Document:

ex10-2.htm

Exhibit 10.2

 

DISTRIBUTOR AND LICENSE AGREEMENT

This “Distributor and License Agreement” (the “Agreement”) is entered into as of April 12, 2011 (the “Effective Date”), by and between AG Worldwide, LLC, a Nevada limited liability company ("AG Worldwide"), and AeroGrow International, Inc., a Nevada corporation ("AII").

BACKGROUND

A.  AII is the manufacturer and seller of a product known as the AeroGarden, an aeroponic garden product, and owns the intellectual and intangible property relating to the AeroGarden including, without limitation, patents, patents pending, trade secrets, manufacturing processes, trademarks, service marks, trade names and associated good will with respect to the “AeroGarden” and associated products and services.  For purposes of this Agreement, the term “AeroGarden” means the current AeroGarden product and all future improvements and developments related thereto and the term “AeroGarden Intangible Property” means all of the existing and future patents, patents pending, trade secrets, manufacturing processes, trademarks, service marks, trade names, logos, domain names, websites and other intellectual property developed or to be developed with respect to the AeroGarden.

B.  AG Worldwide is a limited liability company formed by Cyrano Partners, LLC (“Cyrano”), for the purpose of marketing the AeroGarden by means of a multi-level marketing network (the “MLM Network”).

C.  AII has reached certain conditional agreements with AG Worldwide regarding AII’s future participation as a member of AG Worldwide contingent upon AII achieving the following steps permitting AII to transfer all or substantially all of its assets to AG Worldwide in exchange for a promissory note (the “Note”) and a Member Interest in AG Worldwide (collectively, the “Required Approvals”):  (1) the required approval from its shareholders (consistent with the requirements of the Securities and Exchange Commission in connection with obtaining such shareholder approvals) (the “Shareholder Approval”); (2) the effectiveness of any “information statement” or any other notice required to be filed with, or approval received from, the Securities and Exchange Commission; and (3) the required approval from its secured creditors (the “Creditor Approval”).   The date on which the last Required Approval is obtained is referred to herein as the “Approval Date.”

                D.  The process of obtaining the Required Approvals is anticipated to take several months and, and subject to the terms and conditions of this Agreement, the parties desire to enter into this Sales Agency and License Agreement to permit AG Worldwide, as an agent and licensee of AII, to sell the AeroGarden product during the period prior to the obtaining of the Required Approvals.

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties hereto, intending to be legally bound, hereby mutually covenant and agree as follows:

Section 1.  Appointment as Distributor.

 

 

  

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                      1.1   In General.   AII hereby appoints AG Worldwide to act as a distributor for the AeroGarden, and all associated products and services sold in connection with the AeroGarden (collectively the “Associated AeroGarden Items” which term shall also include future products and services developed in connection with the AeroGarden) within the following countries: the United States, Japan, the People Republic’s of China, the United Kingdom, Hong Kong, and Taiwan.  AII further grants to AG Worldwide the sole and exclusive right to sell through an MLM Network (or an “MLM Equivalent Channel,” as defined below) the AeroGarden and the Associated AeroGarden Items.  The activity of making sales through an MLM Network by AG Worldwide of the AeroGarden and Associated AeroGarden Items is hereinafter referred to as the “MLM Business.”   No other person or party (including AII) shall have the right to sell the AeroGarden and Associated AeroGarden Items through an MLM Network or through any distribution channel (an “MLM Equivalent Channel”), however described, using third party distributors or representatives that is similar to an MLM Network.  AG Worldwide shall have complete discretion to set the prices and terms for the sales of the AeroGarden in the MLM Business and to manage the marketing and sales of the same in whatever manner AG Worldwide deems desirable or necessary and, in connection therewith, AII agrees to be subject to the AII pricing covenants set forth in Section 3 below and the AII operational covenants set forth in Section 4 below.

                      1.2  Purchase of AeroGarden and Associated AeroGarden Items For Resale.  As a distributor of AII, AG Worldwide shall have the right to purchase from, or through, AII the AeroGarden and the Associated AeroGarden Items for resale upon the terms set forth herein.  If AG Worldwide places an order with AII, then AII shall fill such order from AII’s stock on hand.  If such order reasonably necessitates, in the reasonable discretion of both AII and AG Worldwide, the order of additional AeroGarden and Associated AeroGarden Items, then AII shall (a) place such an order on behalf of AG Worldwide by and with AII’s qualified suppliers, (b) purchase such required items on behalf of AG Worldwide, either on consignment or pursuant to any other recognized and acceptable agency arrangement, or (c) make any other arrangement necessary to permit AG Worldwide to directly acquire ownership in the additional required inventory.  It is expressly the intent of both AII and AG Worldwide hereunder that, if AII undertakes any of the actions in the preceding sentence, then AG Worldwide will pay or deposit directly with any of AII’s qualified suppliers any prepayment or deposit necessary or required and that AG Worldwide will at all times have a direct and immediate right to ownership and possession of such inventory.  AG Worldwide will make payments to AII for orders placed under this provision pursuant to Section 5.2, below.

 

 

    Section 2.  Grant of License to Use the AeroGarden Intangible Property, Etc.

                      2.1  In General.   In connection with AG Worldwide’s activities as a sales agent for AII as set forth in Section 1, AII hereby licenses, transfers, and assigns to AG Worldwide the right to the perpetual and unlimited use of the AeroGarden Intangible Property (the “AeroGarden License”) in connection with the activities of AG Worldwide as a sales agent of AII.   AII’s grant to AG Worldwide of the to the AeroGarden License shall be non-exclusive; provided, however, that the AeroGrow License shall be an exclusive License with respect to an MLM Network and any MLM Equivalent Channel, and AII shall not give any other person selling the AeroGarden or AeroGarden Associated Items through an MLM Network or any MLM Equivalent Channel any license or right to use in any manner the AeroGarden Intangible Property.  The rights of AG Worldwide under this Agreement, with respect to the AeroGarden License, are worldwide and shall be for all markets, customers, and sales channels, and AII retains no other rights or power to grant to any other party distributing the AeroGarden or any AeroGarden Associated Items through an MLM Network or an MLM Equivalent Network the right to use or exploit for its own account the AeroGarden Intangible Property in any manner.

 

 

  

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       2.2           Royalties.  AeroGarden shall pay to AII an annual royalty of $100 dollars a year on the 30th day of June of each year in consideration of the AeroGrow License.

 

       2.3           Standard of Conduct.   During the Term, AG Worldwide shall use the AeroGarden Intangible Property only in accordance with the following terms and conditions:

 

          (A)  Quality of MLM Business.  AG Worldwide shall use its reasonable best efforts, skill and diligence in the operation of the MLM Business, and shall regulate its employees, associates, agents and independent distributors and others having a contractual relationship with AG Worldwide, so that they will be courteous and helpful to the public and to all persons purchasing the AeroGarden and Associated AeroGarden Items from AG Worldwide.

 

  (B)  Reasonable Business Standards; Compliance With Law.  AG Worldwide shall operate the MLM Business in accordance with the reasonable business standards in marketing and selling the AeroGarden and the Associated AeroGarden Items and shall do nothing to detract from or diminish the value of the AeroGarden Intangible Property.   AG Worldwide shall conduct the MLM Business and use the AeroGarden Intangible Property in accordance with all applicable governmental laws, ordinances, rules and regulations governing the marketing and sale of the AeroGarden and the Associated AeroGarden Items.

 

          (C)  Inspection by AII.  AG Worldwide shall permit an inspection of the MLM Business utilizing the AeroGarden Intangible Property by AII, as requested by AII from time to time, or by the authorized agents of AII, in such manner and at such times so as not to interfere with Licensee’s operation of the Business.

 

          (D)  Submission of Advertising.  AG Worldwide shall provide AII with samples of all advertising or other literature, packages, labels and labeling not otherwise developed by AII that use any trademarks, trade names, services marks, or logos which comprise part of the AeroGarden Intangible Property.

 

       2.4  Maintenance of AeroGarden Intangible Property.  AII shall use its reasonable best efforts in good faith to register, patent, maintain, or cause to be registered or patented and maintained, the AeroGrow Intangible Property in the United States of America and its possessions to the extent such AeroGrow Intangible Property is registerable or patentable.

 

       2.5  Ownership of AeroGrow Intangible Property.  AG Worldwide acknowledges that it does not own the AeroGrow Intangible Property and that AII is the sole owner of all right, title and interest in and to the AeroGrow Intangible Property.  Licensee will not at any time do or cause to be done any act or thing contesting or in any way impairing or tending to impair any part of such right, title and interest.  Any and all use by Licensee of the AeroGrow Intangible Property should inure to the benefit of AII.

 

       2.6  Infringement.

 

 

  

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          2.6.1  Third Party.  If AG Worldwide becomes aware that any third party is infringing upon any of the AeroGrow Intangible Property, AG Worldwide shall promptly notify AII of such infringement and AII shall demand of the infringer that such infringement cease.   If such infringement continues, AII, at its expense, shall take legal action to prevent continuance of such infringement and to collect damages on account thereof, which damages shall first be allocated to AII to cover all of its reasonable expenses in pursuing any such infringement action and all remaining damages shall be allocated among AII and AG Worldwide in proportion to the reasonable damages suffered by each.  AG Worldwide shall cooperate in any legal action brought by AII hereunder.

 

          2.6.2  Suit Against a Party.  In the event that AG Worldwide is made a party to a legal or similar proceeding which is based in whole or in part on a claim that the use of the AeroGrow Intangible Property infringes upon any other trademark or service mark, or infringes upon any trade name or related intangible property, AII shall, at its own cost and expense, defend such claim and shall indemnify and hold AG Worldwide harmless from and against any such claims.

 

          2.6.3  Indemnification for Infringement.  AII shall indemnify, defend, protect and hold AG Worldwide harmless from and against any and all present and future claims, demands, actions, losses, obligations, liabilities, judgments, penalties, damages, costs, and expenses of any nature whatsoever, including attorneys’ fees, arising out of, or in any way connected with, AG Worldwide’s use of the AeroGarden Intangible Property, including, without limitation, any claims by any third party that the AeroGarden Intangible Property or the use and exploitation of the AeroGarden Intangible  Property by AG Worldwide infringe upon the proprietary rights of any third parties.  The obligation of AII to indemnify, defend, and hold AG Worldwide harmless with respect to the matters described herein shall survive termination of this Agreement.

 

    Section 3.  AII Pricing Covenants.  In consideration of AG Worldwide establishing and building the MLM Business, and for other good and valuable consideration receipt of which AII acknowledges, AII covenants and agrees that it shall not permit the AeroGarden 3” or the “AeroGarden Extra” to be offered for sale in its direct response business (which business includes, but is not limited to, its catalogue business and all business associated with AII’s website) (the “Direct Response Business”) at a price less than that price to be charged for such items in the MLM Business as determined by AG Worldwide.  Similarly, AII agrees to request all United States retail outlets selling such items to price said items at a price no less than that price to be charged for such items in the MLM Business, as determined by AG Worldwide.

 

    Section 4.  AII Operational Covenants.  In consideration of AG Worldwide establishing and building the MLM Business, and for other good and valuable consideration, receipt of which AII acknowledges, AII covenants and agrees as follows:

 

          (A)  As of the Go Live Date, which is, subject to Section 9 of the Transaction Agreement executed simultaneously herewith, defined as that day that is the later of April 22, 2011, or that day upon which InfoTrax Systems, L.C. (“InfoTrax”), can begin to process orders from AG Worldwide, AII shall not permit the AeroGarden or the Associated AeroGarden Items to be offered for sale in its Direct Response Business at a price less than that price to be charged for such items in the MLM Business, as determined by AG Worldwide;

 

          (B)  As of the Go Live Date, AII shall cease to fulfill any and all orders for the AeroGarden or the Associated AeroGarden Items placed by any United States retail establishment or to in any manner make any inventory available to any such customers;

 

 

  

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          (C)  As of the Go Live Date, all orders for the AeroGarden or the Associated AeroGarden Items that are placed by any customer on or through any website owned, controlled, or affiliated with AII (collectively, the “Website”) shall be reported to AG Worldwide so that AG Worldwide can, and with the understanding that AG Worldwide will, factor such transactions into its MLM Business in the manner that AG Worldwide deems appropriate so that such sales can be provided as a benefit to the MLM Downline.

 

          (D)  As of the date that the Equity Funds (defined below) are deposited into an escrow account for the use of AG Worldwide (the “Funds Date”), AeroGrow shall institute a password requirement with respect to the Website such that no person or entity who has not been assigned a password by the Funds Date shall not be able to utilize such Website to in any manner order the AeroGarden or the Associated AeroGarden Items.

 

    Section 5.  Certain Services Provided By AII.

 

       5.1  Nature of Services To Be Performed.  During the period which is the shorter of the “Term” (as defined in Section 6 below) of this Agreement or that period ending on December 31, 2012, AII shall provide certain services (the “Related Party Services”) to AG Worldwide as provided below in this Section 4.  It is contemplated that AG Worldwide will have only minimal employees until the date on which the Required Approvals are obtained and AII then transfers all or substantially all of its assets to AG Worldwide. On such date as the Required Approvals are obtained, AG Worldwide shall employ such of the former employees of AII as AG Worldwide deems necessary or desirable.  Until such date as the Required Approvals are obtained, AII shall provide the following Related Party Services for the benefit of AG Worldwide:

	
(1)  

	
Services in connection with the placing and fulfilling of purchase orders for inventory, and services in accounting and bookkeeping with respect to such purchase and sale of inventory and the invoicing and collection of such sales.

	
(2)  

	
Services with respect to providing insurance with respect to the AeroGardens produced and Associated AeroGarden Items.

	
(3)  

	
Liaison services with factories with respect to the timing, and quality of production, of the AeroGarden and the Associated AeroGarden Items.

	
(4)  

	
Accounting and treasury services relating to the investment, use and application of cash flow to maximize the use of any cash flow of AG Worldwide.

	
(5)  

	
Other necessary services for the MLM Business which AG Worldwide is unable to provide because of the lack of employees.

 

       5.2  Payment.  In exchange for all orders filled by AII pursuant to Section 1.2, above, and for the Related Party Services, AG Worldwide shall make the following payments to AII:

 

          (A)  From and after the Effective Date until the date that AG Worldwide raises the Equity Funds (the “Funds Date”), AG Worldwide shall pay to AII an amount equal to all revenues generated in the prior week by AG Worldwide in connection with the sale of the AeroGarden and the Associated AeroGarden Items, less (1) all commissions and related expenses owing with respect to the sales generating such revenues; (2) all commissions and/or fees owing to InfoTrax; (3) all other merchant fees owing with respect to the sales generating such revenues; and (4) all other reasonable costs and expenses of AG Worldwide’s ongoing business activities, so long as such costs and expenses are mutually consented to in advance by both AG Worldwide and AII, neither of which shall unreasonably withhold such consent.  This payment shall be made by the Friday of the week after the occurrence of the sale giving rise to the revenues at issue.

 

 

  

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          (B) From and after the Funds Date, AG Worldwide shall pay to AII an amount equal to AII’s full inventory cost for all items ordered, plus the direct cost of fulfillment and shipping of items ordered, plus the Administrative Charge, as calculated by AII.  AII shall calculate the Administrative Charge and bill the Administrative Charge to AG Worldwide every week, and AG Worldwide shall pay such charge within 5 days of the receipt of such bill.  “Administrative Charge” is meant to approximate the portion of AII’s overhead expense that is applicable to the services provided to AG Worldwide and shall be calculated by multiplying AII’s overhead expense for the applicable two week period by a fraction, the numerator of which is AG Worldwide’s revenues for such two week period (the “AG Revenue”), and the denominator of which is the AG Revenue plus AII’s revenues generated by its direct response sales and its retail sales and specifically excluding any and all sales to AG Worldwide for such two week period.  Once per month, on or before the last day of each month in which an Administrative Charge has been paid by AG Worldwide, each party shall have the right to examine all calculations of the Administrative Charges that have been billed to AG Worldwide, and AII agrees that it will repay to AG Worldwide any excess amounts that have been paid by AG Worldwide, and AG Worldwide agrees that it will pay to AII any amounts that should have been paid to AII but were not, as revealed by such review.  Then, once AII has transferred all or substantially all of its assets to AG Worldwide, AG Worldwide shall have the right to perform a final examination of all calculations of the Administrative Charges that have been billed to AG Worldwide, and AII agrees that it will repay to AG Worldwide any excess amounts that have been paid by AG Worldwide, and AG Worldwide agrees that it will pay to AII any amounts that should have been paid to AII but were not, as revealed by such review.

 

       5.3  Freight Forwarding Services.  AII shall also provide to AG Worldwide all freight forwarding and shipping services necessary to insure that inventory arrives in a timely manner at the proper destination.  AII shall invoice AG Worldwide separately for all such services provided, at a price equal to AII’s cost of obtaining such services.

    Section 6.  Term.  The term (the “Term”) of this Agreement shall commence as of the Effective Date and shall continue until the completion of AII’s transfer of all or substantially all of its assets to AG Worldwide following the Approval Date, as AII is contractually bound to do upon the receipt of the Required Approvals.  AII herein undertakes to diligently seek all Required Approvals and will use its reasonable best efforts to do the same.  Notwithstanding anything else herein to the contrary, this Agreement will terminate if AG Worldwide does not raise funds by way of an equity investment in AG Worldwide of at least $3,000,000, as contemplated by the operating agreement of AG Worldwide (the “Equity Funds”), on or before that date which is the later of (i) June 30, 2011, or (ii) the date that is 60 days after the earlier of (A) July 31, 2011, or (B) the date that the Shareholder Approvals and Creditor Approvals have been achieved.

 

 

  

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    Section 7.  Representations and Warranties of AII.  AII hereby represents and warrants to AG Worldwide that (a) AII is the exclusive owner of the AeroGarden Intangible Property free of any liens other than the liens set forth in Schedule 7, attached and incorporated hereto, encumbrances, judgments, litigation, investigations, restrictions, pledges, licenses, claims or claims of right of any nature whatsoever; (b) the use by AG Worldwide of the AeroGarden Intangible Property does not infringe any rights owned or possessed by any third party; and (c) AII has the full right and corporate authority to appoint AG Worldwide as its distributor as provided in Section 1 above and to license the AeroGarden Intangible Property to AG Worldwide as provided in Section 2 above.

    Section 8.  Exclusivity and Noncompetition.  AII covenants and agrees that so long as AG Worldwide is operating the MLM Business and in existence and using the AeroGarden Intangible Property or any modifications, enhancements, improvements or derivatives thereof, AII shall not, without prior written approval of AG Worldwide, directly or indirectly, (i) own or otherwise hold a financial or ownership interest, as an owner, shareholder, member, partner, consultant or any other capacity in any person or entity that engages in a business competitive with the MLM Business of AG Worldwide; (ii) disclose, communicate or use or otherwise authorize the use of AeroGarden Intangible Property, whether or not such information is a trade secret under applicable laws; and (iii) solicit or otherwise encourage or persuade any person or entity under contract or considering business arrangements with AG Worldwide not to do business with AG Worldwide, nor shall AII or its affiliates employ or engage, attempt to employ or engage, solicit or assist anyone else to employ or engage any personnel of AG Worldwide to leave such employment or engagement.  The scope of the exclusivity and noncompetition provisions of this agreement shall apply to all current and potential markets and all existing and potential customers and sales channels of the AII, all on a worldwide basis, except that it specifically does not include AII’s continued operation of or rights to the Direct Response Business or any retail or wholesale business conducted outside the United States.

 

    Section 9  General Provisions.

 

          9.1  Effect of Headings; Schedules.  The subject headings of the sections of this agreement are included for purposes of convenience only and shall not affect the construction or interpretation of any of its provisions.  All schedules to this agreement are incorporated into this agreement in their entirety.

 

          9.2  Entire Agreement; Modification; Waiver.  This agreement constitutes the entire agreement between the parties pertaining to the subject matter contained in this agreement, except for the other agreements referenced in this agreement.  This agreement supersedes all prior and contemporaneous agreements (other than those entered into in writing simultaneously with this agreement) and all prior and contemporaneous representations and understandings of the parties.  No supplement, modification or amendment of this agreement shall be binding unless executed in writing by all the parties.  No waiver of any of the provisions of this agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver.  No waiver shall be binding unless executed in writing by the party making the waiver.

 

          9.3  Counterparts.  This agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

 

  

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          9.4  Successors and Assigns.  This agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors, and assigns.

 

          9.5  Notices.  All notices, requests, demands, and other communications under this agreement shall be in writing and shall be deemed to have been duly given on the date of delivery if delivered personally on the parties to whom notice is to be given, or on the third day after mailing if mailed to the party to whom notice is to be given, by first class mail, postage prepaid, and properly addressed at the address shown on the signature page of this agreement.  Any party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above.

 

          9.6  Governing Law.  This agreement shall be governed by and construed in accordance with the laws of the State of Nevada.

 

          9.7  Severability.  Each term, covenant, condition or provision of this agreement shall be viewed as separate and distinct, and in the event that any such term, covenant, condition or provision shall be held by a court of competent jurisdiction to be invalid, the remaining provisions shall remain valid and shall continue in full force and effect.

 

          9.8  Necessary Acts.  Each party to this agreement agrees to perform any further acts and execute and deliver any further documents that may be reasonably necessary to carry out the provisions of this agreement.

 

          9.9  Attorneys’ Fees.  If either party commences or is made a party to any litigation, arbitration, mediation or other judicial or administrative proceeding ("proceeding") to enforce, interpret or obtain a declaration of rights under this agreement, the prevailing party in such proceeding shall be entitled to recover from the other party all attorneys’ fees, costs (whether otherwise taxable or recoverable) and expenses incurred in connection with such proceeding or any appeal or enforcement of any judgment obtained in any such proceeding, including, without limitation, fees incurred in connection with post-judgment motions, contempt proceedings, garnishment, levy, debtor and third party examinations, discovery and bankruptcy litigation.  Any judgment or order entered in any proceeding shall contain a specific provision providing for the recovery of attorneys' fees and costs incurred in enforcing such judgment or order.  This attorneys' fees provision is intended to be severable from the other provisions of this agreement, shall survive any judgment or order entered in any proceeding, and shall not be deemed merged into any such judgment or order.

 

          9.10  Construction.  This Agreement has been negotiated at arm’s length, and each party has been provided the opportunity to be represented by legal counsel, and to the extent it has desired to do so, each party has consulted with legal counsel with respect to this agreement.  Accordingly, any rule of law or legal decision that would require interpretation of any ambiguities in this agreement against the party drafting it is not applicable and is waived.  The provisions of this Agreement shall be interpreted in a reasonable manner to effect the purpose of the parties and this Agreement.

In witness whereof, this Distribution and License Agreement is executed and delivered effective as of the Effective Date set forth above.

 

 

  

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AII:

	 	
 

             AeroGrow International, Inc.

	 
	 	 	 	 
	 	 	/s/ J. Michael Wolfe	 
	 	 	By:  J. Michael Wolfe	 
	 	 	Its:  President and CEO	 
	 	 	 	 

	
  

	
AG Worldwide:

	 	
 

             AG Worldwide, LLC

	 
	 	 	 	 
	
Date

	
By: 

	/s/ Melyn Campbell	 
	 	 	By:  Melyn Campbell	 
	 	 	Its:  Manager	 
	 	 	 	 

SCHEDULE 7

Scheduled liens:

	
1.  

	
First Western Trust Bank

	
2.  

	
Holders of subordinated, secured convertible notes

 

 

  

9Amended and Restated Employment Letter - Andrew T. Yang

 Exhibit 10.12 
 Apache Design Solutions, Inc. 
 2645 Zanker Road 

San Jose, CA 95134 

April 14, 2011 
 Dr. Andrew T.
Yang 
  
 Dear Andrew: 

This letter shall serve to confirm the terms of your continuing employment with Apache Design Solutions, Inc. (the “Company”) as
its Chief Executive Officer. If the terms discussed below are acceptable to you, please sign this confirmation letter where indicated and return it to me. 
 1. Compensation and Benefits. During your employment with the Company, you will be entitled to receive compensation and benefits as follows: 

a. Salary. You will be paid a salary at an annualized rate of $250,000, less applicable withholdings and deductions (hereafter
“Base Salary”), commencing with the mid-March 2011 payroll period and payable in accordance with the Company’s standard payroll practices in effect from time to time. The Compensation Committee of the Company’s Board of Directors
(the Committee”) will review your Base Salary annually. 
 b. Annual Bonus. You will be eligible to receive an
annual incentive bonus each fiscal year (“Annual Bonus”), subject to your continued employment with the Company through the last day of the fiscal year, with your target Annual Bonus for 2011 being one hundred and twenty percent
(120%) of your annual rate of Base Salary for 2011 and your target Annual Bonus for each year thereafter being an amount to be determined by the Committee in its sole discretion, subject to full independent Board approval. Your Annual Bonus
amount will be determined by the Committee in its sole discretion, based on the Committee’s assessment of the Company’s and your performance for the applicable fiscal year, will be subject to full independent Board approval and will be
paid not later than two and one-half months after the end of such fiscal year. 
 c. Vacation, Holidays and Sick-Leave.
You will accrue fifteen (15) paid time-off (PTO) days per year of service during your employment; provided that such PTO will accrue and be subject to the Company’s PTO policies in effect from time to time. PTO includes vacation and
sick leave. PTO is pro-rated for a partial year of service. Holidays will be provided in accordance with the Company’s policies. 
 d. Benefit Programs. You will be entitled to participate in all employee pension and welfare benefit plans and programs, and fringe benefit plans and

 
programs, made available by the Company to the Company’s employees generally, in accordance with the eligibility and participation provisions of such plans and as such plans or programs may
be in effect from time to time. 
 e. Reimbursement of Business Expenses. You are authorized to incur reasonable
expenses in carrying out your duties for the Company and will be entitled to reimbursement for all reasonable business expenses you incur in connection with carrying out such duties, subject to the Company’s expense reimbursement policies and
any pre-approval policies in effect from time to time. You agree to promptly submit and document any reimbursable expenses in accordance with the Company’s expense reimbursement policies to facilitate the timely reimbursement of such expenses.

 f. Indemnification; Insurance. The Company will enter into a separate indemnification agreement pursuant to the
Company’s standard form agreement and the Company will indemnify you and hold you harmless to the maximum extent provided under and subject to the terms of the charter, bylaws and other organizational documents of the Company and applicable law
against and in respect of any and all actions, suits, proceedings, claims, demands, judgments, costs, expenses (including reasonable attorney’s fees), losses, and damages resulting from your good faith performance of your duties and obligations
with the Company. This obligation shall survive any termination of your employment with the Company. The Company will cover you under directors and officers liability insurance both during and, while potential liability for you exists, after your
employment with the Company terminates in substantially the same amount and to substantially the same extent as the Company covers its other executive officers and directors (except in no event shall the Company be required to maintain such coverage
for a period of more than six years after the last day that you serve as an employee of the Company or a member of its Board of Directors (the “Board”)). 
 2. Termination of Employment; Severance. Employment with the Company is not for a specific term and can be terminated by you or by the Company at any time for any reason, with or without cause,
without liability to either party, except as expressly provided herein. 
 a. Accrued Obligations. If your employment
with the Company terminates for any reason other than as contemplated by paragraph 2(b) below, the Company will have no further obligation to make or provide to you any payment or benefits, except (i) any Base Salary that had accrued but had
not been paid (including accrued and unpaid PTO) on or before the date your employment terminates (the “Severance Date”), (ii) any Annual Bonus earned but not yet paid for any fiscal year prior to the fiscal year in which the
Severance Date occurs, (iii) any reimbursement due to you for expenses reasonably incurred by you on or before the Severance Date in accordance with the terms hereof and the Company’s expense reimbursement policies in effect at the
applicable time and (iv) as set forth in paragraph 1(f) above (collectively, the “Accrued Obligations”). 
 b.
Severance. If, in connection with or following a Change in Control, your employment with the Company is terminated by the Company without Cause (other than due to your death or disability), you will be entitled to, in addition to the Accrued

 
Obligations and subject to Section 2(c) below, the following severance benefits (collectively, the “Severance Benefits”): 

i. payment by the Company of an amount equal to the sum of (i) your annualized rate of Base Salary in effect on the Severance Date
and (ii) your target Annual Bonus for the year in which the Severance Date occurs, such aggregate amount to be paid in equal monthly installments (with each installment equal to one-twelfth of the aggregate benefit, rounded down to the nearest
whole cent) over a period of twelve (12) months commencing in the month following the month in which your Separation from Service occurs; 
 ii. payment or reimbursement by the Company of your premiums charged to continue medical coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), at the same or
reasonably equivalent medical coverage for you (and, if applicable, your eligible dependents) as in effect immediately prior to the Severance Date, to the extent you elect such continued coverage; provided that the Company’s obligation to make
any payment pursuant to this clause (ii) shall commence with continuation coverage for the month following the month in which your Separation from Service occurs and shall cease with continuation coverage for the twelfth (12th) month following the month in which your Separation from
Service occurs (or, if earlier, shall cease upon the first to occur of your death, the date you become eligible for substantially similar coverage under the health plan of a future employer, or the date the Company ceases to offer group medical
coverage to its executive officers or the Company is otherwise under no obligation to offer COBRA continuation coverage to you); and 
 iii. full acceleration of each of your equity awards granted by the Company that are outstanding and unvested as of the Severance Date. For avoidance of doubt, this clause (iii) shall not limit any
rights to accelerated vesting you may have in connection with such a Change in Control under any other Company plan or agreement. 
 c. Release; Exclusive Remedy. The Company’s obligation to provide the Severance Benefits to you is subject to (i) your providing the Company with a valid, executed general release
agreement in a form acceptable to Company upon or within twenty-one (21) days following the Severance Date (and your not revoking such release agreement pursuant to any revocation rights afforded by applicable law), and (ii) your continued
compliance with your obligations hereunder and under the Proprietary Information Agreement referred to below; provided, however, that, if you provide the release contemplated hereby, in no event will you be entitled to Severance Benefits of less
than $5,000 (or the amount of such benefits, if less than $5,000), which amount the parties agree is good and adequate consideration, in and of itself, for your release. You agree that the Severance Benefits will constitute the exclusive and sole
remedy for any termination of your employment, and you covenant not to assert or pursue any other remedies, at law or in equity, with respect to any termination of employment; provided, however, that your rights to indemnification and liability
insurance coverage by the Company shall continue after the Severance Date in accordance with Section 1(f) of this letter agreement. You and the Company acknowledge and agree that you have no duty to mitigate damages under this letter
agreement. 

 d. Defined Terms. Capitalized terms used in this Section 2 and not otherwise
defined herein will have the meanings ascribed to such terms on Exhibit A attached hereto. 
 3. Restrictive Covenants.

 a. Proprietary Information and Inventions Agreement. You hereby confirm your obligations and representations under
the Proprietary Information and Inventions Agreement previously entered into by you and the Company (the “Proprietary Information Agreement”), which agreement shall continue in effect. 

b. Non-Solicitation of Employees and Customers. 
 i. During your employment with the Company and its subsidiaries and for a period of twelve (12) months thereafter (the “Restricted Period”), you will not directly or indirectly through any
other individual or entity (a) induce or attempt to induce any employee or independent contractor of the Company or any of its subsidiaries to leave the employ or service, as applicable, of the Company or such subsidiary, or in any way
interfere with the relationship between the Company or any such subsidiary, on the one hand, and any employee or independent contractor thereof, on the other hand, or (b) hire any person who was an employee of the Company or any of its
subsidiaries until six (6) months after such individual’s employment relationship with the Company or such subsidiary has been terminated. 
 ii. During the Restricted Period, you will not directly or indirectly through any other individual or entity influence or attempt to influence customers, vendors, suppliers, licensors, lessors, joint
venturers, associates, consultants, agents, or partners of the Company or any of its subsidiaries to divert their business away from the Company or such subsidiary, and you will not otherwise interfere with, disrupt or attempt to disrupt the
business relationships, contractual or otherwise, between the Company or any of its subsidiaries, on the one hand, and any of its or their customers, suppliers, vendors, lessors, licensors, joint venturers, associates, officers, employees,
consultants, managers, partners, members or investors, on the other hand. 
 iii. You acknowledge that, in the course of your
employment with the Company and/or its subsidiaries, you have or will become familiar with trade secrets and other confidential and proprietary information concerning the Company and its subsidiaries and that your services have been and will be of
special, unique and extraordinary value to the Company and its subsidiaries. You agree that the foregoing covenants are reasonable and necessary to protect the Company’s and its subsidiaries’ trade secrets and other confidential and
proprietary information, good will, stable workforce, and customer relations. Accordingly, you agree that a breach by you of such covenants would cause immediate and irreparable harm to the Company that would be difficult or impossible to measure,
and that damages to the Company for any such injury would therefore be an inadequate remedy for any such breach. Therefore, you agree that in the event of any breach or threatened breach of any such covenant, the Company will be entitled, in
addition to such other remedies as the Company may have in the circumstances, to obtain specific performance, injunctive relief and/or other appropriate relief in order to enforce or prevent any violations of such covenants. 

 4. Arbitration. Any controversy between the parties hereto involving the construction
or application of any terms, covenants or conditions of this agreement, or any claims arising out of or relating to this agreement or the breach thereof or out of your employment with the Company or any termination of that employment, will be
submitted to and settled by final and binding arbitration in Palo Alto, California, in accordance with the Model Employment Dispute Resolution Rules of the American Arbitration Association (the “Rules”) then in effect; provided, however,
that provisional injunctive relief may, but need not, be sought by either party to this agreement in a court of law while arbitration proceedings are pending, and any provisional injunctive relief granted by such court shall remain effective until
the matter is finally determined by the arbitrator. Any arbitrator (“Arbitrator”) shall be selected pursuant to such Rules and judgment upon the award rendered by the Arbitrator may be entered in any court having jurisdiction thereof.
Final resolution of any dispute through arbitration may include any remedy or relief which the Arbitrator deems just and equitable, including any and all remedies provided by applicable state or federal statutes. At the conclusion of the
arbitration, the Arbitrator shall issue a written decision that sets forth the essential findings and conclusions upon which the Arbitrator’s award or decision is based. Any award or relief granted by the Arbitrator hereunder shall be final and
binding on the parties hereto and may be enforced by any court of competent jurisdiction. The parties hereto acknowledge and agree that they are hereby waiving any rights to trial by jury in any action, proceeding or counterclaim brought by either
of the parties hereto against the other in connection with any matter whatsoever arising out of or in any way connected with this agreement or your employment. The parties agree hereto that the Company shall be responsible for payment of the forum
costs of any arbitration hereunder, including the Arbitrator’s fee. The parties further agree that in any proceeding to enforce the terms of this agreement, the prevailing party shall be entitled to its or his reasonable attorneys’ fees
and costs (other than forum costs associated with the arbitration) incurred by it or him in connection with resolution of the dispute in addition to any other relief granted. Notwithstanding this provision, the parties hereto may mutually agree to
mediate any dispute prior to or following submission to arbitration. 
 5. Successors and Assigns. This agreement is
personal to you and without the prior written consent of the Company shall not be assignable by you otherwise than by will or the laws of descent and distribution. This agreement shall inure to the benefit of and be enforceable by your legal
representatives. This agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns. Without limiting the generality of the preceding sentence, the Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets or stock of the Company to assume expressly and agree to perform this agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place. As used in this agreement, “Company” shall mean the Company as defined above and any successor or assignee, as applicable, which assumes and agrees to perform
this agreement by operation of law or otherwise. 
 6. Section 409A. 

a. It is intended that any amounts payable under this agreement shall either be exempt from or comply with Section 409A of the U.S.
Internal Revenue Code (including the Treasury regulations and other published guidance relating thereto) (“Code 

 
Section 409A”) so as not to subject you to payment of any additional tax, penalty or interest imposed under Code Section 409A. The provisions of this agreement shall be construed
and interpreted to avoid the imputation of any such additional tax, penalty or interest under Code Section 409A yet preserve (to the nearest extent reasonably possible) the intended benefit payable to you. To the extent that any benefits
pursuant to Section 2(b)(ii) or reimbursements pursuant to Section 1(e) are taxable to you, any reimbursement payment due to you pursuant to any such provision shall be paid to you on or before the last day of your taxable year following
the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that you
receive in one taxable year shall not affect the amount of such benefits or reimbursements that you receive in any other taxable year. 
 b. Notwithstanding any provision of this agreement to the contrary, if your are a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of your
Separation from Service, you shall not be entitled to any payment or benefit pursuant to Section 2(b) until the earlier of (i) the date which is six (6) months after your Separation from Service for any reason other than death, or
(ii) the date of your death. Any amounts otherwise payable to you upon or in the six (6) month period following your Separation from Service that are not so paid by reason of this paragraph shall be paid (without interest) as soon as
practicable (and in all events within thirty (30) days) after the date that is six (6) months after your Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of
your death). The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Code Section 409A. 

7. Miscellaneous. The validity, interpretation, construction and performance of this agreement shall be governed by the laws of
the State of California without regard to the conflicts of laws principles thereof. No provision of this agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the party
against whom such modification, waiver or discharge is sought to be enforced. No waiver by either party hereto at any time of any breach by the other party hereto or compliance with any condition or provision of this agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This agreement (along with the documents referred to herein) constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes any and all prior agreements of the parties with respect to such subject matter. No agreements or representations, oral or otherwise, expressed or implied with respect to the subject matter
hereof have been made by either party which are not set forth expressly in this agreement (or the documents referred to herein). This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same agreement. 
 [Remainder of page intentionally left blank] 

 If this agreement accurately reflects our understanding regarding these matters, please
indicate your acceptance by signing this agreement below and returning it to me. A duplicate copy of this agreement is included for your records. 
 Sincerely, 
  

	
	 /s/ Ping Yang

	Director

  
 ACCEPTANCE 
 I accept the terms of this letter agreement. The provisions
stated in this letter agreement supersede all prior discussions and negotiations. 
  

			
	Accepted:	 	 /s/  Andrew Yang

	Printed Name: Andrew T. Yang
	Date: April 14, 2011

 EXHIBIT A 
 DEFINITIONS 
 Cause. “Cause” shall mean, as reasonably
determined by the Board (excluding you, if you are then a member of the Board), based on the information then known to it, that one or more of the following has occurred: (i) you are convicted of, pled guilty or pled nolo contendere to a
felony (under the laws of the United States or any relevant state, or a similar crime or offense under the applicable laws of any relevant foreign jurisdiction); (ii) you have engaged in an act of fraud or other act of willful and intentional
misconduct in the course of your duties hereunder; (iii) you willfully and intentionally fail to perform your duties to the Company and/or willfully and intentionally fail to comply with the reasonable directives of the Board; or (iv) a
material breach by you of any contract you are party to with the Company or any of its subsidiaries or any written policy or program of the Company or any of its subsidiaries. 
 Change in Control. With respect to a transaction that occurs prior to the date of an initial public offering of the Company’s common stock (the “IPO Date”), “Change in
Control” shall have the meaning ascribed to the term “Corporate Transaction” in the Company’s Amended and Restated 2001 Stock Option/Stock Issuance Plan as in effect on the date hereof. With respect to a transaction that occurs
on or after the IPO Date, “Change in Control” shall mean: 
 (a) The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more
than 30% of either (1) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this clause (a), the following acquisitions shall not constitute a Change in Control Event; (A) any
acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate of the Company or a successor,
(D) any acquisition by any entity pursuant to a transaction that complies with clauses (c)(1), (2) and (3) below, and (E) any acquisition by a Person who owned more than 30% of either the Outstanding Company Common Stock or the
Outstanding Company Voting Securities as of the IPO Date or an affiliate of any such Person; 
 (b) A change in
the Board or its members such that individuals who, as of the later of the IPO Date or the date that is two years prior to such change (the later of such two dates is referred to as the “Measurement Date”), constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Measurement Date whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (including for these purposes, the new members whose election or nomination was so approved, without counting the member
and his or her 

 
predecessor twice) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; 

(c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction
involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a
“Business Combination”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all
or substantially all of the Company’s assets directly or through one or more subsidiaries (a “Parent”)) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company
Common Stock and the Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or a Parent or any employee benefit plan (or related trust) of the Company or such
entity resulting from such Business Combination or Parent) beneficially owns, directly or indirectly, more than 30% of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of 30% existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors or
trustees of the entity resulting from such Business Combination or a Parent were members of the Incumbent Board (determined pursuant to clause (b) above using the date that is the later of the IPO Date or the date that is two years prior
to the Business Combination as the Measurement Date) at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or 

(d) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company other than in the
context of a transaction that does not constitute a Change in Control under clause (c) above. 
 Separation from
Service. As used herein, a “Separation from Service” occurs when you die, retire, or otherwise have a termination of employment with the Company that constitutes a “separation from service” within the meaning of Treasury
Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.

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