<PAGE> 1
SCHEDULE 13D
(Rule 13d-101)
Information to be Included in Statements Filed Pursuant to Rule 13d-1(a) and
Amendments Thereto Filed Pursuant to Rule 13d-2(a)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _____)*
Rockford Corporation
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
77316P
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(CUSIP Number)
Victoria L. Hodson
Rockford Corporation
546 S. Rockford Drive
Tempe, Arizona 85281
480-967-3565
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(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
April 19, 2000
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [ ]
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See
Rule 13d-7(b) for the other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
CUSIP NO. 77316P 13D PAGE 1 OF 5 PAGES
1 Names of Reporting Persons/I.R.S. Identification Nos. of Above Persons
(Entities Only)
W. Gary Suttle
2 Check the Appropriate Box if a Member of a Group (a)
(See Instructions) (b)X
3 SEC Use Only
4 Source of Funds (See Instructions)
SC, OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e) [ ]
6 Citizenship or Place of Organization United States of America
7 Sole Voting Power
Number of 920,200
Shares
Beneficially 8 Shared Voting Power
Owned by 21,500
Each
Reporting 9 Sole Dispositive Power
Person With 920,200
10 Shared Dispositive Power
21,500
11 Aggregate Amount Beneficially Owned by Each Reporting Person 941,700
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions)
13 Percent of Class Represented by Amount in Row (11) 11.91%
14 Type of Reporting Person (See Instructions) I
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<PAGE> 3
SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER.
This schedule 13D related to the common stock, $0.01 per share par
value ("Common Stock"), of Rockford Corporation ("Rockford"). The address of the
principal executive offices of Rockford is:
546 S. Rockford Drive
Tempe, Arizona 85281
ITEM 2. IDENTITY AND BACKGROUND.
(a) W. Gary Suttle
(b) 546 S. Rockford Drive, Tempe, Arizona 85281
(c) Mr. Suttle is the President and Chief Executive Officer of
Rockford Corporation located at 546 S. Rockford Drive, Tempe, Arizona 85281.
(d) None.
(e) None.
(f) Mr. Suttle is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
a. Mr. Suttle was granted an option to purchase 795,500 shares
of Rockford's Common Stock from Monument Investors Limited Partnership, a family
partnership owned by two of the corporation's directors, Mr. N. Bartol and Mr.
T. Bartol. The option was originally granted to Mr. Suttle effective August 1,
1992 and fully vested on August 1, 1995. In connection with Mr. Suttle's January
1, 1999 employment agreement with Rockford Corporation, Monument agreed to
extend the term of the options from August 1, 1999 until August 1, 2002. The
exercise price of the options increase over time from $0.41 per share if
exercised on or before August 1, 1999 to $0.70 per share if exercised after
August 1, 1999 and on or before the expiration date.
b. On December 21, 1995, Mr. Suttle was granted an option to
purchase 38,700 shares of Rockford's common stock under its 1994 Stock Option
Plan at $10.50 per share. The options are currently exercisable and will expire
on December 22, 2005. On January 1, 1999, Mr. Suttle was granted an option to
purchase 86,000 shares of Rockford's common stock under its 1999 Stock Option
Plan. The options are exercisable after January 1, 2002 and expire after
January 1, 2009. All of the options are held by the W. Gary Suttle Family Trust,
of which Mr. Suttle is the sole beneficiary.
c. Suttle Brothers Investments, LLC, of which Mr. Suttle owns
fifty percent of the membership interest, has the right to acquire 21,500 shares
of Rockford's Common Stock upon the conversion of $52,000 of Rockford's 8.5%
Convertible Subordinated Debentures. Mr. Suttle's brother, Roger C. Suttle, Jr.,
owns the remaining fifty percent of the membership interest of Suttle Brothers
Investments, LLC.
ITEM 4. PURPOSE OF TRANSACTION.
a. Mr. Suttle was granted the options as described above
pursuant to Rockford's stock option plans and pursuant to an agreement with
Monument Limited Partnership. He holds such options as investments. Mr. Suttle
may exercise the options pursuant to their terms or may make purchases of
Rockford's Common Stock from time to time and may dispose of any or all of such
shares held by him, individually, at any time
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<PAGE> 4
following the expiration of a lock up period 180 days after the initial public
offering of Rockford's Common Stock (pursuant to the Lock Up Agreement described
below). Mr. Suttle does not have present plans nor does he contemplate any
present proposals that would result in any of the transactions described in Item
4 of Schedule 13D.
b. Suttle Brothers Investments, LLC ("SBI") acquired the 8.5%
Convertible Subordinate Debenture as described above and holds it as an
investment. SBI may make purchases of Rockford's Common Stock from time to time,
and may dispose of any or all of such shares it holds, at any time following the
expiration of a lock up period 180 days after the initial public offering of the
Common Stock (pursuant to the Lock Up Agreement described below). SBI does not
have present plans nor does it contemplate any present proposals that would
result in any of the transactions described in Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
At the date of this filing, Mr. Suttle's beneficially owns
941,700 shares or 11.91% of Rockford's Common Stock. Mr. Suttle, as an
individual, holds an option to purchase 795,500 shares of Common Stock from
Monument Investors Limited Partnership. The W. Gary Suttle Family Trust, of
which Mr. Suttle is the sole beneficiary, holds options to purchase an
additional 124,700 shares of Common Stock. Mr. Suttle holds sole power to vote
and dispose of all such shares. Suttle Brothers Investments, LLC ("SBI") holds
debentures convertible into 21,500 shares of Common Stock. Mr. Suttle owns 50%
of SBI, is a member of SBI and has shared power to vote and dispose of such
shares.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
a. Mr. Suttle is a party to a lock up agreement in connection
with Rockford's initial public offering which restricts the disposition of his
shares of Rockford's Common Stock for a period of 180 days following the initial
public offering of Rockford's Common Stock.
b. Suttle Brothers Investments, LLC is a party to a lock up
agreement in connection with Rockford's initial public offering which restricts
the disposition of its shares of Rockford's Common Stock for a period of 180
days following the initial public offering of Rockford's Common Stock.
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<PAGE> 5
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
a. Lock Up Agreement, dated July 10, 1999, by and between W.
Gary Suttle and Dain Rauscher Wessels.
b. Lock Up Agreement, dated July 10, 1999, by and between
Suttle Brothers Investments, LLC and Dain Rauscher Wessels.
c. Amendment and Renewal of Services & Option Agreement dated
August 1, 1995, by and between W. Gary Suttle, Rockford Corporation and Monument
Investors Limited Partnership.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: 5-5-2000
-------------------------------
/s/ W. Gary Suttle
------------------------------------
W. Gary Suttle
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<PAGE> 1
Exhibit 99.a
ROCKFORD CORPORATION
LOCK-UP AGREEMENT
July ___, 1999
DAIN RAUSCHER WESSELS
NEEDHAM & COMPANY, INC.
as Representatives of the several Underwriters
c/o Dain Rauscher Wessels
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Re: Rockford Corporation (the "Company")
Proposed Offering of Common Stock
Ladies and Gentlemen:
This letter is being delivered to you in accordance with the proposed
Underwriting Agreement (the "Underwriting Agreement") between the Company and
the Representatives, as Representatives of the several Underwriters named in
Schedule A thereto (the "Underwriters"), relating to a underwritten public
offering of common stock of the Company (the "Common Stock"). The undersigned,
the beneficial owner of shares of the Company's Common Stock and/or securities
evidencing the right to purchase shares of the Company's Common Stock,
understands that the Company intends to sell shares of Common stock of the
Company and to grant to the Underwriters an over-allotment option to purchase
additional shares of Common Stock (the "Offering"). All capitalized terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Underwriting Agreement.
In order to induce the Company and the Underwriters to enter into the
Underwriting Agreement and to proceed with the Offering, and in recognition of
the benefit that such Offering will confer upon the undersigned as a stockholder
of the company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned irrevocably
agrees, with each Underwriter to be named in the Underwriting Agreement, for the
benefit of the Company, you and the other Underwriters, that, should the
Offering be effected, the undersigned will not publicly announce any intention
to, will not allow any affiliate or subsidiary, if applicable, to, and will not
itself, without the prior written consent of Dain Rauscher Wessels on behalf of
the Underwriters, (i) offer, pledge, sell, offer to sell, contract to sell, sell
any option or contract to purchase, purchase any option to sell, grant any
option right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any of the shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, Common Stock, or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of ownership of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock (whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of the shares of Common Stock or such other
securities, in cash or otherwise), in each case, beneficially owned (within the
meaning Rule 13d-3 under the Securities Exchange Act of 1934, as amended) or
otherwise controlled by the undersigned on the date hereof or hereafter
acquired, for a period beginning from the date of execution of the Underwriting
Agreement and continuing to and
<PAGE> 2
including the date 180 days after the date of the Prospectus (as such term in
defined in the Underwriting Agreement); provided, however, that, if the
undersigned is an individual, the undersigned may, without prior written consent
of Dain Rauscher Wessels on behalf of the Underwriters, transfer share of Common
Stock or any securities convertible into, or exercisable or exchangeable for,
Common Stock either during his or her lifetime or, on death, by will or
intestacy to members of the undersigned's immediate family or to trusts
exclusively for the benefit of members of the undersigned's immediate family or
in connection with bona fide gifts, provided that, prior to any such transfer,
such transferee executes an agreement, satisfactory to Dain Rauscher Wessels,
pursuant to which such transferee agrees to receive and hold such shares subject
to the provisions hereof and that there shall be no further transfer except in
accordance with the provisions hereof. For purposes of this paragraph,
"immediate family" shall mean the undersigned's spouse, lineal descendant,
father, mother, brother or sister.
The restrictions on transfers described in the immediately preceding
paragraph shall not apply to (a) the sale of shares of Common Stock to the
Underwriters pursuant to the Underwriting Agreement or (b) transfers in shares
of Common Stock acquired in open market transactions after completion of the
Offering.
In addition, the undersigned agrees that, without the prior written
consent of Dain Rauscher Wessels on behalf of the Underwriters, he, she or it
will not, during the period ending 180 days after the date of the Prospectus,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. The undersigned agrees and consents to the entry of stop transfer
instructions with the company's transfer agent against the transfer of Common
Stock except in compliance with this agreement. This agreement shall be binding
on the undersigned and his, her or its respective successors, heirs, personal
representatives and assigns. If for any reason the Underwriting Agreement shall
be terminated prior to the Closing Date (as such term is defined in the
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.
THE UNDERSIGNED AGREES TO KEEP CONFIDENTIAL ALL INFORMATION REGARDING
THE OFFERING, INCLUDING WITHOUT LIMITATION, THE ANTICIPATED DATE OF THE
OFFERING, THE TERMS OF THE OFFERING, AND THE IDENTITY OF THE UNDERWRITERS.
Sincerely,
---------------------------------------------
Signature
---------------------------------------------
Name
---------------------------------------------
Title (if applicable)
<PAGE> 1
Exhibit 99.b
ROCKFORD CORPORATION
LOCK-UP AGREEMENT
July ___, 1999
DAIN RAUSCHER WESSELS
NEEDHAM & COMPANY, INC.
as Representatives of the several Underwriters
c/o Dain Rauscher Wessels
60 South Sixth Street
Minneapolis, Minnesota 55402-4422
Re: Rockford Corporation (the "Company")
Proposed Offering of Common Stock
Ladies and Gentlemen:
This letter is being delivered to you in accordance with the proposed
Underwriting Agreement (the "Underwriting Agreement") between the Company and
the Representatives, as Representatives of the several Underwriters named in
Schedule A thereto (the "Underwriters"), relating to a underwritten public
offering of common stock of the Company (the "Common Stock"). The undersigned,
the beneficial owner of shares of the Company's Common Stock and/or securities
evidencing the right to purchase shares of the Company's Common Stock,
understands that the Company intends to sell shares of Common stock of the
Company and to grant to the Underwriters an over-allotment option to purchase
additional shares of Common Stock (the "Offering"). All capitalized terms used
but not otherwise defined herein shall have the meanings ascribed to such terms
in the Underwriting Agreement.
In order to induce the Company and the Underwriters to enter into the
Underwriting Agreement and to proceed with the Offering, and in recognition of
the benefit that such Offering will confer upon the undersigned as a stockholder
of the company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned irrevocably
agrees, with each Underwriter to be named in the Underwriting Agreement, for the
benefit of the Company, you and the other Underwriters, that, should the
Offering be effected, the undersigned will not publicly announce any intention
to, will not allow any affiliate or subsidiary, if applicable, to, and will not
itself, without the prior written consent of Dain Rauscher Wessels on behalf of
the Underwriters, (i) offer, pledge, sell, offer to sell, contract to sell, sell
any option or contract to purchase, purchase any option to sell, grant any
option right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any of the shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, Common Stock, or (ii)
enter into any swap or other agreement that transfers, in whole or in part, any
of the economic consequences of ownership of the shares of Common Stock or any
securities convertible into, or exercisable or exchangeable for, shares of
Common Stock (whether any such transaction described in clause (i) or (ii) above
is to be settled by delivery of the shares of Common Stock or such other
securities, in cash or otherwise), in each case, beneficially owned (within the
meaning Rule 13d-3 under the Securities Exchange Act of 1934, as amended) or
otherwise controlled by the undersigned on the date hereof or hereafter
acquired, for a period beginning from the date of execution of the Underwriting
Agreement and continuing to and
<PAGE> 2
including the date 180 days after the date of the Prospectus (as such term in
defined in the Underwriting Agreement); provided, however, that, if the
undersigned is an individual, the undersigned may, without prior written consent
of Dain Rauscher Wessels on behalf of the Underwriters, transfer share of Common
Stock or any securities convertible into, or exercisable or exchangeable for,
Common Stock either during his or her lifetime or, on death, by will or
intestacy to members of the undersigned's immediate family or to trusts
exclusively for the benefit of members of the undersigned's immediate family or
in connection with bona fide gifts, provided that, prior to any such transfer,
such transferee executes an agreement, satisfactory to Dain Rauscher Wessels,
pursuant to which such transferee agrees to receive and hold such shares subject
to the provisions hereof and that there shall be no further transfer except in
accordance with the provisions hereof. For purposes of this paragraph,
"immediate family" shall mean the undersigned's spouse, lineal descendant,
father, mother, brother or sister.
The restrictions on transfers described in the immediately preceding
paragraph shall not apply to (a) the sale of shares of Common Stock to the
Underwriters pursuant to the Underwriting Agreement or (b) transfers in shares
of Common Stock acquired in open market transactions after completion of the
Offering.
In addition, the undersigned agrees that, without the prior written
consent of Dain Rauscher Wessels on behalf of the Underwriters, he, she or it
will not, during the period ending 180 days after the date of the Prospectus,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. The undersigned agrees and consents to the entry of stop transfer
instructions with the company's transfer agent against the transfer of Common
Stock except in compliance with this agreement. This agreement shall be binding
on the undersigned and his, her or its respective successors, heirs, personal
representatives and assigns. If for any reason the Underwriting Agreement shall
be terminated prior to the Closing Date (as such term is defined in the
Underwriting Agreement), the agreement set forth above shall likewise be
terminated.
THE UNDERSIGNED AGREES TO KEEP CONFIDENTIAL ALL INFORMATION REGARDING
THE OFFERING, INCLUDING WITHOUT LIMITATION, THE ANTICIPATED DATE OF THE
OFFERING, THE TERMS OF THE OFFERING, AND THE IDENTITY OF THE UNDERWRITERS.
Sincerely,
---------------------------------------------
Signature
---------------------------------------------
Name
---------------------------------------------
Title (if applicable)
<PAGE> 1
Exhibit 99.C
AMENDMENT
OF
SERVICES & OPTION AGREEMENT
This Agreement is between W. Gary Suttle ("Suttle"), Monument Investors Limited
Partnership ("Monument") as successor to Caroline S. Bartol and the estate of
John G. Bartol ("Bartols"), and Rockford Corporation, an Arizona corporation
("Rockford"). Suttle, Monument, and Rockford agree as follows:
1 RECITALS.
1.1 Rockford Business. Rockford manufactures and distributes high
quality car and professional audio products under various brand
names including "Rockford-Fosgate", "Hafler Professional",
"Rockford Acoustic Designs", and "Connecting Punch".
1.2 Prior Agreement. Suttle, Bartols, and Rockford were parties to a
Services and Option Agreement, and Suttle, Monument and Rockford
are parties to the Amendment and Renewal of Services and Option
Agreement effective as of August 1, 1995 (the "Prior Agreement")
under which Suttle holds options to purchase up to 185,000 shares
of Rockford common stock from Monument (the "Prior Options").
Bartols assigned their shares of Rockford to Monument and
Monument has assumed Bartols' obligations under the Prior
Agreement and Prior Options. The Prior Agreement was for the
period August 1, 1992, through August 1, 1995.
1.3 Monument's Ownership. Monument, an Arizona limited partnership
formed for the benefit of members of the Bartols' family (the
"Family"), owns a majority of the issued and outstanding shares
of Rockford common stock. Monument together with the Family will
own 35.45% of Rockford's fully diluted stock issue assuming (a)
conversion of all of the outstanding Rockford debentures, (b)
exercise of all outstanding Rockford stock options and warrants
(including the Prior Options), and (c) vesting of all "stock
grants" outstanding prior to the date of this Agreement.
1.4 Suttle Services to Rockford. Suttle has made himself available to
perform certain services under the Contract between Grisanti,
Galef & Goldress, Inc. ("3G") and Rockford (the "Contract"), a
copy of which is attached as Exhibit A.
1.5 Stock Option. Monument desires to amend and extend the Prior
Options as consideration for (1) Suttle's agreement to provide
services to Rockford under the Contract and (2) Suttle's
undertaking of the obligations provided in this Agreement.
1.6 Rockford Participation. Rockford is a party to this Agreement in
order to consent to the grant of the option, to permit it to
enforce Suttle's obligations under this Agreement, and to permit
it to withhold shares purchased by Suttle for the purpose of
paying any required withholding taxes.
<PAGE> 2
2 SUTTLE SERVICES.
2.1 Suttle Services. Suttle will serve as Director, President and
CEO of Rockford (or in another capacity agreed by Suttle,
Monument, and Rockford) on a "full time" basis pursuant to the
terms of the Employment Agreement. In consideration of such
services, the parties agree that (1) all references in the
Prior Agreement to the Contract will, beginning on the date of
this Amendment, be deemed to refer in addition to the
Employment Agreement and (2) the requirements in the Prior
Agreement that Suttle provide services to Rockford under the
Contract will be satisfied by Suttle's providing of service to
Rockford under the Employment Agreement.
2.2 Definition of "Full Time". "full time" means that Suttle will
devote four out of five business days (averaged in each month)
to his services for Rockford including work at Rockford's
headquarters, work for Rockford in the field, and travel time
on Rockford's behalf. Periods of vacation and sick leave
permitted under this Agreement do not count in determining
whether Suttle has worked "full time".
2.3 Service to 3 G and its Clients. Suttle is a "partners" in, and
plans to continue his affiliation with, 3G. Suttle will not
take on any Interim Management assignments for 3G. Subject to
the non-competition obligation established in this Agreement
and the time limitation set forth above, Suttle may (a)
perform advisory and assessment services on behalf of 3G for
its clients, (b) continue as a director of Image Carpets, and
(c) advise former clients who seek his advise.
2.4 Executive Secretary. Suttle will employ (at Rockford's
expense) a Confidential or Executive Secretary to assist him
in the performance of his duties for Rockford.
2.5 Suttle Compensation and Benefits. Suttle will be compensated
exclusively by 3G for his services to Rockford and will not
receive compensation directly from Rockford. Suttle will not
participate in any Rockford employee benefit plans except as
otherwise agreed by Rockford and Suttle, but may take
reasonable vacations (consistent with the needs of Rockford"
business) and sick leaves (when he is actually incapacitated).
Suttle acknowledges that Rockford is paying compensation
directly to 3G pursuant to the Contract.
2.6 Indemnification. Suttle will be indemnified and held harmless
by Rockford from any damages, costs, and expenses resulting
from his services to Rockford. Neither Monument nor the Family
will have any responsibility for such indemnification and
Suttle will look solely to Rockford under the Contract if he
has any claim for indemnification.
3 OPTION AMENDMENT. Monument amends and extends the Prior Option so that
Suttle has the right to purchase up to 185,000 shares of Rockford common
stock at the following prices during the following terms:
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<PAGE> 3
<TABLE>
<CAPTION>
Price Term
----- ----
<S> <C>
$1.59 per share on or before August 1, 1995
$1.95 per share on or before August 1, 1999
$3.00 per share on or before August 1, 2002
</TABLE>
This amends to Prior Option by adding the right to purchase shares during the
period after August 1, 1999, and before August 1, 2002. The Prior Option as
amended is referred to in this Agreement as the "Option".
3.1 Qualification to Purchase. In order to exercise the Option (a)
Suttle must be an "accredited investor" on the dates of
exercise and must give investment representation reasonably
satisfactory to Monument and Rockford or (b) Suttle must
provide other evidence reasonably satisfactory to Rockford
that a proposed exercise is exempt from registration under,
and otherwise complies with, applicable federal and state
securities laws.
3.2 Vesting and Exercise. The prior Option provided a vesting
period before Suttle was permitted to exercise. The vesting
period was completed on August 1, 1995, and Suttle may
exercise the Option at any time before expiration.
3.3 Expiration. The Option expires and may not be exercise after
the earliest of the following dates:
(a) August 1, 2002,
(b) 24 months after the day Rockford common stock becomes
publicly traded,
(c) 24 months after the day Rockford is merged into or
acquired by any publicly owned corporation and
Rockford common stock is exchanged for securities
that are publicly traded,
(d) 150 days after Suttle's death, or
(e) upon any attempted or purported assignment of the
Options other than an assignment to a trust for the
benefit of Suttle or members of his family.
3.4 Adjustment of Number of Shares. The number of shares subject
to the Option, will be adjusted upwards or downwards to
reflect all stock dividends, stock splits, reverse splits,
mergers, consolidations, recapitalizations and corporate
adjustments effected by Rockford between the date of this
Agreement and the date of any option exercise.
3.5 Notice of Exercise and Payment for Shares. Suttle must give
Monument and Rockford written notice of his intention to
exercise the Option not less than 10 nor more than 90 days
before the date on which he intends to exercise his options
(the
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<PAGE> 4
"Exercise Date" or "Closing Date"). The notice must state the
Closing Date and the number of shares to be purchased. the
notice creates a binding obligation on Suttle to purchase the
specified number of shares on the Closing Date. Monument must
deliver the shares, and Suttle must pay for them in cash, on
the Closing Date.
3.6 Taxes and Cancellation of Shares. Suttle acknowledges that, as
an independent contractor, upon exercise of the options he may
become subject to (and is solely responsible for) payment of
tax on the excess of the fair market value of the shares
purchased over the option exercise price. Rockford may become
entitled to a deduction in the same amount pursuant to
provision of the Internal Revenue Code of 1986 and Internal
Revenue Service ("IRS") regulations thereunder (the "Code")
that attribute to Rockford the options granted by Monument.
Rockford may elect to cancel (from the shares presented by
Monument for transfer to Suttle pursuant to an option
exercise) up to that percentage of shares that is equal to the
maximum marginal rate of taxes Suttle would be required by the
Code to pay to the IRS upon exercise of the options; Rockford
will then pay the fair market value of any canceled shares to
the IRS for Suttle's account. At the time of any exercise
Suttle may pay the cash value attributed to the canceled
shares to Rockford and Rockford will then transfer to Suttle
all the shares presented for transfer. Rockford will make an
election to cancel shares only upon advise of its professional
advisors that such action is necessary to protect its
deduction (and then only in the amount required by the Code);
such an election will not constitute an admission by either
Suttle or Rockford that Suttle is an employee of Rockford and
Suttle will at all times be an independent contractor to
Rockford.
4 ELECTION OF DIRECTORS. Monument and Suttle will vote as Directors and
shareholders of Rockford (to the extent they are OR become Directors or
shareholders) so as to set the number of Directors at 5 and to elect John
P. Lloyd, Nicholas Bartol, Caroline S. Bartol, Glen J. Carrio, and Suttle
to serve as Directors (or such other number of directors and candidates as
they agree upon).
5 OWNERSHIP OF WORKS. All ideas, artworks, compositions, conceptions, and
materials ('Works") prepared by Suttle during the term of his engagement
for Rockford, pursuant to this Agreement and the Contract, and usable in
Rockford's business will be the property of Rockford. Suttle assigns to
Rockford all of Suttle's right, copyright, title and interest in such
Works. Suttle will not use, or transfer to others, any Works other than in
connection with Rockford's business or with Rockford's written consent;
provided that Rockford grants Suttle a non-exclusive right to use the
Works personally in any activity that is not competitive with Rockford.
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<PAGE> 5
6 CONFIDENTIAL INFORMATION. During and after the term of Suttle's engagement
pursuant to this Agreement and the Contract, Suttle will keep
confidential, and will not reproduce, copy or disclose to any other person
or firm, any trade secrets or other proprietary or confidential
information of Rockford or about its business ("Confidential
Information'). Suttle will not, during or after the term of this
Agreement, use (either alone or with others), disclose to any person, or
encourage anyone else to disclose, any Confidential Information except
within the scope of Suttle's duties and responsibilities for Rockford or
with, Rockford's consent.
7 RETURN OF ROCKFORD DOCUMENTS. Upon termination of Suttle's engagement
pursuant to this Agreement and the Contract, Suttle will return to
Rockford all records and documents of or pertaining to Rockford
(including, but not limited to, customer, distributor, and supplier lists,
names, or addresses) and will not make, retain, or give to any other
person any copy or extract of any such record or document. "Record"
includes, but is not limited to, information stored on computer.
8 NON-COMPETE AND SOLICITATION. During the term of Suttle's engagement for
Rockford pursuant to this Agreement and the Contract, and for 2 years
thereafter, Suttle will not engage in, plan for, organize, work for,
acquire an ownership interest in, or assist, directly or indirectly, any
business that competes with Rockford in the United States or elsewhere.
During and after the term of Suttle's engagement for Rockford pursuant to
this Agreement and the Contract, Suttle will not solicit, or assist others
to solicit, any customers, distributors, suppliers, or employees of
Rockford who did business or agreed to do business with Rockford at any
time before or during the term of Suttle's engagement for Rockford
pursuant to this Agreement and the Contract.
If this section is deemed unreasonable as to time or scope by any court or
arbitrator, then such court or arbitrator is directed to modify this section as
to time or scope, or both, so that this section is reasonable and to then
enforce this section as modified. Suttle acknowledges and agrees that the market
for Rockford's product is limited and international in scope, so that any
competitive activities in violation of this section would cause -material harm
to Rockford and Monument.
9 ACTIONS. Suttle acknowledges that it would be difficult to determine
damages, and Rockford and Monument will not have an adequate remedy at
law, if Suttle breaches this Agreement. Accordingly, if Suttle breaches
this Agreement, Rockford or Monument may seek injunctive relief to
enforce this Agreement. Nothing in this section limits or excludes any
and all other rights, including rights to money damages, granted to
Rockford or Monument in law or equity,
10 SEVERABILITY. If any section of this Agreement is deemed unreasonable by a
court or arbitrator, that section is severable from the remainder of this
Agreement, which is to be enforced according to its terms irrespective of
the enforceability of the unreasonable section SO long AS enforcement is
consistent with the general intent of the parties as evidenced by this
Agreement taken as a whole.
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<PAGE> 6
11 NON-ASSIGNABILITY. Suttle's obligations and rights under this Agreement
are not assignable. Suttle's options are exercisable only by Suttle or
by the personal representative of his estate. Any attempted or
purported assignment of Suttle's obligations oR rights under this
Agreement is a material breach and will result in the immediate
termination of the Option.
12 ESCROW OF SHARES. Upon request by Suttle, Monument will place in escrow
with a mutually acceptable third party selected by Monument (and pursuant
to documentation approved by Monument and Suttle) a certificate for not
less than 185,000 shares of Rockford common stock, with four or more
signed stock powers attached, and instructions to deliver to Suttle up to
185,000 shares upon proper exercise of Ms options and payment of the
option price to Monument.
13 CONFLICTS WITH CONTRACT. If there is a conflict between this Agreement and
the Contract, this Agreement will regulate the relations between Monument
and Suttle and the Contract will regulate the dealings between Rockford
and 3G.
14 NOTICES. Notices under this Agreement are effective upon delivery or three
days after mailing, certified or registered mail, return receipt
requested, to the addresses stated on the signature page of this Agreement
(which may be changed by notice).
15 INTEGRATION AND AMENDMENT. This Agreement is the entire agreement of the
parties with respect to the grant of the Option and may be amended only by
a written document signed by all the parties.
16 GOVERNING LAW. Arizona law will govern this Agreement and any disputes
arising out of or related in any way to this Agreement.
17 ATTORNEYS' FEES. In any proceeding arising out of or related to this
Agreement, the prevailing party is entitled to reasonable attorneys' fees,
costs and other expenses incurred in connection with such proceeding.
18 ARBITRATION. Disputes not resolved by the parties and arising out of or
related in any way to this Agreement will be submitted to binding
arbitration in metropolitan Phoenix, Arizona, before a single arbitrator
or, if the parties cannot agree upon a single arbitrator, before a panel
of three arbitrators, one selected by each party (within 10 days after
notice of a dispute and failure to agree upon a single arbitrator) and a
third appointed by the arbitrators selected by the parties. The selection
of arbitrators and all arbitration proceedings will be in accordance with
the rules of the American Arbitration Association, as amended to the date
of the proceedings, and judgment upon the award may be entered in any
court having jurisdiction. The arbitrators will render a decision within
30 days after their appointment and may award the costs of arbitration as
they see fit.
19 EXECUTION AND EFFECTIVE DATE This Agreement is executed _______1995, and
is effective as of August 1, 1995.
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<PAGE> 7
/s/
-----------------------------------------
W. Gary Suttle
Address: 648 S. River Dr.
Tempe, AZ 85281
Monument Investors Limited Partnership
By /s/
---------------------------------------
Nicholas Bartol, General Partner
Address: 239 Cove Drive
Coppell, TX 75019
Rockford Corporation
By /s/
---------------------------------------
Glen J. Carrio, Chairman
Address: 648 South River Drive
Tempe, AZ 852
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