Document:

STIPULATED FINAL JUDGMENT AND ORDER

 Exhibit 10.1 
 UNITED STATES DISTRICT COURT 
 FOR THE NORTHERN DISTRICT OF OHIO

 EASTERN DIVISION 
  

					
	 	 	 	 	
			
	    FEDERAL TRADE COMMISSION,	 		 	
		
		 	Plaintiff,                      Docket
No.                    
	 v.
	 		 	
		
	    SKECHERS U.S.A., INC., d/b/a SKECHERS,	 	                            
        Judge                     
		
		 	 Defendant.

	 	 	 	 	

 STIPULATED FINAL JUDGMENT AND ORDER 

FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF 
 Plaintiff, the Federal Trade Commission (Commission or FTC), filed a Complaint for Permanent Injunction and Other Equitable Relief against Skechers U.S.A., Inc., pursuant to Section 13(b) of
the Federal Trade Commission Act (FTC Act), 15 U.S.C. § 53(b), alleging deceptive acts or practices and false advertisements in violation of Sections 5(a) and 12 of the FTC Act, 15 U.S.C. §§ 45(a) and 52.

 The Commission and Defendant have stipulated to the entry of this Stipulated Final Judgment and Order for Permanent
Injunction and Other Equitable Relief (Order) in settlement 

  
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of the Commission’s allegations against Defendant. The Court, having been presented with this Order, finds as follows: 

FINDINGS 
 1. This Court has jurisdiction over the subject matter of this case and over all parties. Venue in the United States District Court for the Northern District of Ohio is proper. 

2. The Complaint states a claim upon which relief can be granted, and the Commission has the authority to seek the relief it has
requested. 
 3. The activities of the Defendant, for purposes of this Order, are in or affecting “commerce,” as
defined in Section 4 of the FTC Act, 15 U.S.C. § 44. 
 4. This Order is for settlement purposes only, and
does not constitute and shall not be interpreted to constitute an admission by Defendant or a finding that the law has been violated as alleged in the Complaint, or that the facts alleged in the Complaint, other than jurisdictional facts, are true.

 5. Defendant waives all rights to seek judicial review or otherwise challenge or contest the validity of this Order.
Defendant also waives any claim that it may have held under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action to the date of this Order. 

6. This action and the relief awarded herein are in addition to, and not in lieu of, other remedies as may be provided by law.

 7. This Order reflects the negotiated agreement of the parties. 

 

  
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 8. The parties shall jointly be deemed the drafters of this Order; the rule that any
ambiguity in a contract shall be construed against the drafter of the contract shall not apply to this Order. 
 9. Nothing in
this Order obviates the obligation of Defendant to comply with Sections 5 and 12 of the FTC Act, 15 U.S.C. §§ 45 and 52. 
 10. The Commission’s action against Defendant is an exercise of the Commission’s police or regulatory power as a governmental unit. 

11. The paragraphs of this Order shall be read as the necessary requirements of compliance and not as alternatives for compliance, and no
paragraph serves to modify another paragraph unless expressly so stated. 
 12. Each party shall bear its own costs and
attorneys’ fees. 
 13. Entry of this Order is in the public interest. 

ORDER 
 DEFINITIONS 
 Unless otherwise specified, 

1. “Defendant” means Skechers U.S.A., Inc., doing business as Skechers, and its successors and assigns.

 2. “Skechers Toning Footwear” means, collectively, Shape-ups, Resistance Runner, Shape-ups Toners, and
Tone-ups. 
 3. “Commerce” is as defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

 4. “Adequate and well-controlled human clinical study” means a clinical study that is randomized, controlled
(including but not limited to controlled for dietary intake if testing 

  
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for weight loss or a reduction in body fat), blinded to the maximum extent practicable, uses an appropriate measurement tool or tools, and is conducted by persons qualified by training and
experience to conduct and measure compliance with such a study. 
 5. “Covered Product” means Skechers Toning
Footwear, and any other footwear that purports to improve or increase muscle tone, muscle strength, muscle activation, overall circulation, or aerobic conditioning, and/or that purports to result in increased calorie burn, weight loss, loss of body
fat or improvement or reduction in body composition. 
 6. “Class Action Notice” means notice to consumers of a
class action settlement. 
 7. “Class Action Settlement Administrator” means a third-party agent or
administrator appointed by a court in a class action to implement the claims and settlement process of a class action settlement. 
 8. “Consumer Claim Form” means a form that consumers who purchased any Covered Product use to seek payment in a class action settlement. 

9. “Notice Administrator” means a third-party agent or administrator appointed by a court in a class action to implement
the Class Action Notice and related requirements of a class action settlement. 
 10. “Notice Plan” means the
plan for providing Class Action Notice. 
 11. “Settlement Claim Procedures and Claim Calculation Protocol”
means an agreement in a class action settlement, used by a Class Action Settlement Administrator (1) to review, address, implement, and process claims for payment submitted pursuant to a class action settlement, and (2) to otherwise
implement the terms of the claims process in a class action settlement. 

  
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 12. “Endorsement” is as defined in 16 C.F.R. § 255.0(b).

 13. The term “including” in this Order means “including without limitation.” 

14. The terms “and” and “or” in this Order shall be construed conjunctively or disjunctively as
necessary, to make the applicable phrase or sentence inclusive rather than exclusive. 
 I. 

PROHIBITED REPRESENTATIONS: 
 STRENGTHENING CLAIMS 
 IT IS ORDERED that Defendant, directly or
through any corporation, partnership, subsidiary, division, trade name, or other device, and its officers, agents, servants, representatives, employees, and all persons or entities in active concert or participation with them who receive actual
notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any Covered Product in or affecting commerce, is hereby permanently
restrained and enjoined from making, or assisting others in making, directly or by implication, including through the use of a product name, endorsement, depiction, or illustration, any representation that such product is effective in strengthening
muscles unless the representation is non-misleading and, at the time of making such representation, Defendant possesses and relies upon competent and reliable scientific evidence that substantiates that the representation is true. For purposes of
this Section, competent and reliable scientific evidence shall consist of at least one adequate and well-controlled human clinical study of the Covered Product that conforms to acceptable designs and protocols, is of at least six-weeks duration, and
the result of which, when considered in light of 

  
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the entire body of relevant and reliable scientific evidence, is sufficient to substantiate that the representation is true. 

II. 

PROHIBITED REPRESENTATIONS: WEIGHT LOSS CLAIMS 
 IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and its officers, agents, servants, representatives,
employees, and all persons or entities in active concert or participation with them who receive actual notice of this Order, by personal service or otherwise, in connection with the manufacturing, labeling, advertising, promotion, offering for sale,
sale, or distribution of any Covered Product, in or affecting commerce, is hereby permanently restrained and enjoined from making, or assisting others in making, directly or by implication, including through the use of a product name, endorsement,
depiction, or illustration, any representation that such product causes weight loss unless the representation is non-misleading and, at the time of making such representation, Defendant possesses and relies upon competent and reliable scientific
evidence that substantiates that the representation is true. For purposes of this Section, competent and reliable scientific evidence shall consist of at least two adequate and well-controlled human clinical studies of the Covered Product, conducted
by different researchers, independently of each other, that conform to acceptable designs and protocols and whose results, when considered in light of the entire body of relevant and reliable scientific evidence, are sufficient to substantiate that
the representation is true. 

  
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 III. 
 PROHIBITED REPRESENTATIONS: 
 OTHER HEALTH OR FITNESS-RELATED CLAIMS

 IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division,
trade name, or other device, and its officers, agents, servants, representatives, employees, and all persons or entities in active concert or participation with them who receive actual notice of this Order, by personal service or otherwise, in
connection with the manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any Covered Product in or affecting commerce, is hereby permanently restrained and enjoined from making, or assisting others in making,
directly or by implication, including through the use of a product name, endorsement, depiction, or illustration, any representation, other than representations covered under Section I and/or Section II of this Order, about the health or
fitness benefits of any Covered Product, including but not limited to, representations regarding caloric expenditure, calorie burn, blood circulation, aerobic conditioning, muscle tone, and muscle activation, unless the representation is
non-misleading and, at the time of making such representation, Defendant possesses and relies upon competent and reliable scientific evidence that is sufficient in quality and quantity based on standards generally accepted in the relevant scientific
fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. For purposes of this Section, competent and reliable scientific evidence means tests, analyses,
research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results. 

  
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 IV. 
 PROHIBITED REPRESENTATIONS 
 REGARDING TESTS OR STUDIES 

IT IS FURTHER ORDERED that Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other
device, and its officers, agents, servants, representatives, employees, and all persons or entities in active concert or participation with them who receive actual notice of this Order, by personal service or otherwise, in connection with the
manufacturing, labeling, advertising, promotion, offering for sale, sale, or distribution of any Covered Product in or affecting commerce, is hereby permanently restrained and enjoined from misrepresenting, or assisting others in misrepresenting, in
any manner, directly or by implication, including through the use of any product name, endorsement, depiction, or illustration, the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research, including
but not limited to misrepresenting that wearing any Covered Product will result in a quantified percentage or an amount of muscle activation, toning, or strengthening. 
 V. 
 MONETARY JUDGMENT AND CONSUMER REDRESS 

IT IS FURTHER ORDERED that: 
  

	 	A.	Judgment is hereby entered in favor of the Commission and against Defendant in the amount of Forty Million Dollars ($40,000,000). 

 

	 	B.	 Defendant is ordered to pay this judgment by depositing Forty Million Dollars ($40,000,000) into an interest-bearing escrow account (“Escrow
Account”) no later than fifteen (15) days after entry of this Order. A representative of the Commission and Defendant shall execute an Escrow Agreement no later than

  
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seven (7) days after entry of the Order, which shall provide instructions to the Escrow Agent consistent with the terms of this Order. The money deposited into the Escrow Account and all
interest thereon (collectively, “Escrow Funds”) shall be administered by BMC Group (“Escrow Agent”) in accordance with the terms of this Order and the Escrow Agreement. 

 

	 	1.	The Escrow Agent’s acceptance of the deposited judgment amount into the Escrow Account shall constitute the Escrow Agent’s agreement to comply with the terms
of this Order and consent to the jurisdiction of this Court. 

  

	 	2.	All reasonable expenses incurred by the Escrow Agent to administer the Escrow Account and disburse Escrow Funds shall be paid from the Escrow Funds upon approval of a
representative of the Commission, and such approval shall not be unreasonably withheld. Such payments shall be based on invoices, and shall be paid timely and on a rolling basis as they become due. 

 

	 	C.	Defendant relinquishes all dominion, control, and title to the Escrow Funds to the fullest extent permitted by law. Defendant shall make no claim to or demand for
return of the Escrow Funds, directly or indirectly, through counsel or otherwise. 

  

	 	D.	 All Escrow Funds shall be used for equitable relief including, but not limited to, consumer redress and attendant expenses for administration of the
Escrow Account, and for administration of consumer redress, as set forth herein, including in Subparagraphs E and F below. If direct redress to consumers is wholly or partially impracticable or if Escrow Funds remain after redress is completed, the

  
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Commission may apply all remaining Escrow Funds for such other equitable relief (including consumer information remedies) as it determines to be reasonably related to Defendant’s practices
alleged in the Complaint. Any Escrow Funds not used for such equitable relief, as set forth herein, including in Subparagraphs E and F below, shall be deposited to the U.S. Treasury as disgorgement. No portion of any payment under the judgment
herein shall be deemed a payment of any fine, penalty, or punitive assessment. 

  

	 	E.	Consumer redress that would otherwise be conducted by the Commission using the Escrow Funds pursuant to Subparagraph D may be instead conducted through prompt,
court-approved resolution of one or more private class action lawsuits against the Defendant, provided however, that a representative of the Commission must approve of each of the following components of any such class action
resolution: 

  

	 	1.	the Class Action Settlement Administrator submitted for court approval in the class action(s), with the Class Action Settlement Administrator being required to handle
consumer information in a manner that is consistent with the Commission’s privacy and data security policies and practices; 

  

	 	2.	the Notice Administrator submitted for court approval in the class action(s); 

 

	 	3.	The Class Action Notice and the Notice Plan submitted for court approval in the class action(s); 

  
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	 	4.	The Consumer Claim Form submitted for court approval in the class action(s); and 

 

	 	5.	The Settlement Claim Procedures and Claim Calculation Protocol initially submitted and any changes subsequently submitted for court approval in the class action(s).

 Where approval is required by a representative of the Commission, such approval shall not be unreasonably
withheld and shall be timely provided. 
  

	 	F.	If the conditions in Subparagraph E are met and no Termination Events occur, as defined in Subparagraph G, and pursuant to the instructions of the Escrow Agreement, the
Escrow Agent shall release Escrow Funds in accordance with the Settlement Claim Procedures and Claim Calculation Protocol to pay the reasonable expenses necessary to provide notice to potential claimants in the class action(s); reasonable
administrative expenses, including the costs of and expenses incurred by the Class Action Settlement Administrator and Notice Administrator; and disbursements to valid claimants. Such payments shall be based on invoices and shall be paid timely and
on a rolling basis as they become due. Escrow Funds shall not be used to pay any other fees, costs, or expenses associated with resolution of the class action(s), including but not limited to attorneys’ fees, litigation expenses, or incentive
payments to the class representatives. 

  

	 	G.	The Commission may, at its sole discretion, terminate the obligations under Subparagraphs E and F, if: 

  
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	 	1.	A settlement agreement and preliminary approval order containing the terms outlined in Subparagraph E is not submitted to the court within thirty (30) days after
entry of this Order; or 

  

	 	2.	The Notice Administrator has not completed publication notice pursuant to the Notice Plan within eight (8) months after entry of this Order; or

  

	 	3.	The Class Action Settlement Administrator has not begun accepting claims from eligible claimants within eight (8) months after entry of this Order; or

  

	 	4.	The disbursement of Escrow Funds to eligible claimants has not begun within one (1) year after entry of this Order; or 

 

	 	5.	The court fails to approve or approves something that is materially different in Subparagraphs E.1-5 than what is approved by a representative of the Commission;
or 

  

	 	6.	The Class Action Settlement Administrator is, for any reason, replaced, and a representative of the Commission does not approve the next Class Action Settlement
Administrator agreed to by the Parties to the class action(s) and recommended for approval to the court in the class action(s), with such approval by a representative of the Commission to be timely provided and not to be unreasonably withheld; or

  

	 	7.	 The Notice Administrator is, for any reason, replaced, and a representative of the Commission does not approve the next Notice Administrator agreed to
by the Parties to the class action(s) and recommended for approval to 

  
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the court in the class action(s), with such approval by a representative of the Commission to be timely provided and not to be unreasonably withheld (collectively, “Termination
Events”). A representative of the Commission shall, consistent with Subparagraph F, authorize the Escrow Agent to use Escrow Funds to pay all valid costs and expenses incurred up to the date of the Termination Event. 

 

	 	H.	If a Termination Event occurs and the Commission elects, at its sole discretion, to terminate the obligations under Subparagraphs E and F, then:

  

	 	1.	The Commission shall have sole discretion regarding the use of the remaining Escrow Funds in accordance with Subparagraph D, and the Escrow Agent shall only release
Escrow Funds in accordance with instructions from a representative of the Commission; 

  

	 	2.	The Commission may, at its sole discretion, continue to work with the Class Action Settlement Administrator and Notice Administrator; and 

 

	 	3.	Within fourteen (14) days of receipt of a written request from a representative of the Commission, Defendant shall provide the following information in accordance
with instructions provided by a representative of the Commission: 

  

	 	a)	A list of all consumers who purchased any Covered Product directly from Defendant during the relevant time period, provided such information is kept in the regular
course of business; and 

  
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	 	b)	Subject to court approval in the class action(s), any information that Defendant, its agents, or the Class Action Settlement Administrator have regarding the class
action claims. 

  

	 	c)	Defendant, its agents, or the Class Action Settlement Administrator shall confer with a representative of the Commission concerning the manner, format, and production
of the list and information transmitted. 

  

	 	I.	If Escrow Funds remain after payment of all claims and expenses as part of redress conducted in accordance with resolution of the class action(s) as provided in
Subparagraphs E and F, then the Commission shall have sole discretion regarding the use of the remaining Escrow Funds in accordance with Subparagraph D, and the Escrow Agent shall only release Escrow Funds in accordance with instructions from a
representative of the Commission. 

  

	 	J.	The total amount of all payment obligations incurred herein shall not exceed the total amount of Escrow Funds. 

 

	 	K.	Defendant shall have no right to challenge any actions the Commission or its representatives may take pursuant to Subparagraphs D, G, H, and I.

  

	 	L.	 Defendant agrees that the facts as alleged in the Complaint filed in this action, and only for purposes of this Order, shall be taken as true without
further proof in any bankruptcy case or subsequent civil litigation pursued by the Commission to enforce its rights to any payment or money judgment pursuant to this Order, including, but not limited to, a nondischargeability complaint in any
bankruptcy 

  
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case. Defendant further stipulates and agrees, for purposes of this Order, that the facts alleged in the Complaint establish all elements necessary to sustain an action pursuant to
Section 523(a)(2)(A) of the Bankruptcy Code, 11 U.S.C. § 523(a)(2)(A), and that this Order shall have collateral estoppel effect for such purposes. 

 

	 	M.	In accordance with 31 U.S.C. § 7701, Defendant is hereby required, unless it has done so already, to furnish to the Commission its taxpayer identifying
number, which shall be used for the purposes of collecting and reporting on any delinquent amount arising out of Defendant’s relationship with the government. 

 

	 	N.	In the event of default on Defendant’s obligation to make payment under this Order, interest, computed pursuant to 28 U.S.C. § 1961(a), shall accrue
from the date of default to the date of payment. 

 VI. 

COMPLIANCE MONITORING 
 IT IS FURTHER ORDERED that, for the purpose of monitoring and investigating compliance with any provision of this Order: 

 

	 	A.	Within fourteen (14) days of receipt of written notice from a representative of the Commission, Defendant shall submit additional written reports, which are true
and accurate and sworn to under penalty of perjury; produce documents for inspection and copying; appear for deposition; and provide entry during normal business hours to any business location in Defendant’s possession or direct or indirect
control to inspect the business operation. 

  
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	 	B.	In addition, the Commission is authorized to use all other lawful means, including, but not limited to: 

 

	 	1.	Obtaining discovery from any person, without further leave of the court, using the procedures prescribed by Fed. R. Civ. P. 30, 31, 33, 34, 36, 45 and 69; and

  

	 	2.	Having its representatives pose as consumers and suppliers to Defendant, its employees, or any other entity managed or controlled in whole or in part by Defendant,
without the necessity of identification or prior notice. 

  

	 	C.	Defendant shall permit representatives of the Commission to interview any employer, consultant, independent contractor, representative, agent, or employee who has
agreed to such an interview, relating in any way to any conduct subject to this Order. The person interviewed may have counsel present. 

 Provided however, that nothing in this Order shall limit the Commission’s lawful use of compulsory process, pursuant to Sections 9 and 20 of the FTC Act, 15 U.S.C.
§§ 49, 57b-l, to obtain any documentary material, tangible things, testimony, or information relevant to unfair or deceptive acts or practices in or affecting commerce (within the meaning of 15 U.S.C. § 45(a)(1)).

 VII. 
 COMPLIANCE REPORTING 
 IT IS FURTHER ORDERED that, in order that
compliance with the provisions of this 
 Order may be monitored: 

  
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	 	A.	For a period of three (3) years from the date of entry of this Order, Defendant shall notify the Commission of any changes in the corporate structure of Defendant
or any business entity that Defendant directly or indirectly controls, or has an ownership interest in, that may affect compliance obligations arising under this Order, including but not limited to: incorporation or other organization; a
dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this Order; or a
change in the business name or address, at least thirty (30) days prior to such change, provided that, with respect to any such change in the business entity about which Defendant learns less than thirty (30) days prior to
the date such action is to take place, Defendant shall notify the Commission as soon as is practicable after obtaining such knowledge. 

  

	 	B.	One hundred eighty (180) days after the date of entry of this Order, Defendant shall provide a written report to the FTC, which is true and accurate and sworn to
under penalty of perjury, setting forth in detail the manner and form in which it has complied and is complying with this Order. This report shall include, but not be limited to: 

 

	 	1.	A copy of each acknowledgment of receipt of this Order, obtained pursuant to the Section titled “Distribution of Order”; and 

 

	 	2.	Any other changes required to be reported under Subsection A of this Section. 

  

  
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	 	C.	Defendant shall notify the Commission of the filing of a bankruptcy petition by Defendant within fifteen (15) days of filing. 

 

	 	D.	For the purposes of this Order, Defendant shall, unless otherwise directed by the Commission’s authorized representatives, send by overnight courier (not the U.S.
Postal Service) all reports and notifications required by this Order to the Commission, to the following address: 

Associate Director for Enforcement 
 Federal Trade Commission 
 600 Pennsylvania Avenue, N.W. 

Washington, D.C. 20580 
 Re: FTC v. Skechers, Matter No.                      

Provided that, in lieu of overnight courier, Defendant may send such reports or notifications by first-class mail, but only
if Defendant contemporaneously sends an electronic version of such report or notification to the Commission at: DEBrief@ftc.gov. 
  

	 	E.	For purposes of the compliance reporting and monitoring required by this Order, the Commission is authorized to communicate directly with Defendant unless or until
Defendant directs the Commission to communicate with it through its outside legal counsel and identifies the name and contact information for said counsel. All communications to Defendant related to this Order should go to the General Counsel of
Skechers at Defendant’s corporate headquarters, with a copy to Daniel Petrocelli, O’Melveny & Myers LLP, 1999 Avenue of the Stars, 7th Floor, Los Angeles, CA 90067. 

  
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 VIII. 
 RECORDKEEPING 
 IT IS FURTHER ORDERED that, for a period of
five (5) years from the date of entry of this Order, Defendant is hereby restrained and enjoined from failing to create and retain the following records: 
  

	 	A.	Accounting records that reflect the cost of the Covered Product, revenues generated for the Covered Product, and, to the extent such records are created and maintained
in the ordinary course of business, the disbursement of such revenues; 

  

	 	B.	Personnel records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business, including as an independent
contractor; that person’s job title or position; the date upon which the person commenced work; and the date and reason for the person’s termination, if applicable; provided however, that with respect to those persons covered by this
Subsection whose employment has terminated, personnel records need only be retained for three (3) years from the date of termination; 

  

	 	C.	Records accurately reflecting: the name, address, and telephone number of each reseller or retailer of the Covered Product; the dollar amounts paid; and the
identification and quantity of items purchased; 

  

	 	D.	Customer files containing the names, addresses, telephone numbers, dollar amounts paid, quantity of Covered Product purchased, and description of items or services
purchased, to the extent such information is obtained in the ordinary course of business; 

  
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	 	E.	Complaints and refund requests relating to any Covered Product (whether received directly or indirectly, such as through a third-party) and any responses to those
complaints or requests; 

  

	 	F.	Copies of all advertisements, promotional materials, sales scripts, training materials, Web sites, or other marketing materials utilized in the advertising, marketing,
promotion, offering for sale, sale, or distribution of any Covered Product. For purposes of this provision, keeping one representative copy of all non-identical materials referenced in this provision is sufficient for compliance;

  

	 	G.	All materials that were relied upon in making any representations contained in the materials identified in Subsection F above, including all documents evidencing or
referring to the accuracy of any claim therein or to the benefits, performance, or efficacy of any Covered Product, including, but not limited to, all tests, reports, studies, demonstrations, or other evidence that confirms, contradicts, qualifies,
or calls into question the accuracy of any claim regarding the benefits, performance, or efficacy of any products covered by this Order, including complaints and other communications with consumers or with governmental or consumer protection
agencies; 

  

	 	H.	Records accurately reflecting the name, address, and telephone number of each laboratory engaged in the development or creation of any testing obtained for the purpose
of advertising, marketing, promoting, offering for sale, selling, or distributing any Covered Product; and 

  
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	 	I.	All records and documents necessary to demonstrate full compliance with each provision of this Order, including, but not limited to, copies of acknowledgments of
receipt of this Order required by the Sections titled “Distribution of Order” and “Acknowledgment of Receipt of Order” and all reports submitted to the FTC pursuant to the Section titled “Compliance Reporting.”

 IX. 
 DISTRIBUTION OF ORDER 
 IT IS FURTHER ORDERED that, for a period of
three (3) years from the date of entry of this Order, Defendant shall deliver copies of the Order as directed below: 
  

	 	A.	Defendant shall deliver a copy of this Order to: (1) each of its principals, officers, and directors having decision-making authority with respect to the subject
matter of the Order; (2) all of its employees, agents, and representatives having primary responsibilities with respect to the subject matter of the Order; and (3) any business entity resulting from any change in structure set forth in
Subsection A of the Section titled “Compliance Reporting.” For current personnel, delivery shall be within seven (7) days of entry of this Order. For new personnel, delivery shall occur prior to their assuming their responsibilities.
For any business entity resulting from any change in structure set forth in Subsection A of the Section titled “Compliance Reporting,” delivery shall be at least fourteen (14) days prior to the change in structure.

  
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	 	B.	Defendant must secure a signed and dated statement acknowledging receipt of the Order, within thirty (30) days of delivery, from all persons receiving a copy of
the Order pursuant to this Section. 

 X. 

NOTIFICATION OF ORDER 
 IT IS FURTHER ORDERED that Defendant shall send no later than fifteen (15) days after entry of this Order, by first-class mail, postage paid and return receipt requested, or by courier service
such as FedEx with signature proof of delivery, an exact copy of the notice attached hereto as Attachment A, showing the date of mailing, to each reseller and retailer who purchased or otherwise received any Covered Product directly from Defendant
and who continues to market any Covered Product. The notice required by this Section shall not include any other document or enclosures and may be sent to the principal place of business of each such reseller or retailer. 

XI. 

ACKNOWLEDGMENT OF RECEIPT OF ORDER 
 IT IS FURTHER ORDERED that Defendant, within seven (7) business days of receipt of this Order as entered by the Court, shall submit to the Commission a truthful sworn statement acknowledging
receipt of this Order. 
 XII. 
 RETENTION OF JURISDICTION 
 IT IS FURTHER ORDERED that this Court
shall retain jurisdiction of this matter for purposes of construction, modification, and enforcement of this Order. 

  
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 SO ORDERED: 
  

									
	 Dated:
	 	July 12, 2012	  		  	 /s/ James S. Gwin
	  	
		 		  		  	United States District Judge	  	

 SO STIPULATED AND AGREED: 
 ATTORNEYS FOR PLAINTIFF 
 FEDERAL TRADE COMMISSION: 

 

			
		
	/s/ Larissa L. Bungo	  	

 LARISSA L. BUNGO 
       (Ohio Bar 0066148) 
 DANA C. BARRAGATE 

      (Ohio Bar 0065748) 
 MICHAEL MILGROM 
       (Ohio Bar 0012959) 

CHRISTOPHER D. PANEK 

      (Ohio Bar 0080016) 
 Federal Trade Commission 
 East Central Region 

1111 Superior Avenue, Suite 200 
 Cleveland, Ohio
44114 
 Phone (216) 263-3403 (Bungo) 
 Fax: (216) 263-3426 
 lbungo@ftc.gov 

dbarragate@ftc.gov 

mmilgrom@ftc.gov 
 cpanek@ftc.gov

  
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 SO STIPULATED AND AGREED: 
 FOR DEFENDANT: 
 SKECHERS U.S.A., INC., d/b/a Skechers 

 

			
		
	 /s/ David Weinberg
	  	

 DAVID WEINBERG 
 Executive Vice President 
 SKECHERS U.S.A., INC., d/b/a Skechers 

228 Manhattan Beach Boulevard 
 Manhattan Beach,
CA 90266 

  
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 SO STIPULATED AND AGREED: 
 DEFENDANT’S OUTSIDE COUNSEL: 
  

			
	 /s/ Jeffrey A. Barker
	  	

 DANIEL M. PETROCELLI 
 JEFFREY A. BARKER 
 MARYANNE S. KANE 

O’Melveny & Myers LLP 
 1999 Avenue
of the Stars, 7th Floor 
 Los Angeles, CA 90067 
 Phone: (310) 553-6700 
 Fax: (310) 246-6779 

dpetrocelli@omm.com 

jbarker@omm.com 
 makane@omm.com

  
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 SO STIPULATED AND AGREED: 
 DEFENDANT’S OUTSIDE COUNSEL: 
  

			
	 /s/ Timothy J. Muris
	  	

 TIMOTHY J. MURIS 
 Kirkland & Ellis LLP 
 655 Fifteenth Street, N.W. 

Washington, D.C. 20005-5793 
 Phone:
(202) 879-5000 
 Fax: (202) 879-5200 
 tim.muris@kirkland.com 

  
 Page 26 of 27

 ATTACHMENT A 
 [On Skechers U.S.A., Inc., Letterhead] 
 [Insert Date] 

[Addressee] 
 Dear Skechers U.S.A., Inc., Retail
Business Partner: 
 In response to a lawsuit by the Federal Trade Commission (FTC) and separate lawsuits brought by a group of
state attorneys general, Skechers has agreed to stop making certain claims for the following footwear products: Shape-ups, the Resistance Runner, Toners, and Tone-ups. 
 Although we dispute the charges, to settle the FTC’s and the states’ cases against us, Skechers has agreed to stop using advertising or promotional materials claiming that any of our footwear
products can: 
  

	 	•	 	 Improve or increase muscle tone and muscle strength; 

  

	 	•	 	 Improve or increase overall circulation or aerobic conditioning; 

 

	 	•	 	 Result in increased weight loss or loss of body fat; and/or; 

 

	 	•	 	 Result in improvement or reduction in body composition. 

 In addition to the above, Skechers has agreed to stop using advertising or promotional materials claiming that the Resistance Runner improves or increases muscle activation. 

Please take these three steps immediately: 
  

	 	(1)	If you have materials on display (POS, posters, etc.) that include any of these claims, please remove them. 

 

	 	(2)	Where these claims appear on boxes, please cover them with stickers that Skechers will provide. 

 

	 	(3)	If inserts in boxes or footwear hangtags include any of these claims, please remove them. 

We are actively pursuing additional studies in the marketplace. We look forward to sharing these details with you as they become
available. 
 You can find out more about the settlement at www.ftc.gov. Please call [Insert name and telephone numbers
of the responsible Skechers U.S.A., Inc., Attorney or Officer.] if you have any questions. 
 Skechers thanks you for your
business and greatly appreciates your cooperation in this matter. 
 Sincerely, 

Skechers U.S.A., Inc. 

  
 Page 27 of 27AGREED FINAL JUDGMENT

 Exhibit 10.2 
 IN THE FIRST CIRCUIT COURT FOR DAVIDSON COUNTY 
 TWENTIETH JUDICIAL
DISTRICT AT NASHVILLE 
  

							
	 STATE OF TENNESSEE, ex rel. ROBERT E.
 COOPER, JR., ATTORNEY GENERAL and
 REPORTER,

 

                        
Plaintiff,
  
 v.

 
 SKECHERS USA, INC., d/b/a SKECHERS, a

Delaware corporation,
  
                         Defendant.
	  	 )
 )
 )

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 No. 12C1966
	  	

  
  

AGREED FINAL JUDGMENT 
  

 

INTRODUCTION 
 1. The Plaintiff, the State of Tennessee, by and through Robert E. Cooper, Jr., the Attorney General (“Plaintiff”), at the request of Gary Cordell, the Director of the Division of Consumer
Affairs, and Skechers USA, Inc., (“Defendant”), as evidenced by the signatures below, do consent to the entry of this Judgment and its provisions. This Agreed Final Judgment (hereinafter also referred to as this “Judgment”) is
part of a larger forty-five member multistate action1 and
is being filed in concert with consent judgments in those jurisdictions as well as a stipulated judgment reached with the Federal Trade Commission. 

 

	1 	The multistate action consists of Attorneys General from the states of Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of
Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio,
Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Vermont, Virginia, Washington, West Virginia, and Wisconsin. The State of Hawaii is represented by the State of Hawaii Office of Consumer Protection and
the State of Georgia is represented by the Georgia Governor’s Office of Consumer Protection. 

 IT IS HEREBY ORDERED, ADJUDGED, AND DECREED: 

2. After engaging in settlement discussions, the Defendant, without admitting any liability or wrongdoing, agrees to the entry of this
Judgment. The Defendant states that it does so solely to avoid the time, further expense, inconvenience, and interference with its business operations associated with litigation. Nothing in this Judgment shall constitute an admission of the
Defendant’s liability or be used as evidence of the Defendant’s liability. 
 3. The Defendant hereby accepts and
expressly waives any defect in connection with the service of process of the Summons and Complaint in this matter. The Defendant expressly waives notice of the Plaintiff’s intention to file an action. 

4. This Judgment is entered into by the Defendant as its own free and voluntary act and with full knowledge and understanding of the
nature of the proceedings and the obligations and duties imposed upon it by this Judgment, and it consents to its entry without further notice, and avers that no offers, agreements or inducements of any nature whatsoever have been made to it by the
Plaintiff or their attorneys or any State employee to procure this Judgment. 
 5. The Defendant has, by signature of counsel
hereto, waived any right to add, alter, amend, appeal, petition for certiorari, or move to reargue or rehear or be heard in connection with any judicial proceeding concerning the entry of this Judgment and any and all challenges in law or
equity to the entry of the Judgment by the courts. If the Court elects to hold any hearing on this Judgment, a representative of the Attorney General’s office will briefly summarize the settlement for the Court. The Defendant agrees to support
the Judgment and its terms at any such hearing for approval. 
 6. In the event the Court shall not approve this Judgment, this
Judgment shall be of no force and effect against either party, the parties will revert to their respective positions 

  
 2 

 
immediately prior to reaching the settlement giving rise to this Judgment, and to the extent consistent with state law, no documents or communications related to the settlement shall have any
effect or be admissible in evidence for any purpose in this litigation or in any other proceeding. 
 DEFINITIONS

 7. Unless otherwise specified, the following definitions shall be used in this Judgment: 

 

	 	(A)	“Adequate and well-controlled human clinical study” means a clinical study that is randomized, controlled (including, but not limited to, controlled
for dietary intake if testing for weight loss or a reduction in body fat), blinded to the maximum extent practicable, uses an appropriate measurement tool or tools, and is conducted impartially by persons qualified by training and experience to
conduct and measure compliance with such a study. 

  

	 	(B)	“Consumer Law” means the Tennessee Consumer Protection Act of 1977, Tennessee Code Annotated § 47-18-101 et seq. and any of its
amendments. 

  

	 	(C)	“Covered Product” means Skechers Toning Footwear, and any other Skechers footwear product that purports to improve or increase muscle tone, muscle
strength, muscle activation, overall circulation, or aerobic conditioning, and/or that purports to result in increased calorie burn, weight loss, loss of body fat, or improvement or reduction in body composition. 

  
 3 

	 	(D)	“Covered Conduct” means the statements or representations made by Defendant, directly or through any third-party on behalf of Defendant, about the
benefits, characteristics, or effects of Skechers Toning Footwear that are expressly subject to the Permanent Injunction provisions contained in Paragraph 16(C)-(G) of this Judgment. 

 

	 	(E)	“Defendant” means Skechers USA, Inc., doing business as Skechers, and its successors and assigns. 

 

	 	(F)	“Effective Date” means the date on which a copy of this Judgment, duly executed by Skechers USA, Inc. and by the Plaintiff is approved by, and becomes
a judgment of the Court. 

  

	 	(G)	“Family Member” or “Familial Relationship” means a spouse, mother, father, grandmother, grandfather, son, daughter, brother, sister,
grandson, granddaughter, uncle, aunt, or a spouse’s mother, father, grandmother, grandfather, son (if different from above), daughter (if different from above), brother, sister, grandson (if different from above), granddaughter (if different
from above), uncle (if different from above), and aunt (if different from above). 

  

	 	(H)	“Including” in this Judgment means including without limitation. 

 

	 	(I)	“Multistate Executive Committee” means the Attorney General Offices, and their representatives, from the States of Arizona, Illinois, Maryland, Ohio,
South Carolina, Tennessee, Washington, and Wisconsin. 

  

	 	(J)	 “Multistate Working Group” means the Attorney General Offices, and their representatives, from the States of Alabama, Alaska, Arizona,

  
 4 

	 	
Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland, Massachusetts, Michigan,
Mississippi, Missouri, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Vermont, Virginia, Washington, West
Virginia, and Wisconsin.2 

 

	 	(K)	“Skechers Toning Footwear” means, collectively, Shape-ups, Resistance Runner, Shape-ups Toners, and Tone-ups. 

JURISDICTION 
 8. Jurisdiction of this Court over the subject matter and over the Defendant for the purpose of entering into and enforcing this Judgment is admitted. Jurisdiction is retained by this Court for the
purpose of enabling the Plaintiff to apply to this Court for such further judgments and directions as may be necessary or appropriate for the construction, modification or execution of this Judgment, including the enforcement of compliance therewith
and remedies, penalties and sanctions for violation thereof. The Defendant agrees to pay all applicable court costs and attorneys’ fees that are ordered by the Court in connection with any successful petition to enforce any provision of this
Judgment against the Defendant. 
  

	2 	The State of Hawaii is represented by the State of Hawaii Office of Consumer Protection and the State of Georgia is represented by the Georgia Governor’s
Office of Consumer Protection. 

  
 5 

 VENUE 
 9. Pursuant to Tennessee Code Annotated § 47-18-108(a)(3), venue as to all matters between the parties relating hereto or arising out of this Judgment shall be in Davidson County, Tennessee.

 DEFENDANT 
 10. The Defendant warrants and represents that it is the proper party to this Judgment. 
 11. The Defendant represents and warrants that signatories to this Judgment have authority to act for and bind the Defendant. 
 12. Beginning in 2008 and continuing into the present, the Defendant marketed and sold Skechers Toning Footwear nationwide including in Davidson County, Tennessee. At all times relevant hereto, the
Defendant engaged in trade affecting consumers in the State of Tennessee including, but not limited to, Davidson County. 
 13.
The Defendant acknowledges that it understands that the Plaintiff and this Court expressly rely upon all representations and warranties in this Judgment. The Defendant further acknowledges and understands that if the Defendant makes any false or
deceptive representation or warranty, the Plaintiff has the right to move that the Defendant making such false, or deceptive representation(s) or warranty(ies) be held in contempt and to seek sanctions and remedies under any other law, regulation or
rule, together with any and all such other sanctions, remedies or relief as may be available to the Plaintiff in law or equity, if the Plaintiff so elects. 
 PLAINTIFF 
 14. The Plaintiff has commenced this action pursuant to
the Tennessee Consumer Protection Act. The Plaintiff is appearing by and through its attorneys Robert E. Cooper, Jr., and Brant Harrell. 

  
 6 

 APPLICATION OF JUDGMENT 

15. Unless otherwise expressly stated, the Defendant agrees that the duties, responsibilities, burdens and obligations it is undertaking
pursuant to this Judgment shall apply to the Defendant, as defined above. 
 PERMANENT INJUNCTION 

16. The Defendant, directly or through any corporation, partnership, subsidiary, division, trade name, or other device, and its officers,
agents, servants, representatives, employees, and all persons or entities in active concert or participation with them who receive actual notice of this Judgment, by personal service or otherwise, in connection with the manufacturing, labeling,
advertising, promotion, offering for sale, sale, or distribution of any Covered Product in or affecting trade or commerce: 

Compliance with State Consumer Laws 
  

	 	(A)	Shall be permanently restrained and enjoined from engaging, or assisting others in engaging, in any unfair or deceptive acts or practices in the conduct of trade or
commerce or its business and shall fully abide by all provisions of the Consumer Law which prohibit any and all unfair and/or deceptive acts or practices. 

  

	 	(B)	Shall be permanently restrained and enjoined from making, or assisting others in making, any statement or representation that goods or services have uses or benefits
that they do not have. 

 Prohibited Representations: Strengthening Claims 

 

	 	(C)	 Shall be permanently restrained and enjoined from making, or assisting others in making, directly or by implication, including through the use of a

  
 7 

	 	
product name, endorsement, depiction, or illustration, any representation that such Covered Product is effective in strengthening muscles unless the representation is non-misleading and
non-deceptive, and, at the time of making such representation, the Defendant possesses and relies upon competent and reliable scientific evidence that substantiates that the representation is true. For purposes of this Paragraph 16(C),
competent and reliable scientific evidence shall consist of at least one adequate and well-controlled human clinical study of the Covered Product that conforms to acceptable designs and protocols, is of at least six-weeks duration, and the result of
which, when considered in light of the entire body of relevant and reliable scientific evidence, is sufficient to substantiate that the representation is true. 

 Prohibited Representations: Weight Loss Claims 
  

	 	(D)	 Shall be permanently restrained and enjoined from making, or assisting others in making, directly or by implication, including through the use of a
product name, endorsement, depiction, or illustration, any representation that such Covered Product causes weight loss unless the representation is non-misleading and non-deceptive, and, at the time of making such representation, Defendant possesses
and relies upon competent and reliable scientific evidence that substantiates that the representation is true. For purposes of this Paragraph 16(D), competent and reliable scientific evidence shall consist of at least two adequate and
well-controlled human clinical studies of the Covered Product, conducted by different 

  
 8 

	 	
researchers, independently of each other, that conform to acceptable designs and protocols and whose results, when considered in light of the entire body of relevant and reliable scientific
evidence, are sufficient to substantiate that the representation is true. 

 Prohibited Representations: Other
Health or Fitness-Related Claims 
  

	 	(E)	Shall be permanently restrained and enjoined from making, or assisting others in making, directly or by implication, including through the use of a product name,
endorsement, depiction, or illustration, any representation, other than representations covered under Paragraph 16(C) and/or Paragraph 16(D) of this Judgment, about the health or fitness benefits of any Covered Product including, but not
limited to, representations regarding caloric expenditure, calorie burn, blood circulation, aerobic conditioning, muscle tone, and muscle activation, unless the representation is non-misleading and non-deceptive and, at the time of making such
representation, the Defendant possesses and relies upon competent and reliable scientific evidence that is sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the
entire body of relevant and reliable scientific evidence, to substantiate that the representation is true. For purposes of this Paragraph 16(E), competent and reliable scientific evidence means tests, analyses, research, or studies that have
been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results. 

  
 9 

 Prohibited Representations: Tests or Studies 

 

	 	(F)	Shall be permanently restrained and enjoined from misrepresenting, or assisting others in misrepresenting, in any manner, directly or by implication, including through
the use of any product name, endorsement, depiction, or illustration, the existence, contents, validity, results, conclusions, or interpretations of any test, study, or research including, but not limited to, misrepresenting that wearing any Covered
Product will result in a quantified percentage or an amount of muscle activation, toning, strengthening, calorie burn, caloric expenditure, or weight loss. 

 Disclosure of Material Connections to Studies in Advertisements 
  

	 	(G)	 Shall, whenever it refers to any study in advertisements, marketing materials, or elsewhere to promote its Covered Products, clearly and conspicuously
disclose in such advertisements, marketing materials, or elsewhere to promote its Covered Products any material connections between the study’s authors or supervising researchers and the Defendant that consumers would find relevant in assessing
the accuracy of a study such as any conflict of interest, including the fact that the author, supervising researcher, or a Family Member was compensated by or on behalf of the Defendant, or any Familial Relationship between a study’s author or
supervising researcher and a director, officer, or an employee (but only if the employee has primary responsibility with respect to the Covered Product) of the Defendant. For purposes of this Paragraph 16(G), “clearly and
conspicuously,” when referring to a statement or disclosure, 

  
 10 

	 	
shall mean that such statement or disclosure is disclosed in such size, color, contrast, location, duration, and audibility that it is readily noticeable, readable and understandable. A statement
may not contradict or be inconsistent with any other information with which it is presented. If a statement modifies, explains, or clarifies other information with which it is presented, it must be presented in proximity to the information it
modifies, in a manner readily noticeable, readable, and understandable, and it must not be obscured in any manner. Audio disclosure shall be delivered in a volume and cadence sufficient for a consumer to hear and comprehend it. Visual disclosure
shall be of a size and shade and appear on the screen for a duration sufficient for a consumer to read and comprehend it. In a print advertisement or promotional material, including, but without limitation, point of sale display or brochure
materials directed to consumers, the disclosures shall be in a type size and location sufficiently noticeable for a consumer to read and comprehend it, in a print that contrasts with the background against which it appears. 

17. Unless otherwise expressly stated, the preceding injunctive provisions (16(A)-(G)) shall take effect on the Effective Date. No cost
bond shall be required for the injunction. 
 CONSUMER PAYMENTS 

18. Consumer payments shall be made and distributed pursuant to the Federal Trade Commission’s Stipulated Final Judgment and
Order for Permanent Injunction and Other Equitable Relief, which sets forth Forty Million Dollars ($40,000,000) in the aggregate for available funds for this purpose less administrative expenses associated with the claims

  
 11 

 
procedure. The Defendant shall include a requirement in the Class Action Settlement Agreement for the Class Action Settlement Administrator to provide to Plaintiff, within thirty (30) days
of delivery of consumer payments pursuant to the consumer payments program by the Class Action Settlement Administrator, an electronically searchable alphabetical list of consumers who reside in this state who have made claims out of the proposed
consumer payments fund, the consumer’s contact information, and the amount paid to those consumers. 
 COMPLIANCE
REPORTING 
 19. For a period of three (3) years from the date of entry of this Judgment, the Defendant shall
notify the Plaintiff of any changes in the corporate structure of the Defendant or any business entity that the Defendant directly or indirectly controls, or has an ownership interest in, that may affect compliance obligations arising under this
Judgment, including but not limited to: incorporation or other organization; a dissolution, assignment, sale, merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent,
or affiliate that engages in any acts or practices subject to this Judgment; or a change in the business name or address, at least thirty (30) days prior to such change, provided that, with respect to any such change in the
business entity about which the Defendant learns less than thirty (30) days prior to the date such action is to take place, the Defendant shall notify the Plaintiff as soon as is practicable after obtaining such knowledge. 

20. One hundred eighty (180) days after the date of entry of this Judgment, the Defendant shall provide a written report to the
Plaintiff, which is true and accurate and sworn to under penalty of perjury, setting forth in detail the manner and form in which it has complied and is complying with this Judgment. This report shall include, but not be limited to: (1) a copy
of each acknowledgment of receipt of this Judgment, obtained pursuant to the Section titled 

  
 12 

 
“Distribution of Judgment;” and (2) any other changes required to be reported under Paragraph 19. 
 21. The Defendant shall notify the Plaintiff of the filing of a bankruptcy petition by Defendant within fifteen (15) days of filing. 

22. For the purposes of this Judgment, the Defendant shall, unless otherwise directed by the Plaintiff’s authorized representatives,
send by overnight courier all reports and notifications required by this Judgment to the Plaintiff, to the following address: 

Office of the Attorney General of Tennessee 
 Consumer Advocate and Protection Division 
 c/o Deputy Attorney General 

425 Fifth Avenue North, 2nd Floor Cordell Hull Building 
 Nashville, Tennessee 37243 
 or as subsequently directed by the Plaintiff. Provided
that, in lieu of overnight courier, the Defendant may send such reports or notifications by first-class mail, but only if the Defendant contemporaneously sends an electronic version of such report or notification to the Plaintiff at:

 brant.harrell@ag.tn.gov 
 or as subsequently directed by the Plaintiff. 
 23. For purposes of the compliance
reporting and monitoring required by this Judgment, the Plaintiff is authorized to communicate directly with the Defendant unless or until the Defendant directs the Plaintiff to communicate with it through its outside legal counsel and identifies
the name and contact information for said counsel. All communications to the Defendant related to this Judgment should go to the General Counsel of Skechers at the Defendant’s corporate headquarters, with a copy to Daniel Petrocelli,
O’Melveny & Myers LLP, 1999 Avenue of the Stars, 7th Floor, Los Angeles, CA 90067. 

  
 13 

 RECORDKEEPING 

24. For a period of five (5) years from the date of entry of this Judgment, the Defendant is hereby restrained and enjoined from
failing to create and retain the following records: 
  

	 	(A)	Accounting records that reflect the cost of the Covered Product, revenues generated for the Covered Product, and, to the extent such records are created and maintained
in the ordinary course of business, the disbursement of such revenues; 

  

	 	(B)	Personnel records accurately reflecting: the name, address, and telephone number of each person employed in any capacity by such business, including as an independent
contractor; that person’s job title or position; the date upon which the person commenced work; and the date and reason for the person’s termination, if applicable; provided however, that with respect to those persons covered by Paragraph
24(B) whose employment has terminated, personnel records need only be retained for three (3) years from the date of termination; 

  

	 	(C)	Records accurately reflecting: the name, address and telephone number of each domestic distributor, domestic reseller, or domestic retailer of the Covered Product; the
dollar amounts paid; and the identification and quantity of items purchased; 

  

	 	(D)	 Customer files containing the names, addresses, telephone numbers, dollar amounts paid, quantity of Covered Product purchased, and description of

  
 14 

	 	
items or services purchased, to the extent such information is obtained in the ordinary course of business; 

 

	 	(E)	Complaints and refund requests relating to any Covered Product (whether received directly or indirectly, such as through a third-party) and any responses to those
complaints or requests; 

  

	 	(F)	Copies of all advertisements, promotional materials, sales scripts, training materials, web sites, or other marketing materials utilized in the advertising, marketing,
promotion, offering for sale, sale, or distribution of any Covered Product. For purposes of this provision, keeping one representative copy of all non-identical materials referenced in this provision is sufficient for compliance;

  

	 	(G)	All materials that were relied upon in making any representations contained in the materials identified in (F) above, including all documents evidencing or
referring to the accuracy of any claim therein or to the benefits, performance, or efficacy of any Covered Product, including, but not limited to, all tests, reports, studies, demonstrations, or other evidence that confirms, contradicts, qualifies,
or calls into question the accuracy of any claim regarding the benefits, performance, or efficacy of any products covered by this Judgment, including complaints and other communications with consumers or with governmental or consumer protection
agencies; 

  

	 	(H)	 Records accurately reflecting the name, address, and telephone number of each laboratory engaged in the testing or the development or creation of

  
 15 

	 	
any testing obtained for the purpose of advertising, marketing, promoting, offering for sale, selling, or distributing any Covered Product; and 

 

	 	(I)	All records and documents necessary to demonstrate full compliance with each provision of this Judgment including, but not limited to, copies of acknowledgments of
receipt of this Judgment required by the Sections titled “Distribution of Judgment” and “Acknowledgment of Receipt of Judgment” and all reports submitted to the Plaintiff pursuant to the Section titled “Compliance
Reporting.” 

 DISTRIBUTION OF JUDGMENT 

25. For a period of three (3) years from the date of entry of this Judgment, the Defendant shall deliver copies of this Judgment as
directed below: 
  

	 	(A)	To each of its principals, officers, and directors having decision-making authority with respect to the subject matter of the Judgment; 

 

	 	(B)	To all of its employees, agents, and representatives having primary responsibilities with respect to the subject matter of the Judgment, including, but not limited to
any individual and/or entity employed by the Defendant in conducting any tests, analyses, research, or studies to support any fitness benefit claims associated with Skechers Toning Footwear; and 

 

	 	(C)	 For current personnel of the Defendant, delivery shall be within seven (7) days of entry of this Judgment. For new personnel of the Defendant,
delivery shall occur prior to their assuming their responsibilities. For any business entity resulting from any change in structure set forth in 

  
 16 

	 	
Paragraph 19 titled “Compliance Reporting,” delivery shall be at least fourteen (14) days prior to the change in structure. 

26. The Defendant shall secure a signed and dated statement acknowledging receipt of the Judgment, within thirty (30) days of
delivery, from all persons receiving a copy of the Judgment pursuant to this Section. 
 NOTIFICATION OF JUDGMENT

 27. The Defendant shall send no later than fifteen (15) days after entry of this Judgment, by first-class mail,
postage paid and return receipt requested, or by courier service such as Federal Express with signature proof of delivery, an exact copy of the notice attached hereto as Attachment A, showing the date of mailing, to each domestic distributor,
domestic reseller, and domestic retailer who purchased or otherwise received any Covered Product directly from the Defendant and who continues to market, sell or offer for sale any Covered Product. The notice required by this Paragraph 27 shall
not include any other document or enclosures and may be sent to the principal place of business of each such domestic distributor, domestic reseller or domestic retailer. 
 ACKNOWLEDGMENT OF RECEIPT OF JUDGMENT 
 28. The Defendant shall,
within seven (7) business days of receipt of this Judgment after entry by the Court, submit to the Plaintiff a truthful sworn statement acknowledging receipt of this Judgment. 

PAYMENT TO THE STATES 
 29. No later than thirty (30) days after the Effective Date of this Judgment, the Defendant shall pay a total amount of Five Million Dollars ($5,000,000) to be divided and paid by the Defendant
directly to each Signatory Attorney General of the Multistate Working Group 

  
 17 

 
in an amount to be designated by, and in the sole discretion of, the Multistate Executive Committee. No portion of any payment under the Judgment shall be deemed a payment of any fine, penalty,
or punitive assessment. 
 30. Tennessee’s portion of the $5,000,000, as co-lead state, totals $404,863. Of the
$404,863, retained by the State of Tennessee, $200,000 shall be allocated to the State of Tennessee – Office of the Attorney General to be used for consumer protection purposes or any other purpose allowed by law at the sole discretion
of the Attorney General. $104,863 shall be allocated to the State of Tennessee – General Fund to be used for any purpose allowed by law. The remaining $100,000 shall be allocated to the State of Tennessee – Division of Consumer Affairs for
consumer protection purposes or any other purpose allowed by law at the sole discretion of the Director of the Division of Consumer Affairs. Without excusing the Defendant’s obligation to pay, if the entire monetary amount anticipated by the
State of Tennessee is not received, any monies received shall first be attributed in full to the Attorney General’s office, next in full to the Division of Consumer Affairs, and then to the General Fund. Further, if the State of Tennessee
receives any additional monies beyond the amount set forth herein, legitimately obtained and not allocated to be paid to other States, such as interest accrued or for any other reason, it shall be retained by the Attorney General and used for any
lawful purpose at the Attorney General’s sole discretion. 
 GENERAL PROVISIONS 

31. The acceptance of this Judgment by the Plaintiff shall not be deemed approval by the Plaintiff of any of the Defendant’s
advertising or business practices. Further, neither the Defendant nor anyone acting on its behalf shall state or imply, or cause to be stated or implied, 

  
 18 

 
that the Plaintiff or any other governmental unit of the State has approved, sanctioned or authorized any practice, act, advertisement or conduct of the Defendant. 

32. This Judgment may only be enforced by the Plaintiff, the Defendant, and this Court. 

33. The titles and headers to each section of this Judgment are for convenience purposes only and are not intended by the parties to lend
meaning to the actual provisions of the Judgment. 
 34. Nothing in this Judgment shall limit the Plaintiff’s right to
obtain information, documents or testimony from the Defendant pursuant to any state or federal law, regulation or rule. 
 35.
Nothing in this Judgment shall be construed to limit the authority of the Attorney General to protect the interests of the State or consumers. This Judgment shall not bar the Plaintiff, or any other governmental entity from enforcing laws,
regulations or rules against the Defendant. 
 36. No waiver, modification, or amendment of the terms of this Judgment shall be
valid or binding unless made in writing, agreed to by both parties, and approved by this Court and then only to the extent specifically set forth in such written waiver, modification or amendment. 

37. Any failure by any party to this Judgment to insist upon the strict performance by any other party of any of the provisions of this
Judgment shall not be deemed a waiver of any of the provisions of this Judgment, and such party, notwithstanding such failure, shall have the right thereafter to insist upon the specific performance of any and all of the provisions of this Judgment.
For the Plaintiff, this shall be without prejudice in the future to the imposition of any 

  
 19 

 
applicable penalties, including but not limited to contempt, civil penalties as set forth in Tennessee Code Annotated § 47-18-108(c) and/or the payment of attorneys’ fees to the
Plaintiff, and any other remedies under applicable state law. 
 38. If any clause, provision or section of this Judgment shall,
for any reason, be held illegal, invalid or unenforceable, such illegality, invalidity or unenforceability shall not affect any other clause, provision or section of this Judgment and this Judgment shall be construed and enforced as if such illegal,
invalid or unenforceable clause, section or other provision had not been contained herein. 
 39. Time shall be of the essence
with respect to each provision of this Judgment that requires action to be taken by the Defendant within a stated time period or upon a specified date. 
 40. Nothing in this Judgment shall be construed to waive any claims of Sovereign Immunity the Plaintiff may have. 
 41. Aside from the consumer payments provision which refers to the Federal Trade Commission’s Stipulated Judgment amount for consumer payments, this Judgment sets forth the entire agreement between
the parties, and there are no representations, agreements, arrangements, or understanding, oral or written, between the parties relating to the subject matter of this Judgment which are not fully expressed hereto or attached hereto. 

42. The Defendant shall not participate, directly or indirectly, in any activity or form a separate entity or corporation for the purpose
of engaging in acts or practices in whole or in part in the State which are prohibited in this Judgment or for any other purpose which would otherwise circumvent any part of this Judgment or the spirit or purposes of this Judgment. 

43. If the Defendant has provided the Plaintiff with certain documents, advertisements, and contracts, the Defendant acknowledges and
agrees that providing these 

  
 20 

 
documents to the Plaintiff in no way constitutes the Plaintiff’s pre-approval, review for compliance with state or federal law, or with this Judgment, or a release of any issues relating to
such documents. 
 44. The Defendant further agrees to execute and deliver all authorizations, documents and instruments which
are necessary to carry out the terms and conditions of this Judgment. 
 45. This document may be executed in any number of
counterparts and by different signatories on separate counterparts, each of which shall constitute an original counterpart hereof and all of which together shall constitute one and the same document. One or more counterparts of this Judgment may be
delivered by facsimile or electronic transmission with the intent that it or they shall constitute an original counterpart thereof. 
 46. The terms of this Judgment shall be governed by the laws of the State of Tennessee. 
 MONITORING FOR COMPLIANCE 
 47. Upon request, the Defendant shall
provide books, records or documents to the Plaintiff, and shall informally, or formally under oath, provide testimony or other information to the Plaintiff relating to compliance with this Judgment. The Defendant shall make any requested information
available within fourteen (14) days of the request, at the Office of the applicable State Attorney General or at such other location within the State as is mutually agreed in writing by the Defendant and the applicable Attorney General. This
shall in no way limit the Plaintiff’s right to obtain documents, records, testimony or other information pursuant to any law, regulation, or rule. 

  
 21 

 COMPLIANCE WITH ALL LAWS 

48. Nothing in this Judgment shall be construed as relieving the Defendant of the obligation to comply with all state and federal laws,
regulations, or rules, nor shall any of the provisions of this Judgment be deemed to be permission to engage in any acts or practices prohibited by such laws, regulations, or rules. 

RELEASE 
 49. Nothing in this Judgment shall impair or limit the private right of action that any consumer, person, or entity may have against the Defendant. 

50. By execution of this Judgment and following a full and complete payment to the States as required under Paragraph 29, as well as
a full and complete payment to the Federal Trade Commission for consumer payments as required under Paragraph 18, the Attorney General of the State of Tennessee releases and forever discharges the Defendant, as defined above, from the
following: all civil claims, causes of action, damages, consumer payments, fines, costs, and penalties that the Tennessee Attorney General could have asserted against the Defendant, as defined above, under the Tennessee Consumer Protection Act of
1977, as amended, resulting from the Covered Conduct up to and including the Effective Date that is the subject of this Judgment. 
 51. Notwithstanding any term of this Judgment, any and all of the following forms of liability are specifically reserved and excluded from the Release in Paragraph 50 as to any entity or person,
including the Defendant: 
  

	 	(A)	Any criminal liability that any person or entity, including the Defendant, has or may have to the State of Tennessee. 

  
 22 

	 	(B)	Any civil or administrative liability that any person or entity, including the Defendant, has or may have to the State of Tennessee under any statute, regulation or
rule not expressly covered by the Release in Paragraph 50 above, including but not limited to, any and all of the following claims: 

  

	 	(i)	State or federal antitrust violations; 

  

	 	(ii)	State or federal securities violations; or 

  

	 	(iii)	State or federal tax claims. 

COURT COSTS 
 52. All court costs associated with this action and any other incidental costs or expenses incurred in this action thereby shall be borne by the Defendant. No costs shall be taxed to the State. Further,
no discretionary costs shall be taxed to the State. 
 PENALTY FOR FAILURE TO COMPLY 

53. Pursuant to Tennessee Code Annotated § 47-18-108(c), any knowing violation of the terms of the injunction contained in this
Judgment shall be punishable by a civil penalty of not more than two thousand dollars ($2,000), recoverable by the State for each violation, in addition to any other appropriate relief. 

OTHER 
 54. This Consent Judgment is expressly contingent on court approval of the FTC’s Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief and complete payment of
$40,000,000 under the FTC’s Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief. If the FTC’s Stipulated Final Judgment and Order for Permanent Injunction and Other Equitable Relief is
not approved, this Consent Judgment shall be without force or effect on either party. 

  
 23 

 IT IS SO ORDERED, ADJUDGED, AND DECREED. 

This the 16th day of May, 2012. 

 

			
	/s/ Hamilton Gayden	 	 
	  
 JUDGE HAMILTON GAYDEN, JR.

First Circuit Court
 Twentieth Judicial
District
	 	 

  
 24 

 APPROVED AND AGREED TO: 

 

			
	 /s/ R E Cooper, Jr
	  	

 ROBERT E. COOPER, JR., B.P.R. No. 10934 
 Attorney General and Reporter 
  

			
	 /s/ Brant Harrell
	  	

 BRANT HARRELL, B.P.R. No. 024470 
 Assistant Attorney General 
 Office of the Tennessee Attorney General 

Consumer Advocate and Protection Division 
 Post
Office Box 20207 
 Nashville, Tennessee 37202-0207 
 Phone: (615) 741-3549 
 Facsimile: (615) 532-2910 

Email: brant.harrell@ag.tn.gov 

Attorneys for the State of Tennessee 

  
 25 

 APPROVED AND AGREED TO: 
 FOR DEFENDANT: 
 SKECHERS USA, INC., d/b/a Skechers 

 

			
	By:	 	/s/ David Weinberg
		 	 DAVID WEINBERG
 Executive
Vice President
 SKECHERS USA, INC., d/b/a Skechers
 228 Manhattan Beach Boulevard
 Manhattan Beach, CA 90266

  
 26 

 APPROVED AND AGREED TO: 
 DEFENDANT’S COUNSEL OF RECORD: 
  

			
	By:	 	/s/ Charles Bone
		 	 CHARLES ROBERT BONE
 B.P.R.
No. 021161
 Bone McAllester Norton, PLLC
 Nashville City Center, Suite 1600
 511 Union Street

Nashville, Tennessee 37219
 Phone:
(615) 238-6394
 Facsimile: (615) 238-6301
 crb@bonelaw.com

  
 27 

 REPRESENTATIVES OF SKECHERS U.S.A., INC.: 

DANIEL M. PETROCELLI 
 JEFFREY A. BARKER 
 MARYANNE S. KANE 

O’Melveny & Myers LLP 
 1999 Avenue of the Stars, 7th Floor 
 Los Angeles, CA 90067 

Phone: (310) 553-6700 
 Fax: (310) 246-6779 
 dpetrocelli@omm.com 

jbarker@omm.com 
 makane@omm.com 

  
 28 

 ATTACHMENT A 
 [On Skechers USA, Inc., Letterhead] 
 [Insert Date] 

[Addressee] 
 Dear Skechers USA, Inc., Retail
Business Partner: 
 In response to a lawsuit by the Federal Trade Commission (FTC) and separate lawsuits brought by a group of
state attorneys general, Skechers has agreed to stop making certain claims for the following footwear products: Shape-ups, the Resistance Runner, Toners, and Tone-ups. 
 Although we dispute the charges, to settle the FTC’s and the states’ cases against us, Skechers has agreed to stop using advertising or promotional materials claiming that any of our footwear
products can: 
  

	 	•	 	 Improve or increase muscle tone and muscle strength; 

  

	 	•	 	 Improve or increase overall circulation or aerobic conditioning; 

 

	 	•	 	 Result in increased weight loss or loss of body fat; and/or; 

 

	 	•	 	 Result in improvement or reduction in body composition. 

 In addition to the above, Skechers has agreed to stop using advertising or promotional materials claiming that the Resistance Runner improves or increases muscle activation. 

Please take these three steps immediately: 
  

	 	(1)	If you have materials on display (POS, posters, etc.) that include any of these claims, please remove them. 

 

	 	(2)	Where these claims appear on boxes, please cover them with stickers that Skechers will provide. 

 

	 	(3)	If inserts in boxes or footwear hangtags include any of these claims, please remove them. 

We are actively pursuing additional studies in the marketplace. We look forward to sharing these details with you as they become
available. 
 You can find out more about the settlement at www.ftc.gov. Please call [Insert name and telephone numbers of the
responsible Skechers USA, Inc., Attorney or Officer.] if you have any questions. 
 Skechers thanks you for your business and
greatly appreciates your cooperation in this matter. 
 Sincerely, 

Skechers USA, Inc. 

  
 29 

 SCHEDULE TO EXHIBIT 
 This Schedule of additional States, including the District of Columbia, in which substantially identical Consent Judgments have been approved is included pursuant to Instruction 2 of Item 601(a) of
Regulation S-K for the purposes of setting forth the material details in which these Consent Judgments differ from the Consent Judgment filed herewith as Exhibit 10.2. 
  

					
	 States including
District of Columbia
	 	Dates of Court Entry of
Consent Judgments	 	Amounts Received by
States under Consent
Judgments
	Alaska	 	5/18/2012	 	$71,001
	Arizona	 	5/21/2012	 	$115,140
	Arkansas	 	5/16/2012	 	$84,254
	California	 	5/18/2012	 	$290,574
	Colorado	 	5/21/2012	 	$96,951
	Connecticut	 	6/12/2012	 	$88,208
	Delaware	 	6/1/2012	 	$72,129
	District of Columbia	 	6/21/2012	 	$70,349
	Florida	 	5/24/2012	 	$179,701
	Georgia	 	5/29/2012	 	$124,942
	Hawaii	 	6/4/2012	 	$74,907
	Idaho	 	5/29/2012	 	$76,152
	Illinois	 	5/16/2012	 	$153,826
	Indiana	 	5/16/2012	 	$105,691
	Iowa	 	5/16/2012	 	$85,037
	Kansas	 	5/16/2012	 	$83,876
	Kentucky	 	5/25/2012	 	$92,806
	Maine	 	5/23/2012	 	$74,715
	Maryland	 	6/8/2012	 	$111,424
	Massachusetts	 	5/29/2012	 	$106,075
	Michigan	 	5/16/2012	 	$126,119
	Mississippi	 	5/16/2012	 	$84,562
	Missouri	 	5/16/2012	 	$102,718
	Montana	 	5/21/2012	 	$72,678
	Nebraska	 	5/16/2012	 	$77,707
	Nevada	 	5/22/2012	 	$82,960
	New Jersey	 	5/16/2012	 	$119,559
	New Mexico	 	6/5/2012	 	$79,106
	New York	 	6/15/2012	 	$183,167
	North Carolina	 	5/16/2012	 	$124,027
	North Dakota	 	5/21/2012	 	$70,775
	Ohio	 	5/22/2012	 	$156,050
	Oklahoma	 	5/16/2012	 	$89,273
	Oregon	 	5/16/2012	 	$89,752
	Pennsylvania	 	5/17/2012	 	$143,056
	Rhode Island	 	6/11/2012	 	$73,058
	South Carolina	 	6/4/2012	 	$104,525
	South Dakota	 	5/16/2012	 	$71,625
	Vermont	 	5/22/2012	 	$70,493
	Virginia	 	5/17/2012	 	$114,807
	Washington	 	5/16/2012	 	$117,138
	West Virginia	 	5/16/2012	 	$77,867
	Wisconsin	 	6/5/2012	 	$110,904

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