Document:

Exhibit 10.1

 

AMENDED AND RESTATED SUPREME INDUSTRIES, INC.

OWNERSHIP TRANSACTION INCENTIVE PLAN

 

This AMENDED AND RESTATED SUPREME INDUSTRIES, INC. OWNERSHIP TRANSACTION INCENTIVE PLAN (the “Plan”) was adopted by the Board of Directors of SUPREME INDUSTRIES, INC., a Delaware corporation (the “Company”), effective as of May 2, 2016 (the “Effective Date”). This Plan amends, restates and replaces the Supreme Industries, Inc. Ownership Transaction Incentive Plan adopted by the Company’s Board of Directors (the “Board”) effective January 1, 2016 in its entirety.

 

ARTICLE 1

PURPOSE

 

The purpose of the Plan is to advance the interests of the Company and its stockholders and motivate and retain certain key employees in order to maximize stockholder value by providing these key employees with certain bonus opportunities in the event of a Change of Control.  This Plan is intended to be compliant with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations or other applicable guidance issued thereafter, including, without limitation, Treas. Reg. section 1.409A-3(i)(5)(iv)(A).

 

ARTICLE 2

DEFINITIONS

 

For the purpose of the Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:

 

2.1                               “Base Price” means, for each Incentive Pool Percentage awarded to a Participant, the amount established by the Board, in its sole discretion, at the time of the grant as the base measurement price with respect to a share of Common Stock for purposes of determining the Change of Control Value in connection with a Vesting Event.  The “Base Price” may be the Fair Market Value of the Common Stock (either the Class A or Class B, or both), or any other amount established by the Board.

 

2.2                               “Board” means the board of directors of the Company.

 

2.3                               “Cause” for termination means “cause” as defined in any employment agreement then in effect between the Company and the Participant, or if no such agreement is in effect (or cause is not defined in such agreement), then (i) the Participant’s breach or violation of a material term of this Agreement or other agreement to which the Participant and the Company are parties (including the Disclosure and Invention Agreement), which the Participant failed to cure within thirty (30) days after receiving written notice detailing the allegations from the Board; (ii) the Participant’s material failure or refusal to perform his or her job duties or responsibilities, which the Participant failed to cure within thirty (30) days after receiving written notice from the Board (or the board of directors of any Subsidiary); (iii) the Participant’s gross negligence, willful misconduct, willful breach of fiduciary duty, dishonesty, fraud, embezzlement or theft, which the Company, in its sole discretion, considers materially damaging to, or which materially discredits, the Company; and (iv) the Participant’s conviction, commission, or plea of nolo contendere to any felony or other crime involving dishonesty or moral turpitude.  Upon the giving of notice of termination of the Participant’s employment for Cause, the Company shall have no further obligation or liability to the Participant hereunder.

 

2.4                               “Change of Control” means a change in (i) the Company’s ownership; or (ii) the ownership of a substantial portion of its assets, as follows:

 

 

(i)                                     Change in Ownership.  A change in ownership of the Company occurs on the date that any “Person” (as defined in paragraph (iii) below), other than (1) the current stockholders of the Company or their respective Affiliates to the extent such stockholders individually or acting as a group, effectively control the Company (within the meaning of Treasury Regulation §1.409A-3(i)(5)(vi)(C)) immediately prior to such date, (2) the Company or any of its subsidiaries; (3) a trustee or other fiduciary holding securities either on behalf of a current stockholder or pursuant to an employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates; or (4) an underwriter temporarily holding stock pursuant to an offering of such stock, acquires ownership (either directly, or indirectly through application of the attribution of stock ownership rules described in Treasury Regulation §1.409A-3(i)(5)(iii)) of the Company’s stock that, together with stock held by such Person, constitutes more than 50% of the total fair market value or total voting power of the Company’s stock (including, Common Stock and any other equity securities then outstanding).  However, if any Person is considered to own already more than 50% of the total fair market value or total voting power of the Company’s stock (either directly or indirectly through application of the attribution of stock ownership rules described in Treasury Regulation §1.409A-3(i)(5)(iii)), the acquisition of additional stock by the same Person is not considered to be a Change of Control; or

 

(ii)                                  Change in Ownership of Substantial Portion of Assets.  A change in the ownership of a substantial portion of the Company’s assets occurs on the date that a Person acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person) total assets of the Company (including the stock of its consolidated subsidiaries), that have a total gross fair market value equal to at least 80% of the total gross fair market value of all of the Company’s assets (including the stock of its consolidated subsidiaries) immediately before such acquisition or acquisitions.  However, there is no Change of Control when there is such a transfer to an entity that is controlled by the current stockholders of the Company immediately after the transfer, through a transfer to (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock; (2) an entity, at least 50% of the total value or voting power of the stock of which is owned, directly or indirectly, by the Company; (3) a Person that owns directly or indirectly, at least 50% of the total value or voting power of the Company’s outstanding stock; or (4) an entity, at least 50% of the total value or voting power of the stock of which is owned by a Person that owns, directly or indirectly, at least 50% of the total value or voting power of the Company’s outstanding stock.

 

(iii)                               For purposes of paragraphs (i) and (ii):

 

(1)                                 “Person” would have the meaning given in Section 7701(a)(1) of the Code.  Person would include more than one Person acting as a group as defined by the Final Treasury Regulations issued under Section 409A of the Code.

 

(2)                                 “Affiliate” would have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended.

 

Notwithstanding the foregoing, a Change of Control shall not be deemed to include (A) any equity financing of the Company, or the transactions contemplated thereby or executed in connection therewith (including but not limited to preferred stock equity financings with venture capital operating companies); or (B) any disposition solely of the Class B Common Stock.

 

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2.5                               “Change of Control Incentive Pool” means, with respect to each Base Price for which Incentive Pool Percentages have been granted under the Plan, (i) the aggregate amount of all Incentive Pool Percentages granted at such Base Price multiplied by the number of shares of Common Stock outstanding immediately prior to the Change of Control, multiplied by (ii) the sum of (A) 7% multiplied by any Change of Control Value up to $2.00 above such Base Price, plus (B) 8% multiplied by any Change of Control Value greater than $2.00 above such Base Price but less than or equal to $4.00 above the Base Price, plus (C) 9% multiplied by any Change of Control Value greater than $4.00 above such Base Price.

 

By way of example, if a Change of Control occurs and 65% of the Incentive Pool Percentages were granted at $2.50, 10% were granted at $6.50, and 15% were granted at $8.00 and on the closing date of such Change of Control the number of shares of Common Stock outstanding was 16,610,000 shares and the consideration paid in the Change of Control was $12.00 per share of Common Stock, then three Change of Control Incentive Pools would be created (one for grants made at $2.50, one for grants made at $6.50, and one for grants made at $8.00) as follows: (i) the $2.50 Change of Control Incentive Pool would equal $8,583,217.50, calculated as follows: (A) the product of 65% multiplied by 16,610,000 multiplied by (B) 0.795, which is the sum of: (1) 0.14 [7% x $2.00] plus (2) 0.16 [8% x $2.00] plus (3) 0.495 [9% x $5.50]; (ii) the $6.50 Change of Control Incentive Pool would equal $722,535.00, calculated as follows: (A) the product of 10% multiplied by 16,610,000 multiplied by (B) 0.435, which is the sum of: (1) 0.14 [7% x $2.00] plus (2) 0.16 [8% x $2.00] plus (3) 0.135 [9% x $1.50]; and (iii) the $8.00 Change of Control Incentive Pool would equal $747,450.00, calculated as follows: (A) the product of 15% multiplied by 16,610,000 multiplied by (B) 0.30, which is the sum of: (1) 0.14 [7% x $2.00] plus (2) 0.16 [8% x $2.00].

 

2.6                               “Change of Control Value” means for each award granted pursuant to this Plan, in the event a Change of Control occurs, the difference between (i) the per share value of the total cash proceeds or the per share Fair Market Value of any other consideration received by the Company or the Company’s stockholders in connection with a Change of Control, as determined by the Committee, and (ii) the Base Price.

 

2.7                               “Claims” shall have the meaning given to such term in Section 8.6.

 

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

 

2.9                               “Committee” shall have the meaning given to such term in Section 3.1 below.

 

2.10                        “Common Stock” means all classes of common stock of the Company which the Company is currently authorized to issue or may in the future be authorized to issue (including, without limitation, the Class A and Class B common stock).

 

2.11                        “Company” means Supreme Industries, Inc., a Delaware corporation, and any successor entity thereto.

 

2.12                        “Employee” means a common law employee (as defined in accordance with the Regulations and Revenue Rulings then applicable under Section 3401(c) of the Code) of any Employer.

 

2.13                        “Employer” means the Company or its Subsidiaries.

 

2.14                        “Fair Market Value” means (i) for purposes of the establishing the Base Price, the fair market value of a share of Common Stock as determined by the Committee in good faith, from time to time, by any reasonable means; and (ii) for purposes of establishing the Change of Control Value in 

 

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connection with a Change of Control, the per share of Common Stock fair market value of the consideration received by the Company (or the stockholders).

 

2.15                        “Incentive Payment” means the compensation awarded by the Committee to a Participant in connection with a Vesting Event in accordance with Section 5.2 below.

 

2.16                        “Incentive Pool Percentage” means the percentage of the Change of Control Incentive Pool allocated to each Employee (with the aggregate of the percentages not exceeding 100%).  The Incentive Pool Percentage for certain Participants shall be as set forth on Exhibit A hereto.  Any amount of the Change of Control Incentive Pool that remains unallocated at any time may be allocated by the Committee among those Employees it designates as Participants.  Further, in the event a Participant forfeits his or her Incentive Pool Percentage prior to a Vesting Event, the Committee may reallocate such forfeited Incentive Pool Percentage among either current Participants or new Employees that the Committee designates as Participants in the Plan. In the event there is more than one Change of Control Incentive Pool with respect to a Vesting Event, the Participant’s Incentive Pool Percentage shall be equal to the result of (i) the Participant’s Incentive Pool Percentage set forth on Exhibit A divided by (ii) the sum of all Incentive Pool Percentages granted at the same Base Price as the Participant’s Incentive Pool Percentage.

 

2.17                        “Participant” means those Employees set forth on Exhibit A and any other Employee who satisfies the eligibility requirements of Article 4 of the Plan and who is selected by the Committee to participate in the Plan.

 

2.18                        “Permanent Disability” means, a Participant meets one of the following requirements: (A) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (B) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.  The Company, at its own option and expense, may retain a physician to confirm the existence of such incapacity or disability, and the determination of such physician shall be binding upon the Company and the Participant.

 

2.19                        “Plan” means this Supreme Industries, Inc. Ownership Transaction Incentive Plan, as amended from time to time.

 

2.20                        “Subsidiary” means (i) any corporation in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock in one of the other corporations in the chain, (ii) any limited partnership, if the Company or any corporation described in item (i) above owns a majority of the general partnership interest and a majority of the limited partnership interests entitled to vote on the removal and replacement of the general partner, and (iii) any partnership or limited liability company, if the partners or members thereof are composed only of the Company, any corporation listed in item (i) above or any limited partnership listed in item (ii) above.  “Subsidiaries” means more than one of any such corporations, limited partnerships, partnerships or limited liability companies.

 

2.21                        “Termination of Service” means a Participant ceases to serve as an Employee of the Company and its Subsidiaries, for any reason, provided that such cessation constitutes a “separation from service” within the meaning of Section 409A of the Code.

 

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2.22                        “Vesting Event” means a Change of Control.

 

ARTICLE 3

ADMINISTRATION OF THE PLAN

 

3.1                               Committee’s Establishment and Organization.  Subject to the terms of this Article 3, the Plan shall be administered by the Compensation Committee of the Board (the “Committee”).  Notwithstanding the foregoing, if at any time there are no longer any Class B shares of common stock outstanding (or the Class B shares of common stock no longer have the authority to elect 2/3rds of the directors on the Board), the Board shall make such provisions as they, in their discretion, deem appropriate to cause one or more persons to exercise the powers of the Committee hereunder, prior to any Change of Control or other event the result of which will be the cessation of control (by virtue of their not constituting a majority of directors) of the Board by the individuals who (x) at the date of this Plan were directors or (y) become directors after the date of this Plan and whose election or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then in office who were directors at the date of this Plan or whose election or nomination for election was previously so approved.

 

3.2                               Committee’s Powers.  The Committee shall have the power, in its discretion, to take such actions as may be necessary to carry out the provisions and purposes of the Plan and shall have the authority to control and manage the operation and administration of the Plan.  In order to effectuate the purposes of the Plan, the Committee shall have the discretionary power and authority to construe and interpret the Plan, to supply any omissions therein, to reconcile and correct any errors or inconsistencies, to decide any questions in the administration and application of the Plan, and to make equitable adjustments for any mistakes or errors made in the administration of the Plan.  All such actions or determinations made by the Committee, and the application of rules and regulations to a particular case or issue by the Committee, in good faith, shall be final, binding and conclusive on all persons ever interested hereunder.

 

In construing the Plan and in exercising its power under provisions requiring the Committee’s approval, the Committee shall attempt to ascertain the purpose of the provisions in question, and when the purpose is known or reasonably ascertainable, the purpose shall be given effect to the extent feasible.  Likewise, the Committee is authorized to determine all questions with respect to the individual rights of all Participants under this Plan (which need not be identical), including, but not limited to, all issues with respect to eligibility.  The Committee shall have all powers necessary or appropriate to accomplish its duties under this Plan including, but not limited to, the power and duty to:

 

(i)                                     designate the employees of the Company and its Subsidiaries who shall participate in the Plan;

 

(ii)                                  maintain complete and accurate records of all plan transactions and other data in the manner necessary for proper administration of the Plan;

 

(iii)                               adopt rules of procedure and regulations necessary for the proper and efficient administration of the Plan, provided the rules and regulations are not inconsistent with the terms of the Plan as set out herein.  The Committee shall exercise its discretion hereunder in a nondiscriminatory manner;

 

(iv)                              enforce the terms of the Plan and the rules and regulations it adopts;

 

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(v)                                 review claims and render decisions on claims for benefits under the Plan;

 

(vi)                              furnish the Company or the Participants, upon request, with information that the Company or the Participants may require for tax or other purposes;

 

(vii)                           employ agents, attorneys, accountants or other persons (who also may be employed by or represent the Company) for such purposes as the Committee considers necessary or desirable in connection with its duties hereunder; and

 

(viii)                        perform any and all other acts necessary or appropriate for the proper management and administration of the Plan.

 

ARTICLE 4

ELIGIBILITY

 

In addition to those Employees set forth on Exhibit A hereto, the Committee may, but shall not be obligated to, select the particular Employees who may be Participants and their respective Incentive Pool Percentages.  In the event a Participant does not vest in the Participant’s Incentive Payment in accordance with the provisions of Article 6, the Committee may, but shall not be obligated to, designate one or more additional Employees as Participants or designate any forfeited Incentive Pool Percentages to the Participants.

 

Participants may also participate in other incentive or benefit plans of the Company or any Subsidiary, subject to the terms and conditions of such plans.  The compensation payable pursuant to this Plan is in addition to, and not in lieu of, any other compensation, including severance payments, that an Employee may be entitled to pursuant to his or her employment agreement with the Company, or pursuant to any other plan, program or compensation arrangement of the Company.

 

ARTICLE 5

DETERMINATION OF CHANGE OF CONTROL INCENTIVE POOL

AND INCENTIVE PAYOUTS

 

5.1                               Determination of Change of Control Incentive Pool.  On or as soon as administratively practicable after a Change of Control, the Committee shall determine the Change of Control Value to be received in connection with the Change of Control and shall determine the amount of the Change of Control Incentive Pool available with respect to such Change of Control.

 

5.2                               Determination of Incentive Payments.  Subject to Section 5.10, each Participant shall be eligible for an Incentive Payment in an amount equal to the Participant’s Incentive Pool Percentage multiplied by the Change of Control Incentive Pool approved by the Committee in connection with a Vesting Event.

 

5.3                               Priority of Incentive Payments.  Incentive Payments to the Participants under the Plan shall be payable as employee compensation, prior in right to any payment to the Company’s stockholders.

 

5.4                               Form and Time of Payment Upon a Change of Control.  Subject to Section 5.10, Incentive Payments to the Participants under the Plan shall be payable upon a Change of Control, in the same form (e.g., cash, securities or other property), on the same schedule, and subject to the same terms and conditions, as that of the consideration paid to the Company or, in the case of a transaction described in Section 2.4(i) above, to the Company’s stockholders in connection with the Change of Control; provided that, (i) at the Committee’s election, the Company may pay any amount payable in securities or 

 

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other property, in cash in lieu thereof, the amount of which shall be equal to the Fair Market Value of such securities or other property (as determined by the Committee); and (ii) a Participant’s Incentive Payment shall be paid no later than the date that is five (5) years from the closing of the Change of Control, as required by Treas. Reg. section 1.409A-3(i)(5)(iv)(A).  Subject to Section 5.10, in the event a Change of Control occurs and following the Change of Control, the Participant incurs a Termination of Service due to his or her death or Permanent Disability prior to the date that all amounts are paid pursuant to this Section 5.4, then such Participant (or his or her legal representative or estate, as applicable) shall be eligible to receive 100% of the unpaid portion of his or her Incentive Payment as if he or she had remained actively employed through the applicable payment date (paid at the same time payments are made to other active Participants in the Plan).

 

5.5                               Termination of Service without Cause.  Subject to Section 5.10, if a Participant incurs a Termination of Service without Cause prior to a Change of Control, and within nine (9) months of such Termination of Service a Change of Control occurs, such Participant shall be eligible to receive 100% of the unpaid portion of his or her Incentive Payment as if he or she had remained actively employed through the applicable payment date (paid at the same time payments are made to other active Participants in the Plan pursuant to Section 5.4).

 

5.6                               Termination of Service due to Death or Permanent Disability.  Subject to Section 5.10, if a Participant incurs a Termination of Service due to his or her death or Permanent Disability:

 

(i)                                     Prior to June 30, 2020 (and prior to the occurrence of a Change of Control), and at the time of such Termination of Service a definitive, legally binding agreement has been entered into by the Company with respect to a Change of Control, and within nine (9) months of such Termination of Service the Change of Control occurs, then such Participant (or his or her legal representative or estate, as applicable) shall be eligible to receive 100% of the unpaid portion of his or her Incentive Payment as if he or she had remained actively employed through Change of Control; or

 

(ii)                                  Prior to June 30, 2020 and either no definitive, legally binding agreement was in place with respect to a Change of Control at the time of his or her Termination of Service or a such an agreement was in place, but the Change of Control occurs more than nine (9) months following such Termination of Service, then no amounts shall be payable to such Participant (or his or her legal representative or estate, as applicable)  pursuant to the Plan, and he or she shall forfeit 100% of the unpaid portion of his or her Incentive Payment.

 

5.7                               Termination of Service for Cause or due to Resignation by the Participant.  Subject to Section 5.10, if, at any time, a Participant incurs a Termination of Service for Cause or due to resignation by the Participant for any reason, such Participant shall forfeit his or her right to receive an Incentive Payment pursuant to this Plan.

 

5.8                               Allocation of Amounts to the Change of Control Incentive Pool.  No amounts will be allocated to the Change of Control Incentive Pool or the Plan until the Committee has determined, in its sole discretion, that a Vesting Event has occurred and the Committee has determined that amount of the Change of Control Value.

 

5.9                               Committee Discretion.  The Committee shall have the sole authority for valuing the proceeds to be received in a Change of Control transaction for purposes of determining the Change of Control Value, the Change of Control Incentive Pool and any Incentive Payments.  The Committee shall utilize such methods as they in their discretion deem appropriate in determining the Change of Control Value.  The Committee shall have the sole discretion at any time prior to the Vesting Date to increase, but 

 

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not decrease, the amount of any Incentive Pool Percentage of any Participant prior to a Vesting Event; provided, however, in the event any Participant fails to vest in accordance with the provisions of Section 6.2, such Participant’s Incentive Pool Percentage shall automatically be reduced to zero.

 

5.10                        Section 280G.

 

(i)                                     In the event it is determined that any payment, distribution, or benefit of any type by the Company to or for the benefit of a Participant, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with a Change of Control (the “Change of Control Payments”), constitute “parachute payments” within the meaning of Code Section 280G(b)(2), the Company will provide such Participant with a computation of (i) the maximum amount of the Change of Control Payments that could be made, without the imposition of the excise tax imposed by Code Section 4999 (said maximum amount being referred to as the “Capped Amount”); (ii) the value of the Change of Control Payments that could be made pursuant to the terms of this Agreement (all said payments, distributions and benefits being referred to as the “Uncapped Amount”); (iii) the dollar amount of the excise tax (if any) including any interest or penalties with respect to such excise tax which such Participant would become obligated to pay pursuant to Code Section 4999 as a result of receipt of the Uncapped Payments (the “Excise Tax Amount”); and (iv) the net value of the Uncapped Amount after reduction by the Excise Tax Amount and the estimated income taxes payable by such Participant on the difference between the Uncapped Amount and the Capped Amount, assuming that such Participant is paying the highest marginal tax rate for state, local and federal income taxes (the “Net Uncapped Amount”).  If the Capped Amount is greater than the Net Uncapped Amount, the Participant shall be entitled to receive or commence to receive payments equal to the Capped Amount; or if the Net Uncapped Amount is greater than the Capped Amount, the Participant shall be entitled to receive or commence to receive payments equal to the Uncapped Amount.  If the Participant receives the Uncapped Amount, then the Participant shall be solely responsible for the payment of all income and excise taxes due from the Participant and attributable to such Uncapped Amount, including, without limitation, the excise tax including any interest or penalties with respect to such excise tax which the Participant may become obligated to pay pursuant to Code Section 4999, with no right of additional payment from the Company as reimbursement for any taxes, interest or penalties.

 

(ii)                                  All determinations required to be made under this Section 5.10 shall be made in writing by the independent accounting firm agreed to by the Company and the Participant on the date of the Change of Control (the “Accounting Firm”), whose determination shall be conclusive and binding upon the Participant and the Company for all purposes.  For purposes of making the calculations required by Section 5.10(i), the Accounting Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Code Sections 280G and 4999.  The Company and the Participant shall furnish to the Accounting Firm such information and documents as it reasonably may request in order to make determinations under this Section 5.10.  If the Accounting Firm determines that no Excise Tax Amount is payable by the Participant, it shall furnish the Participant with an opinion that he has substantial authority not to report any Code Section 4999 excise tax on his federal income tax return. The Company shall bear all costs the Accounting Firm may reasonably incur in connection with any calculations contemplated by this Section 5.10.

 

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ARTICLE 6

VESTING

 

6.1                               No Right to Benefits.  No Participant shall have a right to any benefit under this Plan prior to the date that a determination is made by the Committee that a Vesting Event has occurred.

 

6.2                               Vesting.  Any Participant who is a current Employee upon the effective date of a Change of Control shall become one hundred percent (100%) vested in his or her Incentive Payment.

 

6.3                               Forfeiture Upon Plan Termination without Vesting Event.  In addition to the events of forfeiture set forth in Sections 5.6 and 5.7 above, each Participant shall forfeit his or her Incentive Pool Percentage on June 30, 2020 if by such date a Change of Control has not occurred, provided, however, that if on June 30, 2020 a definitive, legally binding agreement has been entered into by the Company with respect to a Change of Control, then, except as otherwise provided by Sections 5.6 and 5.7, such Incentive Pool Percentages shall not be forfeited until the end of the Extended Term (as defined in Section 7.1 below).

 

ARTICLE 7

AMENDMENT AND TERMINATION

 

7.1                               Term.  The Effective Date of the Plan shall be as of May 2, 2016 and, unless sooner terminated by action of the Board, the Plan will terminate on June 30, 2020 (“Termination Date”); provided, however, (i) the term may be extended by the adoption of a resolution by the Board extending the term prior to the Termination Date; and (ii) if a Vesting Event has occurred prior to the Termination Date, the Plan’s provisions regarding payment of Incentive Payments and forfeiture of Incentive Payments shall remain in effect until all Incentive Payments relating to such Vesting Event have either been paid or forfeited.  If the Plan is not extended by the Board, then on the Termination Date, all rights of Participants under this Plan shall terminate (other than the right to payments pursuant to the Plan with respect to a Vesting Event that occurred prior to the Termination Date), provided, however, that in the event a definitive, legally binding agreement has been entered into by the Company with respect to a Change of Control prior to the Termination Date, then the term of this Plan automatically shall be extended solely with respect to such Change of Control until the closing date of the Change of Control or the termination or revocation of such agreement without the consummation of the Change of Control (as determined by the Board in its sole discretion) (the “Extended Term”), and, except as otherwise provided by Section 5.6 or 5.7, any Participants holding Incentive Pool Percentages as of the Termination Date shall be entitled to payment pursuant to this Plan upon the closing date of such Change of Control to the extent it closes during the Extended Term.

 

7.2                               Amendment and Termination.  The Company may at any time and from time to time amend, in whole or in part, any or all of the provisions of this Plan or terminate the Plan by the adoption of a resolution by the Board, provided, however, that no amendment or termination of this Plan shall, without the consent of the affected Participant, decrease the amount of any Incentive Pool Percentage of the Participant prior to the occurrence of a Vesting Event.

 

ARTICLE 8

MISCELLANEOUS PROVISIONS

 

8.1                               Non-Assignability.  A Participant may not alienate, assign, pledge, encumber, transfer, sell or otherwise dispose of any rights or benefits awarded hereunder prior to the actual receipt thereof; and any attempt to alienate, assign, pledge, sell, transfer or assign prior to such receipt, or any levy, attachment, execution or similar process upon any such rights or benefits shall be null and void.

 

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8.2                               No Right to Continue In Employment.  Nothing in the Plan shall confer upon any employee the right to continue in the employ of the Company or any Subsidiary, or interferes with or restricts in any way the right of the Company or any Subsidiary to discharge any employee at any time (subject to any contract rights of such employee), including, without limitation, before or after the date such Participant is entitled to an Incentive Payment under the Plan.

 

8.3                               No Rights as an Owner.  No Participant shall have any rights as an owner of the Company as a result of such Participant’s receipt of an Incentive Payment, as a result of the existence of this Plan or as a result of any action taken (or omitted to be taken ) by the Committee.

 

8.4                               Indemnification of Committee; No Duties; Waiver of Claims.  No member of the Committee, nor any director, officer, or employee of the Company or any Subsidiary acting on behalf of the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all of the members of the Committee and each and any director, officer, or employee of the Company or any Subsidiary acting on their behalf shall be indemnified and protected by the Company in respect of any such action, determination, or interpretation to the fullest extent provided by law.  Except to the extent required by any unwaiveable requirement under applicable law, no member of the Committee shall have any duties or liabilities, including without limitation any fiduciary duties, to any Participant (or any person claiming by and through any Participant) as a result of this Plan, any Incentive Payment or any Claim arising hereunder and, to the fullest extent permitted under applicable law, each Participant (as consideration for receiving and accepting an Incentive Payment) irrevocably waives and releases any right or opportunity such Participant might have to assert (or participate or cooperate in) any Claim against any member of the Committee arising out of this Plan.  This Plan does not create, nor shall it be construed as creating, any principal and agent, trust, or other fiduciary duty or special relationship running from the Company to the Participant.

 

8.5                               No Trust or Plan Funding.  The Company will be solely responsible for the payment of all Incentive Payments hereunder.  The Plan shall at all times be entirely unfunded and no provision shall at any time be made with respect to segregating assets of the Company for payment of any Incentive Payments hereunder.  The Plan shall not create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and any Participant.  No Participant, beneficiary, or other person shall have any interest in any particular assets of the Company by reason of the right to receive any payment under the Plan or with respect to any Incentive Payments.  To the extent that any Participant acquires a right to receive any payment from the Company pursuant to the Plan, such right shall be no greater than the right of any general unsecured creditor of the Company.

 

8.6                               Governing Law.  This Plan shall be construed according to the laws of the State of Delaware, without giving effect to principles of conflict of laws.  The Participant’s sole remedy for any claim, liability or obligation of any nature, arising out of or relating to this Plan or an alleged breach of this Plan (collectively, “Claims”) shall be against the Company, and no Participant shall have any claim or right of any nature against any Subsidiary or any owner or existing or former director, officer or Employee of the Company or any Subsidiary.  The individuals and entities described above in this Section 8.6 (other than the Company) shall be third-party beneficiaries of this Plan for purposes of enforcing the terms of this Section 8.6.

 

8.7                               Binding Effect.  This Plan shall be binding upon and inure to the benefit of the Company, its successors and assigns, and the Participants, and their heirs, successors, assigns, and personal representatives.

 

10

 

8.8                               Notices.  Any notice required or permitted under this Plan shall be given in writing and shall be deemed to have been effectively made or given if personally delivered, or if sent via U.S. mail or recognized overnight delivery service or sent via confirmed e-mail or facsimile to the Company at its headquarters, or if to the Participant, to the Participant’s last known address on file with the Company.  Any effective notice hereunder shall be deemed given on the date personally delivered, three business days after mailed via U.S. mail or one business day after it is sent via overnight delivery service or via confirmed e-mail or facsimile, as the case may be.

 

8.9                               Construction of Plan.  The captions used in this Plan are for convenience only and shall not be construed in interpreting the Plan.  Whenever the context so requires, the masculine shall include the feminine and neuter, and the singular shall also include the plural, and conversely.

 

8.10                        Integrated Plan.  This Plan constitutes the final and complete expression of agreement among the parties hereto with respect to the subject matter hereof, and fully supersedes any and all prior agreements, understanding or representations between the Company and any Employee pertaining to or concerning the subject matter of this Plan.  No oral statements or prior written material not specifically incorporated in this Plan shall be of any force and effect, and no changes in or additions to this Plan shall be recognized, unless incorporated in this Plan by written amendment executed in accordance with the provisions of Article 7, such amendment to become effective on the date stipulated in it.

 

8.11                        FMLA Leave.  This Plan shall be administered to comply with the Family and Medical Leave Act of 1993, as amended (“FMLA”).  Any employee of the Company or a Subsidiary who takes leave that satisfies the requirements of the FMLA shall, for purposes of Article 6 only, be considered actively working with the Company or a Subsidiary during such FMLA leave; provided, however, that nothing herein shall be construed to credit such employee with working full time if such employee was not otherwise actually working full time prior to such FMLA leave.

 

8.12                        Accounting of Compensation.  Unless otherwise specifically provided in such benefit plan, any Performance Bonus paid to a Participant hereunder shall not be treated as compensation paid to such Participant for the purposes of any other benefit plan.

 

ARTICLE 9

EFFECT OF THE PLAN

 

Neither the adoption of this Plan nor any action of the Board or the Committee shall be deemed to give any Participant any right to be granted an Incentive Payment or any other rights.  In addition, nothing contained in this Plan and no action taken pursuant to its provisions shall be construed to (a) give any Participant any right to any compensation, except as expressly provided herein; (b) be evidence of any agreement, contract or understanding, express or implied, that the Company or any Subsidiary will employ a Participant in any particular position; (c) give any Participant any right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations hereunder; or (d) create a trust of any kind or a fiduciary relationship between the Company and a Participant or any other person.

 

[Signature Page Follows]

 

11

 

IN WITNESS WHEREOF, the Company has caused this instrument to be executed as of May 6th, 2016, by its Chief Executive Officer pursuant to prior action taken by the Board.

 

	
 
    	
SUPREME INDUSTRIES, INC.,
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark D. Weber
    
	
 
    	
 
    	
Name:
    	
Mark D. Weber
    
	
 
    	
 
    	
Title:
    	
President and Chief   Executive Officer
    

 

Signature Page to OTIP

 

12

 

EXHIBIT A

 

1.                                      Mark Weber (President and CEO) will receive 23.75% of the Change of Control Incentive Pool.  The Base Price is $2.50.

 

2.                                      Matt Long (CFO) will receive 17% of the Change of Control Incentive Pool.  The Base Price is $2.50.

 

3.                                      Mike Oium (VP Operations) will receive 11.75% of the Change of Control Incentive Pool. The Base Price is $2.50.

 

4.                                      John Dorbin, (VP and General Counsel) will receive 7.5% of the Change of Control Incentive Pool.  The Base Price is $2.50.

 

5.                                      Brad Karch (VP Human Resources) will receive 5% of the Change of Control Incentive Pool.  The Base Price is $2.50.

 

6.                                      Kerri Walker (VP Marketing) will receive 5% of the Change of Control Incentive Pool.  The Base Price is $6.50.

 

7.                                      William “Mickey” McKee (VP Sales) will receive 10% of the Change of Control Incentive Pool.  The Base Price for the first 5% is $6.50, and the Base Price for the second 5% is $8.00.

 

8.                                      Tim Marling (VP Engineering) will be a 10% of the Change of Control Incentive Pool. The Base Price is $8.00.

 

As of the Effective Date, the unallocated portion of the Change of Control Incentive Pool is 10%.

 

Exhibit A to OTIP

 

13Exhibit 10.1

 

MARKETO, INC.

 

MANAGEMENT RETENTION AGREEMENT

 

This Management Retention Agreement (the “Agreement”) is made and entered into by and between Brian Kinion (the “Executive”) and Marketo, Inc. (the “Company”), effective as of the Effective Date.  Initially capitalized terms herein shall have the meanings set forth in Section 5 of this Agreement or in such other section as they are defined.

 

1.             Term of Agreement.  This Agreement will commence on the Effective Date and will remain in effect for one year following the Effective Date; provided, however that the term of this Agreement shall automatically be extended for one year thereafter and shall automatically be extended for one year on each anniversary of the Effective Date thereafter unless either party notifies the other in writing or by e-mail that the term shall not be extended, with such notice provided at least one month prior to the expiration of the term of this Agreement, including any extensions; provided, further, that if prior to the expiration of the term of this Agreement, the Company enters into a definitive agreement (a “Definitive Agreement”) with a third party (or third parties), the consummation of which would result in a Change in Control (as defined in this Agreement), then the term of this Agreement shall automatically be extended to twenty-four months following the resulting Change in Control, unless the Definitive Agreement terminates or is cancelled without resulting in a Change in Control, in which case such extension shall not be effective.  Moreover, this Agreement shall survive the lapse of the term of this Agreement and shall be binding on both parties with respect to any termination of Executive’s employment that triggers severance benefits under Section 3 hereof that occurs prior to the lapsing of the term of this Agreement.

 

2.             At-Will Employment.  The Company and the Executive acknowledge that the Executive’s employment is and shall continue to be at-will, as defined under applicable law.  If the Executive’s employment terminates for any reason, the Executive shall not be entitled to any payments, benefits, damages, awards or compensation other than as provided under this Agreement.

 

3.             Change in Control Severance Benefits.

 

(a)           Involuntary Termination Other than for Cause, Voluntary Termination for Good Reason During the Change in Control Period.  If, during the Change in Control Period, the Executive’s employment with the Company (i) is terminated involuntarily by the Company without Cause and other than pursuant to Executive’s death or Disability, or (ii) voluntarily by Executive for Good Reason, then subject to the Executive signing and not revoking a release of claims in favor of the Company substantially in the form attached as Exhibit A to this Agreement (a “Release”), the Company shall provide severance pay and benefits, subject to certain conditions, as follows:

 

(i)    Severance Payment.  The Executive shall be entitled to receive an immediate cash lump-sum severance payment equal to one-hundred percent of the Executive’s annual base salary (as in effect immediately prior to (A) the Change in Control, or (B) the Executive’s termination, whichever is greater) plus, an amount equal to the greater or (A) one-

 

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hundred percent of the Executive’s annual target bonus or (B) one-hundred percent of the most recent annual bonus paid by the Company to Executive.

 

(ii)   Equity Compensation Acceleration.  One hundred percent of the shares subject Executive’s then outstanding stock options, stock appreciation rights, restricted stock units and other Company equity compensation awards, including performance-based vesting full-value awards where the payout is either a fixed number of shares or zero shares depending on whether the performance metric is obtained, shall immediately accelerate vesting.  With respect to performance-based vesting full-value awards in which the performance period has not been completed prior to the Executive’s termination date and where the number of shares earned is variable based upon the extent to which performance milestones are reached (i.e., where the number of shares earned based upon achieving performance milestones can be more than one positive number), each such award shall immediately accelerate vesting as to one hundred percent of the target performance level. With respect to performance-based vesting full-value awards where the performance period has been completed prior to the Executive’s termination date and that remain subject to additional service-based vesting, such awards shall accelerate as to one hundred percent of the total shares earned by virtue of attaining the performance metrics during the performance period.  Any Company stock options and stock appreciation rights shall thereafter remain exercisable following the Executive’s employment termination for the period prescribed in the respective option and stock appreciation right agreements.

 

(iii)  Pay in Lieu of Continued Employee Benefits.  In lieu of continued employee benefits (other than as statutorily required, such as COBRA continuation coverage as required by law), Executive shall receive payments of three thousand dollars ($3,000) per month for twelve months from the date of employment termination in accordance with the payroll schedule applicable to active officers of the Company (subject to the timing provisions of Sections 3(g) and 8 of this Agreement).

 

(b)           Voluntary Resignation Other than for Good Reason, Termination for Cause; Termination due to Death or Disability within the Change in Control Period; Terminations Outside of Change in Control Period.  If the Executive’s employment with the Company terminates (i) voluntarily by the Executive other than for Good Reason during the Change in Control Period, (ii) for Cause by the Company during the Change in Control Period, (iii) pursuant to Executive’s death or Disability during the Change in Control period, or (iv) for any reason outside of the Change in Control Period, then the Executive shall not be entitled to receive severance or other benefits except for those (if any) as may then be established under the Company’s then existing severance and benefits plans and practices or pursuant to other written agreements with the Company.

 

(c)           Terminations Triggering Severance.  In the event severance benefits are triggered under Section 3 of this Agreement, Executive shall only receive severance payments and benefits under this Agreement and not pursuant to the Company’s then existing severance and benefits plans and practices or pursuant to other written agreements with the Company.

 

(d)           No Mitigation.  The Executive shall not be required to mitigate the amount of any severance payments or benefits provided for under this Agreement by seeking other employment

 

 

nor shall any amounts to be received by the Executive under this Agreement be reduced by any other compensation earned.

 

(e)           Tax Withholding.  The Company shall be entitled to withhold from any payments made to Executive under this Section 3 any amounts required to be withheld by applicable federal, state or local tax law.

 

(f)            Release of Claims.  Receipt of the severance payments and vesting acceleration specified in Section 3(a) shall be contingent on Executive’s execution of the Release, and the lapse of any statutory period for revocation, and such Release becoming effective in accordance with its terms within fifty-two (52) days following Executive’s termination date.  Any severance payment or vesting acceleration to which Executive otherwise would have been entitled during such fifty-two (52) day period shall be paid or made by the Company in full on the fifty-third (53d) day following Executive’s employment termination date or such later date as is required to avoid the imposition of additional taxes under Internal Revenue Section 409A (“Section 409A”).

 

4.             Code Section 280G Best Results.  If any payment or benefit Executive would receive pursuant to this Agreement or otherwise, including accelerated vesting of any equity compensation (“Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be either (x) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever amount, after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in Executive’s receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.  If a reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, reduction shall occur in the following order: (A) cash payments shall be reduced first and in reverse chronological order such that the cash payment owed on the latest date following the occurrence of the event triggering such excise tax will be the first cash payment to be reduced; and (B) accelerated vesting of stock awards shall be cancelled/reduced next and in the reverse order of the date of grant for such stock awards (i.e., the vesting of the most recently granted stock awards will be reduced first), with full-value awards reversed before any stock option or stock appreciation rights are reduced.

 

The Company shall appoint a nationally recognized accounting firm to make the determinations required hereunder and perform the foregoing calculations.  The Company shall bear all expenses with respect to the determinations by such accounting firm required to be made hereunder.

 

The accounting firm engaged to make the determinations hereunder shall provide its calculations, together with detailed supporting documentation, to the Company and Executive within fifteen (15) calendar days after the date on which right to a Payment is triggered (if requested at that time by the Company or Executive) or such other time as requested by the Company or Executive.

 

 

Any good faith determinations of the accounting firm made hereunder shall be final, binding and conclusive upon the Company and Executive.

 

5.             Definition of Terms.  The following terms referred to in this Agreement shall have the following meanings:

 

(a)           Beneficial Owner. “Beneficial Owner” has the meaning set forth in Rule 13d-3 under the Exchange Act.

 

(b)           Cause.  “Cause” means (i) an unauthorized use or disclosure of the Company’s confidential information or trade secrets, which use or disclosure causes material harm to the Company; (ii) a deliberate material failure to comply with any of the Company’s written policies or rules; (iii) conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof; (iv) gross misconduct; (v) following a Change in Control only, a continued failure to perform assigned duties after receiving written notification of such failure from the Board of Directors, provided that such duties are those customarily performed by a person holding the position that Executive holds immediately prior to the Change in Control of a corporation of similar size as the Company engaged in a similar line of business as the Company; or (vi) failure to cooperate in good faith with a governmental or internal investigation of the Company or its directors, officers or employees, if the Company has requested Executive’s cooperation

 

(c)           Change in Control.  “Change in Control” means the occurrence of any of the following events:

 

(i)    any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company other than securities acquired by virtue of the exercise of a conversion or similar privilege or right unless the security being so converted or pursuant to which such right was exercised was itself acquired directly from the Company) representing 50% or more of (A) the then outstanding shares of common stock of the Company or (B) the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors; or

 

(ii)   the following individuals cease for any reason to constitute a majority of the number of directors then serving on the Board (the “Incumbent Board”): individuals who, on the Effective Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including, without limitation, a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least two-thirds of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved or recommended; or

 

(iii)  a merger or consolidation of the Company or any direct or indirect subsidiary of the Company is consummated with any other corporation, other than a merger or consolidation pursuant to which (A) the voting securities of the Company outstanding immediately

 

 

prior to such merger or consolidation will continue to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) more than 50% of the outstanding shares of common stock and the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; (B) no Person will become the Beneficial Owner, directly or indirectly, of securities of the Company or such surviving entity or any parent thereof representing 50% or more of the outstanding shares of common stock or the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to such merger or consolidation); and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation (or any parent thereof) resulting from such merger or consolidation; or

 

(iv)  the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, (A) more than 50% of the outstanding shares of common stock and the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of which (or of any parent of such entity) is owned by stockholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale; (B) in which (or in any parent of such entity) no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 50% or more of the outstanding shares of common stock resulting from such sale or disposition or the combined voting power of the outstanding voting securities entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to such sale or disposition); and (C) in which (or in any parent of such entity) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors.

 

(d)           Change in Control Period.  “Change in Control Period” means the period commencing three months prior to a Change in Control and ending twelve months after the Change in Control.

 

(e)           Disability.  “Disability” means Executive (i) 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 twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering Company employees.

 

(f)            Effective Date.  “Effective Date” means the date upon which the Company’s Board of Directors or a committee thereof approves the Company entering into this Agreement, which is March 7, 2016.

 

 

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

 

(h)           Good Reason.  “Good Reason” means, without the Executive’s consent, (a) a material reduction in the Executive’s level of responsibility and/or scope of authority, (b) a material reduction in base salary (other than a reduction generally applicable to executive officers of the Company and in generally the same proportion as for the optionee or purchaser), or (c) relocation of the Executive’s principal workplace by more than 35 miles.  In addition, upon any such voluntary termination for Good Reason the Executive must provide written notice to the Company of the existence of the one or more of the above conditions within 60 days of its initial existence, the Company must be provided written or e-mailed notice with 30 days to remedy the condition and the resignation must be effective no later than 31 days following the provision of such written or e-mailed notice to the Company.

 

(i)            Person.  “Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its Affiliates, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its subsidiaries, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

6.             Assignment.  This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company.  Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes.  For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or other, directly or indirectly acquires all or substantially all of the assets or business of the Company.  None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will of the laws of descent and distribution.  Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

 

7.             Notices.  All notices, requests, demands and other communications called for under this Agreement shall be in writing and shall be deemed given (i) on the date of delivery if delivered personally, (ii) one (1) day after being sent by a well established commercial overnight service, or (iii) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successor at the following addresses, or at such other addresses as the parties may later designate in writing:

 

 

If to the Company:

 

Marketo, Inc.

901 Mariners Island Blvd.

San Mateo, CA 94404

Attn:  General Counsel

 

If to Executive:

At the last residential address known to the Company

 

8.             Section 409A.

 

(a)           Notwithstanding anything to the contrary in this Agreement, no Deferred Compensation Separation Benefits payable under this Agreement will be considered due or payable until and unless Executive has a “separation from service” within the meaning of Section 409A. Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s “separation from service” other than due to Executive’s death, then any severance benefits payable pursuant to this Agreement and any other severance payments or separation benefits, that in each case when considered together may be considered deferred compensation under Section 409A (together, the “Deferred Compensation Separation Benefits”) and are otherwise due to Executive on or within the six (6) month period following Executive’s “separation from service” will accrue during such six (6) month period and will instead become payable in a lump sum payment on the date six (6) months and one (1) day following the date of Executive’s “separation from service.”  All subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.  Each payment and benefit payable under this Agreement is intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

 

(b)           Notwithstanding anything to the contrary in this Agreement, if Executive dies following Executive’s “separation from service” but prior to the six (6) month anniversary of the date of Executive’s “separation from service,” then any Deferred Compensation Separation Benefits delayed in accordance with this Section will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death, but not later than ninety (90) days after the date of Executive’s death, and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit.

 

(c)           It is the intent of this Agreement to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided under this Agreement will be subject to the additional tax imposed under Section 409A, and any ambiguities in this Agreement will be interpreted to so comply.  The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition under Section 409A prior to actual payment to Executive.

 

 

9.             Miscellaneous Provisions.

 

(a)           Waiver.  No provision of this Agreement shall be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by the Executive and by an authorized officer of the Company (other than the Executive).  No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party shall be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

(b)           Headings.  All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

 

(c)           Entire Agreement.  This Agreement, the Proprietary Information and Inventions Agreement and Executive’s written equity compensation agreements with the Company constitute the entire agreement of the parties hereto and supersede in their entirety all prior representations, understandings, undertakings or agreements (whether oral or written and whether expressed or implied) of the parties with respect to the subject matter hereof, including, without limitation Exhibit A to the offer letter by and between Executive and the Company dated April 5, 2011; provided, however, that this Agreement, while in effect, supersedes in its entirety the Company’s Change in Control Acceleration Policy with respect to Executive, including as to any equity awards made prior to the Effective Date.

 

(d)           Choice of Law.  This Agreement will be governed by the laws of the State of California (with the exception of its conflict of laws provisions).

 

(e)           Severability.  The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision hereof, which shall remain in full force and effect.

 

(f)            Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have executed this Management Retention Agreement on the respective dates set forth below.

 

 

	
 
    	
Marketo, Inc.
    
	
 
    	
 
    
	
Dated:    March 21, 2016
    	
By:
    	
/s/ Phillip M. Fernandez
    
	
 
    	
Name: Phillip M.   Fernandez
    
	
 
    	
Title: President &   CEO
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Brian Kinion
    
	
Dated:    March 7, 2016
    	
Brian Kinion, an   individual
    

 

 

EXHIBIT A

 

MARKETO, INC.

 

RELEASE OF CLAIMS

 

This Release of Claims (“Agreement”) is made by and between Marketo, Inc. (the “Company”) and Anthony Nemelka (“Executive”).

 

WHEREAS, Executive has agreed to enter into a release of claims in favor of the Company upon certain events specified in the management retention agreement by and between Company and Executive (the “Management Retention Agreement”).

 

NOW THEREFORE, in consideration of the mutual promises made in this Agreement, the parties hereby agree as follows:

 

1.             Termination.  Executive’s employment from the Company terminated on                  (the “Termination Date”).

 

2.             Confidential Information.  Executive shall continue to maintain the confidentiality of all confidential and proprietary information of the Company and shall continue to comply with the terms and conditions of the Proprietary Information and Inventions Agreement.  Executive shall return all the Company property and confidential and proprietary information in Executive’s possession to the Company on the Effective Date of this Agreement.

 

3.             Payment of Salary.  Executive acknowledges and represents that the Company has paid all salary, wages, bonuses, accrued vacation, commissions and any and all other benefits due to Executive.

 

4.             Release of Claims.  Executive agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Executive by the Company.  Executive, on behalf of Executive, and Executive’s respective heirs, family members, executors and assigns, hereby fully and forever releases the Company and its past, present and future officers, agents, directors, employees, investors, shareholders, administrators, affiliates, divisions, subsidiaries, parents, predecessor and successor corporations, and assigns, from, and agrees not to sue or otherwise institute or cause to be instituted any legal or administrative proceedings concerning any claim, duty, obligation or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Executive may possess arising from any omissions, acts or facts that have occurred up until and including the Effective Date of this Agreement including, without limitation,

 

(a)           any and all claims relating to or arising from Executive’s employment relationship with the Company and the termination of that relationship;

 

 

(b)           any and all claims relating to, or arising from, Executive’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;

 

(c)           any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; breach of contract, both express and implied; breach of a covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; and conversion;

 

(d)           any and all claims for violation of any federal, state or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act of 1967, the Americans with Disabilities Act of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974, The Worker Adjustment and Retraining Notification Act, the California Fair Employment and Housing Act, and Labor Code section 201, et seq. and section 970, et seq. and all amendments to each such Act as well as the regulations issued under each such Act;

 

(e)           any and all claims for violation of the federal, or any state, constitution;

 

(f)            any and all claims arising out of any other laws and regulations relating to employment or employment discrimination; and

 

(g)           any and all claims for attorneys’ fees and costs.

 

Executive agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released.  This release does not extend to any severance obligations due Executive under the Management Retention Agreement.  Nothing in this Agreement waives Executive’s rights to indemnification or any payments under any fiduciary insurance policy, if any, provided by any act or agreement of the Company, state or federal law or policy of insurance.

 

5.             Acknowledgment of Waiver of Claims under ADEA.  Executive acknowledges that Executive is waiving and releasing any rights Executive may have under the Age Discrimination in Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and voluntary.  Executive and the Company agree that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement.  Executive acknowledges that the consideration given for this waiver and release Agreement is in addition to anything of value to which Executive was already entitled.  Executive further acknowledges that Executive has been advised by this writing that (a) Executive should consult with an attorney prior to executing this Agreement; (b) Executive has at least twenty-one (21) days within which to consider this Agreement; (c) Executive has seven (7) days following the execution of this Agreement by the parties to revoke the Agreement; (d) this Agreement shall not be effective until the revocation period

 

 

has expired; and (e) nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs for doing so, unless specifically authorized by federal law.  Any revocation should be in writing and delivered to the Vice-President of Human Resources at the Company by close of business on the seventh day from the date that Executive signs this Agreement.

 

6.             Civil Code Section 1542.  Executive represents that Executive is not aware of any claims against the Company other than the claims that are released by this Agreement.  Executive acknowledges that Executive has been advised by legal counsel and is familiar with the provisions of California Civil Code 1542, below, which provides as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

Executive, being aware of said code section, agrees to expressly waive any rights Executive may have under such code section, as well as under any statute or common law principles of similar effect.

 

7.             No Pending or Future Lawsuits.  Executive represents that Executive has no lawsuits, claims, or actions pending in Executive’s name, or on behalf of any other person or entity, against the Company or any other person or entity referred to in this Agreement.  Executive also represents that Executive does not intend to bring any claims on Executive’s own behalf or on behalf of any other person or entity against the Company or any other person or entity referred to herein.

 

8.             Application for Employment.  Executive understands and agrees that, as a condition of this Agreement, Executive shall not be entitled to any employment with the Company, its subsidiaries, or any successor, and Executive hereby waives any right, or alleged right, of employment or re-employment with the Company.

 

9.             No Cooperation.  Executive agrees that Executive will not counsel or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against the Company and/or any officer, director, employee, agent, representative, shareholder or attorney of the Company, unless under a subpoena or other court order to do so.

 

10.          No Admission of Liability.  Executive understands and acknowledges that this Agreement constitutes a compromise and settlement of disputed claims.  No action taken by the Company, either previously or in connection with this Agreement shall be deemed or construed to be (a) an admission of the truth or falsity of any claims heretofore made or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to the Executive or to any third party.

 

 

11.          Costs.  The parties shall each bear their own costs, expert fees, attorneys’ fees and other fees incurred in connection with this Agreement.

 

12.          Authority.  Executive represents and warrants that Executive has the capacity to act on Executive’s own behalf and on behalf of all who might claim through Executive to bind them to the terms and conditions of this Agreement.

 

13.          No Representations.  Executive represents that Executive has had the opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement.  Neither party has relied upon any representations or statements made by the other party which are not specifically set forth in this Agreement.

 

14.          Severability.  In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision.

 

15.          Entire Agreement.  This Agreement, along with the Proprietary Information and Inventions Agreement and Executive’s written equity compensation agreements with the Company, represents the entire agreement and understanding between the Company and Executive concerning Executive’s separation from the Company.

 

16.          No Oral Modification.  This Agreement may only be amended in writing signed by Executive and the Chairman of the Board of Directors of the Company.

 

17.          Governing Law.  This Agreement shall be governed by the internal substantive laws, but not the choice of law rules, of the State of California.

 

18.          Effective Date.  This Agreement is effective eight (8) days after it has been signed by both parties.

 

19.          Counterparts.  This Agreement may be executed in counterparts, and each counterpart shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

 

20.          Voluntary Execution of Agreement.  This Agreement is executed voluntarily and without any duress or undue influence on the part or behalf of the parties to this Agreement, with the full intent of releasing all claims.  The parties acknowledge that:

 

(a)           They have read this Agreement;

 

(b)           They have been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of their own choice or that they have voluntarily declined to seek such counsel;

 

(c)           They understand the terms and consequences of this Agreement and of the releases it contains;

 

 

(d)           They are fully aware of the legal and binding effect of this Agreement.

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the respective dates set forth below.

 

	
 
    	
Marketo, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:                      , 20
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
Dated:                      , 20
    	
 
    
	
 
    	
Brian Kinion

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