii) any amounts which may become due under Section 4.6 of the Employment Agreement, and (iv) any indemnification rights you have under applicable law, VTBs certificate of incorporation and/or bylaws as currently in effect and any indemnification agreement that you are currently a party to. By signing this letter agreement, you also represent that you have complied with the provisions of Sections 6 , 7 , 8 , 9 , 10 , and 12 of the Employment Agreement, acknowledge that such provisions shall remain in effect after the Retirement Date, agree that you will continue to comply with such provisions, agree that, prior to the Retirement Date, you will deliver to VTB any Confidential Information or Intellectual Property (as each such term is defined in the Employment Agreement) as well as any other property of VTB (including credit cards and access keys) in your possession and agree that you will provide such assistance as VTB may reasonably request (not to exceed an average of 2 days a week during the first month after the Retirement Date and an average of 2 days a month during the following 5 months); provided, that, after such six-month period, if such assistance would require more than de minimus time and effort from you, you shall not be required to provide such assistance unless the parties enter into a mutually acceptable consulting arrangement. Additionally, the parties agree that any communications regarding your retirement by either party including to employees and third parties will be consistent with the following: 1) your retirement will be characterized as a retirement from the daily operations of VTB, 2) you fully intend to remain active as a member of the board of directors and a significant shareholder of VTB and 3) you have indicated that you will provide VTB reasonable assistance after the Retirement Date on an as-needed basis. Additionally, although Section 4.1 of the Employment Agreement provided that your base salary was to be at the rate of $355,000 per annum effective January 1, 2011, you have continued to receive a base salary at a rate of $500,000 per annum. If you return a signed copy of this letter agreement as contemplated above, you may retain the additional base salary that you received and the Employment Agreement will be amended as set forth on Exhibit A hereto.
This letter agreement constitutes the complete agreement with respect to the ending of your employment relationship with VTB and supersedes any and all agreements, understandings, and discussions, whether written or oral, between you and VTB regarding the same. Neither you nor VTB has made any representations, promises or statements to induce the other to enter into our agreement, and both parties specifically disclaim reliance, and represent that there has been no reliance, on any such representations, promises or statements and any rights arising therefrom. The invalidity or unenforceability of any provision of this letter agreement shall have no effect on and shall not impair the validity or enforceability of any other provision of this letter agreement. This letter agreement shall be governed by the laws of the State of New York (without giving effect to conflict of laws principles that would require the application of the laws of any other state) as to all matters including, without limitation, validity, construction, effect, performance and remedies.
Very Truly Yours,
Acknowledged and agreed as of August 3, 2012:
/s/ Carmine J. Bonanno |
Carmine J. Bonanno |
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EXHIBIT A
Section 4.1 of the Employment Agreement shall be deleted and replaced in its entirety with the following:
4.1 Base Salary. From the Effective Date until December 31, 2010, the Employees monthly compensation will be $41,666.67 or a prorated portion thereof. Effective January 1, 2011, the Employees base salary will continue at the rate of $500,000 per annum (the Base Salary ) subject to such increase as the Board approves in its sole discretion from time to time. Base Salary will be payable by the Company in regular installments in accordance with the general payroll practices of the Company as in effect from time to time. The term Base Salary used in this Agreement shall refer to the Base Salary as it may be so increased from time to time.
Section 4.4 of the Employment Agreement shall be deleted and replaced in its entirety with the following:
4.4 Bonus . Prior to the Effective Date, the Company awarded Employee a performance bonus for 2010 in the amount of $500,000 (the 2010 Bonus ). The Company shall pay the 2010 Bonus on March 31, 2011. In addition to the 2010 Bonus and the compensation payable under the Performance Bonus Agreement, with respect to the year ending December 31, 2011, Employee shall also participate in an annual incentive bonus plan that will provide Employee the opportunity to earn additional compensation of up to fifty percent (50%) of Employees Base Salary for such year (or such higher percentage as may be required pursuant to the immediately following sentence), contingent upon the achievement of performance goals set by the Board for each such year. The material terms (including performance goals), conditions and percentage payout of such incentive bonus hereunder shall be no less favorable to the Employee than the incentive bonuses established for C level executives as such term is defined in the sole discretion of the Board. Notwithstanding anything to the contrary herein, the Employee shall not be eligible for an incentive bonus payment with respect to (a) 2010 if it is determined that he is eligible to receive his portion of the 2010 Bonus pursuant to the Performance Bonus Agreement (in which case, the Employee shall instead receive a bonus of $75,000 payable on July 31, 2011) or (b) 2011 if it is determined that he is eligible to receive his portion of the 2011 Bonus pursuant to the Performance Bonus Agreement and any incentive bonus payment shall not be payable with respect to 2010 or 2011 prior to the final determination of such eligibility. With respect to each fiscal year during the Employment Period after the fiscal year ending December 31, 2011, the Board may determine in its sole discretion to award Employee a bonus, the amount of which, if any, will also be determined by the Board in its sole discretion. All incentive bonus payments will be paid no later than the 15th day of the second month after the end of the calendar year in which such incentive bonus payment was earned.
Exhibit 10.23
EMPLOYMENT AGREEMENT
This Employment Agreement (this Agreement ) dated as of October 12, 2010, (the Effective Date ) is by and between Voyetra Turtle Beach, Inc., a Delaware corporation (the Company ), and Frederick J. Romano (the Employee ).
WHEREAS, Voyetra Technologies, Inc. and the Employee entered into an Executive Employment Agreement dated November 27, 1996 and Voyetra Technologies, Inc. subsequently merged with its subsidiaries forming the Company;
WHEREAS, the Company, its stockholders, SG VTB Merger Sub, Inc. (the Buyer ) and SG VTB Holdings, LLC have entered into a Stock Purchase Agreement dated September 28, 2010 (the Stock Purchase Agreement ), pursuant to which the stockholders have agreed to sell to the Buyer, and the Buyer has agreed to purchase from the stockholders, outstanding shares of common stock of the Company;
WHEREAS, in connection with the closing of the transactions contemplated by the Stock Purchase Agreement, the Company and the Employee desire to enter into a new agreement intended to supersede, replace and cancel the agreement dated November 27, 1996 and all prior or subsequent agreements entered into prior to the Effective Date herein, which shall have no further force or effect on the terms of the Employees future employment with the Company;
WHEREAS, the Company desires to continue the employment relationship with the Employee pursuant to the terms and conditions set forth herein; and
WHEREAS, the Employee desires to continue employment with the Company on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, terms, covenants and conditions set forth herein, and the performance of each, the parties, intending to be legally bound, hereby agree as follows:
AGREEMENTS
Section 1 . Definitions . For purposes of this Agreement, the following terms have the meanings set forth below:
Affiliate means, with respect to any Person, (i) each Person that, directly or indirectly, owns or controls, whether beneficially, or as a trustee, guardian or other fiduciary, ten percent (10%) or more of the stock having ordinary voting power in the election of directors of such Person, (ii) each Person that controls, is controlled by or is under common control with such Person, and (iii) each of such Persons officers, directors, managers (in the case of any Person that is a manager-managed limited liability company) and general partners. For the purpose of this definition, control of a Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of its management or policies, whether through the ownership of voting securities, by contract or otherwise.
Base Salary has the meaning set forth in Section 4.1.
Board means the Board of Directors of the Company as the same is constituted from time to time.
Cause means: (A) Employees conviction of or plea of guilty or nolo contendere to a felony; (B) a determination by the Board that Employee committed fraud, misappropriation or embezzlement against any Person; (C) Employees material breach of the terms of this Agreement or Employees material breach of any other material written agreement with the Company or any Subsidiary (excluding the Seller Transaction Documents or Company Transaction documents, as those terms are defined in the Stock Purchase Agreement) to which Employee is a party other than this Agreement; (D) Employees willful misconduct or gross neglect in performance of Employees duties; or (E) Employees failure or refusal to carry out material responsibilities reasonably assigned by the Board to the Employee; provided , however , that with respect to subsections (C), (D) and (E) above, Cause will only be deemed to occur after written notice to Employee of such action or inaction giving rise to Cause and the failure by Employee to cure such action or inaction (which is capable of cure) within 30 days after written notice.
Confidential Information shall mean all information respecting the business and activities of the Company or any Subsidiary, including, without limitation, the clients, customers, suppliers, employees, consultants, computer or other files, projects, products, computer disks or other media, computer hardware or computer software programs, marketing plans, financial information, methodologies, know-how, processes, practices, approaches, projections, forecasts, formats, systems, trade secrets, data gathering methods and/or strategies of the Company or any Subsidiary. Notwithstanding the immediately preceding sentence, Confidential Information shall not include any information that is, or becomes, generally available to the public (unless such availability occurs as a result of Employees breach of any portion of this Agreement).
Employment Period has the meaning set forth in Section 2.
Good Reason shall mean a material diminution, without Employees consent (which consent shall not be withheld unreasonably), in Employees duties or responsibilities as in effect immediately before such diminution.
Intellectual Property has the meaning set forth in Section 7.
Non-Compete Period means a period of eighteen (18) months following termination of Employees employment with the Company.
Performance Bonus Agreement shall mean the Performance Bonus Agreement of even date herewith between the Company, Employee and Carmine Bonanno.
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Permanent Disability shall mean that the Employee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months.
Person means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
Reimbursable Expenses has the meaning set forth in Section 4.5.
Subsidiary shall mean any corporation, partnership, joint venture, limited liability company, business trust, or other entity of which (or in which) more than 50% of (a) the issued and outstanding capital stock or other equity interests having ordinary voting power to elect a majority of the board of directors of such entity or Persons performing similar functions with respect to such entity (irrespective of whether at the time capital stock or other equity interests of any other class or classes of such entity shall or might have voting power upon the occurrence of any contingency), or (b) the interest in the capital or profits of such partnership, joint venture or limited liability company or other entity is at the time directly or indirectly owned or controlled by the Company and one or more of its other Subsidiaries or by one or more of the Companys other Subsidiaries.
Termination Notice has the meaning set forth in Section 2.2.
Section 2 . Employment .
2.1 Employment Period . The Employees employment hereunder shall commence on the Effective Date and shall continue in full force and effect until terminated as set forth in Section 2.2 (the Employment Period ).
2.2 At Will Employment . The Employees employment under this Agreement is at will. Therefore, in accordance with Section 5, (a) either the Company, upon 60 days advance written notice, or the Employee upon 60 days (or such lesser time as determined by the Company) advance written notice to the Company, may terminate Employees employment with the Company and/or its Subsidiaries ( Termination Notice ) and (b) the Company may immediately terminate Employees employment with the Company and/or its Subsidiaries for Cause.
2.2.1 Subject to the terms and conditions of this Agreement, to the extent that there is a period of time elapsing between the date of delivery of a Termination Notice and the termination date, the Employee shall continue to perform his duties as set forth in this Agreement during such period, and shall also perform such services for the Company as are necessary and appropriate for a smooth transition to the Employees successor, if any. Notwithstanding the foregoing provisions of this Section 2, the Company may suspend the Employee from performing his duties under this Agreement following the delivery of a
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Termination Notice; provided, however, that during the period of suspension, the Employee shall continue to be treated as employed by the Company for other purposes, and his rights to compensation or benefits shall not be reduced by reason of the suspension.
Section 3. Position and Duties .
3.1 Position . During the Employment Period, the Employee will serve in such position or capacity and will perform such duties and functions as shall from time to time be determined by the Board or its designee(s).
3.2 Performance of Duties; Other Activities . During the Employment Period, the Employee will devote substantially all of his business time and best efforts to the performance of his duties hereunder and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict with the rendition of such services, without the prior written consent of the Board; provided, however, the Employee, subject to Employees obligations under this Agreement, shall be permitted to make personal investments, perform reasonable volunteer services, and serve on the boards of directors of nonprofit organizations.
Section 4 . Base Salary and Benefits.
4.1 Base Salary . From the Effective Date until December 31, 2010, the Employees monthly compensation will be $29,583.33 or a prorated portion thereof. Effective January 1, 2011, the Employees base salary will be at the rate of $300,000 per annum (the Base Salary ), plus an annual percentage increase effective January 1, 2012 at least equal to the cost-of-living adjustment (as defined in the Social Security Act) for the immediately preceding year or such greater increase as the Board approves in its sole discretion from time to time. Base Salary will be payable by the Company in regular installments in accordance with the general payroll practices of the Company as in effect from time to time. The term Base Salary used in this Agreement shall refer to the Base Salary as it may be so increased from time to time.
4.2 Employee Benefits and Perquisites . During the Employment Period, the Employee shall be eligible to participate in the Companys employee benefit plans on the same basis as those benefits are made available to other executives of the Company.
4.3 Vacation . During the Employment Period, the Employee shall be entitled to six weeks of paid vacation per calendar year. Employee shall not be entitled to carry over unused vacation to future years.
4.4 Bonus . Prior to the Effective Date, the Company awarded Employee a performance bonus for 2010 in the amount of $500,000 (the 2010 Bonus ). The Company shall pay the 2010 Bonus on March 31, 2011. In addition to the 2010 Bonus and the compensation payable under the Performance Bonus Agreement, beginning each year during the Employment Period after December 31, 2010, Employee shall also participate in an annual incentive bonus plan that will provide Employee the opportunity to earn additional
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compensation of up to fifty percent (50%) of Employees Base Salary for such year (or such higher percentage as may be required pursuant to the immediately following sentence), contingent upon the achievement of performance goals set by the Board for each such year. The material terms (including performance goals), conditions and percentage payout of such incentive bonus hereunder shall be no less favorable to the Employee than the incentive bonuses established for C level executives as such term is defined in the sole discretion of the Board. All incentive bonus payments will be paid no later than the 15th day of the second month after the end of the calendar year in which such incentive bonus payment was earned. Notwithstanding anything to the contrary herein, the Employee shall not be eligible for an incentive bonus payment with respect to (a) 2010 if it is determined that he is eligible to receive his portion of the 2010 Bonus pursuant to the Performance Bonus Agreement (in which case, the Employee shall instead receive a bonus of $75,000 payable on July 31, 2011) or (b) 2011 if it is determined that he is eligible to receive his portion of the 2011 Bonus pursuant to the Performance Bonus Agreement and any incentive bonus payment shall not be payable with respect to 2010 or 2011 prior to the final determination of such eligibility.
4.5 Expenses . The Company shall reimburse the Employee for any and all reasonable expenses incurred by him in the course of performing his duties under this Agreement which are consistent with the Companys policies in effect from time to time with respect to travel, entertainment and other business expenses ( Reimbursable Expenses ), subject to the Companys requirements with respect to reporting and documentation of expenses. All reimbursements shall be made as soon as reasonably practicable, but at least by the earlier of ninety (90) days following the date on which such Reimbursable Expenses were submitted for reimbursement or the last day of the calendar year following the calendar year in which such Reimbursable Expenses were incurred. In addition, no reimbursement shall be subject to liquidation or exchange for another benefit and the amount available for reimbursement during any calendar year shall not affect the amount available for reimbursement in a subsequent calendar year. Termination of Employees employment hereunder shall not affect Employees right to be reimbursed for any Reimbursable Expenses incurred by Employee before such termination.
Section 5 . Termination .
5.1 Death . The Employees employment under this Agreement shall terminate immediately upon the Employees death, and neither the Company nor any of its Affiliates shall have any further obligations under this Agreement, except to pay to the Employees estate (or his beneficiary, as may be appropriate) (a) any Base Salary earned through his date of death, to the extent theretofore unpaid and (b) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his death under any employee benefit plan of the Company in which the Employee participates, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements.
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5.2 Disability . If the Employee is unable to perform his duties under this Agreement because of Permanent Disability, the Company may terminate the Employees employment by giving written notice to the Employee. Such termination shall be effective as of the date of such notice and neither the Company nor any of its Affiliates shall have any further obligations under this Agreement, except to pay to the Employee (a) any Base Salary earned through the date of such termination, to the extent theretofore unpaid and (b) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination under any employee benefit plan of the Company in which the Employee participates, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements.
5.3 Unjustified Termination .
5.3.1 Except as otherwise provided in Sections 5.1, 5.2, 5.4, and 5.5, if the Employees employment shall be terminated by the Company other than for Cause, the Employee shall be entitled to (a) (i) any Base Salary earned through the date of such termination, to the extent theretofore unpaid and (ii) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination under any employee benefit plan of the Company in which the Employee participates, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements, and (b) so long as the Employee has not breached and does not breach the provisions of Sections 6, 7, 8, 9, or 10 of this Agreement a lump sum payment in an amount equal to (i) eighteen (18) months of the Employees then current Base Salary and (ii) an amount equal to eighteen (18) months of COBRA premiums at the rate in effect under the Companys medical plan in which the Employee is participating immediately prior to the date of his termination, payable in accordance with Section 14.8.1 following the date of such termination.
5.3.2 Subject to the requirements of this Section 5.3.2, if the Employee terminates his employment for Good Reason during the period commencing on the Effective Date and ending on the second anniversary thereof, the Employee shall be entitled to (a) (i) any Base Salary earned through the date of such termination, to the extent theretofore unpaid and (ii) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination under any employee benefit plan of the Company in which the Employee participates, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements, and (b) so long as the Employee has not breached and does not breach the provisions of Sections 6, 7, 8, 9, or 10 of this Agreement, a lump sum payment in an amount equal to (i) twelve (12) months of the Employees then current Base Salary and (ii) an amount equal to twelve (12) months of COBRA premiums at the rate in effect under the Companys medical plan in which the Employee is participating immediately prior to the date of his termination, payable in accordance with Section 14.8.1 following the date of such termination. Notwithstanding the foregoing, the Employee shall be entitled to the severance benefits provided under (b)(i) and (ii) of this Section 5.3.2 only if the Employee notifies the Company of the occurrence of the event alleged to constitute Good
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Reason within 30 days of the occurrence of such event, the Company fails to remedy such event within 30 days after receiving such notice from the Employee, and the Employee actually terminates employment within 15 days after the expiration of the 30-day remedial period.
5.4 Justified Termination . If the Company terminates Employees employment for Cause (a Justified Termination ), the Employee shall be entitled to receive (a) any Base Salary earned through the date of termination, to the extent theretofore unpaid, and (b) such accrued but unused vacation, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements. A Justified Termination shall become effective on the date designated by the Company and the Employee shall not be eligible to receive, and the Company shall not be required to pay, any severance pursuant to Section 5.3 hereof.
5.5 Voluntary Resignation . If the Employee resigns for any reason (other than for Good Reason, which shall be covered by Section 5.3.2) (a Voluntary Resignation), the Employee shall be entitled to receive (a) any Base Salary earned through the date of termination, to the extent theretofore unpaid and (b) such accrued but unused vacation, retirement, incentive, bonus and other benefits earned by the Employee and vested (if applicable) as of the date of his termination, all of the foregoing to be paid in the normal course for such payments and in accordance with the terms of the applicable plans, policies and arrangements. A Voluntary Resignation will be effective upon the conclusion of the 60 day written notice period pursuant to Section 2.2, unless an earlier date is approved by the Board. If the Board approves an earlier termination date, the Employee will not be entitled to payments under Sections 5.5(a) and (b) (above) after such date. In the case of a Voluntary Resignation, Employee shall not be eligible to receive, and the Company shall not be required to pay, any severance pursuant to Section 5.3 hereof.
5.6 Performance Bonus Agreement . For the avoidance of doubt, the termination of the Employees employment for any reason shall not affect the Employees right to any bonus otherwise payable under the terms of the Performance Bonus Agreement.
Section 6 . Confidential Information . Employee shall not, during or after the Employment Period, without the prior express written consent of the Board, directly or indirectly use or divulge, disclose or make available or accessible any Confidential Information to any Person (other than when required to do so in good faith to perform Employees duties and responsibilities under this Agreement or when required to do so by a lawful order of a court of competent jurisdiction, any governmental authority or agency, or any recognized subpoena power). In the event that Employee becomes legally compelled (by oral questions, interrogatories, request for information or documents, subpoena, criminal or civil investigative demand or similar process) to disclose any of the Confidential Information, then prior to such disclosure, Employee will provide the Company with prompt written notice so that the Company may seek (with Employees cooperation) a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the
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event that such protective order or other remedy is not obtained, then Employee will furnish only that portion of the Confidential Information which he is advised by counsel is legally required, and will cooperate with the Company in the Companys efforts to obtain reliable assurance that confidential treatment will be accorded to the Confidential Information.
Section 7 . Ownership of Intellectual Property . Employee acknowledges that all discoveries, concepts, ideas, inventions, innovations, improvements, developments, methods, processes, programs, designs, analyses, drawings, reports, patent applications, copyrightable work, and mask work (whether or not including any Confidential Information) and all registrations or applications related thereto, all other proprietary information and all similar or related information (whether or not patentable) that relate to the Companys or any Subsidiarys actual or anticipated business, research and development, or existing or future products or services and that are conceived, developed, contributed to, made, or reduced to practice by Employee (either solely or jointly with others) while employed by the Company (including any of the foregoing that constitutes any proprietary information or records) (collectively, Intellectual Property ) belong to the Company or such Subsidiary, and Employee hereby assigns, and agrees to assign, all of the above Intellectual Property to the Company or such Subsidiary. Any copyrightable work prepared in whole or in part by Employee in the course of Employees work for any of the foregoing entities shall be deemed a work made for hire under the copyright laws, and the Company or such Subsidiary shall own all rights therein. To the extent that any such copyrightable work is not a work made for hire, Employee hereby assigns and agrees to assign to the Company or such Subsidiary all right, title, and interest, including without limitation, copyright in and to such copyrightable work. Employee shall promptly disclose such Intellectual Property and copyrightable work to the Company and perform all actions reasonably requested by the Company or the Board (whether during or after the Employment Period) to establish and confirm the ownership of the Company or such Subsidiary (including, without limitation, assignments, consents, powers of attorney and other instruments).
Section 8 . Non-Competition . The Employee covenants and agrees that during his employment with the Company, and during the Non-Compete Period , he shall not, either directly or indirectly, without the prior written consent of the Company, on his own behalf or in the service or on behalf of others serve anywhere in the United States as an owner, manager, stockholder (except as a holder of no more than l% of the issued and outstanding stock of a publicly traded company), consultant, director, officer or employee of any business entity that provides services that are similar to or competitive to those provided, offered or sold by the Company; and during the Non-Compete Period the Employee shall not, either directly or indirectly (i) solicit or divert or appropriate to or for any competing business, or (ii) attempt to solicit, divert or appropriate to or for any competing business, any products or services offered, sold or provided by the Company to or from those entities who are clients of the Company or a Subsidiary or who are parties to which Company has submitted a proposal to offer any products or services within six (6) months prior to the termination of Employees employment hereunder. The Employee acknowledges that the provisions of this Section 8 shall apply regardless of the circumstances under which Employees employment with the Company terminates.
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Section 9 . Agreement Not to Solicit Employees . The Employee covenants and agrees that during his employment by the Company, and the Non-Compete Period, he will not directly on his own behalf or in the service or on behalf of others, solicit, divert or hire away, or attempt to solicit, divert or hire away, to any competing business any person employed by the Company, whether or not such employee is a full-time employee or a temporary employee of the Company, and whether or not such employment is pursuant to written agreement and whether or not such employment is for a determined period or is at will. The Employee acknowledges that the provisions of this Section 9 shall apply regardless of the circumstances under which Employees employment with the Company terminates.
Section 10 . Non-Disparagement . Except as required by applicable law, rule or regulation or any recognized subpoena power, following termination of the Employees employment, each of the Company and Employee agrees to refrain from making any derogatory comment to the press or to any individual or entity regarding the other (or its or his affiliates) that relates to their activities or relationship prior to the date of termination, which comment would be reasonably likely to cause material damage or harm to the business interests or reputation of the Company or the Employee, as the case may be, or its or his affiliates, as the case may be. In the event that either party becomes legally compelled (by oral questions, interrogatories, request for information or documents, subpoena, criminal or civil investigative demand or similar process) to make any such statements or representations, then prior thereto, such party will provide the other party with prompt written notice so that the other party may seek (with the reasonable cooperation of the first party) a protective order or other appropriate remedy and/or waive compliance with the provisions of this Agreement. In the event that such protective order or other remedy is not obtained, then the first party will only make such statements or representations which he or it is advised by counsel is legally required, and will cooperate with the other party in the other partys efforts to obtain reliable assurance that confidential treatment will be accorded to any such statements or representations.
Section 11 . The time periods for Employees obligations contained in Section 8 and 9 hereof will be extended beyond the time periods specified therein by the length of time during which Employee will have been in breach (as determined by a court of competent jurisdiction in a final nonappealable judgment, ruling or order or by an arbitration) of any of the provisions of such Sections 8 and 9.
Section 12 . Equitable Relief . The Employee acknowledges that a breach or threatened breach by him of any of his covenants contained in Sections 6, 7, 8, 9, 10 and 11 of this Agreement could cause irreparable harm to the Company, its affiliates and Subsidiaries, for which it or they would have no adequate remedy at law. Accordingly, and in addition to any remedies which the Company, its affiliates or Subsidiaries may have at law, in the event of an actual or threatened breach by the Employee of his covenants contained in Sections 6, 7, 8, 9, 10 and 11 of this Agreement, the Company, its affiliates and Subsidiaries shall have the right to apply to any court of competent jurisdiction for such injunctive or other equitable relief as such court may deem necessary or appropriate in the circumstances.
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Section 13 . No Prior Agreements . The Employee hereby represents and warrants to the Company that the execution of this Agreement by Employee, his employment by the Company, and the performance of his duties hereunder will not violate or be a breach of any agreement with a former employer, client, or any other Person. Further, Employee agrees to indemnify and hold harmless the Company and its officers, directors, and representatives for any claim, including, but not limited to, reasonable attorneys fees and expenses of investigation, of any such third party that such third party may now have or may hereafter come to have against the Company or such other persons, based upon or arising out of any non-competition agreement, invention, secrecy, or other agreement between Employee and such third party that was in existence as of the date of this Agreement.
Section 14 . Miscellaneous .
14.1 Remedies . The Company will have all rights and remedies set forth in this Agreement, all rights and remedies which the Company has been granted at any time under any other agreement or contract and all of the rights which the Company has under any law. The Company will be entitled to enforce such rights specifically, without posting a bond or other security, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or available in equity.
14.2 Waivers and Amendments . The provisions of this Agreement may be amended or waived only by a written agreement executed and delivered by the Company and the Employee. No other course of dealing between the parties to this Agreement or any delay in exercising any rights hereunder will operate as a waiver of any rights of any such parties.
14.3 Successors and Assigns . All covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto will bind and inure to the benefit of any of the parties hereto will bind and inure to the benefit of the parties and their respective heirs, executors, administrators, personal representatives, successors and assigns, whether so expressed or not; provided that the Employee may not assign his rights or delegate his obligations under this Agreement without the written consent of the Company.
14.4 Severability . Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of this Agreement.
14.5 Counterparts . This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all of which counterparts taken together will constitute one and the same agreement.
14.6 Descriptive Headings . The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.
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14.7 Notices . All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when delivered personally to the recipient, two business days after the date when sent to the recipient by certified or registered mail, return receipt requested and postage prepaid. Such notices, demands, and other communications will be sent to the Employee and to the Company at the addresses set forth below.
If to the Employee:
Frederick J. Romano
3176 Arbour Lane
Yorktown Heights, NY 10598
Facsimile: (914) 345-2266
If to the Company:
Voyetra Turtle Beach, Inc.
150 Clearbrook Rd. Suite 162
Elmsford, NY 10523
Attn: Chief Executive Officer
With a copy to (which shall not constitute notice):
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, PA 19102
Facsimile: (215) 994-2222
Attention: Henry N. Nassau, Esq. and David S. Denious, Esq.
Or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.
14.8 409A . The parties intend that this Agreement (and all payments and other benefits provided under this Agreement) be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended ( Code Section 409A ) to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Code Section 409A is applicable to such payments and benefits, the parties intend that this Agreement (and such payments and benefits) comply with the deferral, payout and other limitations and restrictions imposed under Code Section 409A. Notwithstanding any other provision of this Agreement to the contrary, this Agreement shall be interpreted, operated and administered in a manner consistent with such intentions.
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14.8.1 Notwithstanding anything to the contrary contained herein, the Employees receipt of any of the severance benefits set forth in Section 5 (other than any unpaid accrued benefits) shall be conditioned on the Employees execution of a release of claims in form and substance satisfactory to the Company (which release shall be provided to the Employee at the time of Employees termination of employment), such that such release is effective (with all revocation periods having expired unexercised) within sixty (60) days following the Employees termination of employment. Any severance payments (other than unpaid accrued benefits) shall be paid to the Executive in a lump sum on the seventieth (70 th ) day following the Employees termination of employment.
14.8.2 Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary: (a) if at the time of the Employees termination of employment, the Employee is a specified employee, as defined in Treasury Regulation Section 1.409A-1(i) and determined using the identification methodology selected by the Company from time to time, or if none, the default methodology, and a payment or benefit provided for in this Agreement would be subject to additional tax under Code Section 409A if such payment or benefit is paid within 6 months after the Employees termination, then such payment or benefit required under this Agreement shall not be paid (or commence to be paid) during the 6 month period immediately following the Employees termination (except as specifically provided otherwise in this clause (a)), but shall instead be paid in a lump sum on the first day of the seventh month following the Employees termination of employment or, if earlier, on the tenth business day following the Employees death (even if such business day is less than six months following the Employees termination); (b) a termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of amounts or benefits upon or following a termination of employment unless such termination is also a separation from service, as defined in Treasury Regulation Section 1.409A-1(h) after giving effect to the presumptions contained therein, and, for purposes of any such provision of this Agreement, references to a termination, termination of employment and like terms shall mean separation from service; (c) each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments; and (d) with regard to any provision in this Agreement, including, without limitation, Section 4.5, that provides for reimbursement of expenses or in-kind benefits, except for any reimbursement or in-kind benefit provided pursuant to this Agreement that does not constitute taxable compensation to the Employee, (i) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during any taxable year shall not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, and (iii) such payments shall be made on or before the last day of the Employees taxable year following the taxable year in which the expense occurred.
14.9 No Third Party Beneficiary . This Agreement will not confer any rights or remedies upon any person other than the Company, the Employee and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns.
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14.10 Entire Agreement . This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes, cancels and replaces any prior understandings, agreements or representations by or between the parties, written or oral, that may have related in any way to the subject matter hereof. Without limiting the foregoing, the Executive Employment Agreement dated as of November 27, 1996 between the Company and the Employee is superseded in its entirety by this Agreement and is terminated effective as of the Effective Date.
14.11 Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. Any reference to any federal, state, local or foreign statute or law will be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The use of the word including in this Agreement means including without limitation and is intended by the parties to be by way of example rather than limitation.
14.12 Survival . Sections 4.5, 4.6, 5, 6, 7, 8, 9, 10, and 11 of this Agreement will survive and continue in full force in accordance with their terms notwithstanding any termination of the Employment Period.
14.13 Governing Law . All questions concerning the construction, validity and interpretation of this Agreement will be governed by the internal law, and not the law of conflicts, of the state of New York.
14.14 Waiver of Trial by Jury . The Company and Employee waive trial by jury in any proceeding.
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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first above written.
VOYETRA TURTLE BEACH, INC. | ||
By: |
/s/ Carmine J. Bonanno |
|
Name: | Carmine J. Bonanno | |
Title: | PRES/CEO | |
FREDERICK J. ROMANO | ||
/s/ Frederick J. Romano |
Exhibit 10.24
August 2, 2012
Frederick J. Romano
3176 Arbour Lane
Yorktown Heights, NY 10598
Dear Fred:
As discussed, this letter agreement confirms your retirement as Executive Vice President and Chief Operating Officer at Voyetra Turtle Beach, Inc. (VTB) effective August 31, 2012 (the Retirement Date ). In connection with such retirement, if you return a signed copy of this letter agreement prior to August 7, 2012, then VTB will treat your retirement as a termination for Good Reason pursuant to Section 5.3.2 of that certain employment agreement, dated October 12, 2010 (the Employment Agreement ), between you and VTB, and you will be entitled to the following: (a) all unpaid base salary earned through the Retirement Date, (b) all accrued but unused vacation, retirement, incentive, bonus and other benefits to the extent earned and vested as of the Retirement Date and (c) a lump sum severance payment of $457,669, in each case, subject to tax withholdings and deductions (collectively, the Retirement Payments ). You agree that such Retirement Payments shall be in full satisfaction of any liabilities or obligations VTB may have to you in connection with your employment by VTB (including the ending thereof) or the Employment Agreement, including under Section 5 thereof, other than: (i) any amounts payable to you under the Performance Bonus Agreement dated as of October 12, 2010, (ii) reimbursement of any business expenses incurred by you prior to the Retirement Date in accordance with the Companys normal reimbursement policies and (iii) any indemnification rights you have under applicable law, VTBs certificate of incorporation and/or bylaws as currently in effect and any indemnification agreement that you are currently a party to. By signing this letter agreement, you also represent that you have complied with the provisions of Sections 6 , 7 , 8 , 9 , 10 , and 12 of the Employment Agreement, acknowledge that such provisions shall remain in effect after the Retirement Date, agree that you will continue to comply with such provisions, agree that, prior to the Retirement Date, you will deliver to VTB any Confidential Information or Intellectual Property (as each such term is defined in the Employment Agreement) as well as any other property of VTB (including credit cards and access keys) in your possession and agree that you will provide such assistance as VTB may reasonably request (not to exceed an average of 2 days a week during the first month after the Retirement Date and an average of 2 days a month during the following 5 months); provided, that, after such six-month period, if such assistance would require more than de minimus time and effort from you, you shall not be required to provide such assistance unless the parties enter into a mutually acceptable consulting arrangement. Additionally, the parties agree that any communications regarding your retirement by either party including to employees and third parties will be consistent with the following: 1) your retirement will be characterized as a retirement from the daily operations of VTB, 2) you fully intend to remain active as a member of the board of directors and a significant shareholder of VTB and 3) you have indicated that you will provide VTB reasonable assistance after the Retirement Date on an as-needed basis. Additionally, although Section 4.1 of the Employment Agreement provided that your base salary was to be at the rate of $300,000 per annum effective January 1, 2011, you have continued to receive a base salary at a rate of $425,000 per annum. If you return a signed copy of this letter agreement as contemplated above, you may retain the additional base salary that you received and the Employment Agreement will be amended as set forth on Exhibit A hereto.
This letter agreement constitutes the complete agreement with respect to the ending of your employment relationship with VTB and supersedes any and all agreements, understandings, and discussions, whether
written or oral, between you and VTB regarding the same. Neither you nor VTB has made any representations, promises or statements to induce the other to enter into our agreement, and both parties specifically disclaim reliance, and represent that there has been no reliance, on any such representations, promises or statements and any rights arising therefrom. The invalidity or unenforceability of any provision of this letter agreement shall have no effect on and shall not impair the validity or enforceability of any other provision of this letter agreement. This letter agreement shall be governed by the laws of the State of New York (without giving effect to conflict of laws principles that would require the application of the laws of any other state) as to all matters including, without limitation, validity, construction, effect, performance and remedies.
Very truly yours,
Acknowledged and agreed as of August 3, 2012:
/s/ Frederick J. Romano |
Frederick J. Romano |
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EXHIBIT A
Section 4.1 of the Employment Agreement shall be deleted and replaced in its entirety with the following:
4.1 Base Salary . From the Effective Date until December 31, 2010, the Employees monthly compensation will be $35,416.67 or a prorated portion thereof. Effective January 1, 2011, the Employees base salary will continue at the rate of $425,000 per annum (the Base Salary ) subject to such increase as the Board approves in its sole discretion from time to time. Base Salary will be payable by the Company in regular installments in accordance with the general payroll practices of the Company as in effect from time to time. The term Base Salary used in this Agreement shall refer to the Base Salary as it may be so increased from time to time.
Section 4.4 of the Employment Agreement shall be deleted and replaced in its entirety with the following:
4.4 Bonus . Prior to the Effective Date, the Company awarded Employee a performance bonus for 2010 in the amount of $500,000 (the 2010 Bonus). The Company shall pay the 2010 Bonus on March 31, 2011. In addition to the 2010 Bonus and the compensation payable under the Performance Bonus Agreement, with respect to the year ending December 31, 2011, Employee shall also participate in an annual incentive bonus plan that will provide Employee the opportunity to earn additional compensation of up to fifty percent (50%) of Employees Base Salary for such year (or such higher percentage as may be required pursuant to the immediately following sentence), contingent upon the achievement of performance goals set by the Board for each such year. The material terms (including performance goals), conditions and percentage payout of such incentive bonus hereunder shall be no less favorable to the Employee than the incentive bonuses established for C level executives as such term is defined in the sole discretion of the Board. Notwithstanding anything to the contrary herein, the Employee shall not be eligible for an incentive bonus payment with respect to (a) 2010 if it is determined that he is eligible to receive his portion of the 2010 Bonus pursuant to the Performance Bonus Agreement (in which case, the Employee shall instead receive a bonus of $75,000 payable on July 31, 2011) or (b) 2011 if it is determined that he is eligible to receive his portion of the 2011 Bonus pursuant to the Performance Bonus Agreement and any incentive bonus payment shall not be payable with respect to 2010 or 2011 prior to the final determination of such eligibility. With respect to each fiscal year during the Employment Period after the fiscal year ending December 31, 2011, the Board may determine in its sole discretion to award Employee a bonus, the amount of which, if any, will also be determined by the Board in its sole discretion. All incentive bonus payments will be paid no later than the 15th day of the second month after the end of the calendar year in which such incentive bonus payment was earned.
Exhibit 10.25
PERSONAL AND CONFIDENTIAL
October 21, 2013
Mr. Frederick J. Romano
3176 Arbour Lane
Yorktown Heights, NY 10598
Dear Fred;
Voyetra Turtle Beach, Inc. ( VTB ) is pleased to extend you this offer of part-time employment with VTB as the companys operations and supply chain advisor. Your employment will commence on October 21, 2013 and shall continue until terminated by either party as provided below. During your employment, you will report directly to Juergen Stark, VTBs Chief Executive Officer, and perform such duties as may, from time to time, be determined and assigned by VTBs Chief Executive Officer or his designee.
During your employment with VTB, you will be compensated for each day worked at a rate of $1,635 per day, payable in accordance with VTBs normal payroll practices and pro-rated based on an eight hour workday for any partial day worked. You acknowledge and agree that you shall not be entitled to any other compensation from VTB with respect to your employment, and, except as required by law or the applicable plan, you shall not be eligible to participate in any employee benefit plan, program or arrangement sponsored by VTB or its affiliates.
We anticipate that the performance of your duties to VTB will require frequent travel, both domestically and internationally. You will be reimbursed for travel and business expenses in accordance with the terms of VTBs travel and business expense reimbursement policies, each as in effect from time to time.
Your employment with VTB will be on an at-will basis, and either you or VTB may terminate your employment for any reason upon two weeks prior written notice to the other party. Following the termination of your employment with VTB for any reason, VTBs sole obligation to you shall be to (i) pay you any earned compensation that remains unpaid as of your termination date and (ii) reimburse you for any reimbursable travel or business expenses incurred but not reimbursed as of your termination date in accordance with VTBs travel and business expense reimbursement policies, each as in effect from time to time.
As a condition to the commencement of your employment with VTB, you must execute the standard VTB employee restrictive covenant agreement attached hereto as Exhibit A (the Employee Agreement ). As a VTB employee, you will be expected to abide by VTBs published rules and regulations.
We are very pleased to have you as part of our team again. If you have any questions regarding this offer, please contact me at the number below. If this offer is acceptable, please countersign and date this letter, execute the Employee Agreement and return the originals.
VOYETRA TURTLE BEACH, INC. | ||
By: | /s/ Juergen Stark | |
Name: Juergen Stark Title: Chief Executive Officer |
I have read and understand the terms of this employment offer and I accept this offer as presented:
/s/ Frederick J. Romano | 11/6/2013 | |||||||
Frederick J. Romano | Date |
100 Summit Lake Drive Ste 100 Valhalla, NY 10595 | Tel: 914.345.2255 | Fax: 914.345.2266 | www.turtlebeach.com |
Exhibit 10.26
PERSONAL AND CONFIDENTIAL
September 16, 2013
John Hanson
1361 Bridgewater Lane
Long Grove, IL 60047
Dear John:
We are pleased to extend an offer to you to join Voyetra Turtle Beach, Inc. (VTB or the Company) under the terms and conditions as stated below.
TITLE: | Chief Financial Officer | |
REPORTING TO: | Juergen Stark, CEO | |
START DATE: | On or about 9/23/2013 | |
COMPENSATION: | Your base salary will be $350,000 annually, paid in bi-weekly intervals of $13,461.53 and subject to applicable withholdings for FICA, state and federal tax. Your base salary will not be reduced unless you and the Company mutually agree. | |
PERFORMANCE BONUS: |
You will be eligible for a target Performance Bonus. Your target incentive is initially 40% of base salary going to 50% of base salary once you have completed your move to New York or San Diego. Your actual bonus will be based upon a variety of factors including company performance, and your achieving specified performance criteria to be established and approved with your manager. In the event that changes are made to any of the Bonus Plans, the changes will apply to you as they do other similarly situated employees of the Company.
Your 2013 bonus will be fixed at 100% payout prorated based on the portion of 2013 worked.
Payment of your bonus will be delivered according to the regular annual incentive plan payout schedule. An annual bonus shall not be deemed earned by you until the Company has determined your entitlement to such bonus and only if you are employed by the Company at the time such bonus is payable in accordance with the Bonus Plan and Company practices, except that if you are terminated by the Company without Cause (as defined in the VTB Holdings, Inc. 2011 Equity Incentive Plan) or by you for Good Reason, you will be paid a pro-rata bonus for the fiscal year in which such termination occurs in the following fiscal year based upon the average percentage of the applicable target bonuses received by the management team. |
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EQUITY PARTICIPATION: | On the 30 th day following the closing of the pending transaction with Parametric Sound Corporation (PAMT), you will receive a stock option grant of the number of shares of PAMT that 700,000 shares of VTB Holdings Inc. Common Stock would have converted to in the transaction had they been outstanding at that time with a strike price equal to the closing price of PAMT stock on the trading day prior to the date of grant, 25% of which will vest on the first anniversary of your start date with the Company, with the remainder vesting ratably each month over the following three year period. |
100 Summit Lake Drive Ste 100, Valhalla, NY 10595 | Tel: 914.345.2255 | Fax: 914.345.2266 | www.turtlebeach.com |
VACATION & SICK TIME: | You will be granted one week of paid vacation for each consecutive three (3) months of employment (for a total of four weeks (20 days) per year) and one paid sick day per two months of employment, subject to our standard vacation and sick day roll over rules, which will be provided to you. | |
RELOCATION: | You agree to move to either New York or San Diego within 1 year of your start date. Your relocation expenses will be covered per our existing executive relocation plan. | |
SEVERANCE/NOTICE: | In the event that your employment is terminated by VTB without Cause (including following a change in control of the Company), you will be entitled to continuation of your annual salary for a period of six months. In the event that you decide to terminate your employment, you agree to give VTB 30 calendar days notice. Any such payment will be subject to and conditioned upon (a) your continuing compliance with the Voyetra Turtle Beach, Inc. Proprietary Information and Employment Agreement and (b) your signing a written waiver and release of any and ail claims against the Company arising out of or relating to your employment with the Company inform and substance reasonably satisfactory to the Company. | |
RESTRICTIVE COVENANTS: | Your employment agreement will contain non-compete, non-solicit, confidentiality and other customary restrictive covenants consistent with those contained in employment agreements for other employees. | |
REPRESENTATION: | You represent that you are free to accept employment with VTB. | |
POLICIES & PROCEDURES: | You will be required to comply with VTB policies and procedures for employees, which include, among other things, your obligations to comply with VTB rules regarding confidential and proprietary Information and trade secrets, and to furnish accurate and complete information to VTB in connection with your application for employment. | |
CONFIDENTIALITY: | You agree not to disclose the terms of this letter to anyone, other than to your immediate family, your tax advisors and legal counsel, or as otherwise required by law. |
Good Reason means a material diminution in responsibilities; relocation more than 35 miles from San Diego or Valhalla, NY; or any material breach of this agreement by the Company.
We look forward to having you join the Company and anticipate a long and mutually beneficial relationship.
Should you accept this offer and begin employment with the Company you retain the right to resign without cause. There is no fixed duration for your employment. In accepting this offer you acknowledge and agree that your employment with the Company is at will and may be terminated by the Company at any time, with or without notice, and for any or no reason. In accepting this offer you acknowledge that, apart from this letter, there is not and shall not be any written contract between you and the Company concerning this offer of employment, and that this letter does not guarantee employment for any definite or specific term or duration.
By signing and returning this letter you confirm that its contents accurately summarize the current understanding between you and the Company and that you accept and agree to the terms as stated above.
100 Summit Lake Drive Ste 100, Valhalla, NY 10595 | Tel: 914.345.2255 | Fax: 914.345.2266 | www.turtlebeach.com |
Sincerely,
Juergen Stark
Chief Executive Officer
Acknowledged & Agreed: |
/s/ John Hanson |
Date: 9-16-2013 | ||||||
John Hanson |
100 Summit Lake Drive Ste 100, Valhalla, NY 10595 | Tel: 914.345.2255 | Fax: 914.345.2266 | www.turtlebeach.com |
Exhibit 21.1
List of Subsidiaries of
Parametric Sound Corporation
PSC Licensing Corporation
Turtle Beach Europe Limited
Voyetra Turtle Beach, Inc.
VTB Holdings, Inc.
1.
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I have reviewed this quarterly report on Form
10-Q of Parametric Sound Corporation;
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2.
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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;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this 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;
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4.
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The registrant’s other certifying officers 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:
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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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
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b)
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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.
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1.
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I have reviewed this quarterly report on Form
10-Q of Parametric Sound Corporation;
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2.
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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;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this 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 officers 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
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5.
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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.
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