Document:

ex10-1.htm

Exhibit 10.1

 

FORBEARANCE AND FIRST AMENDMENT

TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This FORBEARANCE AND FIRST AMENDMENT to Amended and Restated Loan and Security Agreement (this “Agreement”) is entered into as of March 31, 2014, by and between Silicon Valley Bank (“Bank”) and HipCricket, Inc., a Delaware corporation (“Borrower”).

Recitals

 

A.           Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of November 22, 2013 (as the same may from time to time be amended, modified, supplemented or restated, the “Loan Agreement”).  Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.

 

B.           Borrower acknowledges that Borrower is currently in default of the Loan Agreement for failing to comply with certain provisions of the Loan Agreement as set forth on Schedule A hereto as of the time periods identified on said Schedule A and such failure to comply constitutes Events of Default (each of the defaults set forth, collectively, the “Existing Defaults”).

 

C.           Borrower has requested that Bank forbear from exercising its rights and remedies against Borrower during the Forbearance Period (as defined in Section 2 below).  Although Bank is under no obligation to do so, Bank is willing to forbear from exercising its rights and remedies against Borrower through the Forbearance Period on the terms and conditions set forth in this Agreement, so long as Borrower complies with the terms, covenants and conditions set forth in this Agreement.

 

D.           Borrower and Bank have further amend the Loan Agreement to (1) increase the interest rate and (2) make certain other revisions to the Loan Agreement as more fully set forth herein.  Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.

 

Agreement

 

Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:

 

1. Definitions.  Capitalized terms used but not defined in this Agreement shall have the meanings given to them in the Loan Agreement.

 

  

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2. Forbearance.  Subject to all the terms and conditions set forth herein, Bank shall forbear from filing any legal action or instituting or enforcing any rights and remedies it may have against Borrower from the Forbearance Effective Date (as defined in Section 10) until the date (the “Forbearance Termination Date”) which is the earliest to occur of (a) April 15, 2014, (b) the failure after the date hereof of Borrower to comply with any of the terms or undertakings of this Agreement, (c) the occurrence after the date hereof of any Event of Default (other than the Existing Defaults), and (d) the date that Borrower joins in, assists, cooperates, or participates as an adverse party or adverse witness in any suit or other proceeding against Bank relating to the Obligations in connection with or related to any of the transactions contemplated by any of the other Loan Documents.  Except as expressly provided herein, this Agreement does not constitute a waiver or release by Bank of any Obligations or of any existing Event of Default other than the Existing Defaults or Event of Default which may arise in the future after the date of execution of this Agreement.  If Borrower does not comply with the terms of this Agreement, Bank shall have no further obligations under this Agreement and shall be permitted to exercise at such time any rights and remedies against Borrower as it deems appropriate in its sole and absolute discretion.  Borrower understands that Bank has made no commitment and is under no obligation whatsoever to grant any additional extensions of time at the end of the Forbearance Period.  The time period between the Forbearance Effective Date and the Forbearance Termination Date is referred to herein as the “Forbearance Period.”

 

3. Amendments to Loan Agreement.

 

3.1 Section 2.5 (Payment of Interest on the Credit Extensions).  Section 2.5(a) of the Loan Agreement hereby is amended and restated as follows:

 

“(a)           Advances.  Subject to Section 2.5(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to (a) at all times when a Streamline Period is in effect, three and three quarters of one percentage point (3.75%) above the Prime Rate, and (b) at all times when a Streamline Period is not in effect, four and one quarter percentage points (4.25%) above the Prime Rate, which interest shall be payable monthly in accordance with Section 2.5(d) below.”

3.2 Section 13.1 (Definitions).  Subsection (k) of the definition of “Eligible Accounts” in Section 13.1 of the Loan Agreement hereby is amended and restated as follows:

 

“(k)           Accounts owing from an Account Debtor who is pre-billed or where goods or services have not been rendered to the Account Debtor (sometimes called memo billings or pre-billings);”

4. Limitation of Forbearance.

 

4.1 This Agreement is effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.

 

4.2 This Agreement shall be construed in connection with and as part of the Loan Documents, and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents are hereby ratified and confirmed and shall remain in full force and effect.

 

  

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5. Representations and Warranties.  Borrower represents and warrants to Bank as follows:

 

5.1 (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default other than the Existing Defaults has occurred and is continuing;

 

5.2 Borrower has the power and authority to execute and deliver this Agreement and to perform its obligations under the Loan Agreement;

 

5.3 The organizational documents of Borrower delivered to Bank on the Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;

 

5.4 The execution and delivery by Borrower of this Agreement and the performance by Borrower of its obligations under the Loan Agreement have been duly authorized by all necessary action on the part of Borrower;

 

5.5 The execution and delivery by Borrower of this Agreement and the performance by Borrower of its obligations under the Loan Agreement do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;

 

5.6 The execution and delivery by Borrower of this Agreement and the performance by Borrower of its obligations under the Loan Agreement do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on either Borrower, except as already has been obtained or made; and

 

5.7 This Agreement has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

 

6. Prior Agreement.  The Loan Documents are hereby ratified and reaffirmed and shall remain in full force and effect.  This Agreement is not a novation and the terms and conditions of this Agreement shall be in addition to and supplemental to all terms and conditions set forth in the Loan Documents.  In the event of any conflict or inconsistency between this Agreement and the terms of such documents, the terms of this Agreement shall be controlling, but such document shall not otherwise be affected or the rights therein impaired.  As of March 27, 2014, the aggregate outstanding principal amount owing to Bank is One Million Sixty Four Thousand Seven Hundred Five and 29/100 Dollars ($1,064,705.29).

 

  

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7. Release by Borrower.

 

7.1 FOR GOOD AND VALUABLE CONSIDERATION, Borrower hereby forever relieves, releases, and discharges Bank and its present or former employees, officers, directors, agents, representatives, attorneys, and each of them, from any and all claims, debts, liabilities, demands, obligations, promises, acts, agreements, costs and expenses, actions and causes of action, of every type, kind, nature, description or character whatsoever, whether known or unknown, suspected or unsuspected, absolute or contingent, arising out of or in any manner whatsoever connected with or related to facts, circumstances, issues, controversies or claims existing or arising from the beginning of time through and including the date of execution of this Agreement (collectively “Released Claims”).  Without limiting the foregoing, the Released Claims shall include any and all liabilities or claims arising out of or in any manner whatsoever connected with or related to the Loan Documents, the Recitals hereto, any instruments, agreements or documents executed in connection with any of the foregoing or the origination, negotiation, administration, servicing and/or enforcement of any of the foregoing.

 

7.2 In furtherance of this release, Borrower expressly acknowledges and waives any and all rights under Section 1542 of the California Civil Code, which provides as follows:

 

“A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.” (Emphasis added.)

7.3 By entering into this release, Borrower recognizes that no facts or representations are ever absolutely certain and it may hereafter discover facts in addition to or different from those which it presently knows or believes to be true, but that it is the intention of Borrower hereby to fully, finally and forever settle and release all matters, disputes and differences, known or unknown, suspected or unsuspected; accordingly, if Borrower should subsequently discover that any fact that it relied upon in entering into this release was untrue, or that any understanding of the facts was incorrect, Borrower shall not be entitled to set aside this release by reason thereof, regardless of any claim of mistake of fact or law or any other circumstances whatsoever.  Borrower acknowledges that it is not relying upon and has not relied upon any representation or statement made by Bank with respect to the facts underlying this release or with regard to any of such party’s rights or asserted rights.

 

7.4 This release may be pleaded as a full and complete defense and/or as a cross-complaint or counterclaim against any action, suit, or other proceeding that may be instituted, prosecuted or attempted in breach of this release.  Borrower acknowledges that the release contained herein constitutes a material inducement to Bank to enter into this Agreement, and that Bank would not have done so but for Bank’s expectation that such release is valid and enforceable in all events.

 

7.5 Borrower hereby represents and warrants to Bank, and Bank is relying thereon, as follows:

 

(a) Except as expressly stated in this Agreement, neither Bank nor any agent, employee or representative of Bank has made any statement or representation to Borrower regarding any fact relied upon by Borrower in entering into this Agreement.

 

(b) Borrower has made such investigation of the facts pertaining to this Agreement and all of the matters appertaining thereto, as it deems necessary.

 

(c) The terms of this Agreement are contractual and not a mere recital.

 

(d) This Agreement has been carefully read by Borrower, the contents hereof are known and understood by Borrower, and this Agreement is signed freely, and without duress, by Borrower.

 

  

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(e) Borrower represents and warrants that it is the sole and lawful owner of all right, title and interest in and to every claim and every other matter which it releases herein, and that it has not heretofore assigned or transferred, or purported to assign or transfer, to any person, firm or entity any claims or other matters herein released.  Borrower shall indemnify Bank, defend and hold it harmless from and against all claims based upon or arising in connection with prior assignments or purported assignments or transfers of any claims or matters released herein.

 

8. Integration.  This Agreement and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements.  All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Agreement and the Loan Documents merge into this Agreement and the Loan Documents.

 

9. Counterparts.  This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

 

10. Conditions to Effectiveness.  The parties agree that the forbearance obligations of Bank herein shall be effective upon the satisfaction of each of the following conditions precedent, each in form and substance satisfactory to Bank, on or prior to March 31, 2014 (the date of the satisfaction of such conditions precedent referred to herein as the “Forbearance Effective Date”): (a) the due execution and delivery to Bank of this Agreement by each party hereto, (b) the due execution and delivery to Bank of updated Borrowing Resolutions, (c) Borrower’s payment to Bank of a forbearance fee in an amount equal to Five Thousand Dollars ($5,000) (which fee shall be fully earned by Bank upon the execution and delivery of this Agreement by the parties hereto) and (d) Borrower’s payment of all Bank Expenses, which may be debited from any of Borrower’s accounts maintained at Bank.

 

11. Miscellaneous.

 

11.1 This Agreement shall constitute a Loan Document under the Loan Agreement; the failure to comply with the covenants contained herein shall constitute an Event of Default under the Loan Agreement; and all obligations included in this Agreement (including, without limitation, all obligations for the payment of principal, interest, fees, and other amounts and expenses) shall constitute obligations under the Loan Agreement and secured by the Collateral.

 

11.2 Each provision of this Agreement is severable from every other provision in determining the enforceability of any provision.

 

12. Governing Law.  This Agreement and the rights and obligations of the parties hereto shall be governed by and construed in accordance with the laws of the State of California.

 

[Signature page follows]

  

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In Witness Whereof, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first written above.

	
BANK

	
BORROWER

	
 

Silicon Valley Bank

 

By:  

Name:        /s/ Nathan Sackett 

Title:          VP                                

	
 

HipCricket, Inc.

 

By:  

Name:      /s/ Thomas Virgin 

Title:        CFO                                           

 

[Signature page to Forbearance and First Amendment to Amended and Restated Loan and Security Agreement]

  

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Schedule A

EXISTING DEFAULTS

	
Default

6.9 (a) – Tangible Net Worth – failure to maintain the minimum Tangible Net Worth

	
Period

January 31, 2014

 

  

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BORROWING RESOLUTIONS

 

CORPORATE BORROWING CERTIFICATE

 

	
BORROWER:

	
HIPCRICKET, INC.

	
DATE:  March 31, 2014

	
BANK:

	
Silicon Valley Bank

 

I hereby certify as follows, as of the date set forth above:

 

1.           I am the Secretary, Assistant Secretary or other officer of the Borrower.   My title is as set forth below.

 

2.           Borrower’s exact legal name is set forth above.  Borrower is a corporation existing under the laws of the State of Delaware.

 

3.           Attached hereto are true, correct and complete copies of Borrower’s Certificate of Incorporation (including amendments), as filed with the Secretary of State of the state in which Borrower is incorporated as set forth in paragraph 2 above.  Such Certificate of Incorporation have not been amended, annulled, rescinded, revoked or supplemented, and remain in full force and effect as of the date hereof.

 

4.           The following resolutions were duly and validly adopted by Borrower’s Board of Directors at a duly held meeting of such directors (or pursuant to a unanimous written consent or other authorized corporate action).  Such resolutions are in full force and effect as of the date hereof and have not been in any way modified, repealed, rescinded, amended or revoked, and Bank may rely on them until Bank receives written notice of revocation from Borrower.

 

RESOLVED, that any one of the following officers or employees of Borrower, whose names, titles and signatures are below, may act on behalf of Borrower:

	
Name

	 	
Title

	 	
Signature

	 	
Authorized to Add or

Remove Signatories

	  	 	  	 	  	 	
 ̈

	  	 	  	 	  	 	
 ̈

	  	 	  	 	  	 	
 ̈

	  	 	  	 	  	 	
 ̈

RESOLVED FURTHER, that any one of the persons designated above with a checked box beside his or her name may, from time to time, add or remove any individuals to and from the above list of persons authorized to act on behalf of Borrower.

 

 

 

  

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RESOLVED FURTHER, that such individuals may, on behalf of Borrower:

Borrow Money.  Borrow money from Silicon Valley Bank (“Bank”).

Execute Loan Documents.  Execute any loan documents Bank requires.

Grant Security.  Grant Bank a security interest in any of Borrower’s assets.

Negotiate Items.  Negotiate or discount all drafts, trade acceptances, promissory notes, or other indebtedness in which Borrower has an interest and receive cash or otherwise use the proceeds.

Letters of Credit.  Apply for letters of credit from Bank.

Foreign Exchange Contracts.  Execute spot or forward foreign exchange contracts.

Further Acts.  Designate other individuals to request advances, pay fees and costs and execute other documents or agreements (including documents or agreement that waive Borrower’s right to a jury trial) they believe to be necessary to effectuate such resolutions.

RESOLVED FURTHER, that all acts authorized by the above resolutions and any prior acts relating thereto are ratified.

 

5.           The persons listed above are Borrower’s officers or employees with their titles and signatures shown next to their names.

 

	  	  HIPCRICKET, INC.
	  	  	  
	  	  By: 	
                                                           

	  	  Name: 	
                                                            

	  	  Title: 	
                                                          

*** If the Secretary, Assistant Secretary or other certifying officer executing above is designated by the resolutions set forth in paragraph 4 as one of the authorized signing officers, this Certificate must also be signed by a second authorized officer or director of Borrower.

 

I, the __________________________ of Borrower, hereby certify as to paragraphs 1 through 5 above, as of the date set forth above.

 

	  	  By: 	
                                                            

	  	  Name: 	
                                                         

	  	  Title:ex10-2.htm

Exhibit 10.2

 

HIPCRICKET, INC.

 

2014 INCENTIVE COMPENSATION PLAN

 

Adopted March 18, 2014

 

 

Article I

 

INTRODUCTION

 

This 2014 Incentive Compensation Plan (this “Plan”) is an annual cash incentive plan in which senior executives of Hipcricket, Inc. (the “Company”) are eligible to participate. This Plan’s purpose is to  reward senior executives for the overall success of the Company based on the achievement of goals relating to the performance of the Company.  This Plan shall be effective as of March 18, 2014 (the “Effective Date”).  Certain capitalized terms used in this Plan have the definitions set forth in Article V.

 

Article II

PARTICIPATION AND BONUS PAYOUTS

 

Section 2.1                      Participation in Plan; Establishment of Target Bonuses.  The Committee (as defined in Section 3.1) shall select those individuals who are eligible to participate in this Plan (the “Participants”).    The Committee shall approve a target bonus for each Participant, determined as a percentage of the Participant’s base salary (as in effect on the first day of the Performance Period).

 

Section 2.2                      Bonus Awards.  The aggregate dollar amount payable to a Participant with respect to a Performance Period is referred to herein as such Participant’s “Bonus Payout.”

 

Section 2.3                      Eligibility Requirements.  Unless the Committee specifically authorizes otherwise, and except as otherwise set forth in Section 2.6, a Participant must be continuously employed by the Company through the last day of the Performance Period to receive a Bonus Payout.  A Participant who meets the foregoing requirement shall be eligible to receive a Bonus Payout, even if the Participant is not employed by the Company on the date the Bonus Payout is made.

 

Section 2.4                      Amount of Bonus Payouts.  Bonus Payouts shall be payable based on achievement of the Target Revenue Goal, provided that, except as otherwise set forth in Section 2.6, the Threshold Performance Goal also is met.  As soon as practicable after a Performance Period, the Committee shall determine the level of achievement of the Target Revenue Goal and the Threshold Performance Goal.  Subject to Section 2.6, in the event the Threshold Performance Goal is not met, no Bonus Payouts will be paid for the Performance Period.  The Committee may, in its sole discretion, make adjustments to any payouts under this Plan as a result of extraordinary events and/or conditions that either positively or negatively impact the Company’s performance.

 

Section 2.5                      Timing of Bonus Payouts.  Except as set forth in Section 2.6, Bonus Payouts shall be paid as soon as practicable, but in any event within sixty (60) days, following the last day of the Performance Period.  Bonus Payouts shall be paid to Participants in a single lump sum cash payment.

 

Section 2.6                      Termination without Cause or for Good Reason.  In the event of a Participant’s termination of employment by the Company without Cause or by the Participant for Good Reason prior to the end of the Performance Period, the Participant shall be eligible to receive a Bonus Payout based on the level of achievement of the Target Revenue Goal as of month-end of the month of such termination relative to the Target Revenue Goal for the Performance Period, without regard to achievement of the Threshold Performance Goal (i.e., if revenue is at 50% of the Target Revenue Goal as of the end of the month of termination of employment, the Participant shall be entitled to a Bonus Payout equal to 50% of the Participant’s target bonus).  Such Bonus Payout shall be paid as soon as practicable in a single lump sum cash payment, but in any event within sixty (60) days, following the Participant’s termination of employment by the Company without Cause or by the Participant for Good Reason.

  

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Article III

PLAN ADMINISTRATION

Section 3.1                      Powers of the Compensation Committee of the Board of Directors. The Board and/or the Compensation Committee of the Board of Directors of the Company (as applicable, the “Committee”) shall be responsible for the administration of this Plan. The Committee is authorized to prescribe, amend and rescind rules and regulations relating to the administration of this Plan, to provide for conditions deemed necessary or advisable to protect the interests of the Company or any of its affiliates, and to make all other determinations necessary or advisable for the administration and interpretation of this Plan in order to carry out its provisions and purposes, including to select the Participants eligible for participation in this Plan and to determine the actual Bonus Payouts (if any) payable to each Participant.  Any decision or action taken or to be taken by the Committee, arising out of or in connection with the construction, administration, interpretation and effect of this Plan and of its rules and regulations, shall, to the maximum extent permitted by applicable law, be within its absolute discretion (except as otherwise specifically provided herein) and shall be conclusive and binding upon the Company and all Participants and any person claiming under or through any Participant.

 

Article IV

MISCELLANEOUS

Section 4.1                      Amendment and Termination of this Plan. The Committee reserves the right to unilaterally amend, modify or terminate this Plan at any time without notice to or consent of the Participants.

 Section 4.2                      Tax Withholding. Any Bonus Payout made pursuant to this Plan shall be subject to applicable withholding obligations in an amount sufficient to satisfy federal, state and local or non-U.S. withholding tax requirements.

 

Section 4.3                      Limitation of Rights. A Participant shall have no rights with regard to any Bonus Payout until such time as a bonus amount is determined by the Committee and becomes payable in accordance with the provisions of this Plan.  The Committee shall have no obligation for uniformity of treatment of Participants under this Plan.  Furthermore, nothing in this Plan shall be deemed to limit in any way the Committee’s full discretion whether to award any Bonus Payouts hereunder.

Section 4.4                      Unfunded Plan. Each Bonus Payout that may become payable under this Plan will be paid solely from the general assets of the Company.  Nothing in this Plan shall be construed to create a trust or to establish or evidence any Participant’s claim of any right to any payment hereunder other than as an unsecured general creditor with respect to any payment to which a Participant may be entitled.

Section 4.5                      No Guarantee of Employment. Nothing in this Plan shall interfere with or limit in any way the right of the Company to terminate any Participant’s employment at any time, nor confer upon any Participant any right to continue in the employ of the Company.  The adoption of this Plan shall have no effect on awards made or to be made, or compensation paid or to be paid, pursuant to other plans, programs, or arrangements now or subsequently in effect covering a Participant or other employees of the Company or its subsidiaries, or any predecessors or successors thereto (unless required by specific reference in any such other plan, program, contract or arrangement to awards under this Plan).

 

Section 4.6                      Successor and Assigns.  The terms and conditions of this Plan shall inure to the benefit of and bind the Company and the Participants, and their successors, assigns, beneficiaries, heirs and representatives, as applicable.  Participants may not transfer, encumber, pledge or assign their rights or benefits under this Plan (except by will or the laws of descent and distribution).

Section 4.7                      Severability. If any provision of this Plan is or becomes invalid, illegal or unenforceable in any respect under any law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired.

  

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Section 4.8                       Governing Law. This Plan, and all awards made and actions taken hereunder, shall be construed in accordance with and governed by the internal laws of the State of Delaware without reference to conflicts of law principles thereof.  This Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.

Section 4.9                      Section 409A.  The Company intends that this Plan and the payments provided hereunder be exempt from the requirements of Section 409A of the Internal Revenue Code, as amended (“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) or otherwise.  To the extent Section 409A is applicable to this Plan and the payments provided hereunder, the Company intends that this Plan comply with the deferral, payout and other limitations and restrictions imposed under Section 409A.  Notwithstanding any provision in this Plan to the contrary, this Plan shall be interpreted, operated and administered in a manner consistent with such intentions.  Without limiting the generality of the foregoing, if a Participant is a “specified employee,” within the meaning of Section 409A(2)(B)(i), then to the extent necessary to avoid subjecting the Participant to the imposition of any additional tax under Section 409A, amounts that would otherwise be payable under this Plan or any award granted under this Plan during the six-month period immediately following the Participant’s “separation from service,” within the meaning of Section 409A(a)(2)(A)(i), shall not be paid to the Participant during such period, but shall instead be accumulated and paid to the Participant (or, in the event of the Participant’s death, the Participant’s estate) in a lump sum on the first business day after the earlier of (i) the date that is six months following the Participant’s separation from service or (ii) the Participant’s death.

Section 4.10                      Interpretation.  The headings of articles and sections contained in this Plan are for convenience only and shall not control or affect the meaning or construction of any provision of this Plan. Except when otherwise indicated by the context, the singular shall be read and interpreted as the plural (when appropriate), and the plural shall include the singular.

 

Article V

DEFINITIONS

As used in this Plan, the following terms shall have the following meanings:

(a)           “Cause” means (i) the Participant’s material fraud, gross malfeasance, gross negligence, or willful misconduct done in bad faith, with respect to the Company’s business affairs; (ii) the Participant’s refusal or repeated failure to follow the Company’s established reasonable and lawful policies; (iii) the Participant’s material breach of the employment agreement between the Participant and the Company; or (iv) the Participant’s conviction of a felony or crime involving moral turpitude.  A termination of the Participant’s employment for Cause based on clause (i), (ii) or (iii) of the preceding sentence will take effect thirty (30) days after the Company gives written notice of its intent to terminate the Participant’s employment and the Company’s description of the alleged cause, unless the Participant, in the good faith opinion of the Company, during such thirty (30) day period, remedies the events or circumstances constituting Cause.

 (b)           “Good Reason” means any of the following without the Participant’s written consent: (i) a material reduction in the Participant’s base compensation; (ii) a material reduction in the Participant’s authority, duties and responsibilities as in effect on the Effective Date; or (iii) a change in the Participant’s place of work to a location more than 50 miles from the place of work on the Effective Date, except for required travel on Company business to an extent substantially consistent with the Participant’s position, duties and responsibilities.  Notwithstanding any provision of this Plan to the contrary, a termination of an employment relationship by the Participant will not be for Good Reason unless (A) the Participant notifies the Company in writing of the existence of the condition that the Participant believes constitutes Good Reason within ninety (90) days of the initial existence of such condition (which notice specifically identifies such condition), (B) the Company fails to remedy such condition within thirty (30) days after the date that it receives such notice (the “Remedial Period”), and (c) the Participant actually terminates his employment within thirty (30) days after the expiration of the Remedial Period.  If the Participant terminates his employment before expiration of the Remedial Period or after the Company remedies the condition, then the Participant’s termination will not be for Good Reason.

  

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(c)           “Performance Period” means the Company’s fiscal year 2015, which runs from March 1, 2014 through February 28, 2015.

 

(d)           “Target Revenue Goal” means that amount of GAAP revenue required to be achieved during the Performance Period in order for Bonus Payouts to be paid at 100% of target.

(e)           “Threshold Performance Goal ” means the gross margin and adjusted earnings before interest, taxes, depreciation and amortization that must be realized during the Performance Period before a Bonus Payout shall be paid under this Plan.

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