Document:

Exhibit 10.3

 

BOOT BARN HOLDINGS, INC.

 

2007 STOCK INCENTIVE PLAN AS AMENDED

 

	
 
    	
As   assumed by Boot Barn Holdings, Inc. and amended by resolution of the Board of
    
	
 
    	
Directors   of Boot Barn Holdings, Inc. on December 11,
    
	
 
    	
2011.
    

 

 

BOOT BARN HOLDINGS, INC.

2007 STOCK INCENTIVE PLAN

 

 

Plan Document

 

 

1.                                      Establishment, Purpose, and Types of Awards

 

Boot Barn Holdings, Inc. (the “Company”) hereby establishes this equity-based incentive compensation plan to be known as the “Boot Barn Holdings, Inc. 2007 Stock Incentive Plan” (hereinafter referred to as the “Plan”), in order to provide incentives and awards to select employees, directors, consultants, and advisors of the Company and its Affiliates. The Plan permits, but does not require, the granting of the following types of awards (“Awards”), according to the Sections of the Plan listed here:

 

Section 6                                              Options

Section 7                                              Share Appreciation Rights

Section 8                                              Restricted Shares, Restricted Share Units, and Unrestricted Shares

Section 9                                              Deferred Share Units

Section 10                                       Performance Awards

 

The Plan is not intended to affect and shall not affect any stock options, equity-based compensation, or other benefits that the Company or its Affiliates may have provided, or may separately provide in the future pursuant to any agreement, plan, or program that is independent of this Plan.

 

2.                                      Defined Terms

 

Terms in the Plan that begin with an initial capital letter have the defined meaning set forth in Appendix A, unless defined elsewhere in this Plan or the context of their use clearly indicates a different meaning.

 

3.                                      Shares Subject to the Plan

 

Subject to the provisions of Section 13 of the Plan, the maximum number of Shares that the Company may issue for all Awards is 45,000 Shares; provided, however, that the maximum number of Shares that are issued for ISOs shall not exceed 15,000 Shares. For all Awards, the Shares issued pursuant to the Plan may be authorized but unissued Shares, Shares that the Company has reacquired or otherwise holds in treasury, or Shares held in a trust.

 

Shares that are subject to an Award that for any reason expires, is forfeited, is cancelled, or becomes unexercisable, and Shares that are for any other reason not paid or delivered under this Plan shall again, except to the extent prohibited by Applicable Law, be available for subsequent Awards under the Plan.  In addition, the Committee may make future Awards with respect to (i) shares surrendered in payment of the exercise price of an Option, (ii) shares withheld in order to satisfy the withholding or employment taxes due upon grant, exercise, vesting or distribution of an Award, (iii) shares of Common Stock acquired on the open market, and (iv) shares issued or purchased under the Plan and forfeited back to the Plan.

 

 

4.                                      Administration

 

(a)                                 General. The Committee shall administer the Plan in accordance with its terms, provided that the Board may act in lieu of the Committee on any matter. The Committee shall hold meetings at such times and places as it may determine and shall make such rules and regulations for the conduct of its business as it deems advisable. In the absence of a duly appointed Committee, the Board shall function as the Committee for all purposes of the Plan.

 

(b)                                 Committee Composition. The Board shall appoint the members of the Committee. If and to the extent permitted by Applicable Law, the Committee may authorize one or more Reporting Persons (or other officers) to make Awards to Eligible Persons who are not Reporting Persons (or other officers whom the Committee has specifically authorized to make Awards). The Board may at any time appoint additional members to the Committee, remove and replace members of the Committee with or without Cause, and fill vacancies on the Committee however caused.

 

(c)                                  Powers of the Committee. Subject to the provisions of the Plan, the Committee shall have the authority, in its sole discretion:

 

(i)                                     to grant awards and to determine Eligible Persons to whom Awards shall be granted from time to time and the number of Shares, units, or dollars to be covered by each Award;

 

(ii)                                  to determine, from time to time, the Fair Market Value of Shares;

 

(iii)                               to determine, and to set forth in Award Agreements, the terms and conditions of all Awards, including any applicable exercise or purchase price, the installments and conditions under which an Award shall become vested (which may be based on performance), terminated, expired, cancelled, or replaced, and the circumstances for vesting acceleration or waiver of forfeiture restrictions, and other restrictions and limitations;

 

(iv)                              to approve the forms of Award Agreements and all other documents, notices and certificates in connection therewith which need not be identical either as to type of Award or among Participants;

 

(v)                                 to construe and interpret the terms of the Plan and any Award Agreement, to determine the meaning of their terms, and to prescribe, amend, and rescind rules and procedures relating to the Plan and its administration;

 

(vi)                              in order to fulfill the purposes of the Plan and without amending the Plan, to modify, to cancel, or to waive the Company’s rights with respect to any Awards, to adjust or to modify Award Agreements for changes in Applicable Law, and to recognize differences in foreign law, tax policies, or customs; and

 

(vii)                           to make all other interpretations and to take all other actions that the Committee may consider necessary or advisable to administer the Plan or to effectuate its purposes.

 

2

 

Subject to Applicable Law and the restrictions set forth in the Plan, the Committee may delegate administrative functions to individuals who are Reporting Persons, officers, or Employees of the Company or its Affiliates.

 

(d)                                 Deference to Committee Determinations. The Committee shall have the discretion to interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion it deems to be appropriate in its sole discretion, and to make any findings of fact needed in the administration of the Plan or Award Agreements. The Committee’s prior exercise of its discretionary authority shall not obligate it to exercise its authority in a like fashion thereafter. The Committee’s interpretation and construction of any provision of the Plan, or of any Award or Award Agreement, shall be final, binding, and conclusive. The validity of any such interpretation, construction, decision or finding of fact shall not be given de novo review if challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly made in bad faith or materially affected by fraud.

 

(e)                                  No Liability; Indemnification. Neither the Board nor any Committee member, nor any Person acting at the direction of the Board or the Committee, shall be liable for any act, omission, interpretation, construction or determination made in good faith with respect to the Plan, any Award or any Award Agreement. The Company and its Affiliates shall pay or reimburse any member of the Committee, as well as any Director, Employee, or Consultant who takes action on behalf of the Plan, for all expenses incurred with respect to the Plan, and to the full extent allowable under Applicable Law shall indemnify each and every one of them for any claims, liabilities, and costs (including reasonable attorney’s fees) arising out of their good faith performance of duties on behalf of the Plan. The Company and its Affiliates may, but shall not be required to, obtain liability insurance for this purpose.

 

5.                                      Eligibility

 

(a)                                 General Rule. Subject to the express provisions of the Plan, the Committee shall determine from the class of Eligible Persons those individuals to whom Awards under the Plan may be granted, the number of Shares subject to each Award, the price (if any) to be paid for the Shares or the Award and, in the case of Performance Awards, in addition to the matters addressed in Section 10 below, the specific objectives, goals and performance criteria that further define the Performance Award. The Committee may grant ISOs only to Employees (including officers who are Employees) of the Company or any Affiliate that is a “parent corporation” or “subsidiary corporation” within the meaning of Section 424 of the Code, and may grant all other Awards to any Eligible Person. A Participant who has been granted an Award may be granted an additional Award or Awards if the Committee shall so determine, if such person is otherwise an Eligible Person and if otherwise in accordance with the terms of the Plan.

 

(b)                                 Documentation of Awards. Each Award shall be evidenced by an Award Agreement signed by the Company and, if required by the Committee, by the Participant. The Award Agreement shall set forth the material terms and conditions of the Award established by the Committee, and each Award shall be subject to the terms and conditions set forth in Sections 25, 26, and 27 unless otherwise specifically provided in an Award Agreement.

 

(c)                                  Replacement Awards. Subject to Applicable Laws (including any associated Shareholder approval requirements), the Committee may, in its sole discretion and upon such terms as it deems appropriate, require as a condition of the grant of an Award to a Participant that the

 

3

 

Participant surrender for cancellation some or all of the Awards that have previously been granted to the Participant under this Plan or otherwise. An Award that is conditioned upon such surrender may or may not be the same type of Award, may cover the same (or a lesser or greater) number of Shares as such surrendered Award, may have other terms that are determined without regard to the terms or conditions of such surrendered Award, and may contain any other terms that the Committee deems appropriate.

 

6.                                      Option Awards

 

(a)                                 Types; Documentation. Subject to Section 5(a), the Committee may in its discretion grant Options pursuant to Award Agreements that are delivered to Participants. Each Option shall be designated in the Award Agreement as an ISO or a Non-ISO, and the same Award Agreement may grant both types of Options. At the sole discretion of the Committee, any Option may be exercisable, in whole or in part, immediately upon the grant thereof, or only after the occurrence of a specified event, or only in installments, which installments may vary. Options granted under the Plan may contain such terms and provisions not inconsistent with the Plan that the Committee shall deem advisable in its sole and absolute discretion.

 

(b)                                 ISO $100,000 Limitation. To the extent that the aggregate Fair Market Value of Shares with respect to which Options designated as ISOs first become exercisable by a Participant in any calendar year (under this Plan and any other plan of the Company or any Affiliate) exceeds $100,000, such excess Options shall be treated as Non-ISOs. For purposes of determining whether the $100,000 limit is exceeded, the Fair Market Value of the Shares subject to an ISO shall be determined as of the Grant Date. In reducing the number of Options treated as ISOs to meet the $100,000 limit, the most recently granted Options shall be reduced first. In the event that Section 422 of the Code is amended to alter the limitation set forth therein, the limitation of this Section 6(b) shall be automatically adjusted accordingly.

 

(c)                                  Term of Options. Each Award Agreement shall specify a term at the end of which the Option automatically expires, subject to earlier termination provisions contained in Section 6(h) hereof; provided, that, the term of any Option may not exceed ten years from the Grant Date. In the case of an ISO granted to an Employee who is a Ten Percent Holder on the Grant Date, the term of the ISO shall not exceed five years from the Grant Date.

 

(d)                                 Exercise Price. The exercise price of an Option shall be determined by the Committee in its sole discretion and shall be set forth in the Award Agreement, provided that —

 

(i)                                     if an ISO is granted to an Employee who is a Ten Percent Holder on the Grant Date, the per Share exercise price shall not be less than 110% of the Fair Market Value per Share on the Grant Date, and

 

(ii)                                  for all other Options, such per Share exercise price shall not be less than 100% of the Fair Market Value per Share on the Grant Date.

 

(e)                                  Exercise of Option. The times, circumstances and conditions under which an Option shall be exercisable shall be determined by the Committee in its sole discretion and set forth in the Award Agreement. The Committee shall have the discretion to determine whether and to what extent the vesting of Options shall be tolled during any unpaid leave of absence; provided, however, that in the absence of such determination, vesting of Options shall be tolled during any such leave approved by the Company.

 

4

 

(f)                                   Minimum Exercise Requirements. An Option may not be exercised for a fraction of a Share. The Committee may require in an Award Agreement that an Option be exercised as to a minimum number of Shares, provided that such requirement shall not prevent a Participant from purchasing the full number of Shares as to which the Option is then exercisable.

 

(g)                                  Methods of Exercise. Prior to its expiration pursuant to the terms of the applicable Award Agreement, and subject to the times, circumstances and conditions for exercise contained in the applicable Award Agreement, each Option may be exercised, in whole or in part (provided that the Company shall not be required to issue fractional shares), by delivery of written notice of exercise to the secretary of the Company accompanied by the full exercise price of the Shares being purchased. In the case of an ISO, the Committee shall determine the acceptable methods of payment on the Grant Date and it shall be included in the applicable Award Agreement. The methods of payment that the Committee may in its discretion accept or commit to accept in an Award Agreement include:

 

(i)                                     cash or check payable to the Company (in U.S. dollars);

 

(ii)                                  other Shares that (A) are owned by the Participant who is purchasing Shares pursuant to an Option, (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is being exercised, (C) were not acquired by such Participant pursuant to the exercise of an Option, unless such Shares have been owned by such Participant for at least six months or such other period as the Committee may determine, (D) are all, at the time of such surrender, free and clear of any and all claims, pledges, liens and encumbrances, or any restrictions which would in any manner restrict the transfer of such shares to or by the Company (other than such restrictions as may have existed prior to an issuance of such Shares by the Company to such Participant), and (E) are duly endorsed for transfer to the Company;

 

(iii)                               by a cashless exercise whereby the Participant elects, by providing written notice to the Committee, to exercise any vested portion of the Option by receiving the number of shares equal to (x) the difference between (A) the aggregate Fair Market Value of the shares for which the Option is exercised on the date of exercise by the Participant and (B) the aggregate exercise price, divided by (y) the per share Fair Market Value of the shares on the date of exercise by the Participant; or

 

(iv)                              any combination of the foregoing methods of payment.

 

The Company shall not be required to deliver Shares pursuant to the exercise of an Option until payment of the full exercise price therefor is received by the Company and the Company has received sufficient funds to cover all applicable taxes required to be withheld by the Company by reason of such exercise.

 

(h)                                 Termination of Continuous Service. The Committee may establish and set forth in the applicable Award Agreement the terms and conditions on which an Option shall remain exercisable, if at all, following termination of a Participant’s Continuous Service. The Committee may waive or

 

5

 

modify these provisions at any time. To the extent that a Participant is not entitled to exercise an Option at the date of his or her termination of Continuous Service, or if the Participant (or other person entitled to exercise the Option) does not exercise the Option to the extent so entitled within the time specified in the Award Agreement or below (as applicable), the Option shall terminate and the Shares underlying the unexercised portion of the Option shall revert to the Plan and become available for future Awards. In no event may any Option be exercised after the expiration of the Option term as set forth in the Award Agreement.

 

The following provisions shall apply to the extent an Award Agreement does not specify the terms and conditions upon which an Option shall terminate when there is a termination of a Participant’s Continuous Service:

 

(i)                                     Termination other than Upon Disability or Death or for Cause. In the event of termination of a Participant’s Continuous Service (other than as a result of Participant’s death, disability, retirement after the Participant attains age 65 or termination for Cause), the Participant shall have the right to exercise an Option at any time within three months following such termination to the extent the Participant was entitled to exercise such Option at the date of such termination or such earlier date on which the Option expires.

 

(ii)                                  Disability. In the event of termination of a Participant’s Continuous Service as a result of his or her being Disabled, the Participant shall have the right to exercise an Option at any time within one year following such termination to the extent the Participant was entitled to exercise such Option at the date of such termination or such earlier date on which the Option expires.

 

(iii)                               Retirement. In the event of termination of a Participant’s Continuous Service as a result of Participant’s retirement, the Participant shall have the right to exercise the Option at any time within three months following such termination to the extent the Participant was entitled to exercise such Option at the date of such or such earlier date on which the Option expires.

 

(iv)                              Death. In the event of the death of Participant during the period of Continuous Service since the Grant Date of an Option, or within thirty days following termination of Participant’s Continuous Service, the Option may be exercised, at any time within one year following the date of Participant’s death, by the Participant’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent the right to exercise the Option had vested at the date of death or, if earlier, the date the Participant’s Continuous Service terminated.

 

(v)                                 Cause. If the Committee determines that a Participant’s Continuous Service terminated due to Cause or that the Company had Cause to terminate the Participant’s Continuous Service or would have had Cause if the Company had then known all of the relevant facts, the Participant shall forfeit the right to exercise any Option as of the time that the Committee determines that Cause first existed, and it shall be considered immediately null and void.

 

If there is a Securities and Exchange Commission blackout period that prohibits the buying or selling or Shares during any part of the ten (10) day period before the expiration of any Option

 

6

 

based on the termination of a Participant’s Continuous Service (as described above), the period for exercising the Options shall be extended until ten (10) days beyond when such blackout period ends. Notwithstanding any provision hereof or within an Award Agreement, no Option shall ever be exercisable after the expiration date of its original term as set forth in the Award Agreement.

 

(i)                                     Reverse Vesting. The Committee in its sole discretion may allow a Participant to exercise unvested Non-ISOs, in which case the Shares then issued shall be Restricted Shares having analogous vesting restrictions to the unvested Non-ISOs.

 

(j)                                    Buyout. The Committee may at any time offer to buy out an Option, in exchange for a payment in cash or Shares, based on such terms and conditions as the Committee shall establish and communicate to the Participant at the time that such offer is made. In addition, but subject to any Shareholder approval requirement of Applicable Law, if the Fair Market Value for Shares subject to an Option is more than 33% below their exercise price for more than 30 consecutive business days, the Committee may unilaterally terminate and cancel the Option either (i) by paying the Participant, in cash or Shares, an amount not less than the Black-Scholes value of the vested portion of the Option, (ii) by irrevocably committing to grant, on any date the Committee designates, a new Award other than an Option or SAR, or (iii) by irrevocably committing to grant a new Option on substantially the same terms as the cancelled Option, provided that the per Share exercise price for the new Option shall equal the per Share Fair Market Value of a Share on the date the new grant occurs.

 

7.                                      Share Appreciation Rights (SARs)

 

(a)                                 Grants. The Committee may in its discretion grant Share Appreciation Rights to any Eligible Person in any form described below. At the sole discretion of the Committee, any SAR may be exercisable, in whole or in part, immediately on the grant thereof, or only after the occurrence of a specified event, or only in installments, which installments may vary. SARs granted under the Plan may contain such terms and provisions not inconsistent with the Plan that the Committee shall deem advisable in its sole and absolute discretion.

 

(i)                                     SARs related to Options. The Committee may grant SARs either concurrently with the grant of an Option or with respect to an outstanding Option, in which case the SAR shall extend to all or a portion of the Shares covered by the related Option. An SAR shall entitle the Participant who holds the related Option, upon exercise of the SAR and surrender of the related Option, or portion thereof, to the extent the SAR and related Option each were previously unexercised, to receive payment of an amount determined pursuant to Section 7(e) below. Any SAR granted in connection with an ISO will contain such terms as may be required to comply with the provisions of Section 422 of the Code and the regulations promulgated thereunder.

 

(ii)                                  SARs Independent of Options. The Committee may grant SARs which are independent of any Option subject to such conditions as the Committee may in its discretion determine and set forth in the applicable Award Agreement.

 

(iii)                               Limited SARs. The Committee may grant SARs exercisable only upon or in respect of a Change in Control or any other specified event, and such limited SARs may relate to or operate in tandem or combination with or substitution for Options or other

 

7

 

SARs, or on a stand-alone basis, and may be payable in cash or Shares based on the spread between the exercise price of the SAR, and (A) a price based upon or equal to the Fair Market Value of the Shares during a specified period, at a specified time within a specified period before, after or including the date of such event, or (B) a price related to consideration payable to Company’s shareholders generally in connection with the event.

 

(b)                                 Exercise Price. The per Share exercise price of an SAR shall be determined in the sole discretion of the Committee, shall be set forth in the applicable Award Agreement, and shall be no less than 100% of the Fair Market Value of one Share on the Grant Date. The exercise price of an SAR related to an Option shall be the same as the exercise price of the related Option.

 

(c)                                  Exercise of SARs. An SAR may not have a term exceeding ten years from its Grant Date. Unless the Award Agreement otherwise provides, an SAR related to an Option will be exercisable at such time or times, and to the extent, that the related Option will be exercisable; provided that the Award Agreement shall not provide for an exercise period for the exercise of the SAR that is more favorable to the Participant than the exercise period for the related Option. An SAR granted independently of any other Award will be exercisable pursuant to the terms of the Award Agreement. Whether an SAR is related to an Option or is granted independently, the SAR may only be exercised when the Fair Market Value of the Shares underlying the SAR exceeds the exercise price of the SAR. Each Award Agreement shall specify a term at the end of which the SAR automatically expires, subject to earlier termination provisions contained in Section 7(g) hereof; provided, that, the term of any SAR may not exceed ten years from the Grant Date.

 

(d)                                 Effect on Available Shares. All SARs that may be settled in Shares shall be counted in full against the number of Shares available for awards under the Plan, regardless of the number of Shares actually issued upon settlement of the SARs.

 

(e)                                  Payment. Upon exercise of an SAR related to an Option and the attendant surrender of an exercisable portion of any related Award, the Participant will be entitled to receive payment of an amount determined by multiplying —

 

(i)                                     the excess of the Fair Market Value of a Share on the date of exercise of the SAR over the exercise price per Share of the SAR, by

 

(ii)                                  the number of Shares with respect to which the SAR has been exercised.

 

(iii)                               Notwithstanding the foregoing, an SAR granted independently of an Option (x) may limit the amount payable to the Participant to a percentage, specified in the Award Agreement but not exceeding one-hundred percent (100%), of the amount determined pursuant to the preceding sentence, and (y) shall be subject to any payment or other restrictions that the Committee may at any time impose in its discretion, including restrictions intended to conform the SARs with Section 409A of the Code.

 

(f)                                   Form and Terms of Payment. Unless otherwise provided in an Award Agreement, all SARs shall be settled in Shares as soon as practicable after exercise. Subject to Applicable Law, the Committee may, in its sole discretion, provide in an Award Agreement that the amount determined under Section 7(e) above shall be settled solely in cash, solely in Shares (valued at their Fair Market Value on the date of exercise of the SAR), or partly in cash and partly in Shares, with cash paid in lieu of fractional shares.

 

8

 

(g)                                  Termination of Employment or Consulting Relationship. The Committee shall establish and set forth in the applicable Award Agreement the terms and conditions under which an SAR shall remain exercisable, if at all, following termination of a Participant’s Continuous Service. The provisions of Section 6(h) above shall apply to the extent an Award Agreement does not specify the terms and conditions upon which an SAR shall terminate when there is a termination of a Participant’s Continuous Service.

 

8.                                      Restricted Shares, Restricted Share Units, and Unrestricted Shares

 

(a)                                 Grants. The Committee may in its sole discretion grant restricted shares (“Restricted Shares”) to any Eligible Person and shall evidence such grant in an Award Agreement that is delivered to the Participant and that sets forth the number of Restricted Shares, the purchase price for such Restricted Shares (if any), and the terms upon which the Restricted Shares may become vested. In addition, the Company may in its discretion grant to any Eligible Person the right to receive Shares after certain vesting requirements are met (“Restricted Share Units”), and shall evidence such grant in an Award Agreement that is delivered to the Participant which sets forth the number of Shares (or formula, that may be based on future performance or conditions, for determining the number of Shares) that the Participant shall be entitled to receive upon vesting and the terms upon which the Shares subject to a Restricted Share Unit may become vested. The Committee may condition any Award of Restricted Shares or Restricted Share Units to a Participant on receiving from the Participant such further assurances and documents as the Committee may require to enforce the restrictions. In addition, the Committee may grant Awards hereunder in the form of unrestricted shares (“Unrestricted Shares”), which shall vest in full upon the date of grant or such other date as the Committee may determine or which the Committee may issue pursuant to any program under which one or more Eligible Persons (selected by the Committee in its sole discretion) elect to pay for such Shares or to receive Unrestricted Shares in lieu of cash bonuses that would otherwise be paid.

 

(b)                                 Vesting and Forfeiture. The Committee shall set forth in an Award Agreement granting Restricted Shares or Restricted Share Units, the terms and conditions under which the Participant’s interest in the Restricted Shares or the Shares subject to Restricted Share Units will become vested and non-forfeitable. Except as set forth in the applicable Award Agreement or the Committee otherwise determines, upon termination of a Participant’s Continuous Service for any reason, the Participant shall forfeit his or her Restricted Shares and Restricted Share Units to the extent the Participant’s interest therein has not vested on or before such termination date; provided that if a Participant purchases the Restricted Shares and forfeits them for any reason, the Company shall return the purchase price to the Participant only if and to the extent set forth in an Award Agreement.

 

(c)                                  Issuance of Restricted Shares Prior to Vesting. The Company shall issue stock certificates that evidence Restricted Shares pending the lapse of applicable restrictions, and that bear a legend making appropriate reference to such restrictions. Except as set forth in the applicable Award Agreement or as the Committee otherwise determines, the Company or a third party that the Company designates shall hold such Restricted Shares and any dividends that accrue with respect to Restricted Shares pursuant to Section 8(e) below.

 

9

 

(d)           Issuance of Shares upon Vesting. As soon as practicable after vesting of a Participant’s Restricted Shares (or of the right to receive Shares underlying Restricted Share Units) and the Participant’s satisfaction of applicable tax withholding requirements, the Company shall release to the Participant, free from the vesting restrictions, one Share for each vested Restricted Share (or issue one Share free of the vesting restriction for each vested Restricted Share Unit), unless an Award Agreement provides otherwise. No fractional shares shall be distributed, and cash shall be paid in lieu thereof.

 

(e)           Dividends Payable on Vesting. Whenever Shares are released to a Participant or duly-authorized transferee pursuant to Section 8(d) above as a result of the vesting of Restricted Shares or the Shares underlying Restricted Share Units are issued to a Participant pursuant to Section 8(d) above, such Participant or duly authorized transferee shall also be entitled to receive (unless otherwise provided in the Award Agreement), with respect to each Share released or issued a number of Shares equal to the sum of (i) any stock dividends, which were declared and paid to the holders of Shares between the Grant Date and the date such Share is released from the vesting restrictions in the case of Restricted Shares or issued in the case of Restricted Share Units, and (ii) a number of Shares equal to the Shares that the Participant could have purchased at Fair Market Value on the payment date of any cash dividends if the Participant had received such cash dividends with respect to each Restricted Share or Share subject to a Restricted Share Unit Award between its Grant Date and the date such Share is released or issued.

 

(f)            Section 83(b) Elections. A Participant may make an election under Section 83(b) of the Code (the “Section 83(b) Election”) with respect to Restricted Shares. If a Participant who has received Restricted Share Units promptly provides the Committee with written notice of his or her intention to make a Section 83(b) Election with respect to the Shares subject to such Restricted Share Units, the Committee may in its discretion convert the Participant’s Restricted Share Units into Restricted Shares, on a one-for-one basis, in full satisfaction of the Participant’s Restricted Share Unit Award. The Participant may then make a Section 83(b) Election with respect to those Restricted Shares. Shares with respect to which a Participant makes a Section 83(b) Election shall not be eligible for deferral pursuant to Section 9 below.

 

(g)           Deferral Elections. At any time within the thirty-day period (or other shorter or longer period that the Committee selects in its sole discretion) in which a Participant who is a member of a select group of management or highly compensated employees (within the meaning of ERISA) receives an initial Award of either Restricted Shares or Restricted Share Units that has a vesting condition tied to the Participant’s Continued Service, the Committee may permit the Participant to irrevocably elect, on a form provided by and acceptable to the Committee, to defer the receipt of all or a percentage of the Shares that would otherwise be transferred to the Participant upon the vesting of such Award, provided the election is made at least 12 months in advance of the earliest date that the Restricted Shares or Restricted Share Units may vest.

 

9.             Deferred Share Units

 

(a)           Elections to Defer. The Committee may permit any Eligible Person who is a Director, Consultant or member of a select group of management or highly compensated employees (within the meaning of ERISA) to irrevocably elect, on a form provided by and acceptable to the Committee (the “Election Form”), to forego the receipt of cash or other compensation (including the Shares deliverable pursuant to any Award other than Restricted Shares for which a Section 83(b)

 

10

 

Election has been made), and in lieu thereof to have the Company credit to an internal Plan account (the “Account”) a number of deferred share units (“Deferred Share Units”) having a Fair Market Value equal to the Shares and other compensation deferred. In general, subject to Section 8(g) regarding deferral of Restricted Shares and Restricted Share Units and to Section 10(e) regarding deferral of Performance Awards, Election Forms must be submitted to the Committee no later than December 31st of the calendar year preceding the calendar year in which the Eligible Person first performs the services that are attributable to the compensation being deferred. Notwithstanding the foregoing, any Eligible Person who first becomes eligible to defer compensation under the Plan and is not eligible to defer or otherwise accrue an amount of deferred compensation under any other plan or arrangement that (i) is maintained by the Company or any other Affiliate that would be considered a single employer with the Company pursuant to Code Sections 414(b) or 414(c) and (ii) constitutes a single plan under Treasury Regulation §1.409A-1(c)(2)(A), may submit his or her Election Form to the Committee no later than 30 days after the date the Eligible Person first becomes eligible to defer compensation under the Plan; however, the Election Form may relate only to compensation that is to be paid for services performed after the date the Election Form is submitted to the Committee. The Committee may reject any Election Form that it determines in its sole discretion does not satisfy the requirements of this paragraph. The Committee may unilaterally make Awards in the form of Deferred Share Units, regardless of whether or not the Participant foregoes other compensation.

 

(b)           Vesting. Unless an Award Agreement expressly provides otherwise, each Participant shall be 100% vested at all times in any Shares subject to Deferred Share Units.

 

(c)           Issuances of Shares. The Company shall provide a Participant with one Share for each Deferred Share Unit in five substantially equal annual installments that are issued before the last day of each of the five calendar years that end after the date on which the Participant incurs a “separation from service” within the meaning of Treasury Regulations §1.409A-1(h) (“Separation from Service”), unless —

 

(i)            the Participant has properly elected a different form of distribution, on a form approved by the Committee, that permits the Participant to select any combination of a lump sum and annual installments that are triggered by and completed within ten years following the Participant’s Separation from Service, and

 

(ii)           the Company received the Participant’s distribution election form at the time the Participant elects to defer the receipt of cash or other compensation pursuant to Section 9(a), provided that such election may be changed through any subsequent election that (i) is delivered to the Company at least one year before the date on which distributions are otherwise scheduled to commence pursuant to the Participant’s election, and (ii) defers the commencement of distributions by at least five years from the originally scheduled commencement date.

 

Fractional shares shall not be issued, and instead shall be paid out in cash.

 

(d)           Crediting of Dividends. Unless otherwise provided in an Award Agreement, whenever Shares are issued to a Participant pursuant to Section 9(c) above, such Participant shall also be entitled to receive, with respect to each Share issued, a number of Shares equal to the sum of (i) any stock dividends, which were declared and paid to the holders of Shares between the Grant Date and

 

11

 

the date such Share is issued, and (ii) a number of Shares equal to the Shares that the Participant could have purchased at Fair Market Value on the payment date of any cash dividends if the Participant had received such cash dividends between the Grant Date and the date such Share is issued.

 

(e)           Emergency Withdrawals. In the event a Participant suffers an unforeseeable emergency within the contemplation of this Section and Section 409A of the Code, the Participant may apply to the Company for an immediate distribution of all or a portion of the Participant’s Deferred Share Units. The unforeseeable emergency must result from a sudden and unexpected illness or accident of the Participant, the Participant’s spouse, or a dependent (within the meaning of Section 152(a) of the Code) of the Participant, casualty loss of the Participant’s property, or other similar extraordinary and unforeseeable conditions beyond the control of the Participant. Examples of purposes which are not considered unforeseeable emergencies include post-secondary school expenses or the desire to purchase a residence. In no event will a distribution be made to the extent the unforeseeable emergency could be relieved through reimbursement or compensation by insurance or otherwise, or by liquidation of the Participant’s nonessential assets to the extent such liquidation would not itself cause a severe financial hardship. The amount of any distribution hereunder shall be limited to the amount necessary to relieve the Participant’s unforeseeable emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution. The Committee shall, in its sole and absolute discretion, determine whether a Participant has a qualifying unforeseeable emergency and the amount which qualifies for distribution, if any. The Committee may require evidence of the purpose and amount of the need, and may establish such application or other procedures as it deems appropriate.

 

(f)            Unsecured Rights to Deferred Compensation. A Participant’s right to Deferred Share Units shall at all times constitute an unsecured promise of the Company to pay benefits as they come due. The right of the Participant or the Participant’s duly-authorized transferee to receive benefits hereunder shall be solely an unsecured claim against the general assets of the Company. Neither the Participant nor the Participant’s duly-authorized transferee shall have any claim against or rights in any specific assets, shares, or other funds of the Company.

 

10.          Performance Awards

 

(a)           Performance Units. Subject to the limitations set forth in paragraph (c) hereof, the Committee may in its discretion grant Performance Units to any Eligible Person and shall evidence such grant in an Award Agreement that is delivered to the Participant which sets forth the terms and conditions of the Award.

 

(b)           Performance Compensation Awards. Subject to the limitations set forth in paragraph (c) hereof, the Committee may, at the time of grant of a Performance Unit, designate such Award as a “Performance Compensation Award” (payable in cash or Shares) in order that such Award constitutes “qualified performance-based compensation” under Code Section 162(m), in which event the Committee shall have the power to grant such Performance Compensation Award upon terms and conditions that qualify it as “qualified performance-based compensation” within the meaning of Code Section 162(m). With respect to each such Performance Compensation Award, the Committee shall establish, in writing within the time required under Code Section 162(m), a “Performance Period,” “Performance Measure(s)”, and “Performance Formula(e)” (each such term being hereinafter defined). Once established for a Performance Period, the Performance Measure(s)

 

12

 

and Performance Formula(e) shall not be amended or otherwise modified to the extent such amendment or modification would cause the compensation payable pursuant to the Award to fail to constitute qualified performance-based compensation under Code Section 162(m).

 

A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that the Performance Measure(s) for such Award is achieved and the Performance Formula(e) as applied against such Performance Measure(s) determines that all or some portion of such Participant’s Award has been earned for the Performance Period. As soon as practicable after the close of each Performance Period, the Committee shall review and certify in writing whether, and to what extent, the Performance Measure(s) for the Performance Period have been achieved and, if so, determine and certify in writing the amount of the Performance Compensation Award to be paid to the Participant and, in so doing, may use negative discretion to decrease, but not increase, the amount of the Award otherwise payable to the Participant based upon such performance.

 

(c)           Limitations on Awards. The Committee shall have the discretion to provide in any Award Agreement that any amounts earned in excess of these limitations will either be credited as Deferred Share Units, or as deferred cash compensation under a separate plan of the Company (provided in the latter case that such deferred compensation either bears a reasonable rate of interest or has a value based on one or more predetermined actual investments). Any amounts for which payment to the Participant is deferred pursuant to the preceding sentence shall be paid to the Participant in a future year or years not earlier than, and only to the extent that, the Participant is either not receiving compensation in excess of these limits for a Performance Period, or is not subject to the restrictions set forth under Section 162(b) of the Code.

 

(d)           Definitions.

 

(i)            “Performance Formula” means, for a Performance Period, one or more objective formulas or standards established by the Committee for purposes of determining whether or the extent to which an Award has been earned based on the level of performance attained or to be attained with respect to one or more Performance Measure(s). Performance Formulae may vary from Performance Period to Performance Period and from Participant to Participant and may be established on a stand-alone basis, in tandem or in the alternative.

 

(ii)           “Performance Measure” means one or more of the following selected by the Committee to measure Company, Affiliate, and/or business unit performance for a Performance Period, whether in absolute or relative terms (including, without limitation, terms relative to a peer group or index): basic, diluted, or adjusted earnings per share; sales or revenue; earnings before interest, taxes, and other adjustments (in total or on a per share basis); basic or adjusted net income; returns on equity, assets, capital, revenue or similar measure; debt repayment; economic value added; working capital; total shareholder return; and product development, product market share, research, licensing, litigation, human resources, information services, mergers, acquisitions, sales of assets of Affiliates or business units. Each such measure shall be, to the extent applicable, determined in accordance with generally accepted accounting principles as consistently applied by the Company (or such other standard applied by the Committee) and, if so determined by the Committee, and in the case of a Performance Compensation Award, to the extent permitted under Code

 

13

 

Section 162(m), adjusted to omit the effects of extraordinary items, gain or loss on the disposal of a business segment, unusual or infrequently occurring events and transactions and cumulative effects of changes in accounting principles. Performance Measures may vary from Performance Period to Performance Period and from Participant to Participant, and may be established on a stand-alone basis, in tandem or in the alternative.

 

(iii)          “Performance Period” means one or more periods of time (of not less than one fiscal year of the Company), as the Committee may designate, over which the attainment of one or more Performance Measure(s) will be measured for the purpose of determining a Participant’s rights in respect of an Award.

 

(e)           Deferral Elections. At any time prior to the date that is at least six months before the close of a Performance Period (or shorter or longer period that the Committee selects) with respect to an Award of either Performance Units or Performance Compensation, the Committee may permit a Participant who is a member of a select group of management or highly compensated employees (within the meaning of ERISA) to irrevocably elect, on a form provided by and acceptable to the Committee, to defer the receipt of all or a percentage of the cash or Shares that would otherwise be transferred to the Participant upon the vesting of such Award. If the Participant makes this election, the cash or Shares subject to the election, and any associated interest and dividends, shall be credited to an account established pursuant to Section 9 hereof on the date such cash or Shares would otherwise have been released or issued to the Participant pursuant to Section 10(a) or Section 10(b) above.

 

11.          Taxes

 

(a)           General. As a condition to the issuance or distribution of Shares pursuant to the Plan, the Participant (or in the case of the Participant’s death, the person who succeeds to the Participant’s rights) shall make such arrangements as the Company may require for the satisfaction of any applicable federal, state, local or foreign withholding tax obligations that may arise in connection with the Award and the issuance of Shares. The Company shall not be required to issue any Shares until such obligations are satisfied, and may unilaterally withhold Shares for this purpose. If the Committee allows or effectuates the withholding or surrender of Shares to satisfy a Participant’s tax withholding obligations, the Committee shall not allow Shares to be withheld in an amount that exceeds the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes.

 

(b)           Default Rule for Employees. In the absence of any other arrangement authorized by the Committee or set forth in the Award Agreement, and to the extent permitted under Applicable Law, each Participant shall be deemed to have elected to have the Company withhold from the Shares or cash to be issued pursuant to an Award that number of Shares having a Fair Market Value determined as of the applicable Tax Date (as defined below) or cash equal to the minimum applicable tax withholding and employment tax obligations associated with an Award. The Company may also satisfy any required withholding through withholding from cash compensation otherwise payable to the Participant. For purposes of this Section 11, the Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined under the Applicable Law (the “Tax Date”).

 

14

 

(c)           Surrender of Shares. If permitted by the Committee, in its discretion, a Participant may satisfy the minimum applicable tax withholding and employment tax obligations associated with an Award by surrendering Shares to the Company (including Shares that would otherwise be issued pursuant to the Award) that have a Fair Market Value determined as of the applicable Tax Date equal to the amount required to be withheld. In the case of Shares previously acquired from the Company that are surrendered under this Section 11, such Shares must have been owned by the Participant for more than six months on the date of surrender (or such longer period of time the Company may in its discretion require).

 

(d)           Income Taxes and Deferred Compensation. Participants are solely responsible and liable for the satisfaction of all taxes and penalties that may arise in connection with Awards (including any taxes arising under Section 409A of the Code), and the Company shall not have any obligation to indemnify or otherwise hold any Participant harmless from any or all of such taxes. The Committee shall have the discretion to organize any deferral program, to require deferral election forms, and to grant or to unilaterally modify any Award in a manner (i) that conforms with the requirements of Section 409A of the Code with respect to compensation that is deferred and/or that vests after December 31, 2004, (ii) that voids any Participant election to the extent it would violate Section 409A of the Code, and (iii) for any distribution election that would violate Section 409A of the Code, to make distributions pursuant to the Award at the earliest to occur of a distribution event that is allowable under Section 409A of the Code or any distribution event that is both allowable under Section 409A of the Code and is elected by the Participant, subject to any valid second election to defer, provided that the Committee permits second elections to defer in accordance with Section 409A(a)(4)(C). The Committee shall have the sole discretion to interpret the requirements of the Code, including Section 409A, for purposes of the Plan and all Awards.

 

12.          Non-Transferability of Awards

 

(a)           General. Except as set forth in this Section 12, or as otherwise approved by the Committee, Awards may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or by the laws of descent or distribution. The designation of a beneficiary by a Participant will not constitute a transfer. An Award may be exercised, during the lifetime of the holder of an Award, only by such holder, the duly-authorized legal representative of a Participant who is Disabled, or a transferee permitted by this Section 12

 

(b)           Limited Transferability Rights. Notwithstanding anything else in this Section 12, the Committee may in its discretion permit an Award in the form of a Non-ISO, Share-settled SAR, Restricted Shares, or Performance Shares to be transferred, on such terms and conditions as the Committee deems appropriate, either (i) by instrument to the Participant’s “Immediate Family” (as defined below), (ii) by instrument to an inter vivos or testamentary trust (or other entity) in which the Award is to be passed to the Participant’s designated beneficiaries, or (iii) by gift to charitable institutions. Any transferee of the Participant’s rights shall succeed and be subject to all of the terms of the applicable Award Agreement and the Plan. “Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships.

 

15

 

13.          Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions

 

(a)           Changes in Capitalization. The Committee shall equitably adjust the number of Shares covered by each outstanding Award, and the number of Shares that have been authorized for issuance under the Plan but as to which no Awards have yet been granted or that have been returned to the Plan upon cancellation, forfeiture, or expiration of an Award, as well as the price per Share covered by each such outstanding Award, to reflect any increase or decrease in the number of issued Shares resulting from a stock-split, reverse stock-split, stock dividend, combination, recapitalization or reclassification of the Shares, merger, consolidation, change in form of organization, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company. In the event of any such transaction or event, the Committee may provide in substitution for any or all outstanding Awards under the Plan such alternative consideration (including securities of any surviving entity) as it may in good faith determine to be equitable under the circumstances and may require in connection therewith the surrender of all Awards so replaced. In any case, such substitution of securities shall not require the consent of any person who is granted Awards pursuant to the Plan. Except as expressly provided herein, or in an Award Agreement, if the Company issues for consideration shares of stock of any class or securities convertible into shares of stock of any class, the issuance shall not affect, and no adjustment by reason thereof shall be required to be made with respect to the number or price of Shares subject to any Award.

 

(b)           Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company other than as part of a Change in Control, each Award will terminate immediately prior to the consummation of such action, subject to the ability of the Committee to exercise any discretion authorized in the case of a Change in Control.

 

(c)           Change in Control. In the event of a Change in Control, the Committee may in its sole and absolute discretion and authority, without obtaining the approval or consent of the Company’s shareholders or any Participant with respect to his or her outstanding Awards, take one or more of the following actions:

 

(i)            arrange for or otherwise provide that each outstanding Award shall be assumed or a substantially similar award shall be substituted by a successor corporation or a parent or subsidiary of such successor corporation (the “Successor Corporation”);

 

(ii)           accelerate the vesting of Awards so that Awards shall vest (and, to the extent applicable, become exercisable) as to the Shares that otherwise would have been unvested and provide that repurchase rights of the Company with respect to Shares issued upon exercise of an Award shall lapse as to the Shares subject to such repurchase right;

 

(iii)          arrange or otherwise provide for the payment of cash or other consideration to Participants in exchange for the satisfaction and cancellation of outstanding Awards;

 

(iv)          terminate Awards upon the consummation of the transaction, provided that the Committee may in its sole discretion provide for vesting of all or some outstanding Awards in full as of a date immediately prior to consummation of the Change in Control. To the extent that an Award is not exercised prior to consummation of a transaction in which the Award is not being assumed or substituted, such Award shall terminate upon such consummation; or

 

16

 

(v)           make such other modifications, adjustments or amendments to outstanding Awards or this Plan as the Committee deems necessary or appropriate, subject however to the terms of Section 15(a) below.

 

(d)           Certain Distributions. In the event of any distribution to the Company’s shareholders of securities of any other entity or other assets (other than dividends payable in cash or stock of the Company) without receipt of consideration by the Company, the Committee may, in its discretion, appropriately adjust the price per Share covered by each outstanding Award to reflect the effect of such distribution.

 

14.          Time of Granting Awards

 

The date of grant (“Grant Date”) of an Award shall be the date on which the Committee makes the determination granting such Award or such other date as is determined by the Committee, provided that in the case of an ISO, the Grant Date shall be the later of the date on which the Committee makes the determination granting such ISO or the date of commencement of the Participant’s employment relationship with the Company.

 

15.          Modification of Awards and Substitution of Options

 

(a)           Modification, Extension, and Renewal of Awards. Within the limitations of the Plan, the Committee may modify an Award to accelerate the rate at which an Option or SAR may be exercised (including without limitation permitting an Option or SAR to be exercised in full without regard to the installment or vesting provisions of the applicable Award Agreement or whether the Option or SAR is at the time exercisable, to the extent it has not previously been exercised), to accelerate the vesting of any Award, to extend or renew outstanding Awards or to accept the cancellation of outstanding Awards to the extent not previously exercised. Notwithstanding the foregoing provision, no modification of an outstanding Award shall materially and adversely affect such Participant’s rights thereunder, unless either (i) the Participant provides written consent, or (ii) before a Change in Control, the Committee determines in good faith that the modification is not materially adverse to the Participant.

 

(b)           Substitution of Options. Notwithstanding any inconsistent provisions or limits under the Plan, in the event the Company or an Affiliate acquires (whether by purchase, merger or otherwise) all or substantially all of outstanding capital stock or assets of another corporation or in the event of any reorganization or other transaction qualifying under Section 424 of the Code, the Committee may, in accordance with the provisions of that Section, substitute Options for options under the plan of the acquired company provided (i) the excess of the aggregate fair market value of the shares subject to an option immediately after the substitution over the aggregate option price of such shares is not more than the similar excess immediately before such substitution and (ii) the new option does not give persons additional benefits, including any extension of the exercise period.

 

16.          Term of Plan

 

The Plan shall continue in effect for a term of ten (10) years from its effective date as determined under Section 20 below, unless the Plan is sooner terminated under Section 17 below.

 

17

 

17.          Amendment and Termination of the Plan

 

(a)           Authority to Amend or Terminate. Subject to Applicable Laws, the Board may from time to time amend, alter, suspend, discontinue, or terminate the Plan.

 

(b)           Effect of Amendment or Termination. No amendment, suspension, or termination of the Plan shall materially and adversely affect Awards already granted unless either it relates to an adjustment pursuant to Section 13 or modification pursuant to Section 15(a) above, or it is otherwise mutually agreed between the Participant and the Committee, which agreement must be in writing and signed by the Participant and the Company. Notwithstanding the foregoing, the Committee may amend the Plan to comply with changes in tax or securities laws or regulations, or in the interpretation thereof.

 

(c)           Special Code Section 409A. Notwithstanding the foregoing provisions of this Section 17, with respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Code Section 409A, termination of this Plan shall not result in an acceleration or deferral of income taxation except to the extent permissible within Code Section 409A’s rules and regulations relating to plan terminations.

 

18.          Conditions Upon Issuance of Shares

 

Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such issuance or delivery would comply with Applicable Law, with such compliance determined by the Company in consultation with its legal counsel.

 

19.          Reservation of Shares

 

The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

20.          Effective Date

 

This Plan shall become effective on the date which it has received approval by a vote of a majority of the votes cast at a duly held meeting of the Company’s shareholders (or by such other shareholder vote that the Committee determines to be sufficient for the issuance of Shares or stock options according to the Company’s governing documents and applicable state law).

 

21.          Controlling Law

 

All disputes relating to or arising from the Plan shall be governed by the internal substantive laws (and not the laws of conflicts of laws) of the State of Delaware, to the extent not preempted by United States federal law. If any provision of this Plan is held by a court of competent jurisdiction to be invalid and unenforceable, the remaining provisions shall continue to be fully effective.

 

18

 

22.          Laws and Regulations

 

(a)           U.S. Securities Laws. This Plan, the grant of Awards, and the exercise of Options and SARs under this Plan, and the obligation of the Company to sell or deliver any of its securities (including, without limitation, Options, Restricted Shares, Restricted Share Units, Unrestricted Shares, Deferred Share Units, and Shares) under this Plan shall be subject to all Applicable Law. In the event that the Shares are not registered under the Securities Act of 1933, as amended (the “Act”), or any applicable state securities laws prior to the delivery of such Shares, the Company may require, as a condition to the issuance thereof, that the persons to whom Shares are to be issued represent and warrant in writing to the Company that such Shares are being acquired by him or her for investment for his or her own account and not with a view to, for resale in connection with, or with an intent of participating directly or indirectly in, any distribution of such Shares within the meaning of the Act, and a legend to that effect may be placed on the certificates representing the Shares.

 

(b)           Other Jurisdictions. To facilitate the making of any grant of an Award under this Plan, the Committee may provide for such special terms for Awards to Participants who are foreign nationals or who are employed by the Company or any Affiliate outside of the United States of America as the Committee may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. The Company may adopt rules and procedures relating to the operation and administration of this Plan to accommodate the specific requirements of local laws and procedures of particular countries. Without limiting the foregoing, the Company is specifically authorized to adopt rules and procedures regarding the conversion of local currency, taxes, withholding procedures and handling of stock certificates which vary with the customs and requirements of particular countries. The Company may adopt sub-plans and establish escrow accounts and trusts as may be appropriate or applicable to particular locations and countries.

 

23.          No Shareholder Rights

 

Neither a Participant nor any transferee of a Participant shall have any rights as a shareholder of the Company with respect to any Shares underlying any Award until the date of issuance of a share certificate to a Participant or a transferee of a Participant for such Shares in accordance with the Company’s governing instruments and Applicable Law. Prior to the issuance of Shares pursuant to an Award, a Participant shall not have the right to vote or to receive dividends or any other rights as a shareholder with respect to the Shares underlying the Award, notwithstanding its exercise in the case of Options and SARs. No adjustment will be made for a dividend or other right that is determined based on a record date prior to the date the stock certificate is issued, except as otherwise specifically provided for in this Plan.

 

24.          No Employment Rights

 

The Plan shall not confer upon any Participant any right to continue an employment, service or consulting relationship with the Company, nor shall it affect in any way a Participant’s right or the Company’s right to terminate the Participant’s employment, service, or consulting relationship at any time, with or without Cause. By accepting any Award under this Plan a Participant confirms his or her at-will status (except as otherwise provided in a written employment or consulting agreement signed by an officer of the Company or an authorized designee of an officer of the Company) and that such relationship only can be changed by a written agreement signed by an officer of the Company or an authorized designee of an officer of the Company.

 

19

 

25.                               Termination, Rescission and Recapture of Awards

 

(a)                                 Each Award under the Plan is intended to align the Participant’s long-term interest with those of the Company.  If the Participant engages in certain activities discussed below, either during employment or after employment with the Company terminates for any reason, the Participant is acting contrary to the long-term interests of the Company.  Accordingly, but only to the extent expressly provided in an Award Agreement, the Company may terminate any outstanding, unexercised, unexpired, unpaid, or deferred Awards (“Termination”), rescind any exercise, payment or delivery pursuant to the Award (“Rescission”), or recapture any Common Stock (whether restricted or unrestricted) or proceeds from the Participant’s sale of Shares issued pursuant to the Award (“Recapture”), if the Participant does not comply with the conditions of subsections (b), (c) and (e) hereof (collectively, the “Conditions”).

 

(b)                                 A Participant shall not, without the Company’s prior written authorization, disclose to anyone outside the Company, or use in other than the Company’s business, any proprietary or confidential information or material, as those or other similar terms are used in any applicable patent, confidentiality, inventions, secrecy, or other agreement between the Participant and the Company with regard to any such proprietary or confidential information or material.

 

(c)                                  Pursuant to any agreement between the Participant and the Company with regard to intellectual property (including but not limited to patents, trademarks, copyrights, trade secrets, inventions, developments, improvements, proprietary information, confidential business and personnel information), a Participant shall promptly disclose and assign to the Company or its designee all right, title, and interest in such intellectual property, and shall take all reasonable steps necessary to enable the Company to secure all right, title and interest in such intellectual property in the United States and in any foreign country.

 

(d)                                 Upon exercise, payment, or delivery of cash or Common Stock pursuant to an Award, the Participant shall certify on a form acceptable to the Company that he or she is in compliance with the terms and conditions of the Plan and, if a severance of Continuous Service has occurred for any reason, shall state the name and address of the Participant’s then-current employer or any entity for which the Participant performs business services and the Participant’s title, and shall identify any organization or business in which the Participant owns a greater-than-five-percent equity interest.

 

(e)                                  If the Company determines, in its sole and absolute discretion, that (i) a Participant has violated any of the Conditions or (ii) during his or her Continuous Service, or within two years after its termination for any reason, a Participant (x) has rendered services to or otherwise directly or indirectly engaged in or assisted, any organization or business that, in the judgment of the Company in its sole and absolute discretion, is or is working to become competitive with the Company; (y) has solicited any non-administrative employee of the Company to terminate employment with the Company; or (z) has engaged in activities which are materially prejudicial to or in conflict with the interests of the Company, including any breaches of fiduciary duty or the duty of loyalty, then the Company may, in its sole and absolute discretion, impose a Termination, Rescission, and/or Recapture with respect to any or all of the Participant’s relevant Awards, Shares, and the proceeds

 

20

 

thereof.  It shall not be a basis for Termination, Rescission or Recapture if after termination of a Participant’s Continuous Service, the Participant purchases, as an investment or otherwise, stock or other securities of such an organization or business, so long as (i) such stock or other securities are listed upon a recognized securities exchange or traded over-the-counter, and (ii) such investment does not represent more than a five percent (5%) equity interest in the organization or business.

 

(f)                                   Within ten days after receiving notice from the Company of any such activity described in Section 25(e) above, the Participant shall deliver to the Company the Shares acquired pursuant to the Award, or, if Participant has sold the Shares, the gain realized, or payment received as a result of the rescinded exercise, payment, or delivery; provided, that if the Participant returns Shares that the Participant purchased pursuant to the exercise of an Option (or the gains realized from the sale of such Common Stock), the Company shall promptly refund the exercise price, without earnings, that the Participant paid for the Shares. Any payment by the Participant to the Company pursuant to this Section 25 shall be made either in cash or by returning to the Company the number of Shares that the Participant received in connection with the rescinded exercise, payment, or delivery.

 

(g)                                  Notwithstanding the foregoing provisions of this Section, the Company has sole and absolute discretion not to require Termination, Rescission and/or Recapture, and its determination not to require Termination, Rescission and/or Recapture with respect to any particular act by a particular Participant or Award shall not in any way reduce or eliminate the Company’s authority to require Termination, Rescission and/or Recapture with respect to any other act or Participant or Award. Nothing in this Section shall be construed to impose obligations on the Participant to refrain from engaging in lawful competition with the Company after the termination of employment that does not violate subsections (b), (c) or (e) of this Section, other than any obligations that are part of any separate agreement between the Company and the Participant or that arise under Applicable Law.

 

(h)                                 All administrative and discretionary authority given to the Company under this Section shall be exercised by the most senior human resources executive of the Company or such other person or committee (including without limitation the Committee) as the Committee may designate from time to time.

 

(i)                                     Notwithstanding any provision of this Section, if any provision of this Section is determined to be unenforceable or invalid under any Applicable Law, such provision will be applied to the maximum extent permitted by Applicable Law, and shall automatically be deemed amended in a manner consistent with its objectives to the extent necessary to conform to any limitations required under Applicable Law.  Furthermore, if any provision of this Section is illegal under any Applicable Law, such provision shall be null and void to the extent necessary to comply with Applicable Law.

 

26.                               Recoupment of Awards

 

Unless otherwise specifically provided in an Award Agreement, and to the extent permitted by Applicable Law, the Committee may in its sole and absolute discretion, without obtaining the approval or consent of the Company’s shareholders or any Participant with respect to his or her outstanding Awards, require that each Participant agrees to reimburse the Company for all or any portion of any Awards granted under this Plan (“Reimbursement”), or the Committee may require the Termination or Rescission of, or the Recapture associated with, any Award, if:

 

21

 

(a)                                 the granting, vesting, or payment of such Award was predicated upon the achievement of certain financial results that were subsequently the subject of a material financial restatement;

 

(b)                                 in the Committee’s view the Participant engaged in fraud or misconduct that caused or partially caused the need for a material financial restatement by the Company or any Affiliate; and

 

(c)                                  a lower granting, vesting, or payment of such Award would have occurred based upon the restated financial results.

 

In each instance, the Committee will, to the extent practicable and allowable under Applicable Laws, require Reimbursement, Termination or Rescission of, or Recapture relating to, any such Award granted to a Participant, including reimbursement for any gains realized on the exercise of Options or SARs attributable to such Awards, plus a reasonable rate of interest, effecting the cancellation of Restricted Shares, Restricted Share Units, Unrestricted Shares, Deferred Share Units, Performance Awards, and outstanding Options and SARs; provided that the Company will not seek Reimbursement, Termination or Rescission of, or Recapture relating to, any such Awards that were paid or vested more than three years prior to the date the applicable restatement is disclosed.

 

27.                               Pre-IPO Provisions

 

Subject to any contrary terms set forth in any Award Agreement, for any period preceding the date of an initial public offering, this Section shall be applicable to any Shares subject to or issued pursuant to Awards.  The provisions set forth below shall become null and void upon the occurrence of an initial public offering.

 

(a)                                 Shareholders’ Agreement.  As a condition for the delivery of any Shares pursuant to any Award, the Committee may require the Participant to execute and be bound by any agreement that generally exists between the Company and similarly-situated Shareholders.

 

(b)                                 Repurchase Rights. At any time before an initial public offering, the Company may repurchase any Shares acquired pursuant to an Award for their then Fair Market Value as determined by the Committee in good faith; provided that if a Participant’s Continuous Service is terminated by the Company for Cause, the repurchase price shall be the lower of the purchase price the Participant paid for the Shares, if any, or the Shares’ Fair Market Value. The Company shall not exercise its repurchase right until the Shares have been held by the Participant for at least six months, unless (i) the Company’s independent auditors have advised the Committee that an earlier repurchase will not trigger adverse accounting consequences or (ii) the Committee determines that any adverse accounting consequences are acceptable to the Company. The Company shall pay the repurchase price to the Participant in a lump sum or in equal monthly installments up to 60 months, as determined by the Company in its sole discretion. Notwithstanding the foregoing, to the extent required by Section 260.140.8 of Title 10 of the California Code of Regulations and to the extent compliance with such section is required for the Shares subject to the Award to be exempt from registration in California, any such repurchase right granted prior to the date on which the Shares become publicly-traded to a person who is not an Officer, Director or Consultant shall be upon the following terms:

 

22

 

(i)                                     if the repurchase option gives the Company the right to repurchase the shares upon termination of Continuous Service at not less than the Fair Market Value of the Shares to be purchased on the date of termination of Continuous Service, and

 

(1)                                 the right to repurchase shall be exercised for cash or cancellation of purchase money indebtedness for the shares within six (6) months of termination of Continuous Service (or in the case of shares issued upon exercise of Options or SARs after such date of termination, within six (6) months after the date of the exercise), and

 

(2)                                 the right terminates when the shares become publicly traded; or

 

(ii)                                  if the repurchase option gives the Company the right to repurchase the Shares upon termination of the Participant’s Continuous Service at the original purchase price for such Shares, and

 

(1)                                 the right to repurchase at the original purchase price shall lapse at the rate of at least twenty percent (20%) of the Shares per year over five (5) years from the Grant Date (without respect to the date the Option or SAR was exercised or became exercisable), and

 

(2)                                 the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the Shares within six (6) months of termination of Continuous Service (or, in the case of shares issued upon exercise of Options or SARs, after such date of termination, within six (6) months after the date of the exercise) or such longer period as may be agreed to by the Company and the Participant.

 

(c)                                  Market Stand-Off. In connection with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the federal securities laws, including the Company’s initial public offering, Participants shall not directly or indirectly sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, or otherwise dispose or transfer, or agree to engage in any of the foregoing transactions with respect to, any Shares acquired pursuant to Awards without the prior written consent of the Company or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such period of time, not exceeding one hundred eighty (180) days, following the date of the final prospectus for the offering as may be requested by the Company or such underwriters. The Market Stand-Off shall in any event terminate two (2) years after the date of the Company’s initial public offering. In the event of the declaration of a stock dividend, a spin-off, a stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction affecting the Company’s outstanding securities without receipt of consideration, any new, substituted or additional securities which are by reason of such transaction distributed with respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to such Market Stand- Off. In order to enforce the Market Stand-Off, the Company may impose stop-transfer instructions

 

23

 

with respect to the Shares acquired pursuant to Awards until the end of the applicable stand-off period.  The Company and its underwriters shall be beneficiaries of the agreement set forth in this Section 27(c).  Participants who are not Directors or Officers shall be subject to this Section 27(c) only if Directors and officers of the Company are subject to it.

 

24

 

BOOT BARN HOLDINGS, INC.

2007 STOCK INCENTIVE PLAN

 

 

Appendix A: Definitions

 

 

As used in the Plan, the following definitions shall apply:

 

“Affiliate” means, with respect to any Person (as defined below), any other Person that directly or indirectly controls or is controlled by or under common control with such Person.  For the purposes of this definition, “control,” when used with respect to any Person, means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person or the power to elect directors, whether through the ownership of voting securities, by contract or otherwise; and the terms “affiliated,” “controlling” and “controlled” have meanings correlative to the foregoing.

 

“Applicable Law” means the legal requirements relating to the administration of options and share-based plans under applicable U.S. federal and state laws, the Code, any applicable stock exchange or automated quotation system rules or regulations (to the extent the Committee determines in its discretion that compliance with such rules or regulations is desirable) and the Applicable Laws of any other country or jurisdiction where Awards are granted, or that apply to the Company’s or a Participant’s rights and obligations under this Plan or any Award Agreement, as such laws, rules, regulations and requirements shall be in place from time to time.

 

“Award” means any award made pursuant to the Plan, including awards made in the form of an Option, an SAR, a Restricted Share, a Restricted Share Unit, an Unrestricted Share, a Deferred Share Unit, and a Performance Award, or any combination thereof, whether alternative or cumulative, authorized by and granted under this Plan.

 

“Award Agreement” means any written document setting forth the terms of an Award that has been authorized by the Committee. The Committee shall determine the form or forms of documents to be used, and may change them from time to time for any reason.

 

“Board” means the Board of Directors of the Company.

 

“Cause” for termination of a Participant’s Continuous Service will have the meaning set forth in any unexpired employment agreement between the Company and the Participant. In the absence of such an agreement, “Cause” will exist if the Participant is terminated from employment or other service with the Company or an Affiliate for any of the following reasons: (i) the Participant’s willful failure to substantially perform his or her duties and responsibilities to the Company or deliberate violation of a material Company policy; (ii) the Participant’s commission of any material act or acts of fraud, embezzlement, dishonesty, or other willful misconduct; (iii) the Participant’s material unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (iv) Participant’s willful and material breach of any of his or her obligations under any written agreement or covenant with the Company.

 

 

The Committee shall in its discretion determine whether or not a Participant is being terminated for Cause.  The Committee’s determination shall be final and binding on the Participant, the Company, and all other affected persons.  The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time, and the term “Company” will be interpreted herein to include any Affiliate or successor thereto, if appropriate.

 

“Change in Control” means any of the following:

 

(i)                                     Acquisition of Controlling Interest. Any Person (other than Persons who are Employees at any time more than one year before a transaction) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing more than 50% of the combined voting power of the Company’s then outstanding securities. In applying the preceding sentence, (i) securities acquired directly from the Company or its Affiliates by or for the Person shall not be taken into account, and (ii) an agreement to vote securities shall be disregarded unless its ultimate purpose is to cause what would otherwise be Change in Control, as reasonably determined by the Board.

 

(ii)                                  Merger. The Company consummates a merger, or consolidation of the Company with any other corporation unless: (a) the voting securities of the Company outstanding immediately before the merger or consolidation would continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; and (b) no Person (other than Persons who are Employees at any time more than one year before a transaction) becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities.

 

(iii)                               Sale of Assets.  The stockholders of the Company approve an agreement for the sale or disposition by the Company of all, or substantially all, of the Company’s assets.

 

(iv)                              Liquidation or Dissolution.  The stockholders of the Company approve a plan or proposal for liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions.

 

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

 

“Committee” means one or more committees or subcommittees of the Board appointed by the Board to administer the Plan in accordance with Section 4 above.  With respect to any decision involving an Award intended to satisfy the requirements of Section 162(m) of the Code, the Committee shall consist of two or more Directors of the Company who are “outside directors”

 

2

 

within the meaning of Section 162(m) of the Code.  With respect to any decision relating to a Reporting Person, the Committee shall consist solely of two or more Directors who are disinterested within the meaning of Rule 16b-3.

 

“Company” means Boot Barn Holdings, Inc., a Delaware corporation; provided, however, that in the event the Company reincorporates to another jurisdiction, all references to the term “Company” shall refer to the Company in such new jurisdiction.

 

“Consultant” means any person, including an advisor, who is engaged by the Company or any Affiliate to render services and is compensated for such services.

 

“Continuous Service” means the absence of any interruption or termination of service as an Employee, Director, or Consultant. Continuous Service shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Committee, provided that such leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to Company policy adopted from time to time; (iv) changes in status from Director to advisory director or emeritus status; or (iv) in the case of transfers between locations of the Company or between the Company, its Affiliates or their respective successors. Changes in status between service as an Employee, Director, and a Consultant will not constitute an interruption of Continuous Service unless the Committee determines that the individual has not continued or will not continue to perform bona fide services for the Company or determines that the relationship will or may result in adverse accounting consequences.

 

“Deferred Share Units” mean Awards pursuant to Section 9 of the Plan.

 

“Director” means a member of the Board, or a member of the board of directors of an Affiliate.

 

“Disabled” means a condition under which a Participant—

 

(a)                                 is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or

 

(b)                                 has, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, received income replacement benefits for a period of not less than 3 months under an accident or health plan covering employees of the Company.

 

“Eligible Person” means any Consultant, Director or Employee and includes non- Employees to whom an offer of employment has been or is being extended.

 

“Employee” means any person whom the Company or any Affiliate classifies as an employee (including an officer) for employment tax purposes, whether or not that classification is correct. The payment by the Company of a director’s fee to a Director shall not be sufficient to constitute “employment” of such Director by the Company.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

3

 

“Fair Market Value” as of any date (the “Determination Date”) means: (i) the closing price of a Share on the New York Stock Exchange or the American Stock Exchange (collectively, the “Exchange”), on the Determination Date, or, if shares were not traded on the Determination Date, then on the nearest preceding trading day during which a sale occurred; or (ii) if such stock is not traded on the Exchange but is quoted on NASDAQ or a successor quotation system, (A) the last sales price (if the stock is then listed as a National Market Issue under The NASDAQ National Market System) or (B) the mean between the closing representative bid and asked prices (in all other cases) for the stock on the Determination Date as reported by NASDAQ or such successor quotation system; or (iii) if such stock is not traded on the Exchange or quoted on NASDAQ but is otherwise traded in the over-the-counter, the mean between the representative bid and asked prices on the Determination Date; or (iv) if subsections (i)-(iii) do not apply, the fair market value established in good faith by the Board.

 

“Grant Date” has the meaning set forth in Section 14 of the Plan.

 

“Incentive Share Option or ISO” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code, as designated in the applicable Award Agreement.

 

“Non-ISO” means an Option not intended to qualify as an ISO, as designated in the applicable Award Agreement.

 

“Option” means any stock option granted pursuant to Section 6 of the Plan.

 

“Participant” means any holder of one or more Awards, or the Shares issuable or issued upon exercise of such Awards, under the Plan.

 

“Performance Awards” mean Performance Units and Performance Compensation Awards granted pursuant to Section 10.

 

“Performance Compensation Awards” mean Awards granted pursuant to Section 10(b) of the Plan.

 

“Performance Unit” means Awards granted pursuant to Section 10(a) of the Plan which may be paid in cash, in Shares, or such combination of cash and Shares as the Committee in its sole discretion shall determine.

 

“Person” means any natural person, association, trust, business trust, cooperative, corporation, general partnership, joint venture, joint-stock company, limited partnership, limited liability company, real estate investment trust, regulatory body, governmental agency or instrumentality, unincorporated organization or organizational entity.

 

“Plan” means this Boot Barn Holdings, Inc. 2007 Stock Incentive Plan.

 

“Reporting Person” means an officer, Director, or greater than ten percent shareholder of the Company within the meaning of Rule 16a-2 under the Exchange Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange Act.

 

4

 

“Restricted Shares” mean Shares subject to restrictions imposed pursuant to Section 8 of the Plan.

 

“Restricted Share Units” mean Awards pursuant to Section 8 of the Plan.

 

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.

 

“SAR”  or  “Share Appreciation Right” means Awards granted pursuant to Section 7 of the Plan.

 

“Separation from Service” has the meaning set forth in Section 9 of the Plan.

 

“Share” means a share of common stock of the Company, as adjusted in accordance with Section 13 of the Plan.

 

“Ten Percent Holder” means a person who owns stock representing more than ten percent (10%) of the combined voting power of all classes of stock of the Company or any Affiliate.

 

“Unrestricted Shares” mean Shares awarded pursuant to Section 8 of the Plan.

 

5Exhibit 10.4

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of November 12, 2012 (the “Effective Date”), by and between Boot Barn, Inc., a Delaware corporation (the “Company”), and James G. Conroy (“Executive”). (The Company and Executive are referred to herein as the “parties.”)

 

RECITALS

 

WHEREAS, the Company wishes to employ Executive as the President and Chief Executive Officer of the Company, and Executive wishes to be employed by the Company on the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the promises and obligations set forth below and for other good and valuable consideration, the receipt of which is hereby acknowledged by the parties, the Company and Executive agree and intend to be legally bound, as follows:

 

AGREEMENT

 

1.            POSITION AND DUTIES.

 

(a)       Position.  The Company agrees to employ Executive during the Term as the President and Chief Executive Officer of the Company, reporting to the Company’s Board of Directors (“Board”).  Executive shall have such responsibilities and duties consistent with such positions and as determined from time to time by the Board. During the Term, Executive shall serve as a member of the Board without additional compensation. If requested by the Board, Executive will serve as an officer of and/or provide services to Boot Barn Holding Corporation, a Delaware corporation (Boot Barn Holding Corporation along with WW Top Investment Corporation (“TopCo”) shall be referred to herein as the “Parents”), and/or any subsidiary or affiliate of the Company without additional compensation.

 

(b)       Location.  During the Term, Executive shall perform his duties at the Company’s corporate offices located in Orange County, California subject to customary travel as reasonably required.

 

2.               BEST EFFORTS.  During the Term, Executive shall devote his full business time and best efforts to the faithful and loyal performance of his duties to the Company (except for permitted vacation periods and reasonable periods of illness or other incapacity). Executive shall not, directly or indirectly, provide employment, consultant or other services to any other person or entity other than the Parents or a subsidiary or affiliate thereof if so requested by the Board. Executive shall not, directly or indirectly, engage or participate in any outside activity that would, or may be perceived to, conflict with the best interests of the Company or his duties to the Company.  Notwithstanding the foregoing, nothing herein shall preclude Executive from: (i) serving, with the prior written consent of the Board, as a member of the board of directors or advisory board (or their equivalents in the case of a non-corporate entity) of a non-competing business or a non-competing entity engaged in charitable activities and community

 

 

affairs; (ii) engaging in charitable activities and community affairs; or (iii) managing his personal investments and affairs; provided however, that the activities set out in clauses (i)-(iii) shall be limited by Executive so as not to interfere, individually or in the aggregate, with the performance of his duties and responsibilities hereunder.  Nothing in this Agreement shall prohibit Executive from owning, as a passive investment, less than 2% of capital stock of any corporation listed on the national securities exchange or publicly traded in the over-the-counter.

 

3.            TERM.  This Agreement shall commence on the Effective Date and continue until the third anniversary of the Effective Date, unless earlier terminated pursuant to Section 6; provided, however, that commencing on the third anniversary of the Effective Date and on each anniversary date thereafter, this Agreement shall be automatically renewed for an additional one year period unless, not later than 90 calendar days prior to such date, the Board or Executive provide the other party written notice that such party does not wish to renew the term (the initial term and any renewed term shall be referred to herein as the “Term”). Executive’s post-termination obligations pursuant to Sections 7-10, 11(a) and 12(d) of this Agreement (“Continuing Obligations”) shall survive the non-renewal or termination of this Agreement and/or Executive’s employment, however caused.

 

4.            COMPENSATION AND BENEFITS.

 

(a)           Base Salary.  During the Term, the Company shall pay Executive a base salary in the amount of Six Hundred Thousand Dollars ($600,000.00) (the “Base Salary”), less applicable withholdings under state and federal law in accordance with the Company’s normal payroll practices.

 

(b)           Incentive Bonus.  For the fiscal year ending March 30, 2013, Executive will receive a guaranteed bonus of One Hundred Fifty Thousand Dollars ($150,000.00), less applicable deductions. For each subsequent fiscal year, Executive shall be eligible to receive a bonus of 60% of the Base Salary if the Company achieves its budget (as established by the Board), with an opportunity to receive a maximum aggregate bonus of up to 120% of the Base Salary if the Company achieves additional performance targets established by the Board, in each case subject to the terms of the Company’s senior management bonus plan in force and as amended from time to time.  The Company shall pay the bonus, if any, to Executive following the end of the fiscal year to which the bonus relates but no later than 120 days following the end of such fiscal year, provided that, subject to Section 6, Executive is employed on the bonus payment date.  Subject to Section 6, no bonus or prorated bonus will be payable to Executive to the extent Executive is not employed on the bonus payment date.

 

(a)          Equity. On the Effective Date, Executive will be granted 11,776 options to purchase the common stock of TopCo, at a strike price of the fair market value as of the Effective Date (“FMV”), and 11,776 options at a strike price of 150% of the FMV. These options will vest in five equal annual installments beginning on the first anniversary of the grant date and ending on the fifth anniversary of the grant date.  In addition to the forgoing, Executive will receive an option to purchase for cash 5,000 shares of the common stock of TopCo FMV, which option shall expire on February 28, 2013.  All options provided hereunder will be subject to the terms of the Company’s stock option plan and form of option agreement as amended and in force from time to time.

 

2

 

(b)           Vacation/Sick Leave/Holidays. During the Term, Executive shall be entitled to accrue four weeks of paid vacation per calendar year (prorated for partial years worked). Vacation may be carried over from one calendar year to the next for a maximum of six weeks of paid vacation (“Vacation Cap”).  Once Executive reaches the Vacation Cap, he will not be entitled to accrue any additional paid vacation days until he uses his vacation days so as to fall below the Vacation Cap.  Any vacation shall be taken at the reasonable and mutual convenience of the Company and Executive.  In addition, Executive will be provided the same sick leave and holiday benefits provided to other similarly-situated officers of the Company. The amount, eligibility and extent of these benefits shall be governed by the Company’s applicable policy in effect and as amended from time to time and in compliance with applicable law.

 

(c)           Benefits.  During the Term, Executive shall be eligible to participate in any Company-sponsored health and welfare benefit plans or programs in effect from time to time and available to other similarly-situated officers of the Company. The amount, eligibility and extent of the benefits shall be governed by the applicable benefit plan or program of the Company as in force from time to time.

 

5.            EXPENSES.

 

(a)          General.  During the Term, the Company shall reimburse Executive for all reasonable business expenses of types authorized by the Company and reasonably and necessarily incurred or paid for by Executive in the performance of his duties, responsibilities, and authorities hereunder. Executive shall provide the Company with reasonable documentation and receipts establishing the amount and nature of such expenses. Executive shall comply with such reasonable budget limitations and approval and reporting requirements with respect to expenses as the Company or the Board may establish from time to time.

 

(b)          Relocation.  The Company shall reimburse Executive for expenses reasonably and necessarily incurred by him in connection with Executive’s relocation from Chicago, Illinois to Orange County, California, which shall include the following: weekly round-trip coach tickets for Executive to/from Chicago, Illinois until his family is fully relocated to California, up to a maximum of 12 trips; rent for temporary corporate housing up to a maximum of six months; the actual sales commission paid by Executive to a real estate broker, up to maximum of 5.25%, in connection with the sale of Executive’s current residence; and the actual moving costs incurred by Executive.  In addition, the Company will reimburse Executive for 50% of the actual loss incurred by him (if any) in connection with the sale of Executive’s current residence provided that, such reimbursement shall not exceed Two Hundred Thousand Dollars ($200,000.00). Executive shall provide the Company with reasonable documentation and receipts establishing the amount and nature of such expenses in accordance with the Company’s standard reimbursement procedures.  Any expenses paid or reimbursed pursuant to this Section 5(b) shall be grossed up to the extent taxable as determined by the Company’s independent accountants.

 

3

 

(c)           Attorneys’ Fees. The Company shall reimburse Executive for attorneys’ fees actually incurred by him in connection with the negotiation and drafting of this Agreement, up to a maximum of Five Thousand Dollars ($5,000.00), provided Executive submits to the Company reasonable documentation establishing the amount of said fees.  Any such expenses pursuant to this Section 5(c) shall be grossed up to the extent taxable as determined by the Company’s independent accountants.

 

(d)           Taxable Reimbursements.  Notwithstanding the foregoing, any taxable reimbursement of business or other expenses provided for under this Agreement shall be subject to the following conditions: (i) the expenses eligible for reimbursement in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year; (ii) the reimbursement of an eligible expense shall be made no later than the end of the year after the year in which such expense was incurred; and (iii) the right to reimbursement shall not be subject to liquidation or exchange for another benefit.

 

6.            TERMINATION. Upon termination of Executive’s employment or non- renewal of this Agreement, Executive is entitled to no other payments, compensation, severance or benefits upon termination except as expressly stated in this Section 6.

 

(a)          Termination Without Cause.  The Company may terminate Executive’s employment without Cause (other than as a result of Executive’s death or disability or due to non-renewal of this Agreement) at any time during the Term by providing Executive 30 days’ written notice (the “Notice Period”) (which termination date can be accelerated in the Company’s discretion provided the Company pays Executive his Base Salary during the Notice Period.) If Executive’s employment is terminated by the Company without Cause prior to a Change of Control (defined in Section 6(h)(iii)), the Company shall pay Executive: (i) the Accrued Obligations (defined in Section 6(h)(i)) and (ii) the Severance Payment (defined in Section 6(h)(vi)).  If Executive’s employment is terminated by the Company without Cause within one year following a Change of Control, in addition to the foregoing payments, the Company shall pay Executive the Bonus Payment (defined in Section 6(h)(ii)).  Executive will only be entitled to the Severance Payment and the Bonus Payment (if applicable), if he executes, delivers and does not revoke a general waiver and release of all claims in favor of the Company, its Parents, subsidiaries and affiliates in a form provided to Executive by the Company (the “Release”) within 60 days after his termination date, and he complies with his Continuing Obligations.

 

If Executive’s employment is terminated pursuant to this Section 6(a), then except as set forth in this Section 6(a), the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise.

 

(b)          Death or Disability. Executive’s employment during the Term shall terminate upon the death of Executive or, in the Company’s discretion, in the event of Executive’s disability, upon 30 days’ written notice to Executive. Executive shall be deemed disabled if an independent medical doctor (selected by the Company’s health insurer and reasonably acceptable to Executive or his legal representative) certifies that Executive, for 90 consecutive days or 120 non-consecutive days in any 12-month period, has been unable to perform the essential functions of his job duties with or without reasonable accommodation.

 

4

 

Executive agrees to cooperate in submitting to a reasonable medical examination for the purpose of certifying disability under this Section 6(b) if requested by the Company.  If Executive’s employment is terminated for death or disability, Executive (or his legal heirs) shall not be entitled to receive any severance, bonus or other payments, except the Accrued Obligations, and the Company shall have no further obligation to Executive (or his legal heirs) or liability under this Agreement by way of compensation or otherwise.  If Executive’s employment is terminated due to his disability, Executive shall continue to be fully bound by his Continuing Obligations.

 

(c)           Termination For Cause.  During the Term, the Company may terminate Executive’s employment immediately for Cause (as defined in Section 6(h)(iv)) upon written notice.

 

If Executive’s employment is terminated pursuant to this Section 6(c), Executive shall not be entitled to receive any severance, bonus or other payments, except the Accrued Obligations, and the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise. If Executive’s employment is terminated pursuant to this Section 6(c), Executive shall continue to be fully bound by his Continuing Obligations.

 

(d)          Resignation By Executive without Good Reason. Executive may resign his employment at any time during the Term without Good Reason (defined in Section 6(h)(v)) by providing the Company 30 days’ written notice. If Executive resigns his employment without Good Reason, Executive shall not be entitled to receive any severance, bonus or other payments, except the Accrued Obligations, and the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise. If Executive’s employment is terminated pursuant to this Section 6(d), Executive shall continue to be fully bound by his Continuing Obligations.

 

(e)           Resignation by Executive For Good Reason. Executive may resign his employment during the Term for Good Reason but only if the condition giving rise to the existing Good Reason is disclosed in writing by Executive to the Company within 60 days after the occurrence of such condition and then is not cured by the Company within 60 days after the Company receives such written notice. If Executive resigns his employment for Good Reason pursuant to this Section 6(e), Executive shall be entitled to receive the Accrued Obligations and the Severance Payment, provided that, Executive shall only be entitled to the Severance Payment if signs, delivers and does not revoke the Release within 60 days after his termination date, and he complies with his Continuing Obligations. If Executive resigns his employment for Good Reason pursuant to this Section 6(e), then except as set forth in this Section 6(e), the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise.

 

(f)           Non-Renewal of Term.  Executive’s employment shall terminate upon the non-renewal of the Term as set forth in Section 3.  If Executive’s employment terminates pursuant to this Section 6(f) due to the Company providing Executive notice of non-renewal pursuant to Section 3, then Executive shall be entitled to receive the Accrued Obligations and the Severance Payment, provided that, Executive shall only be entitled to the Severance Payment if signs, delivers and does not revoke the Release within 60 days after his

 

5

 

termination date, and he complies with his Continuing Obligations.  If Executive’s employment terminates pursuant to this Section 6(f) due to Executive providing the Company notice of non-renewal pursuant to Section 3, then Executive shall not be entitled to receive any severance, bonus or other payments, except the Accrued Obligations, and the Company shall have no further obligation to Executive or liability under this Agreement by way of compensation or otherwise and Executive shall continue to be fully bound by his Continuing Obligations.

 

(g)       Board Resignation. Upon termination or resignation of Executive’s employment for any reason, whether initiated by the Company or Executive, or upon non-renewal of this Agreement, Executive agrees to resign as of the date of such termination from the Board and/or any committees thereof and any service he is providing to the Parents or any subsidiary or affiliate of the Company shall terminate as of the date of such termination.

 

(h)       Certain Definitions. For purposes of this Agreement:

 

(i)           “Accrued Obligations” shall mean: (A) the amount of any accrued but unpaid Base Salary, less applicable withholdings and deductions, due and owing to Executive as of the date of termination; (B) any accrued and unused vacation, less applicable withholdings and deductions, through the date of termination; and (C) reimbursement of expenses incurred by Executive in accordance with Section 5 of this Agreement and not previously reimbursed through the date of termination.

 

(ii)          “Bonus Payment” shall mean an amount equivalent to 60% of Executive’s Base Salary, less applicable deductions, payable to Executive following the end of the fiscal year to which the bonus relates but no later than 120 days following the end of such fiscal year, provided that, Executive has executed and delivered the Release and the Release is irrevocable as of such date.

 

(iii)         “Change of Control” shall mean: (A) any sale or exchange of stock of the Company or TopCo for cash, securities or other property in a single or series of related transactions if as a result securities possessing more than 50% of the total combined voting power of the survivor’s or acquirer’s outstanding securities (or the securities of any parent thereof) cease to be held by a person or persons who held securities possessing more than 50% of the total combined voting power of the Company or TopCo’s outstanding securities immediately prior to that transaction, or (B) any sale, transfer, or other disposition of all or substantially all of the Company’s or TopCo’s assets to one or more unaffiliated other persons in a single transaction or series of related transactions. For avoidance of doubt, a public offering of stock by TopCo or its stockholders shall not constitute a Change of Control.

 

(iv)         “Cause” shall mean:

 

(A)         Executive’s intentional refusal or intentional failure to perform his duties and responsibilities under this Agreement or to follow any reasonable instruction issued by the Company or the Board; provided however, that prior to any termination pursuant to Section 6(c), the Company must give written notice to Executive within 60 days of any event triggering this Section 6(i)(iv)(A) and Executive shall thereafter have the right to

 

6

 

remedy the condition, if such condition can be remedied, within 30 days of the date Executive received the written notice from the Company. If Executive does not remedy the condition within the 30-day cure period to the reasonable satisfaction of the Board, then the Board may deliver a notice of termination for Cause at any time within 30 days following the expiration of such cure period, in which case termination will be effective upon delivery of such notice;

 

(B)          Executive’s failure to comply in any material respect with any written policies or procedures of the Company or the Board (including, but not limited to, the Company’s anti-discrimination and harassment policies and the Company’s drug and alcohol policy);

 

(C)          Executive’s engagement in any act or omission involving willful misfeasance or nonfeasance by Executive of his assigned duties, which includes, without limitation, the intentional refusal by Executive to follow the directions of the Board or any committee thereof or the intentional refusal by Executive to perform his assigned duties in any material respect;

 

(D)          Executive’s engagement in any act of theft, fraud, embezzlement, falsification of Company documents, misappropriation of funds or other assets of the Company or in any misconduct which is materially damaging to the goodwill, business or reputation of the Company;

 

(E)          Executive’s conviction by a court of competent jurisdiction of, or his pleading guilty or nolo contendere to, any felony or crime involving moral turpitude that is damaging to the reputation of the Company; or

 

(F)           Executive’s material breach of any of his obligations contained in this Agreement, including Sections 7-10.

 

(v)          “Good Reason” shall mean the occurrence of any of the following events without Executive’s consent: (A) any material diminution in Executive’s Base Salary; (B) any material and continuing diminution in Executive’s authority or responsibilities; (C) changing the geographic location at which Executive provides services to the Company to a location more than 35 miles from that location; or (D) requiring Executive to report to someone other than the Board.

 

(vi)         “Severance Payment” shall mean Executive’s Base Salary in effect on the termination date for a period of 12 months from the termination date, payable as salary continuation payments in accordance with the Company’s normal payroll practices, the first installment of which shall be made on the 60th day following the termination date (and will include any Severance Payment installment that would have otherwise been paid during the period following the termination date thorough the date of the first Severance Payment installment); provided that, Executive has executed and delivered the Release and the Release is irrevocable as of such date. Any Severance Payment shall be subject to Section 6(i).

 

(i)        Mitigation.  Notwithstanding any provision in this Section 6, if Executive becomes employed or retained by another employer or entity as an employee or a consultant (including self-employment or engaging in an enterprise as a sole proprietor or

 

7

 

partner) during the period in which Executive is receiving any Severance Payment pursuant to Section 6, the amount of such Severance Payment to which Executive would otherwise be entitled shall be reduced by the amount of compensation and benefits earned and/or received by Executive due to such other employment or consulting arrangement. Executive shall have an obligation to promptly and completely report such employment, compensation and/or benefits to the Company.

 

7.             CONFIDENTIAL INFORMATION.

 

(a)          Company Information. Executive recognizes that the services to be performed by him hereunder are special, unique and extraordinary in that, by reason of his employment hereunder, he will acquire and have access to, or has acquired and has had access to, the Company’s Confidential Information (defined in this Section 7(a)) concerning the operations of the Company and the Parents, and their subsidiaries and affiliates, the use or disclosure of which could cause the Company substantial loss and damages which could not be readily calculated and for which no remedy at law would be adequate. Executive agrees that at all times during the Term and at all times thereafter, Executive will hold in strictest confidence and safeguard, and will not destroy, use or disclose to any person or entity except as absolutely necessary to perform his job duties hereunder, any confidential, proprietary or trade secret information of or belonging to the Company, the Parents, subsidiaries or affiliates. “Confidential Information” shall include, but is not limited to: (i) confidential and proprietary matters relating to actual or prospective customers and the sales operations of the Company or the Parents, or any subsidiary or affiliate thereof, including, but not limited to, sales methods; pricing information; merchandising and marketing plans and strategies; proprietary information relating to services, products, processes and know-how; descriptions and information concerning prospective and actual customers, suppliers or vendors; lists of actual or potential customers, suppliers or vendors and any information about or provided by such customer, supplier or vendor; and product specifications; (ii) confidential and proprietary matters relating to the business and operations of the Company or the Parents, or any subsidiary or affiliate thereof, including, but not limited to, financial data and plans; budgets and financial statements; business plans and strategies; research and development plans; product or service plans; training materials developed by the Company or the Parents, or any subsidiary or affiliate thereof; techniques and materials; methods of distribution; assets and liabilities; past, present or proposed business operations, mergers or acquisitions or projects; business opportunities for new or developing business; recruiting methodology; and personnel information concerning Company employees other than Executive; (iii) confidential and proprietary data, information and materials related to the Company or the Parents, or any subsidiary or affiliate thereof, including, but not limited to, products; services; concepts; ideas; proposals; Inventions (defined in Section 10(a)); formulas; know-how; technology; improvements; discoveries; developments; modifications; processes; data; techniques; software programs; and proposed trademarks and trade names; and (iv) any trade secret of the Company or the Parents, or any subsidiary or affiliate thereof. Executive understands and agrees that the rights and obligations set forth in this Section 7(a) are perpetual and shall extend beyond Executive’s employment. Notwithstanding the foregoing, the restrictions of this Agreement on the use and disclosure of Confidential Information shall not apply (w) to information that becomes publicly known through no fault of Executive subsequent

 

8

 

to the time of the Company’s communication thereof to Executive; (x) if the information is rightfully obtained by Executive from a third party authorized to make such disclosure without restriction; (y) if the information is identified by the Board in writing as no longer proprietary or confidential; or (z) if the information is required in response to a legal summons, subpoena or other lawful court order, provided that, Executive shall promptly notify the Company in writing of any such legal requirement and assist the Company or its designee in seeking a protective order or in objecting to such request, provided further, that any such assistance will be at the sole cost and expense of the Company. If Executive produces any Confidential Information pursuant to clause (z), Executive shall disclose only that portion of the Confidential Information that he is legally compelled to disclose and provide a copy of same to the Company.

 

(b)           Former Employer Information.  Executive agrees that he will not improperly use or disclose any confidential, proprietary or trade secret information of or belonging to any former employer, person or entity, and that he will not bring onto the premises of the Company or use on behalf of the Company, the Parents, or any subsidiary or affiliate thereof, any unpublished document or confidential or proprietary information belonging to any such former employer, person or entity unless consented to in writing by such person or entity.

 

(c)           Third Party Information.  Executive recognizes that the Company has received and in the future will receive confidential and/or proprietary information from third parties, including the Company’s customers, vendors or suppliers, subject to a duty on the Company’s part to maintain the confidentiality of and safeguard such information, and to use such information only for certain limited purposes. Executive agrees to hold all such confidential and proprietary information in the strictest confidence and not to disclose it to any person or entity, destroy it, or use it except as necessary in carrying out his duties for the Company and consistent with the Company’s agreement with such third party.

 

(d)           Exclusive Property. Executive agrees that the Confidential Information belongs exclusively to the Company or the Parents or any subsidiary or affiliate thereof.  Executive agrees that, at the time of Executive’s separation from the Company for any reason, whether initiated by Executive or the Company, he will return to the Company all Confidential Information and any other property, equipment, materials or information belonging to the Company, and he will not keep in his possession, recreate, duplicate, destroy, or deliver to any person or entity, any Confidential Information.

 

8.            NON-SOLICITATION. During the Term and for a period of 12 months immediately following Executive’s separation from the Company, however caused, Executive shall not, directly or indirectly, either for or on behalf of himself or any other person or entity, solicit or induce or attempt to solicit or induce any employee, consultant, independent contractor, agent or representative of the Company, the Parents or any subsidiary or affiliate thereof, to discontinue employment or engagement with the Company or the Parents, or any subsidiary or affiliate thereof; or otherwise interfere or attempt to interfere with the relationship between the Company, the Parents, or any subsidiary or affiliate thereof, and their employees, consultants, independent contractors, agents or representatives.

 

9.            NON-DISPARAGEMENT. During the Term and thereafter, Executive shall not make to any person or entity, including but not limited to competitors, customers or

 

9

 

vendors of the Company or the Parents, or any subsidiary or affiliate thereof, any statement that disparages the Company or the Parents, or any subsidiary or affiliate thereof, or which reflects negatively upon the Company or the Parents, or any subsidiary or affiliate thereof, including but not limited to disparaging statements regarding the Company’s financial condition, the Board or the officers or employees of the Company or the Parents, or any subsidiary or affiliate thereof. Notwithstanding the foregoing, nothing in this Agreement shall preclude Executive from making truthful statements required by applicable law, regulation or legal process, or in connection with any action, suit or other proceeding to enforce his rights under this Agreement.

 

10.             INVENTIONS.

 

(a)          Assignment.  Executive agrees to assign and hereby irrevocably assigns to the Company, without further consideration, all right, title, and interest that he may presently have or acquire (throughout the United States and in all foreign countries), free and clear of all liens and encumbrances, in and to each Invention (as defined herein), which Invention shall be the sole property of the Company, whether or not patentable.  “Invention” as used herein shall mean all ideas, processes, trademarks, service marks, inventions, technology, computer programs, original works of authorship, designs, formulas, discoveries, patents, copyrights, moral rights (including but not limited to rights to attribution or integrity) and all improvements, rights, and claims related to the foregoing that are conceived, created, developed, or reduced to practice by Executive alone or with others during the course of employment with the Company. In addition, to the extent not assigned, Executive hereby irrevocably waives any moral rights (including rights of attribution and integrity) that he may have with respect to the Inventions. Executive acknowledges that all original works of authorship which are made by him (solely or jointly with others) during the term of and which are protectable by copyright are “Works Made For Hire” Agreement as defined in the United States Copyright Act (17 USCA, § 101) and are included in the definition of Inventions.

 

(b)          Prior Inventions.  Executive has attached hereto on Exhibit A, a list describing all Inventions made or developed by Executive prior to the date of this Agreement which relate to the Company’s business or proposed business, products, services or research and development, and which are not assigned to the Company hereunder (collectively referred to as “Prior Inventions”).  If no such list is attached, Executive represents that no such Prior Inventions exist or that any such Prior Invention has already been assigned to the Company by Executive.  If, during the course of employment with the Company, Executive incorporates into a Company product, process or machine a Prior Invention owned by Executive, or in which Executive has an interest, the Company is hereby granted and shall have a nonexclusive, royalty-free, irrevocable, perpetual, worldwide license to make, have made, reproduce, modify, adapt, distribute, display, perform, use, import, offer to sell and sell such Prior Invention as part of or in connection with such product, process or machine.

 

(c)           Patent and Copyright Registrations.  Executive agrees to assist the Company, or its designee, at the Company’s expense, in securing the Company’s rights in and to the Inventions and any copyrights, patents, trademarks, service marks, mask work rights or other intellectual property rights relating thereto in any and all countries. Such assistance shall include the disclosure to the Company of all pertinent information and data with respect thereto, the execution of all applications, specifications, oaths, assignments and all other

 

10

 

instruments which the Company shall deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive rights, title and interest in and to such Inventions, and any copyrights, patents, trademarks, service marks, mask work rights or other intellectual property rights relating thereto.  Executive further agrees that his obligation to execute or cause to be executed, when it is in his power to do so, any such instrument or papers shall continue after the termination of his employment, however caused.  If the Company is unable, for any reason, to secure Executive’s signature to apply for or to pursue any application for any United States or foreign intellectual property rights including patents or copyright registrations covering Inventions or original works of authorship assigned to the Company as provided herein, then Executive hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Executive’s agent and attorney in fact, to act for and on Executive’s behalf to execute and file any such applications, and to do all other lawfully permitted acts to further the prosecution and issuance of such intellectual property rights, including letters patent or copyright registrations thereon, with the same legal force and effect as if executed by Executive.  Executive hereby irrevocably assigns to the Company any and all claims of any nature that Executive now or hereafter has for past, present or future infringement of all proprietary or intellectual property rights assigned to the Company.

 

(d)          Records.  Executive agrees to maintain adequate and current written records on the development of all Inventions and to disclose promptly to the Company all Inventions and relevant records, which records will remain the sole property of the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company.  Executive further agrees that all information and records pertaining to any idea, process, trademark, service mark, invention, discovery, improvement, technology, computer program, original work of authorship, design formula, discovery, patent, or copyright that Executive does not believe to be an Invention, but is conceived, developed, or reduced to practice by Executive (alone or with others) during the course of his employment with the Company shall be promptly disclosed to the Company (such disclosure to be received in confidence).

 

(e)           Exclusions.  Executive knows of no existing agreement to which he is a party that would conflict with this Section 10.  Executive understands and acknowledges that he has been advised, pursuant to Section 2872 of the California Labor Code, that the provisions of this Agreement requiring the assignment of inventions do not apply to any invention that qualifies fully under Section 2870 of the California Labor Code, which provides:

 

“(a)                           Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

 

(1)                                  Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or

 

11

 

(2)                                  Result from any work performed by the employee for the employer.”

 

11.          ENFORCEMENT/REMEDIES.

 

(a)       Arbitration.  In consideration of the Company employing Executive, and the salary and benefits provided under this Agreement, Executive and the Company agree that all claims arising out of or relating to his employment, including its termination shall be resolved by binding arbitration.  This Agreement expressly does not prohibit either party from filing an application for a provisional remedy to prevent actual or threatened irreparable harm in accordance with California law. The dispute will be arbitrated in accordance with the rules of the American Arbitration Association (“AAA”) under its existing Employment Arbitration Rules which may be found at http://www.adr.org/sp.asp?id=32904. Executive acknowledges that he has been provided a copy of the AAA rules contemporaneously herewith. The Company shall pay the arbitration administrative costs and the arbitrator’s fees in accordance with California law and the AAA rules.  Each party in the arbitration shall bear his/its own attorneys’ fees and legal costs.  The parties agree to file any demand for arbitration within the time limit established by the applicable statute of limitations for the asserted claims.  Failure to demand arbitration within the prescribed time period shall result in waiver of said claims.  The parties agree that the arbitration will be held in Orange County, California. EXECUTIVE UNDERSTANDS AND AGREES THAT HE IS WAIVING HIS RIGHTS TO BRING SUCH CLAIMS TO COURT, INCLUDING THE RIGHT TO A JURY TRIAL.

 

(b)       Rights Cumulative.  Each party recognizes that nothing in this Agreement is intended to limit any remedy available to it/him under state and federal laws in the event of actual or threatened irreparable harm.  The rights and remedies provided herein are cumulative, and the exercise of any right or remedy, whether pursuant hereto, to any other agreement, or to law, shall not preclude or waive the right to exercise any or all other rights and remedies.

 

12.          GENERAL.

 

(a)       Severability.  Wherever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any part, clause, or condition of this Agreement is held to be partially or wholly invalid, unenforceable, or inoperative for any reason whatsoever, such invalid provision shall not affect any other provision or portion hereof, which shall continue to be effective as though such invalid, unenforceable or inoperative part, clause or condition had not been made.

 

(b)       Representations and Warranties.  Executive represents and warrants that: (i) his employment with the Company does not and will not breach any agreements with or duties to any third party; (ii) he has no obligations or commitments inconsistent with the terms of this Agreement or with undertaking an employment relationship

 

12

 

with the Company; and (iii) he will not enter into any agreement or engage in any activity which would conflict with this Agreement or which would otherwise materially interfere with his duties hereunder and/or the best interests of the Company or the Parents, or any subsidiary or affiliate thereof.

 

(c)           Survival of Obligations. Termination of Executive’s employment, however caused, or non-renewal of this Agreement shall not affect Executive’s Continuing Obligations.  Executive agrees that after leaving the employ of the Company for any reason, whether initiated by Executive or the Company, the Company may notify Executive’s new employer about his Continuing Obligations.

 

(d)          Cooperation. Following Executive’s termination of employment and subject to the Company reimbursing Executive for any reasonable out-of-pocket expenses, Executive agrees to cooperate in good faith with the Company in connection with any defense, prosecution or investigation by the Company including regarding any internal investigation, actual or potential litigation, administrative or regulatory proceeding, or other such like proceeding, in which the Company may be involved as a party or non-party from time to time, including without limitation, Executive being available to the Company upon reasonable notice for interviews and factual investigations, Executive appearing at the Company’s request to give testimony without requiring service of a subpoena or other legal process, and Executive providing the Company all pertinent information and documents, at reasonable times and pursuant to reasonable schedules.

 

(e)           Notices.  All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or if mailed by overnight courier with receipt signature or sent by facsimile (with “answerback” confirmation of transmission), to the relevant address set forth below, or to such other address as the recipient of such notice or communication shall have specified to the other party hereto in accordance with this Section 12(e):

 

If to the Company:

 

Boot Barn, Inc.

c/o WW Top Investment Corporation

11100 Santa Monica Boulevard, Suite 1900

Los Angeles, CA 90025

Fax: 310.444.1870

 

Attention: Brad Brutocao

 

With a copy to (which copy shall not constitute notice):

 

Bingham McCutchen LLP

355 South Grand Avenue

Suite 4400

Los Angeles, CA 90071

Fax: 213.680.6499

 

Attention Cynthia Dunnett, Esq.

 

If to Executive:

 

James G. Conroy

1655 Pheasant Trail

Inverness, IL 60067

 

13

 

Any such notice shall be deemed effective: (i) if delivered personally, when received; (ii) if sent by overnight courier, when receipted for; or (iii) if sent by facsimile during normal business hours on any business day, pending generation of a transmission report by the machine from which the facsimile was sent indicating the date and time that the facsimile was sent and “answerback” confirmation of transmission.

 

(f)           Waivers/Construction.  Unless otherwise set forth in this Agreement, no delay or omission by either party hereto in exercising any right, power or privilege hereunder shall impair such right, power or privilege, nor shall any single or partial exercise of any such right, power or privilege preclude any further exercise thereof or the exercise of any other right, power or privilege.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.

 

(g)           Withholding.  All compensation (including bonuses and severance, if applicable) payable by the Company to Executive hereunder shall be reduced prior to the delivery of such payment to Executive by an amount sufficient to satisfy any applicable federal, state, local or other tax withholding requirements, and in accordance with the Company’s normal payroll practices.

 

(h)           Successors and Assigns; Assignment.  Executive shall not assign this Agreement and any attempt by him to do so will be deemed null and void; provided that, Executive’s rights to payments hereunder shall, upon his death or incapacity, inure to the benefit of his personal or legal representatives, executors, administrators, heirs, devisees and legatees.  This Agreement will be binding upon and inure to the benefit of the Company, its successors and assigns.  This Agreement may be assigned by the Company to the Parents or any subsidiary or affiliate thereof, or to a person or entity which is a successor in interest to substantially all of the business operations or assets of the Company.

 

(i)            Entire Agreement; No Oral Modification.  This Agreement contains the entire understanding of the parties with respect to the terms and conditions of Executive’s employment with the Company, and supersedes any and all prior and contemporaneous agreements, negotiations and understandings relating to Executive’s employment with the Company. This Agreement cannot be amended or modified except pursuant to a written instrument signed by Executive and the Chairman of the Board of Directors.

 

14

 

(j)            Governing Law.  This Agreement and the performance hereof shall be construed and governed in accordance with the laws of the State of California without giving effect to its conflicts or choice of law principles.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and not strict construction shall be applied against any party.

 

(k)           Executive Acknowledgment/No Inducements. Executive acknowledges that he has had the opportunity to consult legal counsel and a tax advisor of his own choosing in regard to his employment with the Company and this Agreement, and that he has read and understands this Agreement.  Executive has entered into this Agreement with the Company knowingly and voluntarily, based on his own judgment and not on any representations, inducements or promises other than those contained in this Agreement.

 

(l)            Section Headings.  The section and subsection heading of this Agreement are included for purposes of convenience only, and shall not affect the construction or interpretation of any of its provisions.

 

(m)         Counterparts.  This Agreement may be executed by facsimile or pdf signature and in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

13.          409A.

 

(a)          Compliance.  It is intended that compensation paid or delivered to Executive pursuant to this Agreement is either paid in compliance with, or is exempt from, Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder (together, “Section 409A”), and this Agreement shall be interpreted and administered accordingly.  However, the Company does not warrant to Executive that all amounts paid or delivered to him will be exempt from, or paid in compliance with, Section 409A.  Executive understands and agrees that he bears the entire risk of any adverse federal, state or local tax consequences and penalty taxes which may result from payment on a basis contrary to the provisions of Section 409A or comparable provisions of any applicable state or local income tax laws.  Executive acknowledges that he has been advised to seek the advice of a tax advisor with respect to the tax consequences of all payments pursuant to this Agreement, including any adverse tax consequence under Section 409A and applicable state tax law.

 

(b)          Amounts Payable On Account of Termination.  If and to the extent necessary to comply with Section 409A, for the purposes of determining when amounts otherwise payable on account of Executive’s termination of employment under this Agreement will be paid, “terminate”, “terminated” or “termination” or words of similar import relating to Executive’s employment with the Company, as used in this Agreement, shall be construed as the date that Executive first incurs a “separation from service” within the meaning of Section 409A from the Company.

 

(c)           Interpretative Rules.  In applying Section 409A to amounts paid pursuant to this Agreement, any right to a series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

15

 

IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto have caused this Employment Agreement to be duly executed as of the date and year written below.

 

 

	
 
    	
BOOT   BARN, INC.
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
Dated:   11/1/12
    	
By:
    	
/s/   Brad Brutocao
    
	
 
    	
 
    	
Name:   Brad Brutocao
    
	
 
    	
 
    	
Title:   Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
EXECUTIVE
    
	
 
    	
 
    
	
Dated:   11/1/12
    	
By:
    	
/s/   James G. Conroy
    
	
 
    	
 
    	
James   G. Conroy
    

 

 

Exhibit A

 

PRIOR INVENTIONS

 

[No items are listed on this Exhibit.]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00235-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00235-of-00352.parquet"}]]