SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of Class A Common Stock and Class B
Common Stock as of March 31, 2017 by (i) each of our directors, (ii) each of our Named Executive Officers, (iii) each person that we know to be a beneficial owner of more than 5% of either class of our Common Stock and
(iv) all of our directors and executive officers as a group.
Each stockholders percentage of ownership in the
following table is based upon 133,778,930 shares of Class A Common Stock and 24,545,188 shares of Class B Common Stock outstanding as of March 31, 2017. Our Class B Common Stock is convertible at any time into shares of
Class A Common Stock on a
one-for-one
basis. Beneficial ownership is determined in accordance with SEC rules and regulations. In computing the number of shares of
our Class A Common Stock beneficially owned by a person and the percentage of beneficial ownership of that person, shares of Class A Common Stock underlying notes, options or shares of Class B Common Stock held by that person that are
convertible or exercisable, as the case may be, within 60 days of March 31, 2017 are included. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. To our knowledge,
unless otherwise indicated in the footnotes to this table and subject to applicable community property laws, each person named in the table has sole voting and investment power with respect to the shares of Class A and Class B Common Stock
set forth opposite such persons name. Unless otherwise indicated in the footnotes below, the address of each beneficial owner listed below is c/o Skechers U.S.A., Inc., 228 Manhattan Beach Boulevard, Manhattan Beach, California 90266.
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Name of Beneficial Owner
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Number of
Class A Shares
Beneficially Owned
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Percentage of
Class A Shares
Beneficially Owned
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Number of
Class B Shares
Beneficially Owned
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Percentage of
Class B Shares
Beneficially Owned
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5% stockholders:
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FMR LLC
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19,998,448
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(1)
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14.9
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%
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BlackRock, Inc.
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10,810,496
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(2)
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8.1
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The Vanguard Group, Inc.
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9,943,683
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(3)
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7.4
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Skechers Voting Trust
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13,684,670
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(4)
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9.3
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13,684,670
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(5)
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55.8
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%
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Gil Schwartzberg
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8,412,382
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(6)
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5.9
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8,412,382
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(7)
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34.3
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Named Executive Officers and directors:
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Robert Greenberg
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19,246,371
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(8)
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12.6
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%
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18,468,678
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(9)
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75.2
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%
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Michael Greenberg
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1,373,416
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(10)
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1.7
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821,023
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(11)
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6.9
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Jeffrey Greenberg
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2,090,4501
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(12)
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2.2
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948,525
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(13)
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7.4
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David Weinberg
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403,283
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(14)
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*
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Mark Nason
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78,752
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*
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Philip Paccione
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60,000
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*
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Morton Erlich
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37,000
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(15)
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*
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Geyer Kosinski
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22,000
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*
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Richard Rappaport
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27,500
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(16)
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*
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Richard Siskind
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205,999
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*
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Thomas Walsh
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10,750
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*
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All current directors and executive officers as a group (11 persons)
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23,555,521
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15.3
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%
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20,238,226
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82.5
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%
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(1)
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Information is based on a Schedule 13G filed with the SEC on February 14, 2017 and represents the number of shares beneficially owned as of
December 31, 2016. FMR LLC has sole voting power with respect to 5,000,013 shares and sole dispositive power with respect to 19,998,448 shares. Each of FIAM LLC, Fidelity Institutional Asset Management Trust Company and FMR Co., Inc
beneficially owns shares of Class A Common Stock, with FMR Co beneficially owning 5% or more of the outstanding shares of Class A Common Stock. Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC.
Neither FMR LLC nor Ms. Johnson has the sole power to vote or direct the voting of the shares owned
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directly by the various investment companies registered under the Investment Company Act (Fidelity Funds) advised by Fidelity Management & Research Company, a wholly owned
subsidiary of FMR LLC, which power resides with the funds Boards of Trustees. FMR Co carries out the voting of the shares under written guidelines established by the Fidelity Funds Boards of Trustees. The principal business office of FMR
LLC is located at 245 Summer Street, Boston, Massachusetts 02210.
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(2)
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Information is based on a Schedule 13G filed with the SEC on January 27, 2017 and represents the number of shares beneficially owned as of
December 31, 2016. BlackRock, Inc. (BlackRock) has sole voting power with respect to 10,094,367 shares and sole dispositive power with respect to 10,810,496 shares held by the following subsidiaries: BlackRock (Luxembourg) S.A.,
BlackRock (Netherlands) B.V., BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management North Asia Limited, BlackRock Asset Management
Schweiz AG, BlackRock Capital Management, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock
Investment Management (UK) Ltd and BlackRock Investment Management, LLC. The principal business office of BlackRock is located at 55 East 52
nd
Street, New York, New York 10055.
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(3)
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Information is based on a Schedule 13G filed with the SEC on February 13, 2017 and represents the number of shares beneficially owned as of December 31, 2016.
The Vanguard Group, Inc. (Vanguard) has sole voting power with respect to 76,356 shares, of which 69,692 shares are held by its wholly-owned subsidiary, Vanguard Fiduciary Trust Company, for which Vanguard serves as investment manager of
collective trust accounts, and 21,520 shares are held by its wholly-owned subsidiary, Vanguard Investments Australia, Ltd., for which Vanguard serves as investment manager of Australian investment offerings. Vanguard has shared voting power with
respect to 14,856 shares. Vanguard has sole dispositive power with respect to 9,859,135 shares and shared dispositive power with respect to 84,548 shares. The principal business office of Vanguard is located at 100 Vanguard Blvd., Malvern,
Pennsylvania 19355.
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(4)
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Represents shares of Class B Common Stock that are convertible at any time into shares of Class A Common Stock on a
one-for-one
basis. Beneficial ownership of these shares is described in greater detail in note 5 below.
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(5)
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Robert Greenberg and Gil Schwartzberg agreed to place certain shares of Class B Common Stock that they beneficially owned into the Skechers Voting Trust, of which
they serve as
co-trustees,
pursuant to an agreement that was entered into on March 2, 2016. Mr. Greenberg contributed 8,500,000 shares that were held by the Greenberg Family Trust, of which he and
his wife serve as
co-trustees,
to the Skechers Voting Trust. During the
15-year
term of the Skechers Voting Trust (unless terminated sooner by the
co-trustees),
Mr. Greenberg has sole voting power with respect to these shares, and these shares may not be withdrawn from the Skechers Voting Trust in accordance with the terms of the Skechers Voting Trust.
Mr. Schwartzberg has contributed 5,184,670 shares of Class B Common Stock that he beneficially owned to the Skechers Voting Trust. Mr. Schwartzberg has sole voting power with respect to these shares and shared dispositive power with
Mr. Greenberg and the beneficiaries of these shares. Each beneficiary may withdraw the shares held by the Skechers Voting Trust in which he or she has an interest at any time, but only with the consent of the
co-trustees.
The principal business address of the Skechers Voting Trust is c/o Regina Brown, CPA, 21440 Ventura Blvd., Woodland Hills, California 91364.
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(6)
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Represents shares of Class B Common Stock that are convertible at any time into shares of Class A Common Stock on a
one-for-one
basis. Beneficial ownership of these shares is described in greater detail in note 7 below.
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(7)
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Represents 1,613,856 shares of Class B Common Stock held by the Robert Y. Greenberg 2012 Annuity Trust and 1,613,856 shares of Class B Common
Stock held by the M. Susan Greenberg 2012 Annuity Trust (collectively, the Annuity Trusts), and 5,184,670 shares of Class B Common Stock held by the Skechers Voting Trust. Gil Schwartzberg may be deemed to beneficially own the
shares held by the Annuity Trusts as sole trustee of those trusts, and Mr. Schwartzberg has sole voting power and sole dispositive power with respect to the shares held by the Annuity Trusts. Mr. Schwartzberg may be deemed to beneficially
own the shares held by the Skechers Voting Trust as its
co-trustee,
with sole voting power and shared dispositive
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power with respect to these shares. Mr. Schwartzberg disclaims beneficial ownership of any of these shares except to the extent of his pecuniary interest therein. The principal business
office of Mr. Schwartzberg is located at 5500 Military Trail, Suite 22, Jupiter, Florida 33458.
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(8)
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Includes 18,468,678 shares of Class B Common Stock that are convertible at any time into shares of Class A Common Stock on a
one-for-one
basis. Beneficial ownership of these shares is described in greater detail in note 9 below.
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(9)
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Represents 4,784,008 shares of Class B Common Stock held by the Greenberg Family Trust (the Trust) that Robert Greenberg, our Chief Executive Officer
and Chairman of the Board, is deemed to beneficially own as a trustee of the Trust. His wife, Susan Greenberg, is also a trustee of the Trust and is also deemed to beneficially own all shares held by the Trust. Also, represents 13,684,670 shares of
Class B Common Stock held by the Skechers Voting Trust. Mr. Greenberg may be deemed to beneficially own the shares held by the Skechers Voting Trust as its
co-trustee,
with sole voting power and
shared dispositive power with respect to 8,500,000 of these shares and shared dispositive power with respect to 5,184,670 of these shares. Mr. Greenberg disclaims beneficial ownership of any of these shares except to the extent of his pecuniary
interest therein.
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(10)
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Includes 821,023 shares of Class B Common Stock that are convertible at any time into shares of Class A Common Stock on a
one-for-one
basis, and 150,714 shares of Class A Common Stock beneficially owned by Michael Greenberg, our President and a member of our Board of Directors, indirectly through his children.
Mr. Greenberg disclaims beneficial ownership of these 150,714 shares except to the extent of his pecuniary interest therein. Beneficial ownership of the 821,023 shares of Class B Common Stock is described in greater detail in note 11
below.
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(11)
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Represents 667,123 shares of Class B Common Stock held by the Michael Greenberg Trust that Michael Greenberg is deemed to beneficially own as trustee of such
trust, and 153,900 shares of Class B Common Stock held in various trust accounts for Mr. Greenbergs minor children and of which a third party acts as trustee. Mr. Greenberg disclaims beneficial ownership of the 153,900 shares
held in various trusts for his minor children except to the extent of his pecuniary interest therein.
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(12)
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Includes 948,525 shares of Class B Common Stock that are convertible at any time into shares of Class A Common Stock on a
one-for-one
basis, and 303,372 shares of Class A Common Stock held in various trust accounts for Mr. Greenbergs two daughters who are minors and of which Mr. Greenberg is deemed to
beneficially own as trustee of such trusts. Beneficial ownership of the 948,525 shares of Class B Common Stock is described in greater detail in note 13 below.
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(13)
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Represents 364,365 shares of Class B Common Stock held by the Jeffrey and Lori Greenberg Family Trust that Jeffrey Greenberg, a member of our Board of Directors,
is deemed to beneficially own as trustee of such trust, and an additional 4,344 shares of Class B Common Stock held by the Jeffrey and Lori Greenberg Family Trust that are his wifes separate property,. Also, represents 524,964 shares of
Class B Common Stock held in various trust accounts for Mr. Greenbergs two daughters who are minors and of which Mr. Greenberg is deemed to beneficially own as he or his wife is trustee of such trusts, and 32,376 shares of
Class B Common Stock held by the Chloe July Greenberg custodial account and 22,476 shares of Class B Common Stock held by the Catherine Elle Greenberg custodial account, for which one of his siblings acts as custodian. These custodial
accounts are for the benefit of Mr. Greenbergs two daughters who are minors, and he disclaims beneficial ownership of the 54,852 shares held in the two custodial accounts and the 4,344 shares that are his wifes separate property,
except to the extent of his pecuniary interest therein.
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(14)
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Includes 183,283 shares of Class A Common Stock that David Weinberg, our Chief Operating Officer, Chief Financial Officer, Executive Vice President and a member of
our Board of Directors, is deemed to beneficially own as sole trustee of The David Weinberg Trust dated September 7, 2000.
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(15)
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Includes 24,000 shares of Class A Common Stock held by The Erlich Family Trust that Morton Erlich, a member of our Board of Directors, is deemed to beneficially
own as a trustee of such trust.
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(16)
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Includes 6,000 shares of Class A Common Stock held in trust accounts for two of Mr. Rappaports daughters, who share the same household as him, and of
which Mr. Rappaport is deemed to beneficially own as trustee of such trusts.
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48
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act requires our officers, directors and persons who own more than ten percent of a
registered class of our securities, to file with the SEC reports of initial ownership (Form 3s) and reports of changes in ownership (Form 4s and 5s) of our securities. Officers, directors and greater than ten percent stockholders
are required by the SECs regulations to furnish us with copies of all Section 16(a) forms that they file. Based on our review of copies of Form 3s, 4s and 5s furnished to us as well as communications with our officers,
directors and greater than ten percent stockholders, we believe that all of them complied with the filing requirements of Section 16(a) and we are not aware of any late or missed filings of such reports for the 2016 fiscal year, except that
Jeffrey Greenberg filed one late report on Form 4 on June 16, 2016 with respect to a sale of shares on June 1, 2016.
TRANSACTIONS WITH RELATED PERSONS
Policies and Procedures
As provided in our Audit Committee Charter, the
Audit Committee shall review (i) at least annually a summary of directors and executive officers related party transactions and potential conflicts of interest and our policies relating to the avoidance of conflicts of interest
(which is discussed in our Code of Business Conduct and Ethics), (ii) past and proposed transactions between our company, on the one hand, and any of our directors or executive officers, on the other hand, and (iii) policies and procedures
as well as audit results associated with directors and executive officers expense accounts and perquisites, including the use of corporate assets.
Our Policies and Procedures for Related Person Transactions (the Policy), which was adopted by the Board of Directors as of March 8, 2007, covers any transaction, arrangement or
relationship, or series of similar transactions, arrangements or relationships, (including any indebtedness or guarantee of indebtedness) in which (i) the aggregate amount involved will or may be expected to exceed $100,000 in any calendar
year, (ii) we are a participant, and (iii) any Related Person has or will have a direct or indirect interest (other than solely as a result of being a director or a less than ten percent beneficial owner of another entity). A Related
Person is (a) any person who is or was (since the beginning of the last fiscal year for which we have filed a Form
10-K
and proxy statement, even if they do not presently serve in that role) an
executive officer, director or nominee for election as a director of Skechers, (b) a greater than five percent beneficial owner of our Class A or Class B Common Stock or (c) an immediate family member of either of the foregoing.
Certain categories of transactions with Related Persons (such as transactions involving competitive bids) have been reviewed
and
pre-approved
by the Audit Committee under the Policy. The Audit Committee shall review the material facts of all other transactions with Related Persons that require the Committees approval. If
advance approval by the Audit Committee of a transaction with a Related Person is not feasible, then the transaction shall be considered and, if the Committee determines it to be appropriate, ratified at the Committees next regularly scheduled
meeting. Factors that the Audit Committee will take into account include whether the transaction with a Related Person is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar
circumstances and the extent of the Related Persons interest in the transaction. No Audit Committee member shall participate in any discussion or approval of a transaction with a Related Person pursuant to which he is a Related Person except
for providing material information concerning the transaction. For those transactions with a Related Person that are ongoing, the Audit Committee, on at least an annual basis, shall review and assess ongoing relationships with the Related Person to
determine that the transaction with the Related Person remains appropriate.
The following list of transactions with Related
Persons includes all such transactions equal to or greater than $120,000 that took place since January 1, 2016. Each of these transactions was reviewed, and approved or ratified by the Audit Committee, pursuant to the policies and procedures
discussed herein.
49
Related Person Transactions
Jeffrey Greenberg, Jason Greenberg, Joshua Greenberg and Jennifer Greenberg Messer, who are the children of Robert Greenberg and also the siblings of Michael Greenberg, are
non-executive
employees of Skechers, and they earned total compensation of $276,230, $2,860,601, $2,327,619 and $226,245, respectively, in 2016. Jeffrey Greenberg was also a member of our Board of Directors in
2016, but did not earn any additional compensation for services provided as a director.
Andrew Weinberg and Jeffrey Weinberg,
who are the sons of David Weinberg, are
non-executive
employees of Skechers, and they earned total compensation of $537,615 and $369,675, respectively, in 2016.
NOMINATIONS AND STOCKHOLDER PROPOSALS FOR 2018 ANNUAL MEETING
Stockholder proposals intended to be presented at our next Annual Meeting of Stockholders to be held in 2018 must be
received at our principal executive offices no later than January 1, 2018 to be considered for inclusion in the proxy statement and form of proxy relating to that meeting. Proposals must comply with the proxy rules relating to stockholder
proposals, in particular
Rule 14a-8
under the Securities Exchange Act, to be included in our proxy materials. Stockholders who wish to submit a proposal for consideration at our 2018 Annual Meeting of
Stockholders, but who do not wish to submit a proposal for inclusion in our proxy statement, must, in accordance with our bylaws, deliver a copy of their proposal no later than March 24, 2018, the close of business on the 60
th
day, nor earlier than February 22, 2018, the close of business
on the 90
th
day in advance of the first anniversary of the
preceding years annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice must be delivered not earlier than the
close of business on the 90
th
day prior to such annual
meeting and not later than the close of business on the later of the 60
th
day prior to such annual meeting or the tenth day following the day on which public announcement of the date of such meeting is first made by our company. In either case, proposals should be sent by
certified or registered mail, return receipt requested, to Skechers U.S.A., Inc., 228 Manhattan Beach Boulevard, Manhattan Beach, California 90266, Attention: General Counsel.
OTHER BUSINESS
Our Board of Directors does not know of any other matter
to be acted upon at the meeting. However, if any other matter shall properly come before the meeting, the proxy holders named in the proxy accompanying this proxy statement will have authority to vote all proxies in accordance with their discretion.
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BY ORDER OF THE BOARD OF DIRECTORS
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Philip G. Paccione,
Corporate Secretary
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Dated: May 1, 2017
Manhattan Beach, California
50
APPENDIX A
SKECHERS U.S.A., INC.
2017 INCENTIVE AWARD PLAN
ARTICLE 1.
PURPOSE
The purpose of the Skechers U.S.A., Inc. 2017 Incentive Award Plan (as it may be amended or restated from time to time, the
Plan
) is to promote the success and enhance the value of Skechers U.S.A., Inc. (the
Company
) by linking the individual interests of the members of the Board, Employees, and Consultants to those of Company
stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to Company stockholders. The Plan is further intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successful conduct of the Companys operation is largely dependent.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The singular pronoun shall include the plural where the
context so indicates.
2.1
Administrator
shall mean the entity that conducts the general administration of
the Plan as provided in Article 12. With reference to the duties of the Committee under the Plan which have been delegated to one or more persons pursuant to Section 12.6, or as to which the Board has assumed, the term Administrator
shall refer to such person(s) unless the Committee or the Board has revoked such delegation or the Board has terminated the assumption of such duties.
2.2
Applicable Accounting Standards
shall mean Generally Accepted Accounting Principles in the United States, International Financial Reporting Standards or such other accounting
principles or standards as may apply to the Companys financial statements under United States federal securities laws from time to time.
2.3
Applicable Law
shall mean any applicable law, including without limitation: (a) provisions of the Code, the Securities Act, the Exchange Act and any rules or regulations
thereunder; (b) corporate, securities, tax or other laws, statutes, rules, requirements or regulations, whether federal, state, local or foreign; and (c) rules of any securities exchange or automated quotation system on which the Shares
are listed, quoted or traded.
2.4
Award
shall mean an Option, a Stock Appreciation Right, a Restricted
Stock award, a Restricted Stock Unit award, an Other Stock or Cash Based Award or a Dividend Equivalent award, which may be awarded or granted under the Plan.
2.5
Award Agreement
shall mean any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an Award, including through electronic medium,
which shall contain such terms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan.
2.6
Award Limit
shall mean with respect to Awards that shall be payable in Shares or in cash, as the case may be, the respective limit set forth in Section 3.2.
2.7
Board
shall mean the Board of Directors of the Company.
A-1
2.8
Change in Control
shall mean and includes each of the following:
(a) A transaction or series of transactions (other than an offering of Common Stock to the general public through a
registration statement filed with the Securities and Exchange Commission) whereby any person or related group of persons (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) directly or
indirectly acquires beneficial ownership (within the meaning of Rules
13d-3
and
13d-5
under the Exchange Act) of securities of the Company possessing more than 50% of
the total combined voting power of the Companys securities outstanding immediately after such acquisition;
provided
,
however
, that the following acquisitions shall not constitute a Change in Control: (i) any acquisition by
the Company, any of its Subsidiaries or the Greenberg Group; (ii) any acquisition by an employee benefit plan maintained by the Company or any of its Subsidiaries, (iii) any acquisition which complies with Sections 2.8(c)(i) or 2.8(c)(ii);
or (iv) in respect of an Award held by a particular Holder, any acquisition by the Holder or any group of persons including the Holder (or any entity controlled by the Holder or any group of persons including the Holder); or
(b) During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any
new Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in clause (a), (c) or (d) hereof whose election by the Board or nomination for election by
the Companys stockholders was approved by a vote of at least
two-thirds
of the Directors then still in office who either were Directors at the beginning of the
two-year
period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof;
(c) The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more
intermediaries) of (x) a merger, consolidation, reorganization, or business combination, (y) a sale or other disposition of all or substantially all of the Companys assets in any single transaction or series of related transactions
or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
(i) which results
in the Companys voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the
transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Companys assets or otherwise succeeds to the business of the Company (the Company or such person, the
Successor Entity
)) directly or indirectly, at least a majority of the combined voting power of the Successor Entitys outstanding voting securities immediately after the transaction, and
(ii) after which no person or group (other than any member of the Greenberg Group) beneficially owns voting securities representing 50%
or more of the combined voting power of the Successor Entity;
provided
,
however
, that no person or group shall be treated for purposes of this Section 2.8(c)(ii) as beneficially owning 50% or more of the combined voting power of
the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or
(d) The Companys stockholders approve a liquidation or dissolution of the Company.
Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Award (or any portion of an Award) that provides
for the deferral of compensation that is subject to Section 409A, then, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (a), (b), (c) or (d) with respect to
such Award (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Award if such transaction also constitutes a change in control event, as defined in Treasury Regulation Section
1.409A-3(i)(5).
The Administrator shall have full and final authority, which shall be exercised in its sole
discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the
A-2
occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a
change in control event as defined in Treasury Regulation Section
1.409A-3(i)(5)
shall be consistent with such regulation.
2.9
Code
shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance promulgated thereunder, whether issued prior or
subsequent to the grant of any Award.
2.10
Committee
shall mean the Compensation Committee of the Board,
or another committee or subcommittee of the Board or the Compensation Committee of the Board described in Article 12 hereof.
2.11
Common Stock
shall mean the Class A common stock of the Company, par value $0.001 per share.
2.12
Company
shall have the meaning set forth in Article 1.
2.13
Consultant
shall mean any consultant or adviser engaged to provide services to the Company or any Subsidiary who
qualifies as a consultant or advisor under the applicable rules of the Securities and Exchange Commission for registration of shares on a Form
S-8
Registration Statement.
2.14
Covered Employee
shall mean any Employee who is, or could become, a covered employee within the
meaning of Section 162(m) of the Code.
2.15
Director
shall mean a member of the Board, as constituted from
time to time.
2.16
Director Limit
shall have the meaning set forth in Section 4.6.
2.17
Dividend Equivalent
shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on
Shares, awarded under Section 10.2.
2.18
DRO
shall mean a domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder.
2.19
Effective Date
shall mean the date of the 2017 annual meeting of stockholders of the Company, provided that the Plan is approved by the Companys stockholders on such date.
2.20
Eligible Individual
shall mean any person who is an Employee, a Consultant or a
Non-Employee
Director, as determined by the Administrator.
2.21
Employee
shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code and the Treasury Regulations thereunder) of the Company or of any Subsidiary.
2.22
Equity Restructuring
shall mean a nonreciprocal transaction between the Company and its stockholders, such as a
stock dividend, stock split,
spin-off,
rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of Shares (or other securities of the Company) or the
share price of Common Stock (or other securities) and causes a change in the
per-share
value of the Common Stock underlying outstanding Awards.
2.23
Exchange Act
shall mean the Securities Exchange Act of 1934, as amended from time to time.
2.24
Fair Market Value
shall mean, as of any given date, the value of a Share determined as follows:
(a) If the Common Stock is (i) listed on any established securities exchange (such as the New York Stock Exchange, the NASDAQ
Capital Market, the NASDAQ Global Market and the NASDAQ Global Select
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Market), (ii) listed on any national market system or (iii) listed, quoted or traded on any automated quotation system, its Fair Market Value shall be the closing sales price for a Share as
quoted on such exchange or system for such date or, if there is no closing sales price for a Share on the date in question, the closing sales price for a Share on the last preceding date for which such quotation exists, as reported in
The Wall
Street Journal
or such other source as the Administrator deems reliable;
(b) If the Common Stock is not listed on an
established securities exchange, national market system or automated quotation system, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such
date or, if there are no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the last preceding date for which such information exists, as reported in
The Wall Street Journal
or such other
source as the Administrator deems reliable; or
(c) If the Common Stock is neither listed on an established securities
exchange, national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Administrator in good faith.
2.25
Greater Than 10% Stockholder
shall mean an individual then owning (within the meaning of Section 424(d) of
the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation thereof (as defined in Section 424(e) of the Code).
2.26
Greenberg Group
means Robert Greenberg, M. Susan Greenberg, any member of their family, the Greenberg
Family Trust, or any entity controlled by any of the foregoing.
2.27
Holder
shall mean a person who has
been granted an Award.
2.28
Incentive Stock Option
shall mean an Option that is intended to qualify as an
incentive stock option and conforms to the applicable provisions of Section 422 of the Code.
2.29
Non-Employee
Director
shall mean a Director of the Company who is not an Employee.
2.30
Non-Employee
Director Equity Compensation Policy
shall have the meaning
set forth in Section 4.6.
2.31
Non-Qualified
Stock Option
shall mean an Option that is not an Incentive Stock Option or which is designated as an Incentive Stock Option but does not meet the applicable requirements of Section 422 of the Code.
2.32
Option
shall mean a right to purchase Shares at a specified exercise price, granted under Article 6. An Option
shall be either a
Non-Qualified
Stock Option or an Incentive Stock Option;
provided
,
however
, that Options granted to
Non-Employee
Directors and
Consultants shall only be
Non-Qualified
Stock Options.
2.33
Option
Term
shall have the meaning set forth in Section 6.4.
2.34
Organizational Documents
shall
mean, collectively, (a) the Companys articles of incorporation, certificate of incorporation, bylaws or other similar organizational documents relating to the creation and governance of the Company, and (b) the Committees
charter or other similar organizational documentation relating to the creation and governance of the Committee.
2.35
Other Stock or Cash Based Award
shall mean a cash bonus award, stock bonus award, performance award or incentive award that is paid in cash, Shares or a combination of both, awarded under Section 10.1, which may include,
without limitation, deferred stock, deferred stock units, stock payments and performance awards.
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2.36
Performance-Based Compensation
shall mean any compensation that is
intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code.
2.37
Performance Criteria
shall mean the criteria (and adjustments) that the Administrator selects for an Award for purposes of establishing the Performance Goal or Performance Goals for a Performance Period, determined as follows:
(a) The Performance Criteria that shall be used to establish Performance Goals are limited to the following: (i) net
earnings or losses (either before or after one or more of the following: interest, taxes, depreciation, amortization and
non-cash
equity-based compensation expense), (ii) economic value-added, (iii) gross
or net sales or revenue or sales revenue growth, (iv) net income (either before or after taxes and share-based compensation), (v) adjusted net income, (vi) operating earnings or profit (either before or after taxes), (vii) cash flow
(including, but not limited to, operating cash flow and free cash flow), (viii) return on capital (or invested capital), (ix) return on assets, (x) return on shareholders equity, (xi) return on capital, (xii) shareholder
returns, (xiii) return on sales, (xiv) gross or net profit or operating margin, (xv) productivity, (xvi) expense, (xvii) costs, reductions in costs and cost control measures, (xiii) funds from operations, (xix) margins,
(xx) operating efficiency, (xxi) customer satisfaction, (xxii) working capital, (xxiii) earnings or loss per share, (xxiv) adjusted earnings or loss per share, (xxv) price per share, (xxvi) market share,
(xxvii) regulatory achievements or compliance (including, without limitation, regulatory body approval for commercialization of a product), (xxiii) implementation or completion of critical projects, (xxix) economic value, (xxx) booked
revenue pursuant to revenue recognition policies of the Company, (xxxi) growth in deferred revenue and (xxxii) product line revenue, any of which may be measured either in absolute terms or as compared to any incremental increase or
decrease or as compared to results of a peer group or to market performance indicators or indices.
(b) The Administrator, in
its sole discretion, may provide that one or more objectively determinable adjustments shall be made to one or more of the Performance Goals. Such adjustments may include, but are not limited to, one or more of the following: (i) items related
to a change in Applicable Accounting Standards; (ii) items relating to financing activities; (iii) expenses for restructuring or productivity initiatives; (iv) other
non-operating
items;
(v) items related to acquisitions; (vi) items attributable to the business operations of any entity acquired by the Company during the Performance Period; (vii) items related to the sale or disposition of a business or segment of a
business; (viii) items related to discontinued operations that do not qualify as a segment of a business under Applicable Accounting Standards; (ix) items attributable to any stock dividend, stock split, combination or exchange of stock
occurring during the Performance Period; (x) any other items of significant income or expense which are determined to be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or
developments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of the Companys or its Subsidiaries core,
on-going
business
activities; (xiv) items related to acquired
in-process
research and development; (xv) items relating to changes in tax laws; (xvi) items relating to major licensing or partnership arrangements;
(xvii) items relating to asset impairment charges; (xviii) items relating to gains or losses for litigation, arbitration and contractual settlements; (xix) items related to software revenue recognition; (xx) items related to
deferred revenue growth; (xxi) items attributable to expenses incurred in connection with a reduction in force or early retirement initiative; or (xxii) items relating to any other unusual or nonrecurring events or changes in Applicable
Law, Applicable Accounting Standards or business conditions. For all Awards intended to qualify as Performance-Based Compensation, such determinations shall be made within the time prescribed by, and otherwise in compliance with, Section 162(m) of
the Code.
2.38
Performance Goals
shall mean, for a Performance Period, one or more goals established in
writing by the Administrator for the Performance Period based upon one or more Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company
performance or the performance of a Subsidiary, division, business unit, or an individual. The achievement of each Performance Goal shall be determined, to the extent applicable, with reference to Applicable Accounting Standards.
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2.39
Performance Period
shall mean one or more periods of time, which may
be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Holders right to, vesting of, and/or the payment in respect
of, an Award.
2.40
Permitted Transferee
shall mean, with respect to a Holder, any family
member of the Holder, as defined in the General Instructions to Form
S-8
Registration Statement under the Securities Act (or any successor form thereto), after taking into account Applicable Law.
2.41
Plan
shall have the meaning set forth in Article 1.
2.42
Program
shall mean any program adopted by the Administrator pursuant to the Plan containing the terms and
conditions intended to govern a specified type of Award granted under the Plan and pursuant to which such type of Award may be granted under the Plan.
2.43
Restricted Stock
shall mean Common Stock awarded under Article 8 that is subject to certain restrictions and may be subject to risk of forfeiture or repurchase.
2.44
Restricted Stock Units
shall mean an Award providing for the right to receive Shares awarded under Article 9.
2.45
Section 409A
shall mean Section 409A of the Code and the Department of Treasury regulations and other
interpretive guidance issued thereunder, including, without limitation, any such regulations or other guidance that may be issued after the Effective Date.
2.46
Securities Act
shall mean the Securities Act of 1933, as amended.
2.47
Shares
shall mean shares of Common Stock.
2.48
Stock Appreciation Right
shall mean an Award entitling the Holder (or other person entitled to exercise pursuant to the Plan) to exercise all or a specified portion thereof (to the extent then exercisable pursuant to its terms)
and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of such Award from the Fair Market Value on the date of exercise of such Award by the number of Shares with
respect to which such Award shall have been exercised, subject to any limitations the Administrator may impose.
2.49
SAR Term
shall have the meaning set forth in Section 6.4.
2.50
Subsidiary
shall
mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the
determination, securities or interests representing at least fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.
2.51
Substitute Award
shall mean an Award granted under the Plan in connection with a corporate transaction, such as a
merger, combination, consolidation or acquisition of property or stock, in any case, upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity;
provided
,
however
, that in
no event shall the term Substitute Award be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right.
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2.52
Termination of Service
shall mean:
(a) As to a Consultant, the time when the engagement of a Holder as a Consultant to the Company or a Subsidiary is terminated for any
reason, with or without cause, including, without limitation, by resignation, discharge, death or retirement, but excluding terminations where the Consultant simultaneously commences or remains in employment or service with the Company or any
Subsidiary.
(b) As to a
Non-Employee
Director, the time when a Holder who is a
Non-Employee
Director ceases to be a Director for any reason, including, without limitation, a termination by resignation, failure to be elected, death or retirement, but excluding terminations where the Holder
simultaneously commences or remains in employment or service with the Company or any Subsidiary.
(c) As to an Employee, the
time when the employee-employer relationship between a Holder and the Company or any Subsidiary is terminated for any reason, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding
terminations where the Holder simultaneously commences or remains in employment or service with the Company or any Subsidiary.
The Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to any Termination of
Service, including, without limitation, whether a Termination of Service has occurred, whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of
Service;
provided
,
however
, that, with respect to Incentive Stock Options, unless the Administrator otherwise provides in the terms of any Program, Award Agreement or otherwise, or as otherwise required by Applicable Law, a leave of
absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Service only if, and to the extent that, such leave of absence, change in status or other
change interrupts employment for the purposes of Section 422(a)(2) of the Code and the then-applicable regulations and revenue rulings under said Section. For purposes of the Plan, a Holders employee-employer relationship or consultancy
relationship shall be deemed to be terminated in the event that the Subsidiary employing or contracting with such Holder ceases to remain an Subsidiary following any merger, sale of stock or other corporate transaction or event (including, without
limitation, a
spin-off).
ARTICLE 3.
SHARES SUBJECT TO THE PLAN
3.1
Number of Shares
.
(a) Subject to Sections 3.1(b) and 13.2, the
aggregate number of Shares which may be issued or transferred pursuant to Awards (including, without limitation, Incentive Stock Options) under the Plan is 10,000,000 Shares (the
Share Limit
). Any Shares distributed pursuant to an
Award may consist, in whole or in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open market.
(b) If any Shares subject to an Award are forfeited or expire, or such Award is settled for cash (in whole or in part) (including Shares repurchased by the Company under Section 8.4 at the same price
paid by the Holder), the Shares subject to such Award shall, to the extent of such forfeiture, expiration or cash settlement, again be available for future grants of Awards under the Plan and shall be added back to the Share Limit in the same number
of Shares as were debited from the Share Limit in respect of the grant of such Award (as may be adjusted in accordance with Section 13.2 hereof). Notwithstanding anything to the contrary contained herein, the following Shares shall not be added
to the Shares authorized for grant under Section 3.1(a) and shall not be available for future grants of Awards: (i) Shares tendered by a Holder or withheld by the Company in payment of the exercise price of an Option; (ii) Shares tendered
by the Holder or withheld by the Company to satisfy any tax
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withholding obligation with respect to an Award; (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation
Right on exercise thereof; and (iv) Shares purchased on the open market with the cash proceeds from the exercise of Options. The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the
Shares available for issuance under the Plan. Notwithstanding the provisions of this Section 3.1(b), no Shares may again be optioned, granted or awarded if such action would cause an Incentive Stock Option to fail to qualify as an incentive stock
option under Section 422 of the Code.
(c) Substitute Awards shall not reduce the Shares authorized for grant under the
Plan, except as may be required by reason of Section 422 of the Code. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a
pre-existing
plan approved by its stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such
pre-existing
plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration
payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan to the extent that grants of Awards using such
available Shares are (i) permitted without stockholder approval under the rules of the principal securities exchange on which the Common Stock is then listed and (ii) made to individuals who were not employed by or providing services to
the Company or its Subsidiaries immediately prior to such acquisition or combination.
3.2
Limitation on Number of Shares
Subject to Awards
. Notwithstanding any provision in the Plan to the contrary, and subject to Section 13.2, the maximum aggregate number of Shares with respect to one or more Awards that may be granted to any one person during any calendar
year shall be 1,500,000 Shares and the maximum aggregate amount of cash that may be paid in cash to any one person during any calendar year with respect to one or more Awards payable in cash shall be $15,000,000. To the extent required by Section
162(m) of the Code, Shares subject to Awards which are canceled shall continue to be counted against the Award Limit.
ARTICLE 4.
GRANTING OF AWARDS
4.1
Participation
. The Administrator may, from time to time, select from among all Eligible Individuals, those to whom an Award shall be granted and shall determine the nature and amount of each
Award, which shall not be inconsistent with the requirements of the Plan. Except for any
Non-Employee
Directors right to Awards that may be required pursuant to the
Non-Employee
Director Equity Compensation Policy as described in Section 4.6, no Eligible Individual or other Person shall have any right to be granted an Award pursuant to the Plan and neither the
Company nor the Administrator is obligated to treat Eligible Individuals, Holders or any other persons uniformly. Participation by each Holder in the Plan shall be voluntary and nothing in the Plan or any Program shall be construed as mandating that
any Eligible Individual or other Person shall participate in the Plan.
4.2
Award Agreement
. Each Award shall be
evidenced by an Award Agreement that sets forth the terms, conditions and limitations for such Award as determined by the Administrator in its sole discretion (consistent with the requirements of the Plan and any applicable Program). Award
Agreements evidencing Awards intended to qualify as Performance-Based Compensation shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code. Award Agreements evidencing Incentive
Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.
4.3
Limitations Applicable to Section
16 Persons
. Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then
subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act
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(including Rule
16b-3
of the Exchange Act and any amendments thereto) that are requirements for the application of such exemptive rule. To the extent
permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
4.4
At-Will
Service
. Nothing in the Plan or in any Program or Award Agreement hereunder shall confer upon any Holder any right to continue in the employ of,
or as a Director or Consultant for, the Company or any Subsidiary, or shall interfere with or restrict in any way the rights of the Company and any Subsidiary, which rights are hereby expressly reserved, to discharge any Holder at any time for any
reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Holder
and the Company or any Subsidiary.
4.5
Foreign Holders
. Notwithstanding any provision of the Plan or applicable
Program to the contrary, in order to comply with the laws in countries other than the United States in which the Company and its Subsidiaries operate or have Employees,
Non-Employee
Directors or Consultants,
or in order to comply with the requirements of any foreign securities exchange or other Applicable Law, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Subsidiaries shall be covered by the
Plan; (b) determine which Eligible Individuals outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Individuals outside the United States to comply with
Applicable Law (including, without limitation, applicable foreign laws or listing requirements of any foreign securities exchange); (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may
be necessary or advisable;
provided
,
however
, that no such subplans and/or modifications shall increase the share limitation contained in Section 3.1, the Award Limit or the Director Limit; and (e) take any action, before or
after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any foreign securities exchange.
4.6
Non-Employee
Director Awards
. The Administrator, in its sole discretion, may provide
that Awards granted to
Non-Employee
Directors shall be granted pursuant to a written nondiscretionary formula established by the Administrator (the
Non-Employee
Director Equity Compensation Policy
), subject to the limitations of the Plan. The
Non-Employee
Director Equity Compensation Policy shall set forth the type of Award(s) to be granted to
Non-Employee
Directors, the number of Shares to be subject to
Non-Employee
Director Awards, the conditions on which such Awards shall be granted, become exercisable and/or
payable and expire, and such other terms and conditions as the Administrator shall determine in its sole discretion. The
Non-Employee
Director Equity Compensation Policy may be modified by the Administrator
from time to time in its sole discretion. Notwithstanding any provision to the contrary in the Plan or in the
Non-Employee
Director Equity Compensation Policy, the grant date fair value (determined as of the
date of grant under Applicable Accounting Standards) of equity-based Awards granted to any
Non-Employee
Director during any calendar year shall not exceed $500,000 (the
Director Limit
).
ARTICLE 5.
PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS PERFORMANCE-BASED COMPENSATION
5.1
Purpose
. The Administrator may, in its sole discretion, (a) determine whether an Award is intended to qualify as Performance-Based Compensation, and (b) at any time after such
determination, alter such intent for any or no reason. If the Administrator, in its sole discretion, decides to grant an Award that is intended to qualify as Performance-Based Compensation (other than an Option or Stock Appreciation Right), then the
provisions of this Article 5 shall control over any contrary provision contained in the Plan or any applicable Program;
provided
that, if after such decision the Administrator alters such intention for any reason, the provisions of this
Article 5 shall no longer control over any other provision contained in the Plan or any applicable Program. The
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Administrator may, in its sole discretion, (i) grant Awards to other Eligible Individuals that are based on Performance Criteria or Performance Goals or any such other criteria and goals as
the Administrator shall establish, but that do not satisfy the requirements of this Article 5 and that are not intended to qualify as Performance-Based Compensation, and (ii) subject any Awards intended to qualify as Performance-Based
Compensation to additional conditions and restrictions unrelated to any Performance Criteria or Performance Goals (including, without limitation, continued employment or service requirements) to the extent such Awards otherwise satisfy the
requirements of this Article 5 with respect to the Performance Criteria and Performance Goals applicable thereto. Unless otherwise specified by the Administrator at the time of grant, the Performance Criteria with respect to an Award intended to be
Performance-Based Compensation payable to a Covered Employee shall be determined on the basis of Applicable Accounting Standards.
5.2
Procedures with Respect to Performance-Based Awards
. To the extent necessary to comply with the requirements of Section 162(m)(4)(C) of the Code, with respect to any Award which is intended to
qualify as Performance-Based Compensation, no later than 90 days following the commencement of any Performance Period or any designated fiscal period or period of service (or such earlier time as may be required under Section 162(m) of the
Code), the Administrator shall, in writing, (a) designate one or more Eligible Individuals, (b) select the Performance Criteria applicable to the Performance Period, (c) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such Performance Period based on the Performance Criteria, and (d) specify the relationship between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned
by each Covered Employee for such Performance Period. Following the completion of each Performance Period, the Administrator shall certify in writing whether and the extent to which the applicable Performance Goals have been achieved for such
Performance Period. In determining the amount earned under such Awards, the Administrator (i) shall, unless otherwise provided in an Award Agreement, have the right to reduce or eliminate the amount payable at a given level of performance to
take into account additional factors that the Administrator may deem relevant, including the assessment of individual or corporate performance for the Performance Period, but (ii) shall in no event have the right to increase the amount payable
for any reason.
5.3
Payment of Performance-Based Awards
. Unless otherwise provided in the applicable Program or Award
Agreement and only to the extent otherwise permitted by Section 162(m) of the Code, as to an Award that is intended to qualify as Performance-Based Compensation, the Holder must be employed by the Company or a Subsidiary throughout the Performance
Period. Unless otherwise provided in the applicable Program or Award Agreement, a Holder shall be eligible to receive payment pursuant to such Awards for a Performance Period only if and to the extent the Performance Goals for such Performance
Period are achieved.
5.4
Additional Limitations
. Notwithstanding any other provision of the Plan and except as
otherwise determined by the Administrator, any Award which is granted to an Eligible Individual and is intended to qualify as Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code or
any regulations or rulings issued thereunder that are requirements for qualification as Performance-Based Compensation, and the Plan and the applicable Program and Award Agreement shall be deemed amended to the extent necessary to conform to such
requirements.
ARTICLE 6.
GRANTING OF OPTIONS AND STOCK APPRECIATION RIGHTS
6.1
Granting of
Options and Stock Appreciation Rights to Eligible Individuals
. The Administrator is authorized to grant Options and Stock Appreciation Rights to Eligible Individuals from time to time, in its sole discretion, on such terms and conditions as it
may determine, which shall not be inconsistent with the Plan.
6.2
Qualification of Incentive Stock Options
. The
Administrator may grant Options intended to qualify as Incentive Stock Options only to employees of the Company, any of the Companys present or future parent corporations or subsidiary corporations as defined in
Sections 424(e) or (f) of the Code, respectively, and any
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other entities the employees of which are eligible to receive Incentive Stock Options under the Code. No person who qualifies as a Greater Than 10% Stockholder may be granted an Incentive Stock
Option unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code. To the extent that the aggregate fair market value of stock with respect to which incentive stock options (within the
meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, and all other plans of the Company and any parent corporation or
subsidiary corporation thereof (as defined in Section 424(e) and 424(f) of the Code, respectively), exceeds $100,000, the Options shall be treated as
Non-Qualified
Stock Options to the extent required by
Section 422 of the Code. The rule set forth in the immediately preceding sentence shall be applied by taking Options and other incentive stock options into account in the order in which they were granted and the fair market value of
stock shall be determined as of the time the respective options were granted. Any interpretations and rules under the Plan with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. Neither the
Company nor the Administrator shall have any liability to a Holder, or any other Person, (a) if an Option (or any part thereof) which is intended to qualify as an Incentive Stock Option fails to qualify as an Incentive Stock Option or
(b) for any action or omission by the Company or the Administrator that causes an Option not to qualify as an Incentive Stock Option, including without limitation, the conversion of an Incentive Stock Option to a
Non-Qualified
Stock Option or the grant of an Option intended as an Incentive Stock Option that fails to satisfy the requirements under the Code applicable to an Incentive Stock Option.
6.3
Option and Stock Appreciation Right Exercise Price
. The exercise price per Share subject to each Option and Stock Appreciation
Right shall be set by the Administrator, but shall not be less than 100% of the Fair Market Value of a Share on the date the Option or Stock Appreciation Right, as applicable, is granted (or, as to Incentive Stock Options, on the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code). In addition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such price shall not be less than 110% of the Fair Market Value of a Share
on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code). Notwithstanding the foregoing, in the case of an Option or Stock Appreciation Right that is a Substitute Award,
the exercise price per share of the Shares subject to such Option or Stock Appreciation Right, as applicable, may be less than the Fair Market Value per share on the date of grant;
provided
that the exercise price of any Substitute Award
shall be determined in accordance with the applicable requirements of Section 424 and 409A of the Code.
6.4
Option
and SAR Term
. The term of each Option (the
Option Term
) and the term of each Stock Appreciation Right (the
SAR Term
) shall be set by the Administrator in its sole discretion;
provided
,
however
,
that the Option Term or SAR Term, as applicable, shall not be more than (a) ten (10) years from the date the Option or Stock Appreciation Right, as applicable, is granted to an Eligible Individual (other than a Greater Than 10% Stockholder), or
(b) five (5) years from the date an Incentive Stock Option is granted to a Greater Than 10% Stockholder. Except as limited by the requirements of Section 409A or Section 422 of the Code and regulations and rulings thereunder or the first
sentence of this Section 6.4 and without limiting the Companys rights under Section 11.7, the Administrator may extend the Option Term of any outstanding Option or the SAR Term of any outstanding Stock Appreciation Right, and may
extend the time period during which vested Options or Stock Appreciation Rights may be exercised, in connection with any Termination of Service of the Holder or otherwise, and may amend, subject to Section 11.7 and 13.1, any other term or
condition of such Option or Stock Appreciation Right relating to such Termination of Service of the Holder or otherwise.
6.5
Option and SAR Vesting
. The period during which the right to exercise, in whole or in part, an Option or Stock Appreciation Right vests in the Holder shall be set by the Administrator and set forth in the applicable Award Agreement. Unless
otherwise determined by the Administrator in the Award Agreement, the applicable Program or by action of the Administrator following the grant of the Option or Stock Appreciation Right, (a) no portion of an Option or Stock Appreciation Right
which is unexercisable at a Holders Termination of Service shall thereafter become exercisable and (b) the portion of an Option or Stock Appreciation Right that is unexercisable at a Holders Termination of Service shall
automatically expire on the date of such Termination of Service.
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6.6
Substitution of Stock Appreciation Rights
. The Administrator may provide in the
applicable Program or Award Agreement evidencing the grant of an Option that the Administrator, in its sole discretion, shall have the right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such
Option;
provided
that such Stock Appreciation Right shall be exercisable with respect to the same number of Shares for which such substituted Option would have been exercisable, and shall also have the same exercise price, vesting schedule
and remaining term as the substituted Option.
ARTICLE 7.
EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS
7.1
Exercise and Payment
. An exercisable Option or Stock Appreciation Right may be exercised in whole or in part. However, an Option or Stock Appreciation Right shall not be exercisable with
respect to fractional Shares and the Administrator may require that, by the terms of the Option or Stock Appreciation Right, a partial exercise must be with respect to a minimum number of Shares. Payment of the amounts payable with respect to Stock
Appreciation Rights pursuant to this Article 7 shall be in cash, Shares (based on its Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Administrator.
7.2
Manner of Exercise
. Except as set forth in Section 7.3, all or a portion of an exercisable Option or Stock Appreciation
Right shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, the stock plan administrator of the Company or such other person or entity designated by the Administrator, or his, her or its office, as
applicable:
(a) A written or electronic notice complying with the applicable rules established by the Administrator stating
that the Option or Stock Appreciation Right, or a portion thereof, is exercised. The notice shall be signed or otherwise acknowledged electronically by the Holder or other person then entitled to exercise the Option or Stock Appreciation Right or
such portion thereof;
(b) Such representations and documents as the Administrator, in its sole discretion, deems necessary or
advisable to effect compliance with Applicable Law.
(c) In the event that the Option shall be exercised pursuant to
Section 11.3 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option or Stock Appreciation Right, as determined in the sole discretion of the Administrator; and
(d) Full payment of the exercise price and applicable withholding taxes for the Shares with respect to which the Option or Stock
Appreciation Right, or portion thereof, is exercised, in a manner permitted by the Administrator in accordance with Sections 11.1 and 11.2.
7.3
Notification Regarding Disposition
. The Holder shall give the Company prompt written or electronic notice of any disposition of Shares acquired by exercise of an Incentive Stock Option which
occurs within (a) two years from the date of grant (including the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) of such Option to such Holder, or (b) one year after the date of transfer of
such Shares to such Holder. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Holder in such disposition or other
transfer.
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ARTICLE 8.
AWARD OF RESTRICTED STOCK
8.1
Award of Restricted Stock
. The
Administrator is authorized to grant Restricted Stock to Eligible Individuals, and shall determine the terms and conditions, including the restrictions applicable to each award of Restricted Stock, which terms and conditions shall not be
inconsistent with the Plan or any applicable Program, and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate. The Administrator shall establish the purchase price, if any, and form of payment for Restricted
Stock;
provided
,
however
, that if a purchase price is charged, such purchase price shall be no less than the par value, if any, of the Shares to be purchased, unless otherwise permitted by Applicable Law. In all cases, legal
consideration shall be required for each issuance of Restricted Stock to the extent required by Applicable Law.
8.2
Rights
as Stockholders
. Subject to Section 8.4, upon issuance of Restricted Stock, the Holder shall have, unless otherwise provided by the Administrator, all the rights of a stockholder with respect to said Shares, subject to the restrictions in
the Plan, any applicable Program and/or the applicable Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the Shares to the extent such dividends and other distributions have a record
date that is on or after the date on which the Holder to whom such Restricted Stock are granted becomes the record holder of such Restricted Stock;
provided
,
however
, that, in the sole discretion of the Administrator, any extraordinary
distributions with respect to the Shares may be subject to the restrictions set forth in Section 8.3. In addition, with respect to a share of Restricted Stock with performance-based vesting, dividends which are paid prior to vesting shall only
be paid out to the Holder to the extent that the performance-based or contingent vesting conditions are subsequently satisfied and the share of Restricted Stock vests.
8.3
Restrictions
. All shares of Restricted Stock (including any shares received by Holders thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall be subject to such restrictions and vesting requirements as the Administrator shall provide in the applicable Program or Award Agreement. By action taken after the Restricted Stock is issued, the Administrator
may, on such terms and conditions as it may determine to be appropriate, accelerate the vesting of such Restricted Stock by removing any or all of the restrictions imposed by the terms of the applicable Program or Award Agreement.
8.4
Repurchase or Forfeiture of Restricted Stock
. Except as otherwise determined by the Administrator, if no price was paid by the
Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Holders rights in unvested Restricted Stock then subject to restrictions shall lapse, and such Restricted Stock shall automatically be
surrendered to the Company and cancelled without consideration on the date of such Termination of Service. If a price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the
Company shall have the right to repurchase from the Holder the unvested Restricted Stock then subject to restrictions at a cash price per share equal to the price paid by the Holder for such Restricted Stock or such other amount as may be specified
in the applicable Program or Award Agreement. Notwithstanding the foregoing, the Administrator, in its sole discretion, may provide that upon certain events, including, without limitation, a Change in Control, the Holders death, retirement or
disability or any other specified Termination of Service or any other event, the Holders rights in unvested Restricted Stock then subject to restrictions shall not lapse, such Restricted Stock shall vest and cease to be forfeitable and, if
applicable, the Company shall cease to have a right of repurchase.
8.5
Section 83(b) Election
. If a Holder makes an
election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of
the Code, the Holder shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service along with proof of the timely filing thereof with the Internal Revenue Service.
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ARTICLE 9.
AWARD OF RESTRICTED STOCK UNITS
9.1
Grant of Restricted Stock
Units
. The Administrator is authorized to grant Awards of Restricted Stock Units to any Eligible Individual selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.
9.2
Term
. Except as otherwise provided herein, the term of a Restricted Stock Unit award shall be set by the Administrator in its
sole discretion.
9.3
Purchase Price
. The Administrator shall specify the purchase price, if any, to be paid by the
Holder to the Company with respect to any Restricted Stock Unit award;
provided
,
however
, that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by Applicable Law.
9.4
Vesting of Restricted Stock Units
. At the time of grant, the Administrator shall specify the date or dates on which the
Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, including, without limitation, vesting based upon the Holders duration of service to the Company or any
Subsidiary, one or more Performance Criteria, Company or Subsidiary performance, individual performance or other specific criteria, in each case on a specified date or dates or over any period or periods, as determined by the Administrator.
9.5
Payment
. At the time of grant, the Administrator shall specify the payment date applicable to each grant of
Restricted Stock Units, which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the Holder (if permitted by the applicable Award Agreement), consistent with the applicable provisions of Section
409A of the Code or an exemption therefrom. On the payment date, the Company shall, in accordance with the applicable Award Agreement and subject to Section 11.4(f), transfer to the Holder one unrestricted, fully transferable Share for each
Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited, or in the sole discretion of the Administrator, an amount in cash equal to the Fair Market Value of such Shares on the payment date or a combination of cash
and Common Stock as determined by the Administrator.
9.6
Payment upon Termination of Service
. An Award of Restricted
Stock Units shall only be payable while the Holder is an Employee, a Consultant or a member of the Board, as applicable;
provided
,
however
, that the Administrator, in its sole discretion, may provide (in an Award Agreement or
otherwise) that a Restricted Stock Unit award may be paid subsequent to a Termination of Service in certain events, including a Change in Control, the Holders death, retirement or disability or any other specified Termination of Service.
ARTICLE 10.
AWARD OF OTHER STOCK OR CASH BASED AWARDS AND DIVIDEND EQUIVALENTS
10.1
Other Stock or Cash Based Awards
. The Administrator is authorized to (a) grant Other Stock or Cash Based Awards, including awards entitling a Holder to receive Shares or cash to be delivered immediately or in the future, to any Eligible
Individual and (b) determine whether such Other Stock or Cash Based Awards shall be Performance-Based Compensation. Subject to the provisions of the Plan and any applicable Program, the Administrator shall determine the terms and conditions of
each Other Stock or Cash Based Award, including the term of the Award, any exercise or purchase price, performance goals, including the Performance Criteria, transfer restrictions, vesting conditions and other terms and conditions applicable
thereto, which shall be set forth in the applicable Award Agreement. Other Stock or Cash Based Awards may be paid in cash, Shares, or a combination of cash and Shares, as determined by the Administrator, and may be available as a form of payment in
the settlement of other Awards granted under the Plan, as stand-alone payments, as a part of a bonus, deferred bonus, deferred compensation or other arrangement, and/or as payment in lieu of compensation to which an Eligible Individual is otherwise
entitled.
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10.2
Dividend Equivalents
. Dividend Equivalents may be granted by the Administrator,
either alone or in tandem with another Award, based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date the Dividend Equivalents are granted to a Holder (or such other date as may
be determined by the Administrator) and the date such Dividend Equivalents terminate or expire, as determined by the Administrator. Such Dividend Equivalents shall be converted to cash or additional Shares by such formula and at such time and
subject to such restrictions and limitations as may be determined by the Administrator. In addition, Dividend Equivalents with respect to an Award with performance-based vesting that are based on dividends paid prior to the vesting of such Award
shall only be paid out to the Holder to the extent that the performance-based vesting conditions are subsequently satisfied and the Award vests. Notwithstanding the foregoing, no Dividend Equivalents shall be payable with respect to Options or Stock
Appreciation Rights.
ARTICLE 11.
ADDITIONAL TERMS OF AWARDS
11.1
Payment
. The Administrator shall
determine the method or methods by which payments by any Holder with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash or check, (b) Shares (including Shares issuable pursuant to the
exercise, vesting or payment of the Award) having a fair market value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Holder has placed a market sell order with a broker
acceptable to the Company with respect to Shares then issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate
payments required;
provided
that payment of such proceeds is then made to the Company upon settlement of such sale, (d) other form of legal consideration acceptable to the Administrator in its sole discretion, or (e) any combination
of the above permitted forms of payment. Notwithstanding any other provision of the Plan to the contrary, no Holder who is a Director or an executive officer of the Company within the meaning of Section 13(k) of the Exchange Act shall be
permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the
Exchange Act.
11.2
Tax Withholding
. The Company or any Subsidiary shall have the authority and the right to deduct or
withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Holders FICA, employment tax or other social security contribution obligation) required by law to be
withheld with respect to any taxable event concerning a Holder arising as a result of the Plan or any Award. The Administrator may, in its sole discretion and in satisfaction of the foregoing requirement, satisfy, or allow a Holder to satisfy, such
obligations by any payment means described in Section 11.1 hereof, including without limitation, by withholding, or allowing such Holder to elect to have the Company or any Subsidiary withhold, Shares otherwise issuable under an Award (or allow
the surrender of Shares). The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a fair market value on the date of withholding or repurchase no greater than the aggregate amount of such
liabilities based on the maximum individual statutory withholding rates in the applicable jurisdiction. The Administrator shall determine the fair market value of the Shares, consistent with applicable provisions of the Code, for tax withholding
obligations due in connection with a broker-assisted cashless Option or Stock Appreciation Right exercise involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.
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11.3
Transferability of Awards
.
(a) Except as otherwise provided in Sections 11.3(b) and 11.3(c):
(i) No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than (A) by will or the laws of
descent and distribution or (B) subject to the consent of the Administrator, pursuant to a DRO, unless and until such Award has been exercised or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares
have lapsed;
(ii) No Award or interest or right therein shall be liable for or otherwise subject to the debts, contracts or
engagements of the Holder or the Holders successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy) unless and until such Award has been exercised, or the Shares underlying such Award have been issued,
and all restrictions applicable to such Shares have lapsed, and any attempted disposition of an Award prior to satisfaction of these conditions shall be null and void and of no effect, except to the extent that such disposition is permitted by
Section 11.3(a)(i); and
(iii) During the lifetime of the Holder, only the Holder may exercise any exercisable portion of an
Award granted to such Holder under the Plan, unless it has been disposed of pursuant to a DRO. After the death of the Holder, any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the Plan or the
applicable Program or Award Agreement, be exercised by the Holders personal representative or by any person empowered to do so under the deceased Holders will or under the then-applicable laws of descent and distribution.
(b) Notwithstanding Section 11.3(a), the Administrator, in its sole discretion, may determine to permit a Holder or a Permitted
Transferee of such Holder to transfer an Award other than an Incentive Stock Option (unless such Incentive Stock Option is intended to become a Nonqualified Stock Option) to any one or more Permitted Transferees of such Holder, subject to the
following terms and conditions: (i) an Award transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than (A) to another Permitted Transferee of the applicable Holder or (B) by
will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO; (ii) an Award transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as
applicable to the original Holder (other than the ability to further transfer the Award to any Person other than another Permitted Transferee of the applicable Holder); and (iii) the Holder (or transferring Permitted Transferee) and the
receiving Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements
for an exemption for the transfer under Applicable Law and (C) evidence the transfer. In addition, and further notwithstanding Section 11.3(a), hereof, the Administrator, in its sole discretion, may determine to permit a Holder to transfer
Incentive Stock Options to a trust that constitutes a Permitted Transferee if, under Section 671 of the Code and other Applicable Law, the Holder is considered the sole beneficial owner of the Incentive Stock Option while it is held in the
trust.
(c) Notwithstanding Section 11.3(a), a Holder may, in the manner determined by the Administrator, designate a
beneficiary to exercise the rights of the Holder and to receive any distribution with respect to any Award upon the Holders death. A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is
subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Holder and any additional restrictions deemed necessary or appropriate by the Administrator. If the Holder is married or a domestic partner in a
domestic partnership qualified under Applicable Law and resides in a community property state, a designation of a person other than the Holders spouse or domestic partner, as applicable, as the Holders beneficiary with respect to more
than 50% of the Holders interest in the Award shall not be effective without the prior written or electronic consent of the
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Holders spouse or domestic partner. If no beneficiary has been designated or survives the Holder, payment shall be made to the person entitled thereto pursuant to the Holders will or
the laws of descent and distribution. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Holder at any time;
provided
that the change or revocation is delivered in writing to the Administrator prior to the
Holders death.
11.4
Conditions to Issuance of Shares
.
(a) The Administrator shall determine the methods by which Shares shall be delivered or deemed to be delivered to Holders.
Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of any Award, unless and until the Administrator has
determined, with advice of counsel, that the issuance of such Shares is in compliance with Applicable Law and the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and
conditions provided herein, the Administrator may require that a Holder make such reasonable covenants, agreements and representations as the Administrator, in its sole discretion, deems advisable in order to comply with Applicable Law.
(b) All share certificates delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to any
stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with Applicable Law. The Administrator may place legends on any share certificate or book entry to reference restrictions applicable to the
Shares (including, without limitation, restrictions applicable to Restricted Stock).
(c) The Administrator shall have the
right to require any Holder to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.
(d) No fractional Shares shall be issued and the Administrator, in its sole discretion, shall determine whether cash shall be
given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding down.
(e) The Company,
in its sole discretion, may (i) retain physical possession of any stock certificate evidencing Shares until any restrictions thereon shall have lapsed and/or (ii) require that the stock certificates evidencing such Shares be held in
custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Holder deliver a stock power, endorsed in blank, relating to such Shares.
(f) Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by Applicable Law, the
Company shall not deliver to any Holder certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).
11.5
Forfeiture and Claw-Back Provisions
. All Awards (including any proceeds, gains or other economic benefit actually
or constructively received by a Holder upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall, to the extent set forth in such claw-back policy and/or in the applicable Award Agreement, be
subject to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with the requirements of Applicable Law, including, without limitation, the Dodd-Frank Wall Street
Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, whether or not such claw-back policy was in place at the time of grant of an Award.
11.6
Prohibition on Repricing
. Subject to Section 13.2, the Administrator shall not, without the approval of the stockholders of the Company, (a) authorize the amendment of any
outstanding Option or Stock Appreciation
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Right to reduce its price per Share, or (b) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per Share
exceeds the Fair Market Value of the underlying Shares.
11.7
Amendment of Awards
. Subject to Section 11.6 and
Applicable Law, the Administrator may amend, modify or terminate any outstanding Award, including but not limited to, substituting therefor another Award of the same or a different type, changing the date of exercise or settlement, and converting an
Incentive Stock Option to a
Non-Qualified
Stock Option. The Holders consent to such action shall be required unless (a) the Administrator determines that the action, taking into account any related
action, would not materially and adversely affect the Holder, or (b) the change is otherwise permitted under the Plan (including, without limitation, under Section 13.2 or 13.10).
11.8
Data Privacy
. As a condition of receipt of any Award, each Holder explicitly and unambiguously consents to the collection,
use and transfer, in electronic or other form, of personal data as described in this Section 11.8 by and among, as applicable, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the
Holders participation in the Plan. The Company and its Subsidiaries may hold certain personal information about a Holder, including but not limited to, the Holders name, home address and telephone number, date of birth, social security
or insurance number or other identification number, salary, nationality, job title(s), any shares of stock held in the Company or any of its Subsidiaries, details of all Awards, in each case, for the purpose of implementing, managing and
administering the Plan and Awards (the
Data
). The Company and its Subsidiaries may transfer the Data amongst themselves as necessary for the purpose of implementation, administration and management of a Holders participation
in the Plan, and the Company and its Subsidiaries may each further transfer the Data to any third parties assisting the Company and its Subsidiaries in the implementation, administration and management of the Plan. These recipients may be located in
the Holders country, or elsewhere, and the Holders country may have different data privacy laws and protections than the recipients country. Through acceptance of an Award, each Holder authorizes such recipients to receive,
possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Holders participation in the Plan, including any requisite transfer of such Data as may be required to a
broker or other third party with whom the Company or any of its Subsidiaries or the Holder may elect to deposit any Shares. The Data related to a Holder will be held only as long as is necessary to implement, administer, and manage the Holders
participation in the Plan. A Holder may, at any time, view the Data held by the Company with respect to such Holder, request additional information about the storage and processing of the Data with respect to such Holder, recommend any necessary
corrections to the Data with respect to the Holder or refuse or withdraw the consents herein in writing, in any case without cost, by contacting his or her local human resources representative. The Company may cancel Holders ability to
participate in the Plan and, in the Administrators discretion, the Holder may forfeit any outstanding Awards if the Holder refuses or withdraws his or her consents as described herein. For more information on the consequences of refusal to
consent or withdrawal of consent, Holders may contact their local human resources representative.
ARTICLE 12.
ADMINISTRATION
12.1
Administrator
. The Committee shall administer the Plan (except as otherwise permitted herein). To the extent necessary to comply with Rule
16b-3
of the
Exchange Act, and with respect to Awards that are intended to be Performance-Based Compensation, including Options and Stock Appreciation Rights, then the Committee shall take all action with respect to such Awards, and the individuals taking such
action shall consist solely of two or more
Non-Employee
Directors, each of whom is intended to qualify as both a
non-employee
director as defined by Rule
16b-3
of the Exchange Act or any successor rule and an outside director for purposes of Section 162(m) of the Code. Additionally, to the extent required by Applicable Law, each of the individuals
constituting the Committee shall be an independent director under the rules of any securities exchange or
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automated quotation system on which the Shares are listed, quoted or traded. Notwithstanding the foregoing, any action taken by the Committee shall be valid and effective, whether or not members
of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 12.1 or the Organizational Documents. Except as may otherwise be provided in the Organizational
Documents or as otherwise required by Applicable Law, (a) appointment of Committee members shall be effective upon acceptance of appointment, (b) Committee members may resign at any time by delivering written or electronic notice to the
Board and (c) vacancies in the Committee may only be filled by the Board. Notwithstanding the foregoing, (a) the full Board, acting by a majority of its members in office, shall conduct the general administration of the Plan with respect
to Awards granted to
Non-Employee
Directors and, with respect to such Awards, the terms Administrator as used in the Plan shall be deemed to refer to the Board and (b) the Board or Committee
may delegate its authority hereunder to the extent permitted by Section 12.6.
12.2
Duties and Powers of
Administrator
. It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with its provisions. The Administrator shall have the power to interpret the Plan, all Programs and Award Agreements, and to
adopt such rules for the administration, interpretation and application of the Plan and any Program as are not inconsistent with the Plan, to interpret, amend or revoke any such rules and to amend the Plan or any Program or Award Agreement;
provided
that the rights or obligations of the Holder of the Award that is the subject of any such Program or Award Agreement are not materially adversely affected by such amendment, unless the consent of the Holder is obtained or such
amendment is otherwise permitted under Section 11.5 or Section 13.10. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee in its capacity as the Administrator
under the Plan except with respect to matters which under Rule
16b-3
under the Exchange Act or any successor rule, or Section 162(m) of the Code, or any regulations or rules issued thereunder, or the rules of
any securities exchange or automated quotation system on which the Shares are listed, quoted or traded are required to be determined in the sole discretion of the Committee.
12.3
Action by the Administrator
. Unless otherwise established by the Board, set forth in any Organizational Documents or as required by Applicable Law, a majority of the Administrator shall
constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Administrator in lieu of a meeting, shall be deemed the acts of the Administrator.
Each member of the Administrator is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Subsidiary, the Companys independent certified
public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.
12.4
Authority of Administrator
. Subject to the Organizational Documents, any specific designation in the Plan and Applicable Law, the Administrator has the exclusive power, authority and sole
discretion to:
(a) Designate Eligible Individuals to receive Awards;
(b) Determine the type or types of Awards to be granted to each Eligible Individual (including, without limitation, any Awards granted in
tandem with another Award granted pursuant to the Plan);
(c) Determine the number of Awards to be granted and the number of
Shares to which an Award will relate;
(d) Determine the terms and conditions of any Award granted pursuant to the Plan,
including, but not limited to, the exercise price, grant price, purchase price, any Performance Criteria or other performance criteria, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to
non-competition
and claw-back and recapture of gain on an Award, based in each case on such
considerations as the Administrator in its sole discretion determines;
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(e) Determine whether, to what extent, and under what circumstances an Award may be settled
in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not be identical for each Holder;
(g) Decide all other matters that must be determined in connection with an Award;
(h) Establish, adopt, or revise any Programs, rules and regulations as it may deem necessary or advisable to administer the Plan;
(i) Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement;
(j) Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or
advisable to administer the Plan; and
(k) Accelerate wholly or partially the vesting or lapse of restrictions of any Award or
portion thereof at any time after the grant of an Award, subject to whatever terms and conditions it selects and Section 13.2.
12.5
Decisions Binding
. The Administrators interpretation of the Plan, any Awards granted pursuant to the Plan, any Program or any Award Agreement and all decisions and determinations by the
Administrator with respect to the Plan are final, binding and conclusive on all Persons.
12.6
Delegation of Authority
.
The Board or Committee may from time to time delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to grant or amend Awards or to take other administrative actions pursuant to this Article
12;
provided
,
however
, that in no event shall an officer of the Company be delegated the authority to grant Awards to, or amend Awards held by, the following individuals: (a) individuals who are subject to Section 16
of the Exchange Act, (b) Covered Employees with respect to Awards intended to constitute Performance Based Compensation, or (c) officers of the Company (or Directors) to whom authority to grant or amend Awards has been delegated hereunder;
provided
,
further
, that any delegation of administrative authority shall only be permitted to the extent it is permissible under any Organizational Documents and Applicable Law (including, without limitation, Section 162(m) of the
Code). Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation or that are otherwise included in the applicable Organizational Documents, and the Board or
Committee, as applicable, may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee appointed under this Section 12.6 shall serve in such capacity at the pleasure of the Board or the Committee,
as applicable, and the Board or the Committee may abolish any committee at any time and
re-vest
in itself any previously delegated authority.
ARTICLE 13.
MISCELLANEOUS PROVISIONS
13.1
Amendment, Suspension or Termination of
the Plan
.
(a) Except as otherwise provided in Section 13.1(b), the Plan may be wholly or partially amended or otherwise
modified, suspended or terminated at any time or from time to time by the Board;
provided
that, except as provided in Section 11.5 and Section 13.10, no amendment, suspension or termination of the Plan shall, without the consent of
the Holder, materially adversely affect any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides.
(b) Notwithstanding Section 13.1(a), the Board may not, except as provided in Section 13.2, take any of the following actions without approval of the Companys stockholders given within twelve
(12) months before
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or after such action: (i) increase the limit imposed in Section 3.1 on the maximum number of Shares which may be issued under the Plan, the Award Limit or the Director Limit,
(ii) reduce the price per share of any outstanding Option or Stock Appreciation Right granted under the Plan or take any action prohibited under Section 11.6, or (iii) cancel any Option or Stock Appreciation Right in exchange for cash
or another Award in violation of Section 11.6.
(c) No Awards may be granted or awarded during any
period of suspension or after termination of the Plan, and notwithstanding anything herein to the contrary, in no event may any Incentive Stock Option be granted under the Plan after the tenth (10
th
) anniversary of the earlier of (i) the date on which the Plan
was adopted by the Board or (ii) the date the Plan was approved by the Companys stockholders (such anniversary, the
Expiration Date
). Any Awards that are outstanding on the Expiration Date shall remain in force
according to the terms of the Plan, the applicable Program and the applicable Award Agreement.
13.2
Changes in Common
Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events
.
(a) In the event of
any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of the Companys
stock or the share price of the Companys stock other than an Equity Restructuring, the Administrator may make equitable adjustments, if any, to reflect such change with respect to: (i) the aggregate number and kind of Shares that may be
issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 on the maximum number and kind of Shares which may be issued under the Plan, and adjustments of the Award Limit); (ii) the number and kind of
Shares (or other securities or property) subject to outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and
(iv) the grant or exercise price per share for any outstanding Awards under the Plan. Any adjustment affecting an Award intended as Performance-Based Compensation shall be made consistent with the requirements of Section 162(m) of the Code
unless otherwise determined by the Administrator.
(b) In the event of any transaction or event described in Section 13.2(a)
or any unusual or nonrecurring transactions or events affecting the Company, any Subsidiary of the Company, or the financial statements of the Company or any Subsidiary, or of changes in Applicable Law or Applicable Accounting Standards, the
Administrator, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event, is hereby authorized to take any one or more
of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any
Award under the Plan, to facilitate such transactions or events or to give effect to such changes in Applicable Law or Applicable Accounting Standards:
(i) To provide for the termination of any such Award in exchange for an amount of cash and/or other property with a value equal to the amount that would have been attained upon the exercise of such Award
or realization of the Holders rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this Section 13.2 the Administrator determines in good faith that no amount would have
been attained upon the exercise of such Award or realization of the Holders rights, then such Award may be terminated by the Company without payment);
(ii) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar rights or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and applicable exercise or purchase price, in all cases, as determined by the Administrator;
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(iii) To make adjustments in the number and type of Shares of the Companys stock (or
other securities or property) subject to outstanding Awards, and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards and Awards which may be granted in the future;
(iv) To provide that such Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby,
notwithstanding anything to the contrary in the Plan or the applicable Program or Award Agreement;
(v) To replace such Award
with other rights or property selected by the Administrator; and/or
(vi) To provide that the Award cannot vest, be exercised
or become payable after such event.
(c) In connection with the occurrence of any Equity Restructuring, and notwithstanding
anything to the contrary in Sections 13.2(a) and 13.2(b):
(i) The number and type of securities subject to each outstanding
Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted (and the adjustments provided under this Section 13.2(c)(i) shall be nondiscretionary and shall be final and binding on the affected Holder and the
Company); and/or
(ii) The Administrator shall make such equitable adjustments, if any, as the Administrator, in its sole
discretion, may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of Shares that may be issued under the Plan (including, but not limited to, adjustments of the limitation in Section 3.1 on the
maximum number and kind of Shares which may be issued under the Plan, and adjustments of the Award Limit).
(d) Except as may
otherwise be provided in any applicable Award Agreement or other written agreement entered into between the Company (or a Subsidiary) and a Holder, if a Change in Control occurs and a Holders outstanding Awards are not continued, converted,
assumed, or replaced by the surviving or successor entity in such Change in Control, then, immediately prior to the Change in Control, such outstanding Awards, to the extent not continued, converted, assumed, or replaced, shall become fully vested
and, as applicable, exercisable, and all forfeiture, repurchase and other restrictions on such Awards shall lapse.
(e) The
Administrator, in its sole discretion, may include such further provisions and limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the
Plan.
(f) Unless otherwise determined by the Administrator, no adjustment or action described in this Section 13.2 or in
any other provision of the Plan shall be authorized to the extent it would (i) with respect to Awards which are granted to Covered Employees and are intended to qualify as Performance-Based Compensation, cause such Award to fail to so qualify
as Performance-Based Compensation, (ii) cause the Plan to violate Section 422(b)(1) of the Code, (iii) result in short-swing profits liability under Section 16 of the Exchange Act or violate the exemptive conditions of Rule
16b-3
of the Exchange Act, or (iv) cause an Award to fail to be exempt from or comply with Section 409A.
(g) The existence of the Plan, any Program, any Award Agreement and/or the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Companys capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights
to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
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(h) In the event of any pending stock dividend, stock split, combination or exchange of
shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the Shares or the share price of the Common Stock including any Equity Restructuring, for reasons
of administrative convenience, the Company, in its sole discretion, may refuse to permit the exercise of any Award during a period of up to thirty (30) days prior to the consummation of any such transaction.
13.3
Approval of Plan by Stockholders
. The Plan shall be submitted for the approval of the Companys stockholders within
twelve (12) months after the date of the Boards initial adoption of the Plan.
13.4
No Stockholders Rights
.
Except as otherwise provided herein or in an applicable Program or Award Agreement, a Holder shall have none of the rights of a stockholder with respect to Shares covered by any Award until the Holder becomes the record owner of such Shares.
13.5
Paperless Administration
. In the event that the Company establishes, for itself or using the services of a third
party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted
through the use of such an automated system.
13.6
Effect of Plan upon Other Compensation Plans
. The adoption of the
Plan shall not affect any other compensation or incentive plans in effect for the Company or any Subsidiary. Nothing in the Plan shall be construed to limit the right of the Company or any Subsidiary: (a) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the Company or any Subsidiary, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose
including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company,
firm or association.
13.7
Compliance with Laws
. The Plan, the granting and vesting of Awards under the Plan and the
issuance and delivery of Shares and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all Applicable Law (including but not limited to state, federal and foreign securities law and margin
requirements), and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject
to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all Applicable
Law. The Administrator, in its sole discretion, may take whatever actions it deems necessary or appropriate to effect compliance with Applicable Law, including, without limitation, placing legends on share certificates and issuing stop-transfer
notices to agents and registrars. Notwithstanding anything to the contrary herein, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate Applicable Law. To the extent permitted by Applicable Law,
the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to Applicable Law.
13.8
Titles and Headings, References to Sections of the Code or Exchange Act
. The titles and headings of the Sections in the Plan
are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor
thereto.
13.9
Governing Law
. The Plan and any Programs and Award Agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of California without regard to conflicts of laws thereof or of any other jurisdiction.
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13.10
Section 409A
. To the extent that the Administrator determines that any Award
granted under the Plan is subject to Section 409A, the Plan, the Program pursuant to which such Award is granted and the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A. In that regard, to
the extent any Award under the Plan or any other compensatory plan or arrangement of the Company or any of its Subsidiaries is subject to Section 409A, and such Award or other amount is payable on account of a Participants Termination of
Service (or any similarly defined term), then (a) such Award or amount shall only be paid to the extent such Termination of Service qualifies as a separation from service as defined in Section 409A, and (b) if such Award
or amount is payable to a specified employee as defined in Section 409A then to the extent required in order to avoid a prohibited distribution under Section 409A, such Award or other compensatory payment shall not be payable prior to
the earlier of (i) the expiration of the
six-month
period measured from the date of the Participants Termination of Service, or (ii) the date of the Participants death. To the extent
applicable, the Plan, the Program and any Award Agreements shall be interpreted in accordance with Section 409A. Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Administrator determines
that any Award may be subject to Section 409A, the Administrator may (but is not obligated to), without a Holders consent, adopt such amendments to the Plan and the applicable Program and Award Agreement or adopt other policies and procedures
(including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A and/or preserve the intended tax
treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A and thereby avoid the application of any penalty taxes under Section 409A. The Company makes no representations or warranties as
to the tax treatment of any Award under Section 409A or otherwise. The Company shall have no obligation under this Section 13.10 or otherwise to take any action (whether or not described herein) to avoid the imposition of taxes, penalties or
interest under Section 409A with respect to any Award and shall have no liability to any Holder or any other person if any Award, compensation or other benefits under the Plan are determined to constitute
non-compliant,
nonqualified deferred compensation subject to the imposition of taxes, penalties and/or interest under Section 409A.
13.11
Unfunded Status of Awards
. The Plan is intended to be an unfunded plan for incentive compensation. With respect
to any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Subsidiary.
13.12
Indemnification
. To the extent permitted under Applicable Law and the Organizational Documents, each member of
the Administrator shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action,
suit, or proceeding against him or her;
provided
he or she gives the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Organizational Documents, as a matter of law, or otherwise, or any power that the Company may have to indemnify
them or hold them harmless.
13.13
Relationship to other Benefits
. No payment pursuant to the Plan shall be taken into
account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except to the extent otherwise expressly provided in writing in such other
plan or an agreement thereunder.
13.14
Expenses
. The expenses of administering the Plan shall be borne by the Company
and its Subsidiaries.
* * * * *
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I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Skechers U.S.A., Inc.
on April 17, 2017.
* * * * *
I hereby certify that the foregoing Plan was approved by the stockholders of Skechers U.S.A., Inc. on
, 2017.
Executed on this
day of
, 2017.
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APPENDIX B
SKECHERS U.S.A., INC.
2018 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I.
PURPOSE, SCOPE AND ADMINISTRATION OF THE PLAN
1.1
Purpose and Scope
. The purpose of the Skechers U.S.A., Inc. 2018 Employee Stock Purchase Plan, as it may be amended from time to time (the
Plan
), is to assist employees of
Skechers U.S.A., Inc. (the
Company
) and its Designated Subsidiaries in acquiring a stock ownership interest in the Company pursuant to a plan which is intended to qualify as an employee stock purchase plan under
Section 423 of the Code and to help such employees provide for their future security and to encourage them to remain in the employment of the Company and its Subsidiaries.
ARTICLE II.
DEFINITIONS
Whenever the following terms are used in the Plan, they shall have the meaning specified below unless the context clearly indicates to
the contrary. The singular pronoun shall include the plural where the context so indicates.
2.1
Administrator
shall mean the Committee, or such individuals to which authority to administer the Plan has been delegated under Section 7.1 hereof.
2.2
Agent
means the brokerage firm, bank or other financial institution, entity or person(s), if any, engaged, retained, appointed or authorized to act as the agent of the Company or an
Employee with regard to the Plan.
2.3
Board
shall mean the Board of Directors of the Company.
2.4
Code
shall mean the Internal Revenue Code of 1986, as amended.
2.5
Committee
shall mean the Compensation Committee of the Board or another committee or subcommittee of the Board or
the Compensation Committee described in Article 7 hereof.
2.6
Common Stock
shall mean the Class A
common stock of the Company, par value $0.001 per share.
2.7
Company
shall have such meaning as set forth
in Section 1.1 hereof.
2.8
Compensation
of an Employee shall mean the regular straight-time earnings
or base salary, bonuses and commissions paid to the Employee from the Company on each Payday as compensation for services to the Company or any Designated Subsidiary, before deduction for any salary deferral contributions made by the Employee to any
tax-qualified
or nonqualified deferred compensation plan, including overtime, shift differentials, vacation pay, salaried production schedule premiums, holiday pay, jury duty pay, funeral leave pay, paid time
off, military pay, prior week adjustments and weekly bonus, but excluding education or tuition reimbursements, imputed income arising under any group insurance or other benefit program, travel expenses, business and moving reimbursements, income
received in connection with any stock options, restricted stock, restricted stock units or other compensatory equity awards and all contributions made by the Company or any Designated Subsidiary for the Employees benefit under any employee
benefit plan now or hereafter established. Such Compensation shall be calculated before deduction of any income or employment tax withholdings, but shall be withheld from the Employees net income.
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2.9
Designated Subsidiary
shall mean each Subsidiary that
have been designated by the Board or Committee from time to time in its sole discretion as eligible to participate in the Plan, including any Subsidiary in existence on the Effective Date and any Subsidiary formed or acquired following the Effective
Date, in accordance with Section 7.2 hereof.
2.10
Effective Date
shall mean the date the Plan is
adopted by the Board, subject to approval by the Companys stockholders.
2.11
Eligible Employee
shall
mean an Employee (a) whose customary employment is more than five (5) months in a calendar year and (b) who after the granting of the Option would not be deemed for purposes of Section 423(b)(3) of the Code to possess five percent
(5%) or more of the total combined voting power or value of all classes of stock of the Company or any Subsidiary. For purposes of clause (b), the rules of Section 424(d) of the Code with regard to the attribution of stock ownership shall apply in
determining the stock ownership of an individual, and stock which an Employee may purchase under outstanding options shall be treated as stock owned by the Employee. Notwithstanding the foregoing, the Administrator may exclude from participation in
the Plan as an Eligible Employee (x) any Employee that is a highly compensated employee of the Company or any Designated Subsidiary (within the meaning of Section 414(q) of the Code), or that is such a highly compensated
employee (A) with compensation above a specified level, (B) who is an officer and/or (C) is subject to the disclosure requirements of Section 16(a) of the Exchange Act and/or (y) any Employee who is a citizen or resident of a
foreign jurisdiction (without regard to whether they are also a citizen of the United States or a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) if either (i) the grant of the Option is prohibited under the laws of
the jurisdiction governing such Employee, or (ii) compliance with the laws of the foreign jurisdiction would cause the Plan or the Option to violate the requirements of Section 423 of the Code;
provided
that any exclusion in clauses
(x), and/or (y) shall be applied in an identical manner under each Offering Period to all Employees of the Company and all Designated Subsidiaries, in accordance with Treasury Regulation Section
1.423-2(e).
2.12
Employee
shall mean any person who renders
services to the Company or a Designated Subsidiary in the status of an employee within the meaning of Section 3401(c) of the Code. Employee shall not include any director of the Company or a Designated Subsidiary who does not render
services to the Company or a Designated Subsidiary in the status of an employee within the meaning of Section 3401(c) of the Code. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on
military leave, sick leave or other leave of absence approved by the Company or Designated Subsidiary and meeting the requirements of Treasury Regulation Section
1.421-1(h)(2).
Where the period of leave
exceeds three (3) months, or such other period specified in Treasury Regulation Section
1.421-1(h)(2),
and the individuals right to reemployment is not guaranteed either by statute or by contract,
the employment relationship shall be deemed to have terminated on the first day immediately following such three (3)-month period, or such other period specified in Treasury Regulation Section
1.421-1(h)(2).
2.13
Grant Date
shall mean the first Trading Day of each Offering Period.
2.14
Exercise Date
shall mean the last Trading Day of each Offering Period, except as provided in Section 5.2
hereof.
2.15
Exchange Act
shall mean the Securities Exchange Act of 1934, as amended.
2.16
Fair Market Value
shall mean, as of any date, the value of a Share determined as follows:
(a) If the Common Stock is (i) listed on any established securities exchange (such as the New York Stock Exchange, the NASDAQ
Global Market and the NASDAQ Global Select Market), (ii) listed on any national market system or (iii) listed, quoted or traded on any automated quotation system, its Fair Market Value shall be the closing sales price for a Share as quoted on
such exchange or system for such date or, if there is no
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closing sales price for a Share on the date in question, the closing sales price for a Share on the last preceding date for which such quotation exists, as reported in
The Wall Street
Journal
or such other source as the Administrator deems reliable;
(b) If the Common Stock is not listed on an
established securities exchange, national market system or automated quotation system, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such
date or, if there are no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the last preceding date for which such information exists, as reported in
The Wall Street Journal
or such other
source as the Administrator deems reliable; or
(c) If the Common Stock is neither listed on an established securities
exchange, national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Administrator in good faith.
2.17
New Exercise Date
shall have such meaning as set forth in Section 5.2(b) hereof.
2.18
Offering Period
shall mean each approximately
six-(6)
month period
commencing on each June 1 and December 1 following the Effective Date, except as provided under Section 5.2 hereof; provided, however, that the first Offering Period commencing on or after the Effective Date shall commence on
January 1, 2018 and end on May 31, 2018. The duration and timing of Offering Periods may be established or changed by the Board or Committee at any time, in its sole discretion. Notwithstanding the foregoing, in no event may an Offering
Period exceed twenty-seven (27) months.
2.19
Option
shall mean the right to purchase Shares pursuant
to the Plan during each Offering Period.
2.20
Option Price
shall mean the purchase price of a Share
hereunder as provided in Section 4.2 hereof.
2.21
Parent
means any entity that is a parent
corporation of the Company within the meaning of Section 424 of the Code and the Treasury Regulations thereunder.
2.22
Participant
shall mean any Eligible Employee who elects to participate in the Plan.
2.23
Payday
shall mean the regular and recurring established day for payment of Compensation to an Employee of the Company or any Designated Subsidiary.
2.24
Plan
shall have such meaning as set forth in Section 1.1 hereof.
2.25
Plan Account
shall mean a bookkeeping account established and maintained by the Company in the name of each Participant.
2.26
Section
423 Option
shall have such meaning as set forth in Section 3.1(b) hereof.
2.27
Share
shall mean a share of Common Stock.
2.28
Subsidiary
shall mean any entity that is a subsidiary corporation of the Company within the meaning of
Section 424 of the Code and the Treasury Regulations thereunder. In addition, with respect to any
sub-plans
adopted under Section 7.1(d) hereof which are designed to be outside the scope of
Section 423 of the Code, Subsidiary shall include any corporate or noncorporate entity in which the Company has a direct or indirect equity interest or significant business relationship.
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2.29
Trading Day
shall mean a day on which the principal securities
exchange on which the Common Stock is listed is open for trading or, if the Common Stock is not listed on a securities exchange, shall mean a business day, as determined by the Administrator in good faith.
2.30
Withdrawal Election
shall have such meaning as set forth in Section 6.1(a) hereof.
ARTICLE III.
PARTICIPATION
3.1
Eligibility
.
(a) Any Eligible Employee who shall be employed by the Company or a Designated Subsidiary on a given Grant Date for an Offering Period
shall be eligible to participate in the Plan during such Offering Period, subject to the requirements of Articles IV and V hereof, and the limitations imposed by Section 423(b) of the Code and the Treasury Regulations thereunder.
(b) No Eligible Employee shall be granted an Option under the Plan which permits the Participants rights to purchase Shares under
the Plan, and to purchase stock under all other employee stock purchase plans of the Company, any Parent or any Subsidiary subject to the Section 423 of the Code (any such Option or other option, a
Section
423
Option
), to accrue at a rate which exceeds $25,000 of fair market value of such stock (determined at the time the Section 423 Option is granted) for each calendar year in which any Section 423 Option granted to the Participant is
outstanding at any time. For purposes of the limitation imposed by this subsection,
(i) the right to purchase
stock under a Section 423 Option accrues when the Section 423 Option (or any portion thereof) first becomes exercisable during the calendar year,
(ii) the right to purchase stock under a Section 423 Option accrues at the rate provided in the Section 423 Option, but in no case may such rate exceed $25,000 of fair market value of such stock
(determined at the time such option is granted) for any one calendar year, and
(iii) a right to purchase
stock which has accrued under a Section 423 Option may not be carried over to any other Section 423 Option;
provided
that Participants may carry forward amounts so accrued that represent a fractional share of stock and were withheld
but not applied towards the purchase of Shares under an earlier Offering Period, and may apply such amounts towards the purchase of additional Shares under a subsequent Offering Period.
The limitation under this Section 3.1(b) shall be applied in accordance with Section 423(b)(8) of the Code and the Treasury Regulations thereunder.
3.2
Election to Participate; Payroll Deductions
(a) Except as provided in Section 3.3 hereof, an Eligible Employee may become a Participant in the Plan only by means of payroll deduction. Each individual who is an Eligible Employee as of an
Offering Periods Grant Date may elect to participate in such Offering Period and the Plan by delivering to the Company a payroll deduction authorization prior to the applicable Grant Date (or by such period of time prior to the Grant Date as
may be determined by the Administrator, in its sole discretion).
(b) Subject to Section 3.1(b) hereof, payroll deductions
with respect to an Offering Period (i) shall be equal to at least one percent (1%) but not more than fifteen percent (15%) of the Participants Compensation as of each Payday during the Offering Period following the Grant Date; and
(ii) shall be expressed as a whole number percentage. Amounts deducted from a Participants Compensation with respect to an Offering Period pursuant to this Section 3.2 shall be deducted each Payday through payroll deduction and
credited to the Participants Plan Account.
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(c) A Participant may decrease (to as low as zero) the amount deducted from such
Participants Compensation during an Offering Period by providing written notice to the Company, which decrease shall be implemented as soon as reasonably practicable following receipt of such notice. A Participant may not increase the amount
deducted from such Participants Compensation during an Offering Period.
(d) Notwithstanding the foregoing, upon the
completion of an Offering Period, each Participant in such Offering Period shall automatically participate in the Offering Period that commences immediately following Offering Period at the same payroll deduction percentage as in effect at the
completion of the prior Offering Period, unless such Participant delivers to the Company a different election with respect to the successive Offering Period in accordance with Section 3.2(a) hereof, or unless such Participant becomes ineligible for
participation in the Plan.
3.3
Leave of Absence
. During leaves of absence approved by the Company and meeting the
requirements of Treasury Regulation Section
1.421-1(h)(2)
under the Code, a Participant may continue participation in the Plan by making cash payments to the Company on his or her normal payday equal to his or
her authorized payroll deduction.
ARTICLE IV.
PURCHASE OF SHARES
4.1
Grant of Option
. Each Participant shall be
granted an Option with respect to an Offering Period on the applicable Grant Date. Subject to the limitations of Section 3.1(b) hereof, the number of Shares subject to a Participants Option as of any Exercise Date shall be determined by
dividing (a) such Participants payroll deductions accumulated prior to an Exercise Date and retained in the Participants Plan Account on such Exercise Date by (b) the applicable Option Price;
provided
that in no event
shall a Participant be permitted to purchase during any Offering Period more than that number of Shares (subject to any adjustment pursuant to Section 5.2 hereof) determined by dividing $25,000 by the Fair Market Value of a Share on the Grant
Date. The Administrator may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of Shares that a Participant may purchase during such future Offering Periods. Each Option shall expire on the Exercise
Date for the applicable Offering Period immediately after the automatic exercise of the Option in accordance with Section 4.3 hereof, unless such Option terminates earlier in accordance with Article 6 hereof.
4.2
Option Price
. The
Option Price
per Share to be paid by a Participant upon exercise of the
Participants Option on the applicable Exercise Date for an Offering Period shall be equal to eighty five percent (85%) of the lesser of the Fair Market Value of a Share on (a) the applicable Grant Date and (b) the applicable Exercise
Date;
provided
that in no event shall the Option Price per Share be less than the par value per Share.
4.3
Purchase
of Shares
.
(a) On the applicable Exercise Date for an Offering Period, each Participant shall automatically and without
any action on such Participants part be deemed to have exercised his or her Option to purchase at the applicable Option Price the largest number of whole Shares which can be purchased with the amount in the Participants Plan Account. Any
balance, if any, remaining in the Participants Plan Account (after exercise of such Participants Option) as of the Exercise Date shall be carried forward to the next Offering Period, unless the Participant has elected to withdraw from
the Plan pursuant to Section 6.1 hereof or, pursuant to Section 6.2 hereof, such Participant has ceased to be an Eligible Employee. Any balance not carried forward to the next Offering Period in accordance with the prior sentence promptly
shall be refunded to the applicable Participant. For the avoidance of doubt, in no event shall an amount greater than or equal to the per share Option Price as of an Exercise Date be carried forward to the next Offering Period.
(b) As soon as practicable following the applicable Exercise Date, the number of Shares purchased by such Participant pursuant to
Section 4.3(a) hereof shall be delivered (either in share certificate or book entry
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form), in the Companys sole discretion, to either (i) the Participant or (ii) an account established in the Participants name at a stock brokerage or other financial
services firm designated by the Company. If the Company is required to obtain from any commission or agency authority to issue any such Shares, the Company shall seek to obtain such authority. Inability of the Company to obtain from any such
commission or agency authority which counsel for the Company deems necessary for the lawful issuance of any such shares shall relieve the Company from liability to any Participant except to refund to the Participant such Participants Plan
Account balance, without interest thereon.
4.4
Transferability of Rights
.
(a) An Option granted under the Plan shall not be transferable, other than by will or the applicable laws of descent and distribution,
and is exercisable during the Participants lifetime only by the Participant.
No option or interest or right to the Option shall be available to pay off any debts, contracts or engagements of the Participant or his or her successors in
interest or shall be subject to disposition by pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempt at disposition of the option shall have no effect.
ARTICLE V.
PROVISIONS RELATING TO COMMON STOCK
5.1
Common Stock Reserved
. Subject to adjustment as provided in Section 5.2 hereof, the maximum number of Shares that shall be made available for sale under the Plan shall be 5,000,000. Shares
made available for sale under the Plan may be authorized but unissued shares, treasury shares of Common Stock, or reacquired shares reserved for issuance under the Plan.
5.2
Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Asset Sale
.
(a)
Changes in Capitalization
. Subject to any required action by the stockholders of the Company, the number of Shares which have been authorized for issuance under the Plan but not yet placed
under Option, as well as the price per share and the number of Shares covered by each Option under the Plan which has not yet been exercised shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from
a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of Shares effected without receipt of consideration by the Company;
provided
,
however
, that conversion of any convertible securities of the Company shall not be deemed to have been effected without receipt of consideration. Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of Shares subject to an Option.
(b)
Dissolution or
Liquidation
. In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the
New Exercise Date
), and such Offering Period
shall terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. The New Exercise Date shall be before the date of the Companys proposed dissolution or
liquidation. The Administrator shall notify each Participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the Participants Option has been changed to the New Exercise Date and that
the Participants Option shall be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 6.1 hereof or the Participant has ceased to be an
Eligible Employee as provided in Section 6.2 hereof.
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(c)
Merger or Asset Sale
. In the event of a proposed sale of all or substantially
all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding Option shall be assumed or an equivalent Option substituted by the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the Option is not assumed or substituted, any Offering Periods then in progress shall be shortened by setting a New Exercise Date and any Offering Periods then in progress shall end on the New Exercise Date. The New
Exercise Date shall be before the date of the Companys proposed sale or merger. The Administrator shall notify each Participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the
Participants Option has been changed to the New Exercise Date and that the Participants Option shall be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as
provided in Section 6.1 hereof or the Participant has ceased to be an Eligible Employee as provided in Section 6.2 hereof.
5.3
Insufficient Shares
. If the Administrator determines that, on a given Exercise Date, the number of Shares with respect to which Options are to be exercised may exceed the number of Shares
remaining available for sale under the Plan on such Exercise Date, the Administrator shall make a pro rata allocation of the Shares available for issuance on such Exercise Date in as uniform a manner as shall be practicable and as it shall determine
in its sole discretion to be equitable among all Participants exercising Options to purchase Shares on such Exercise Date, and unless additional shares are authorized for issuance under the Plan, no further Offering Periods shall take place and the
Plan shall terminate pursuant to Section 7.5 hereof. If an Offering Period is so terminated, then the balance of the amount credited to the Participants Plan Account which has not been applied to the purchase of Shares shall be paid to
such Participant in one (1) lump sum in cash within thirty (30) days after such Exercise Date, without any interest thereon.
5.4
Rights as Stockholders
. With respect to Shares subject to an Option, a Participant shall not be deemed to be a stockholder of the Company and shall not have any of the rights or privileges of a
stockholder. A Participant shall have the rights and privileges of a stockholder of the Company when, but not until, Shares have been deposited in the designated brokerage account following exercise of his or her Option.
ARTICLE VI.
TERMINATION OF PARTICIPATION
6.1
Cessation of Contributions; Voluntary Withdrawal
.
(a) A Participant
may cease payroll deductions during an Offering Period and elect to withdraw from the Plan by delivering written notice of such election to the Company in such form and a reasonable time prior to the Exercise Date for such Offering Period as may be
established by the Administrator (a
Withdrawal Election
). Amounts credited to the Plan Account of a Participant electing to withdraw from the Plan shall be returned to the Participant in one
(1) lump-sum
payment in cash within thirty (30) days after such election is received by the Company, without any interest thereon, and the Participant shall cease to participate in the Plan and the
Participants Option for such Offering Period shall terminate. As soon as practicable following the Companys
receipt of a Withdrawal Election, the Participants payroll deduction authorization and his or her Option to purchase
Shares under the Plan shall terminate.
(b) A Participants withdrawal from the Plan shall not have any effect upon his
or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the Participant withdraws.
(c) A Participant who ceases contributions to the Plan during any Offering Period shall not be permitted to resume contributions to the
Plan during that Offering Period.
6.2
Termination of Eligibility
. Upon a Participants ceasing to be an Eligible
Employee, for any reason, such Participants Option for the applicable Offering Period shall automatically terminate, he or she shall be
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deemed to have elected to withdraw from the Plan, and such Participants Plan Account shall be paid to such Participant or, in the case of his or her death, to the person or persons entitled
thereto pursuant to applicable law, within thirty (30) days after such cessation of being an Eligible Employee, without any interest thereon.
ARTICLE VII.
GENERAL PROVISIONS
7.1
Administration
.
(a) The Plan shall be administered by the Committee, which (unless otherwise determined by the Board) shall consist solely of two or more members of the Board, each of whom is intended to qualify as a
non-employee
director as defined by Rule
16b-3
of the Exchange Act and an independent director under the rules of any securities exchange or automated
quotation system on which the Shares are listed, quoted or traded, in each case, to the extent required under such provision. The Committee may delegate administrative tasks under the Plan to the services of an Agent and/or Employees to assist in
the administration of the Plan, including establishing and maintaining an individual securities account under the Plan for each Participant.
(b) It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with the provisions of the Plan. The Administrator shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(i) To establish and terminate Offering
Periods;
(ii) To determine when and how Options shall be granted and the provisions and terms of each
Offering Period (which need not be identical);
(iii) To select Designated Subsidiaries in accordance with
Section 7.2 hereof; and
(iv) To construe and interpret the Plan, the terms of any Offering Period and
the terms of the Options and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. The Administrator, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan, any Offering Period or any Option, in a manner and to the extent it shall deem necessary or expedient to make the Plan fully effect, subject to Section 423 of the Code and the Treasury
Regulations thereunder.
(c) The Administrator may adopt rules or procedures relating to the operation and administration of
the Plan to accommodate the specific requirements of local laws and procedures. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures regarding handling of participation
elections, payroll deductions, payment of interest, conversion of local currency, payroll tax, withholding procedures and handling of stock certificates which vary with local requirements. In its absolute discretion, the Board may at any time and
from time to time exercise any and all rights and duties of the Administrator under the Plan.
(d) The Administrator may
adopt
sub-plans
applicable to particular Designated Subsidiaries or locations, which
sub-plans
may be designed to be outside the scope of Section 423 of the Code.
The rules of such
sub-plans
may take precedence over other provisions of this Plan, with the exception of Section 5.1 hereof, but unless otherwise superseded by the terms of such sub-plan, the provisions
of this Plan shall govern the operation of such sub-plan.
(e) All expenses and liabilities incurred by the Administrator in
connection with the administration of the Plan shall be borne by the Company. The Administrator may, with the approval of the Committee, employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Administrator, the Company
and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any
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such persons. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon all Participants, the Company and all other
interested persons. No member of the Board or Administrator shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the options, and all members of the Board or Administrator shall be
fully protected by the Company in respect to any such action, determination, or interpretation.
7.2
Designation of
Subsidiary Corporations
. The Board or Committee shall designate from among the Subsidiaries, as determined from time to time, the Subsidiary or Subsidiaries that shall constitute Designated Subsidiaries. The Board or Committee may designate a
Subsidiary, or terminate the designation of a Subsidiary, without the approval of the stockholders of the Company.
7.3
Reports
. Individual accounts shall be maintained for each Participant in the Plan. Statements of Plan Accounts shall be given to Participants at least annually, which statements shall set forth the amounts of payroll deductions, the Option
Price, the number of Shares purchased and the remaining cash balance, if any.
7.4
No Right to Employment
. Nothing in
the Plan shall be construed to give any person (including any Participant) the right to remain in the employ of the Company, a Parent or a Subsidiary or to affect the right of the Company, any Parent or any Subsidiary to terminate the employment of
any person (including any Participant) at any time, with or without cause, which right is expressly reserved.
7.5
Amendment and Termination of the Plan
.
(a) The Board may, in its sole discretion, amend, suspend or terminate the
Plan at any time and from time to time;
provided
,
however
, that without approval of the Companys stockholders given within twelve (12) months before or after action by the Board, the Plan may not be amended to increase the
maximum number of Shares subject to the Plan, to change the designation or class of Eligible Employees or in any other manner that requires the approval of the Companys stockholders; and
provided
,
further
that without approval of
the Companys stockholders, the Plan may not be amended in any manner that would cause the Plan to no longer be an employee stock purchase plan within the meaning of Section 423(b) of the Code.
(b) In the event the Administrator determines that the ongoing operation of the Plan may result in unfavorable financial accounting
consequences, the Administrator may, to the extent permitted under Section 423 of the Code, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but
not limited to:
(i) altering the Option Price for any Offering Period including an Offering Period underway
at the time of the change in Option Price;
(ii) shortening any Offering Period so that the Offering Period
ends on a new Exercise Date, including an Offering Period underway at the time of the Administrator action; and
(iii) allocating Shares.
Such modifications or amendments shall not require stockholder approval or the consent of any Participant.
(c) Upon termination of the Plan, the balance in each Participants Plan Account shall be refunded as soon as practicable after such termination, without any interest thereon.
7.6
Use of Funds; No Interest Paid
. All funds received by the Company by reason of purchase of Shares under the Plan shall be
included in the general funds of the Company free of any trust or other restriction and may be used for any corporate purpose. No interest shall be paid to any Participant or credited under the Plan.
7.7
Term; Approval by Stockholders
. No Option may be granted during any period of suspension of the Plan or after termination of
the Plan. The Plan shall be submitted for the approval of the Companys stockholders within twelve (12) months after the date of the Boards initial adoption of the Plan. Options may be granted prior
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to such stockholder approval;
provided
,
however
, that such Options shall not be exercisable prior to the time when the Plan is approved by the stockholders;
provided
,
further
that if such approval has not been obtained by the end of said twelve (12)-month period, all Options previously granted under the Plan shall thereupon terminate and be canceled and become null and void without being exercised.
7.8
Effect Upon Other Plans
. The adoption of the Plan shall not affect any other compensation or incentive plans in
effect for the Company, any Parent or any Subsidiary. Nothing in the Plan shall be construed to limit the right of the Company, any Parent or any Subsidiary (a) to establish any other forms of incentives or compensation for Employees of the
Company or any Parent or any Subsidiary, or (b) to grant or assume Options otherwise than under the Plan in connection with any proper corporate purpose, including, but not by way of limitation, the grant or assumption of options in connection
with the acquisition, by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, firm or association.
7.9
Conformity to Securities Laws
. Notwithstanding any other provision of the Plan, the Plan and the participation in the Plan by any individual who is then subject to Section 16 of the
Exchange Act shall be subject to any additional limitations set forth in any applicable exemption rule under Section 16 of the Exchange Act (including any amendment to Rule
16b-3
of the Exchange Act) that
are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
7.10
Notice of Disposition of Shares
. Each Participant shall give the Company prompt notice of any disposition or other transfer
of any Shares, acquired pursuant to the exercise of an Option, if such disposition or transfer is made (a) within two (2) years after the applicable Grant Date or (b) within one (1) year after the transfer of such Shares to such
Participant upon exercise of such Option. The Company may direct that any certificates evidencing shares acquired pursuant to the Plan refer to such requirement.
7.11
Tax Withholding
. The Company or any Parent or any Subsidiary shall be entitled to require payment in cash or deduction from other compensation payable to each Participant of any sums required
by federal, state or local tax law to be withheld with respect to any purchase of Shares under the Plan or any sale of such shares.
7.12
Governing Law
. The Plan and all rights and obligations thereunder shall be construed and enforced in accordance with the laws of the State of Delaware.
7.13
Notices
. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be
deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
7.14
Conditions To Issuance of Shares
.
(a) Notwithstanding anything
herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of an Option by a Participant, unless and until the Board or the Committee has
determined, with advice of counsel, that the issuance of such Shares is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any securities exchange or automated quotation system on
which the Shares are listed or traded, and the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Board or the Committee may require that
a Participant make such reasonable covenants, agreements, and representations as the Board or the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements.
(b) All certificates for Shares delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to
any stop-transfer orders and other restrictions as the Committee deems necessary or advisable to comply with federal, state, or foreign securities or other laws, rules and regulations and the rules
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of any securities exchange or automated quotation system on which the Shares are listed, quoted, or traded. The Committee may place legends on any certificate or book entry evidencing Shares to
reference restrictions applicable to the Shares.
(c) The Committee shall have the right to require any Participant to comply
with any timing or other restrictions with respect to the settlement, distribution or exercise of any Option, including a window-period limitation, as may be imposed in the sole discretion of the Committee.
(d) Notwithstanding any other provision of the Plan, unless otherwise determined by the Committee or required by any applicable law,
rule or regulation, the Company may, in lieu of delivering to any Participant certificates evidencing Shares issued in connection with any Option, record the issuance of Shares in the books of the Company (or, as applicable, its transfer agent or
stock plan administrator).
7.15
Equal Rights and Privileges
. Except with respect to
sub-plans
designed to be outside the scope of Section 423 of the Code, all Eligible Employees of the Company (or of any Designated Subsidiary) shall have equal rights and privileges under this Plan to the
extent required under Section 423 of the Code or the regulations promulgated thereunder so that this Plan qualifies as an employee stock purchase plan within the meaning of Section 423 of the Code or the Treasury Regulations
thereunder. Any provision of this Plan that is inconsistent with Section 423 of the Code or the Treasury Regulations thereunder shall, without further act or amendment by the Company or the Board, be reformed to comply with the equal rights and
privileges requirement of Section 423 of the Code or the Treasury Regulations thereunder.
* * * * * *
I hereby certify that the foregoing Skechers U.S.A., Inc. 2018 Employee Stock Purchase Plan was duly approved by the Board of Directors
of Skechers U.S.A., Inc. on April 17, 2017.
I hereby certify that the foregoing Skechers U.S.A., Inc. Employee Stock
Purchase Plan was duly approved by the stockholders of Skechers U.S.A., Inc. on
, 2017.
Executed on this
day of
, 2017.
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Philip G. Paccione, Corporate Secretary
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SKECHERS U.S.A., INC.
228 MANHATTAN BEACH BLVD.
MANHATTAN BEACH, CA 90266
ATTN:
TED WEITZMAN
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