UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 26, 2011
Smith & Wesson Holding Corporation
(Exact name of registrant as specified in its charter)
| Nevada | 001-31552 | 87-0543688 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 2100 Roosevelt Avenue Springfield, Massachusetts |
01104 |
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (800) 331-0852
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers. |
On September 26, 2011, we appointed P. James
Debney as our President, Chief Executive Officer, and a director.
Michael F. Golden, who had been our President and Chief Executive
Officer, will continue to serve as a member of our Board of Directors and
was appointed as Co-Vice Chairman of the Board.
Mr. Debney, 44, has served as Vice President of our company since April 2010 and President of
our firearm division since November 2009. Mr. Debney was President of Presto Products Company, a
$500 million business unit of Alcoa Consumer Products, a manufacturer of plastic products, from
December 2006 until February 2009. Mr. Debney was Managing Director of Baco Consumer Products, a
business unit of Alcoa Consumer Products, a manufacturer of U.K.-branded and private label foil,
film, storage, food, and trash bag consumer products, from January 2006 until December 2006;
Manufacturing and Supply Chain Director from August 2003 until December 2005; and Manufacturing
Director from April 1998 until July 2003. Mr. Debney joined Baco Consumer Products in 1989 and
held various management positions in operations, production, conversion, and materials.
We entered into an employment agreement with Mr. Debney in connection with his appointment as
our President and Chief Executive Officer. Under the terms of the employment agreement, Mr. Debney
is entitled to an annual base salary of $450,000 (subject to annual review and increases by our
Board of Directors); is eligible to participate in our executive compensation programs, to receive
a discretionary annual bonus as determined by our Board of Directors or committee thereof, and to
receive annual stock-based awards as determined by our Board of Directors or committee thereof; and
is entitled to receive other standard benefits, including a car allowance, participation in any
group insurance, pension, retirement, vacation, expense reimbursement, and other plans, programs,
or benefits as may from time to time be provided to other executive employees of our company, and
certain insurance benefits (including the reimbursement of reasonable insurance premiums for
disability insurance, medical and hospitalization insurance, and a life insurance policy).
2
If we
unilaterally terminate Mr. Debney’s employment without cause, Mr. Debney
will receive (i) his base salary for a period of 18 months
after such termination; (ii) an
amount equal to the average of his cash bonus paid for each of the two fiscal years immediately
preceding his termination, which will be paid over the 18-month
period after such termination;
(iii) his car allowance and coverage under our medical plan to the extent provided for him at the
date of termination for a period equal to 18 months after such
termination; and (iv) for a period
of 36 months following the termination, a cash payment in the amount of $10,000 per 12-month period
for post-termination secretarial support.
If Mr. Debney’s employment is terminated by reason of his death or disability, if we
unilaterally terminate Mr. Debney’s employment without cause, or if Mr. Debney voluntarily
terminates his employment following a qualifying change in control event as described below, the
employment agreement provides that he will receive, for the fiscal year of the notice of
termination, any earned bonus, on a pro-rated basis, based on the performance goals actually
achieved for the fiscal year of the notice of termination, as determined by our Board of Directors
in its sole discretion, at the time such bonuses are paid to our other employees. If we
unilaterally terminate Mr. Debney’s employment without cause, or if Mr. Debney voluntarily
terminates his employment following a qualifying change in control event as described below, the
stock options granted pursuant to any employment agreement with us that are vested as of the date
of such termination will have a nine-month post-termination exercise period, but not beyond their
original term. If we unilaterally terminate Mr. Debney’s employment without cause or by reason of
Mr. Debney’s disability, or if Mr. Debney voluntarily terminates his employment with at least six
months advance notice to us or following a qualifying change in control event as described below,
we will continue to pay the life insurance premiums on any then existing life insurance policy
provided by our company, up to an annual premium of $20,000, until 36 months following the
termination of Mr. Debney’s employment.
The employment agreement provides that, in the event of a change in control of our company (as
defined in the employment agreement), Mr. Debney may, at his option and upon written notice to us,
terminate his employment, unless (i) the provisions of the employment agreement remain in full
force and effect and (ii) Mr. Debney suffers no reduction in his status, duties, authority, or
compensation following the change in control, provided that Mr. Debney will be considered to suffer
a reduction in his status, duties, or authority if, after the change in control, (a) he is not the
chief executive officer of the company that succeeds to our business; (b) such company’s stock is
not listed on a national stock exchange; or (c) such company terminates Mr. Debney’s employment or
reduces his status, duties, authority, or compensation within one year of the change in control.
If Mr. Debney terminates his employment due to a change in control following which the employment
agreement does not remain in full force and effect or his status, duties, authority, or
compensation have been reduced, he will receive (A) his base salary for a period of 24 months after
such termination; (B) an amount equal to the average of his cash bonus paid for each of the two
fiscal years immediately preceding his termination, which will be paid over the 18-month period
after such termination; (C) his car allowance for a period equal to 24 months after such
termination; and (D) at our option, either receive (x) coverage under our medical plan to the
extent provided for him at the date of termination for a period equal to 24 months after such
termination or (y) reimbursement for the COBRA premium for such coverage through the earlier of
such 24-month period or the COBRA eligibility period.
3
The employment agreement further prohibits Mr. Debney from
competing with our company for a period equal to the longer of 12 months following the termination
of his employment with our company, regardless of the reason therefor, or any period during which
Mr. Debney receives cash severance pursuant to the terms of the employment agreement. The
employment agreement also prohibits Mr. Debney from soliciting or hiring our personnel or employees
for a period of 24 months following the termination of his employment with our company.
In addition, Mr. Debney will receive options to purchase 450,000 shares of our common stock.
The options will have an exercise price equal to the closing price of our common stock on September
26, 2011, with one-third (1/3) of such options vesting on each of the first, second, and third
annual anniversary of the date of grant.
In connection with Mr. Golden’s retirement as our President and Chief Executive Officer, we
and Mr. Golden entered into a separation agreement and release. In exchange for Mr. Golden
executing a release of rights under his employment agreement and of
the employment claims he may have against us and agreeing not to directly or
indirectly solicit employees or prospective acquisition candidates for a two-year period and not
use our trade secrets or confidential information to solicit customers, manufacturers, or
manufacturer’s representatives, we agreed to pay Mr. Golden $987,835.
The foregoing is a summary only and does not purport to be a complete description of all of
the terms, provisions, covenants, and agreements contained in the employment agreement and the
separation agreement and release, and is subject to and qualified in its entirety by reference to
the full text of the employment agreement and the separation agreement and release, which are
attached hereto as Exhibits 10.91 and 10.92, respectively.
On
September 27, 2011, we issued a press release announcing
Mr. Debney’s appointment and Mr. Golden’s new
role on our Board of Directors. A copy of that press release is
attached hereto as Exhibit 99.1.
On
September 26, 2011, Jeffrey D. Buchanan replaced Ann B. Makkiya
as Secretary to streamline our corporate functions. Ms. Makkiya
will continue to serve in her role as Corporate Counsel.
Reference is made to the information set forth under Item 5.07 of this Current Report on Form
8-K regarding the approval of our 2011 Employee Stock Purchase Plan (the “2011 ESPP”) and the
approval of the material terms of the performance goals under our 2004 Incentive Stock Plan, as
amended (the “2004 Plan”). The disclosure contained in Item 5.07 and the information contained in
Exhibits 10.24(a) and 10.93 attached hereto are hereby incorporated by reference in their entirety
into this Item 5.02.
| Item 5.07. | Submission of Matters to a Vote of Security Holders. |
On September 26, 2011, we held an annual meeting of stockholders to consider and vote upon the
following proposals: (1) to elect directors to serve until our next annual meeting of stockholders
and until their successors are elected and qualified; (2) to approve our 2011 ESPP to replace our
expiring 2001 Employee Stock Purchase Plan (the “2001 ESPP”); (3) to provide a non-binding advisory
vote on the compensation of our named executive officers for fiscal 2011 (“say-on-pay”); (4) to
provide a non-binding advisory vote on the frequency of future non-binding advisory votes on the
compensation of our named executive officers (“say-on-frequency”); (5) to approve the material
terms of the performance goals under our 2004 Plan so as to take advantage of the benefits of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”); and (6) to ratify the
appointment of BDO USA, LLP, an independent registered public accounting firm, as the independent
registered public accountant of our company for the fiscal year ending April 30, 2012.
4
The following directors were elected at the annual meeting:
| Broker | ||||||||||||
| Director | Votes Cast For | Votes Withheld | Non-Votes | |||||||||
Barry M. Monheit |
27,996,308 | 1,938,953 | 22,691,451 | |||||||||
Robert L. Scott |
26,905,385 | 3,029,876 | 22,691,451 | |||||||||
Michael F. Golden |
27,878,202 | 2,057,059 | 22,691,451 | |||||||||
Robert H. Brust |
28,268,493 | 1,666,768 | 22,691,451 | |||||||||
John B. Furman |
27,946,485 | 1,988,776 | 22,691,451 | |||||||||
Mitchell A. Saltz |
27,680,827 | 2,254,434 | 22,691,451 | |||||||||
I. Marie Wadecki |
27,904,807 | 2,030,444 | 22,691,451 | |||||||||
Our stockholders approved our 2011 ESPP to replace our expiring 2001 ESPP. The results of the
vote to approve this proposal were as follows:
| Votes Cast | Votes Cast | Broker | ||||||||||||||
| For | Against | Abstentions | Non-Votes | |||||||||||||
Approval our 2011
ESPP to replace our
expiring 2001 ESPP |
27,799,820 | 1,668,069 | 467,372 | 22,691,451 | ||||||||||||
Our stockholders approved the compensation of our named executive officers on a non-binding,
advisory basis. The results of the vote to approve this proposal were as follows:
| Votes Cast | Votes Cast | Broker | ||||||||||||||
| For | Against | Abstentions | Non-Votes | |||||||||||||
Say-on-pay proposal |
26,427,082 | 2,058,779 | 1,449,400 | 22,691,451 | ||||||||||||
Our stockholders recommended on a non-binding, advisory basis that the advisory vote on the
compensation of our named executive officers be held every year. The results of the vote on this
proposal were as follows:
| Broker | ||||||||||||||||||||
| One Year | Two Years | Three Years | Abstentions | Non-Votes | ||||||||||||||||
Say-on-frequency
proposal |
26,033,186 | 185,092 | 2,954,037 | 762,946 | 22,691,451 | |||||||||||||||
Based upon these results, our Board of Directors determined to hold an advisory vote on the
compensation of our named executive officers every year, until the next required vote on the
frequency of future non-binding advisory votes on the compensation of our named executive officers.
5
Our stockholders approved of the material terms of the performance goals under our 2004 Plan
so as to take advantage of the benefits of Section 162(m) of the Code. The results of the vote to
approve this proposal were as follows:
| Votes Cast | Votes Cast | Broker | ||||||||||||||
| For | Against | Abstentions | Non-Votes | |||||||||||||
Approval of the
material terms of
the performance
goals under our
2004 Plan so as to
take advantage of
the benefits of
Section 162(m) of
the Code |
46,820,705 | 5,397,074 | 408,933 | — | ||||||||||||
Our stockholders ratified the appointment of BDO USA, LLP as our independent registered public
accountants for the fiscal year ending April 30, 2012. The results of the vote to approve this
proposal were as follows:
| Votes Cast | Votes Cast | Broker | ||||||||||||||
| For | Against | Abstentions | Non-Votes | |||||||||||||
Ratification of BDO
USA, LLP as
independent
registered public
accountants |
51,230,931 | 829,744 | 566,037 | — | ||||||||||||
Broker non-votes did not affect the outcome of any proposal voted on at the meeting.
Approval of our 2011 ESPP
Our 2011 ESPP replaces our expiring 2001 ESPP.
General Terms of Our 2011 ESPP; Shares Available for Issuance
Our 2011 ESPP is intended to provide a method whereby our employees will have an opportunity
to acquire a proprietary interest in our company through the purchase of shares of our common stock
through accumulated voluntary payroll deductions, thereby enhancing employee interest in our
continued success. We intend to have our 2011 ESPP qualify as an “employee stock purchase plan”
under Section 423 of the Code. Our 2011 ESPP permits eligible employees to authorize payroll
deductions that will be utilized to purchase shares of our common stock during a series of
consecutive 12-month offering periods, with two six-month purchase or exercise periods within the
offering periods. Employees may purchase shares of common stock pursuant to our 2011 ESPP at a
purchase price equal to the lower of (i) 85% of the greater of (A) the fair market value of a share
of our common stock on the first trading day of the offering period or (B) the fair market value of
a share of our common stock on the entry date on which an employee becomes a participant within the
offering period or (ii) 85% of the fair market value of our common stock on the last trading day of
the applicable purchase period. The fair market value of a share of our common stock on a given
date is determined by the Plan Committee (as defined below), provided that as long as there is a
public market for our common stock, the fair market value will either be (i) the closing price of
our common stock on such date (or, if our common stock is not traded on such date, the immediately
6
preceding
trading date) as reported by Nasdaq; (ii) if such price is not reported, the average of the bid and asked prices for our
common stock on such date (or, if not traded on such date, the immediately preceding trading date)
as reported by Nasdaq; (iii) in the event our common stock is listed on a stock exchange, the
closing price of our common stock on such exchange on such date (or, if not traded on such date,
the immediately preceding trading date), as reported in the Wall Street Journal; or (iv) if no such
quotations are available for a date within a reasonable time prior to the valuation date, the value
of our common stock as determined by the Plan Committee using any reasonable means. Any payroll
deductions remaining in the participant’s bookkeeping account after the end of an offering period
will be retained in such participant’s account for the next purchase period or offering period,
subject to earlier withdrawal by the participant in accordance with the terms of the 2011 ESPP. No
interest is paid on funds withheld, and those funds are used by our company for general operating
purposes.
Initially, there will be a total of 6,000,000 shares of our common stock reserved under our
2011 ESPP, which will include any shares available for issuance under our 2001 ESPP on the first
offering date under our 2011 ESPP, but not to exceed 6,000,000 shares. The shares included in our
2011 ESPP will no longer be available for issuance under our 2001 ESPP. If any change is made in
the stock subject to our 2011 ESPP or subject to any outstanding options under our 2011 ESPP
(through reorganization, restructuring, recapitalization, reclassification, stock split, reverse
stock split, stock dividend, stock repurchase, or similar transaction), equitable and proportionate
adjustments will be made by the Plan Committee in the number and kind of shares, and the per-share
option price thereof, which may be issued in the aggregate and to any participant upon exercise of
the options granted under our 2011 ESPP.
Eligibility and Administration
All employees of our company or of those subsidiaries designated by our Board of Directors who
are regularly scheduled to work at least 20 hours per week for more than five months per calendar
year are eligible to participate in any of the purchase periods of the 2011 ESPP. Eligible
employees may elect to participate in the 2011 ESPP on April 1 or October 1 of each year. An
employee will not be granted an option under our 2011 ESPP if (i) immediately after the grant, such
employee would own common stock, including outstanding options to purchase common stock under our
2011 ESPP, possessing 5% or more of the total combined voting power or value of our common stock,
or (ii) participation in our 2011 ESPP would permit such employee’s rights to purchase our common
stock under all of our employee stock purchase plans to exceed $25,000 in fair market value
(determined at the time the option is granted) of our common stock for each calendar year in which
such option is outstanding.
Our Board of Directors will appoint a committee to administer our 2011 ESPP, the “Plan
Committee.” The Plan Committee will have the authority to (a) interpret and construe any provision
of our 2011 ESPP, (b) adopt rules and regulations for administering our 2011 ESPP, and (c) make all
other determinations deemed necessary or advisable for administering our 2011 ESPP.
7
Offering Periods and Employee Participation
Our 2011 ESPP will be implemented in a series of successive offering periods, each with a
maximum duration of 12 months. If the fair market value per share of our common stock on any
purchase date is less than the fair market value per share on the start date of a 12-month offering
period, then that offering period will automatically terminate, and a new 12-month offering period
will begin on the next business day. Each offering period will begin on the April 1 or October 1,
as applicable, immediately following the end of the previous offering period.
Under our 2011 ESPP, eligible employees may elect to participate in our 2011 ESPP on April 1
or October 1 of each year, the “entry date.” Subject to certain limitations determined in
accordance with calculations set forth in our 2011 ESPP, a participating employee is granted the
right to purchase shares of our common stock on the last business day on or before each March 31
and September 30 during which the employee is a participant in our 2011 ESPP, the “purchase date”
or “exercise date.” Upon enrollment in our 2011 ESPP, the participant authorizes a payroll
deduction, on an after-tax basis, in an amount of not less than 1% and not more than 20% (or such
greater percentage as the Plan Committee may establish from time to time before the first day of an
offering period) of the participant’s compensation on each payroll date. Unless the participant
withdraws from our 2011 ESPP, the participant’s option for the purchase of shares will be exercised
automatically on each exercise date, and the maximum number of full shares subject to the option
will be purchased for the participant at the applicable exercise price with the accumulated plan
contributions then credited to the participant’s account under our 2011 ESPP. The option exercise
price per share will equal 85% of the lower of the fair market value on the first day of the
offering period or the fair market value on the exercise date, unless the participant’s entry date
is not the first day of the offering period, in which case the exercise price will equal 85% of the
lower of (i) the greater of the fair market value on the first day of the offering period or the
fair market value of our common stock on the entry date or (ii) the fair market value on the
exercise date.
At the time an employee becomes a participant in our 2011 ESPP, the employee may elect payroll
deductions of up to 20% (or such greater percentage as the Plan Committee may establish from time
to time before the first day of an offering period) of such employee’s compensation for each pay
period during an offering. For purposes of our 2011 ESPP, compensation consists of all regular
straight time gross earnings paid by us to employees that participate in our 2011 ESPP.
Compensation for purposes of our 2011 ESPP excludes commissions, payments for overtime, shift
premium, incentive compensation, incentive payments, bonuses, and other compensation. Participants
may discontinue, reduce, or increase future payroll deductions during an offering period, however,
participants may change the rate or amount of payroll deductions only once in any purchase period.
A participant’s payroll deductions will continue at the same rate or amount for subsequent offering
periods unless the participant elects otherwise before the beginning of the offering periods. To
the extent necessary to comply with Section 423 of the Code, the Plan Committee may reduce a
participant’s payroll deduction percentage to 0% at such time during any purchase period scheduled
to end during the current calendar year when the participant’s aggregate payroll deductions for the
calendar year exceeds $25,000 multiplied by the applicable percentage (i.e., 85%). All payroll
deductions made by each participant will be credited to a bookkeeping account set up for that
participant under our 2011 ESPP.
8
Grants and Exercises of Options
On a participant’s entry date, the participant will be granted an option to purchase, on each
subsequent purchase date during the offering period in which the entry date occurs, up to a number
of shares of our common stock determined by dividing (i) the amount of such participant’s payroll
deductions accumulated prior to the purchase date and retained in the participant’s account as of
the exercise date by (ii) the option exercise price. The option exercise price is an amount equal
to 85% of the lower of (a) the greater of the fair market value of our common stock at the
beginning of the offering period or the fair market value of our common stock on the participant’s
entry date, or (b) the fair market value of our common stock at the end of the exercise period.
The participant’s option will be deemed to have been exercised automatically on the last day of the
exercise period. The maximum number of shares that a participant may purchase during any exercise
period is 12,500 shares or a total of $25,000 in shares, based on the fair market value on the
first day of the exercise period. A participant will have no interest or voting right in shares of
our common stock covered by the participant’s option until such option has been exercised.
Reclassifications and Mergers
Our 2011 ESPP provides for adjustment of the number of shares for which options may be
granted, the number of shares subject to outstanding options, and the exercise price of outstanding
options in the event of any increase or decrease in the number of issued and outstanding shares as
a result of one or more reorganizations, restructurings, recapitalizations, reclassifications,
stock splits, reverse stock splits, or stock dividends. If our company dissolves or liquidates,
the offering period will terminate immediately prior to the consummation of that action, unless
otherwise provided by the Plan Committee. In the event of a merger or a sale of all or
substantially all of our company’s assets, each option under our 2011 ESPP will be assumed or an
equivalent option substituted by the successor corporation, unless the Plan Committee, in its sole
discretion, accelerates the date on which the options may be exercised.
Participation in Our 2011 ESPP
Participation in our 2011 ESPP is voluntary and depends on each eligible employee’s election
to participate and his or her determination as to the level of payroll deductions.
Withdrawal; Termination; Leave Of Absence
A participant in our 2011 ESPP may withdraw, at any time, from our 2011 ESPP by giving us
written notice. All payroll deductions credited to such participant’s account and not yet invested
in our common stock will be returned to the participant. If a participant withdraws from an
offering period, he or she may not participate again in that offering but may participate in any
succeeding offering under our 2011 ESPP or in any similar plan that we may adopt.
Upon termination of a participant’s employment for any reason, including retirement or death,
the payroll deductions credited to such participant’s account, and not yet invested in our common
stock, will be returned to the participant or the participant’s beneficiary and the unexercised
portion of any option granted to an employee under our 2011 ESPP will be automatically terminated.
9
A participant on an approved leave of absence will be deemed to be an employee during the
first 90 days of the leave of absence and may continue to be a participant in our 2011 ESPP during
that 90-day period. A participant who has been on leave of absence for more than 90 days will be
deemed to have been terminated as an employee and will not be entitled to participate in our 2011
ESPP commencing after the 90th day of such leave of absence. The payroll deductions credited to
such participant’s account, and not yet invested in our common stock, will be returned to the
participant and the unexercised portion of any option granted to an employee under our 2011 ESPP
will be automatically terminated.
Transferability
Neither the payroll deductions credited to a participant’s account nor any rights with respect
to an option granted under our 2011 ESPP may be assigned, transferred, pledged, or otherwise
disposed of by the participant, other than by will or the laws of descent and distribution. Any
such attempted assignment, transfer, pledge, or other disposition will be ineffective and we may
treat any such act as an election to withdraw from participation in our 2011 ESPP.
Duration and Modification
Our 2011 ESPP will remain in effect until the earliest of (a) the exercise date that
participants become entitled to purchase a number of shares greater than the number of reserved
shares available for purchase under our 2011 ESPP, (b) such date as is determined by our Board of
Directors in its discretion, or (c) March 31, 2022. Our 2011 ESPP’s “effective date” means the
date immediately following the end of the current offering period under our 2001 ESPP, which is
April 1, 2012.
Our Board of Directors or the Plan Committee may amend our 2011 ESPP at any time, provided
that such amendment may not adversely affect the rights of any participant with respect to
previously granted options and our 2011 ESPP may not be amended if such amendment would in any way
cause rights issued under our 2011 ESPP to fail to meet the requirements for employee stock
purchase plans as defined in Section 423 of the Code. To the extent necessary to comply with Rule
16b-3 under the Securities Exchange Act of 1934, as amended, Section 423 of the Code, or any other
applicable law or regulation, our Board of Directors will obtain stockholder approval for an
amendment.
The foregoing is a summary only and does not purport to be a complete description of all of
the terms contained in the 2011 ESPP, and is subject to and qualified in its entirety by reference
to the full text of the 2011 ESPP, which is attached hereto as Exhibit 10.93 and is incorporated
herein by reference.
Approval of the Material Terms of the Performance Goals our 2004 Plan
Eligibility; Administration
The persons eligible to receive awards under the 2004 Plan consist of officers, directors,
employees, and independent contractors. However, incentive stock options may be granted under the
2004 Plan only to our employees, including our officers who are employees. The 2004
Plan is administered by a committee of our Board of Directors. The committee determines the
persons to receive awards, the type and number of awards to be granted, the vesting and
exercisability of the award, and any other conditions to which the award is subject.
10
Performance Criteria
One or more of the following objective performance criteria based on our consolidated
financial statements, the financial statements of our affiliates, or for our business units (except
with respect to the total stockholder return and earnings per share criteria), have been or will be
used by the committee in establishing performance goals for awards designed to comply with the
performance-based compensation exception to Section 162(m) of the Code: (1) earnings per share; (2)
revenues or gross margins; (3) cash flow; (4) operating margin; (5) return on net assets,
investment, capital, or equity; (6) economic value added; (7) direct contribution; (8) net income;
pretax earnings; earnings before interest and taxes; earnings before interest, taxes, depreciation
and amortization; earnings after interest expense and before extraordinary or special items;
operating income; income before interest income or expense, unusual items and income taxes, local,
state, or federal and excluding budgeted and actual bonuses which might be paid under any of our
ongoing bonus plans; (9) working capital; (10) management of fixed costs or variable costs; (11)
identification or consummation of investment opportunities or completion of specified projects in
accordance with corporate business plans, including strategic mergers, acquisitions, or
divestitures; (12) total stockholder return; and (13) debt reduction. For employees subject to
Section 162(m) of the Code, the performance goals and the determination of their achievement will
be made in accordance with Section 162(m) of the Code. The committee is authorized to adjust
performance conditions and other terms of awards in response to unusual or nonrecurring events, or
in response to changes in applicable laws, regulations, or accounting principles.
The foregoing is a summary only and does not purport to be a complete description of all of
the terms contained in the 2004 Plan, and is subject to and qualified in its entirety by reference
to the full text of the 2004 Plan, which is attached hereto as Exhibit 10.24(a) and is incorporated
herein by reference.
| Item 9.01. | Financial Statements and Exhibits. |
| (a) | Financial Statements of Business Acquired. |
||
Not applicable. |
|||
| (b) | Pro Forma Financial Information. |
||
Not applicable. |
|||
| (c) | Shell Company Transactions. |
||
Not applicable. |
11
| (d) | Exhibits. |
| Exhibit | ||||
| Number | Exhibits | |||
| 10.24 | (a) | Amended and Restated 2004 Incentive Stock Plan. |
||
| 10.91 | Employment Agreement, dated as of September 26, 2011, between
P. James Debney and Smith & Wesson Holding Corporation. |
|||
| 10.92 | Separation Agreement and Release, dated September 26, 2011,
between Michael F. Golden and Smith & Wesson Holding Corporation. |
|||
| 10.93 | 2011 Employee Stock Purchase Plan. |
|||
| 99.1 | Press release from Smith & Wesson Holding Corporation, dated
September 27, 2011, entitled “Smith & Wesson Announces CEO Transition.” |
|||
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SMITH & WESSON HOLDING CORPORATION |
||||
| Date: September 27, 2011 | By: | /s/ Jeffrey D. Buchanan | ||
| Jeffrey D. Buchanan | ||||
| Executive Vice President, Chief Financial Officer, and Secretary |
||||
EXHIBIT INDEX
| 10.24 | (a) | Amended and Restated 2004 Incentive Stock Plan. |
||
| 10.91 | Employment Agreement, dated as of September 26, 2011, between P. James Debney and Smith &
Wesson Holding Corporation. |
|||
| 10.92 | Separation Agreement and Release, dated September 26, 2011, between Michael F. Golden and
Smith & Wesson Holding Corporation. |
|||
| 10.93 | 2011 Employee Stock Purchase Plan. |
|||
| 99.1 | Press release from Smith & Wesson Holding Corporation, dated September 27, 2011, entitled
“Smith & Wesson Announces CEO Transition.” |
Exhibit
10.24(a)
SMITH & WESSON HOLDING CORPORATION
2004 INCENTIVE STOCK PLAN
AS AMENDED AND RESTATED SEPTEMBER 18, 2006
AS AMENDED AND RESTATED SEPTEMBER 18, 2006
1. Purpose. The purpose of this 2004 Incentive Stock Plan (the “Plan”) is to assist Smith & Wesson
Holding Corporation, a Nevada corporation (the “Company”), and its Related Entities in attracting,
motivating, retaining, and rewarding high-quality executives and other Employees, officers,
Directors, and Consultants by enabling such persons to acquire or increase a proprietary interest
in the Company in order to strengthen the mutuality of interests between such persons and the
Company’s stockholders, and providing such persons with annual and long-term performance incentives
to expend their maximum efforts in the creation of stockholder value. The Plan is intended to
qualify certain compensation awarded under the Plan for tax deductibility under Section 162(m) of
the Code to the extent deemed appropriate by the applicable Committee (or any successor committee)
of the Board of Directors of the Company. The Company adopted the Saf-T-Hammer Corporation Stock
Option Plan on May 31, 2001 (the “Former Plan”). The name of Saf-T-Hammer Corporation was changed
to Smith & Wesson Corporation on February 15, 2002. Upon the adoption of the Plan by the
shareholders of the Company, no further awards shall be made pursuant to the Former Plan.
2. Administration.
(a) Authority of the Committee. The Plan shall be administered by the Committee; provided, however, that except as
otherwise expressly provided in this Plan or, during the period that the Company is a publicly held
corporation, in order to comply with Code Section 162(m) or Rule 16b-3 under the Exchange Act, the
Board may exercise any power or authority granted to the Committee under this Plan. The Committee
or the Board shall have full and final authority, in each case subject to and consistent with the
provisions of the Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters relating to, Awards,
prescribe Award agreements (which need not be identical for each Participant) and rules and
regulations for the administration of the Plan, construe and interpret the Plan and Award
agreements and correct defects, supply omissions or reconcile inconsistencies therein, and to make
all other decisions and determinations as the Committee or the Board may deem necessary or
advisable for the administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or the Board shall
not be required to follow past practices, act in a manner consistent with past practices, or treat
any Eligible Person in a manner consistent with the treatment of other Eligible Persons.
(b) Manner of Exercise of Committee Authority. The Committee, and not the Board, shall exercise sole and exclusive discretion on any
matter relating to a Participant then subject to Section 16 of the Exchange Act with respect to the
Company to the extent necessary in order that transactions by such Participant shall be exempt
under Rule 16b-3 under the Exchange Act. Any action of the Committee or the Board shall be final,
conclusive, and binding on all persons, including the Company, its Related Entities, Participants,
Beneficiaries, transferees under Section 9(b) hereof, or other persons claiming rights from or
through a Participant, and stockholders. The express grant of any specific power to the Committee
or the Board, and the taking of any action by the Committee or the Board, shall not be construed as
limiting any power or authority of the Committee or the Board. The Committee or the Board may
delegate to officers or managers of the Company or any Related Entity, or committees thereof, the
authority, subject to such terms as the Committee or the Board shall determine, (i) to perform
administrative functions, (ii) with respect to Participants not subject to Section 16 of the
Exchange Act, to perform such other functions as the Committee or the Board may determine, and
(iii) with respect to Participants subject to Section 16, to perform such other functions of the
Committee or the Board as the Committee or the Board may determine to the extent performance of
such functions will not result in the loss of an exemption under Rule 16b-3 otherwise available for
transactions by such persons, in each case to the extent permitted under applicable law. The Committee or the
Board may appoint agents to assist it in administering the Plan.
(c) Limitation of Liability. The Committee and the Board, and each member thereof, shall be entitled to, in good faith,
rely or act upon any report or other information furnished to him or her by any Executive Officer,
other officer or Employee, the Company’s independent auditors, Consultants or any other agents
assisting in the administration of the Plan. Members of the Committee and the Board, and any
officer or Employee
1
acting at the direction or on behalf of the Committee or the Board, shall not
be personally liable for any action or determination taken or made in good faith with respect to
the Plan, and shall, to the extent permitted by law, be fully indemnified and protected by the
Company with respect to any such action or determination.
3. Stock Subject to Plan
(a) Limitation on Overall Number of Shares Subject to Awards. Subject to adjustment as provided in Section 9(c) hereof, the total number of shares of
Stock reserved and available for delivery in connection with Awards under the Plan shall be the sum
of (i) the lesser of (y) 15% of the outstanding shares of Stock from time to time or (z) 10,000,000
shares of Stock, plus (ii) the number of shares of Stock with respect to which any Awards
previously granted under the Plan terminated without being exercised, expire, are forfeited or
canceled, do not vest, or are surrendered in payment of any Awards or any tax withholding with
regard thereto. Any shares of Stock delivered under the Plan may consist, in whole or in part, of
authorized and unissued shares or treasury shares. Subject to adjustment as provided in Section
9(c) hereof, the number of shares of Stock that may be issued pursuant to Incentive Stock Options
shall not exceed 10,000,000 shares.
(b) Application of Limitations. The limitation contained in Section 3(a) shall apply not only to Awards that are settleable
by the delivery of shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only Stock Appreciation Rights). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for
example, in the case of tandem or substitute awards), and make adjustments if the number of shares
of Stock actually delivered differs from the number of shares previously counted in connection with
an Award.
4. Eligibility; Per-Person Award Limitations. Awards may be granted under the Plan only to Eligible Persons. Directors, who are not
Employees, and independent contractors shall be eligible to receive awards other than Incentive
Stock Options.
In each fiscal year during any part of which the Plan is in effect, an Eligible Person may not
be granted stock options or stock appreciation rights under each of Sections 5(b) and 5(c) for more
than 300,000 shares of Stock, subject to adjustment as provided in Section 9(c). In each fiscal
year during any part of which the Plan is in effect, an Eligible Person may not be granted awards
subject to Section 6(e) for more than 300,000 shares of Stock, subject to adjustment as provided in
Section 9(c).
5. Specific Terms of Awards.
(a) General. Awards may be granted on the terms and conditions set forth in this Section 5. In
addition, the Committee or the Board may impose on any Award or the exercise thereof, at the date
of grant or thereafter (subject to Section 9(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee or the Board shall determine,
including terms requiring forfeiture of Awards in the event of termination of Continuous Service by
the Participant and terms permitting a Participant to make elections relating to his or her Award.
The Committee or the Board shall retain full power and discretion to accelerate, waive, or modify,
at any time, any term or condition of an Award that is not mandatory under the Plan.
(b) Options. The Committee and the Board each is authorized to grant Options to Participants on the
following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock purchasable under an Option shall be
determined by the Committee or the Board, provided that such exercise price shall
not, in the case of Incentive Stock Options, be less than 100% of the Fair Market
Value of the Stock on the date of grant of the Option and shall not, in any event,
be less than the par value of a share of Stock on the date of grant of such Option.
If an employee owns or is deemed to own (by reason of the attribution rules
applicable under Section 424(d) of the Code) more than 10% of the combined voting
power of all classes of stock of the Company or any Parent Corporation or Subsidiary
and an Incentive Stock Option is granted to such employee, the option price of such
Incentive Stock Option (to the extent required by the Code at the time of grant)
shall be no less
2
than 110% of the Fair Market Value of the Stock on the date such
Incentive Stock Option is granted.
(ii) Time and Method of Exercise. The Committee or the Board shall determine the time or times at which or the
circumstances under which an Option may be exercised in whole or in part (including
based on achievement of performance goals and/or future service requirements), the
time or times at which Options shall cease to be or become exercisable following
termination of Continuous Service or upon other conditions, the methods by which
such exercise price may be paid or deemed to be paid (including in the discretion of
the Committee or the Board a cashless exercise procedure), the form of such payment,
including, without limitation, cash, Stock, other Awards, or awards granted under
other plans of the Company or a Related Entity, or other property (including notes
or other contractual obligations of Participants to make payment on a deferred
basis, provided that such deferred payments are not in violation of the
Sarbanes-Oxley Act of 2002, or any rule or regulation adopted thereunder or any
other applicable law), and the methods by or forms in which Stock will be delivered
or deemed to be delivered to Participants.
(iii) Incentive Stock Options. The terms of any Incentive Stock Option granted under the Plan shall comply in
all respects with the provisions of Section 422 of the Code. Anything in the Plan
to the contrary notwithstanding, no term of the Plan relating to Incentive Stock
Options (including any Stock Appreciation Right in tandem therewith) shall be
interpreted, amended or altered, nor shall any discretion or authority granted under
the Plan be exercised, so as to disqualify either the Plan or any Incentive Stock
Option under Section 422 of the Code, unless the Participant has first requested the
change that will result in such disqualification. Thus, if and to the extent
required to comply with Section 422 of the Code, Options granted as Incentive Stock Options shall be subject to the
following special terms and conditions:
(A) the Option shall not be exercisable more than ten years after the date such
Incentive Stock Option is granted; provided, however, that if a Participant owns or
is deemed to own (by reason of the attribution rules of Section 424(d) of the Code)
more than 10% of the combined voting power of all classes of stock of the Company or
any Parent Corporation and the Incentive Stock Option is granted to such
Participant, the term of the Incentive Stock Option shall be (to the extent required
by the Code at the time of the grant) for no more than five years from the date of
grant; and
(B) The aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the shares of Stock with respect to which Incentive
Stock Options granted under the Plan and all other option plans of the Company
during any calendar year exercisable for the first time by the Participant during
any calendar year shall not (to the extent required by the Code at the time of the
grant) exceed $100,000.
(iv) Repurchase Rights. The Committee and the Board shall have the discretion to grant Options that are
exercisable for unvested shares of Stock. Should the Optionee’s Continuous Service
cease while holding such unvested shares, the Company shall have the right to
repurchase, at the exercise price paid per share, any or all of those unvested
shares. The terms upon which such repurchase right shall be exercisable (including
the period and procedure for exercise and the appropriate vesting schedule for the
purchased shares) shall be established by the Committee or the Board and set forth
in the document evidencing such repurchase right.
(c) Stock Appreciation Rights. The Committee and the Board each is authorized to grant Stock Appreciation Right’s to
Participants on the following terms and conditions:
(i) Right to Payment. A Stock Appreciation Right shall confer on the Participant to whom it is granted
a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value
of one share of stock on the date of exercise (or, in the case of a “Limited Stock
3
Appreciation Right” that may be exercised only in the event of a Change in Control,
the Fair Market Value determined by reference to the Change in Control Price, as
defined under Section 7(c) hereof), over (B) the grant price of the Stock
Appreciation Right as determined by the Committee or the Board. The grant price of
a Stock Appreciation Right shall not be less than the Fair Market Value of a share
of Stock on the date of grant except as provided under Section 6(a) hereof.
(ii) Other Terms. The Committee or the Board shall determine at the date of grant or thereafter,
the time or times at which and the circumstances under which a Stock Appreciation
Right may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the time or times at which
Stock Appreciation Rights shall cease to be or become exercisable following
termination of Continuous Service or upon other conditions, the method of exercise,
method of settlement, form of consideration payable in settlement, method by or
forms in which Stock will be delivered or deemed to be delivered to Participants,
whether or not a Stock Appreciation Right shall be in tandem or in combination with
any other Award, and any other terms and conditions of any Stock Appreciation Right.
Limited Stock Appreciation Rights that may only be exercised in connection with a
Change in Control or other event as specified by the Committee or the Board, may be granted on such terms, not inconsistent with this
Section 5(c), as the Committee or the Board may determine. Stock Appreciation
Rights and Limited Stock Appreciation Rights may be either freestanding or in tandem
with other Awards.
(d) Restricted Stock. The Committee and the Board each is authorized to grant Restricted Stock to Participants on
the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on transferability, risk
of forfeiture, and other restrictions, if any, as the Committee or the Board may
impose, or as otherwise provided in this Plan. The restrictions may lapse
separately or in combination at such times, under such circumstances (including
based on achievement of performance goals and/or future service requirements), in
such installments, or otherwise, as the Committee or the Board may determine at the
date of grant or thereafter. Except to the extent restricted under the terms of the
Plan and any Award agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder, including the right
to vote the Restricted Stock and the right to receive dividends thereon (subject to
any mandatory reinvestment or other requirement imposed by the Committee or the
Board). During the restricted period applicable to the Restricted Stock, subject to
Section 9(b) below, the Restricted Stock may not be sold, transferred, pledged,
hypothecated, margined, or otherwise encumbered by the Participant.
(ii) Forfeiture. Except as otherwise determined by the Committee or the Board at the time of the
Award, upon termination of a Participant’s Continuous Service during the applicable
restriction period, the Participant’s Restricted Stock that is at that time subject
to restrictions shall be forfeited and reacquired by the Company; provided that the
Committee or the Board may provide, by rule or regulation or in any Award agreement,
or may determine in any individual case, that restrictions or forfeiture conditions
relating to Restricted Stock shall be waived in whole or in part in the event of
terminations resulting from specified causes, and the Committee or the Board may in
other cases waive in whole or in part the forfeiture of Restricted Stock.
(iii) Certificates for Stock. Restricted Stock granted under the Plan may be evidenced in such manner as the
Committee or the Board shall determine. If certificates representing Restricted
Stock are registered in the name of the Participant, the Committee or the Board may
require that such certificates bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Restricted Stock, that the Company
retain physical
4
possession of the certificates, and that the Participant deliver a
stock power to the Company, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends and Splits. As a condition to the grant of an Award of Restricted Stock, the Committee or the
Board may require that any cash dividends paid on a share of Restricted Stock be
automatically reinvested in additional shares of Restricted Stock or applied to the
purchase of additional Awards under the Plan. Unless otherwise determined by the
Committee or the Board, Stock distributed in connection with a Stock split or Stock
dividend, and other property distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the Restricted Stock
with respect to which such Stock or other property has been distributed.
(e) Bonus Stock and Awards in Lieu of Obligations. The Committee and the Board each is authorized to grant Stock as a bonus, or to grant Stock
or other Awards in lieu of Company obligations to pay cash or deliver other property under the Plan
or under other plans or compensatory arrangements, provided that, in the case of Participants
subject to Section 16 of the Exchange Act, the amount of such grants remains within the discretion
of the Committee to the extent necessary to ensure that acquisitions of Stock or other Awards are
exempt from liability under Section 16(b) of the Exchange Act. Stock or Awards granted hereunder
shall be subject to such other terms as shall be determined by the Committee or the Board.
(f) Other Stock-Based Awards. The Committee and the Board each is authorized, subject to limitations under applicable
law, to grant to Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the
Committee or the Board to be consistent with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt securities, other rights convertible or exchangeable
into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of
the Company or any other factors designated by the Committee or the Board, and Awards valued by
reference to the book value of Stock or the value of securities of or the performance of specified
Related Entities or business units. The Committee or the Board shall determine the terms and
conditions of such Awards. Stock delivered pursuant to an Award in the nature of a purchase right
granted under this Section 5(f) shall be purchased for such consideration (including without
limitation loans from the Company or a Related Entity), paid for at such times, by such methods,
and in such forms, including, without limitation, cash, Stock, other Awards, or other property, as
the Committee or the Board shall determine. The Committee and the Board shall have the discretion
to grant such other Awards that are exercisable for unvested shares of Stock. Should the
Optionee’s Continuous Service cease while holding such unvested shares, the Company shall have the
right to repurchase, at the exercise price paid per share, any or all of those unvested shares.
The terms upon which such repurchase right shall be exercisable (including the period and procedure
for exercise and the appropriate vesting schedule for the purchased shares) shall be established by
the Committee or the Board and set forth in the document evidencing such repurchase right. Cash
awards, as an element of or supplement to any other Award under the Plan, may also be granted
pursuant to this Section 5(f).
6. Certain Provisions Applicable to Awards.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee or the Board, be
granted either alone or in addition to, in tandem with, or in substitution or exchange for, any
other Award or any award granted under another plan of the Company, any Related Entity, or any
business entity to be acquired by the Company or a Related Entity, or any other right of a
Participant to receive payment from the Company or any Related Entity. Such additional, tandem,
and substitute or exchange Awards may be granted at any time. If an Award is granted in
substitution or exchange for another Award or award, the Committee or the Board shall require the
surrender of such other Award or award in consideration for the grant of the new Award. In
addition, Awards may be granted in lieu of cash compensation, including in lieu of cash amounts
payable under other plans of the Company or any Related Entity, in which the value of Stock subject
to the Award is equivalent in value to the cash compensation (for example, Restricted Stock), or in
which the exercise price, grant price or purchase price of the Award in the nature of a right that
may be exercised is equal to the Fair Market Value of the underlying Stock minus the value of the
cash compensation surrendered (for example, Options granted with an exercise price “discounted” by
the amount of the cash compensation surrendered).
5
(b) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee or
the Board; provided that in no event shall the term of any Option or Stock Appreciation Right
exceed a period of ten years (or such shorter term as may be required in respect of an Incentive
Stock Option under Section 422 of the Code).
(c) Form and Timing of Payment Under Awards; Deferrals. Subject to the terms of the Plan and any applicable Award agreement, payments to be made to
the Company or a Related Entity upon the exercise of an Option or other Award or settlement of an
Award may be made in such forms as the Committee or the Board shall determine, including, without
limitation, cash, other Awards or other property, and may be made in a single payment or transfer,
in installments, or on a deferred basis. Any installment or deferral provided for in the preceding
sentence shall, however, be subject to the Company’s compliance with the provisions of the
Sarbanes-Oxley Act of 2002, the rules and regulations adopted by the Securities and Exchange
Commission thereunder, and all applicable rules of any national securities exchange on which the
Company’s securities are listed for trading. The settlement of any Award may be accelerated, and
cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee
or the Board or upon occurrence of one or more specified events (in addition to a Change in
Control). Installment or deferred payments may be required by the Committee or the Board (subject
to Section 9(e) of the Plan) or permitted at the election of the Participant on terms and
conditions established by the Committee or the Board. Payments may include, without limitation,
provisions for the payment or crediting of a reasonable interest rate on installment or deferred
payments or the grant or crediting of other amounts in respect of installment or deferred payments
denominated in Stock.
(d) Exemptions from Section 16(b) Liability. It is the intent of the Company that this Plan comply in all respects with applicable
provisions of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure that neither the
grant of any Awards to nor other transaction by a Participant who is subject to Section 16 of the
Exchange Act is subject to liability under Section 16(b) thereof (except for transactions
acknowledged in writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such provision will be construed or deemed
amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 or Rule
16a-1(c)(3) so that such Participant shall avoid liability under Section 16(b). In addition, the
purchase price of any Award conferring a right to purchase Stock shall be not less than any
specified percentage of the Fair Market Value of Stock at the date of grant of the Award then
required in order to comply with Rule 16b-3.
(e) Tax Qualified Performance Awards.
(i) Covered Employees. A Committee, composed in compliance with the requirements of Section
162(m) of the Code, in its discretion, may determine at the time an Award is granted to an Eligible
Person who is, or is likely to be, as of the end of the tax year in which the Company would claim a
tax deduction in connection with such Award, a Covered Employee that the provisions of this Section
6(e) shall be applicable to such Award.
(ii) Performance Criteria. If an Award is subject to this Section 6(e), then the lapsing of
restrictions thereon and the distribution of cash, Stock or other property pursuant thereto, as
applicable, shall be contingent upon achievement of one or more objective performance goals.
Performance goals shall be objective and shall otherwise meet the requirements of Section 162(m) of
the Code and regulations thereunder including the requirement that the level or levels of
performance targeted by the Committee result in the achievement of performance goals being
“substantially uncertain.” One or more of the following business criteria for the Company, on a
consolidated basis, and/or for Related Entities, or for business or geographical units of the
Company and/or a Related Entity (except with respect to the total stockholder return and earnings
per share criteria), shall be used by the Committee in establishing performance goals for such
Awards: (1) earnings per share; (2) revenues or gross margins; (3) cash flow; (4) operating margin;
(5) return on net assets, investment, capital, or equity; (6) economic value added; (7) direct
contribution; (8) net income; pretax earnings; earnings before interest and taxes; earnings before
interest, taxes, depreciation and amortization; earnings after interest expense and before
extraordinary or special items; operating income; income before interest income or expense, unusual
items and income taxes, local, state or federal and excluding budgeted and actual bonuses which
might be paid under any ongoing bonus plans of the Company; (9) working capital; (10) management of
fixed costs or variable costs; (11)
6
identification or consummation of investment opportunities or
completion of specified projects in accordance with corporate business plans, including strategic
mergers, acquisitions or divestitures; (12) total stockholder return; and
(13) debt reduction. Any of the above goals may be determined on an absolute or relative
basis or as compared to the performance of a published or special index deemed applicable by the
Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of
companies that are comparable to the Company. The Committee shall exclude the impact of an event
or occurrence which the Committee determines should appropriately be excluded, including without
limitation (i) restructurings, discontinued operations, extraordinary items, and other unusual or
non-recurring charges, (ii) an event either not directly related to the operations of the Company
or not within the reasonable control of the Company’s management, or (iii) a change in accounting
standards required by generally accepted accounting principles.
(iii) Performance Period; Timing For Establishing Performance Goals. Achievement of
performance goals in respect of Awards subject to this Section 6(e) shall be measured over a
performance period, as specified by the Committee. Performance goals shall be established not
later than ninety (90) days after the beginning of any performance period applicable to such
Awards, or at such other date as may be required or permitted for “performance-based compensation”
under Section 162(m) of the Code.
(iv) Adjustments. The Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with Awards subject to this Section 6(e), but may not exercise
discretion to increase any such amount payable to a Covered Employee in respect of an Award subject
to this Section 6(e). The Committee shall specify the circumstances in which such Awards shall be
paid or forfeited in the event of termination of Continuous Service by the Participant prior to the
end of a performance period or settlement of Awards.
(v) Committee Certification. Within a reasonable period of time after the performance
criteria have been satisfied, to the extent necessary to qualify the payments as “performance based
compensation” under Section 162(m) of the Code, the Committee shall certify, by resolution or other
appropriate action in writing, that the performance criteria and any other material terms
previously established by the Committee or set forth in the Plan, have been satisfied.
7. Change in Control.
(a) Effect of “Change in Control.” If and to the extent provided in the Award, in the event of a “Change in Control,” as defined
in Section 7(b):
(i) The Committee may, within its discretion, accelerate the vesting and
exercisability of any Award carrying a right to exercise that was not previously
vested and exercisable as of the time of the Change in Control, subject to
applicable restrictions set forth in Section 8(a) hereof;
(ii) The Committee may, within its discretion, accelerate the exercisability of
any limited Stock Appreciation Rights (and other Stock Appreciation Rights if so
provided by their terms) and provide for the settlement of such Stock Appreciation
Rights for amounts, in cash, determined by reference to the Change in Control Price;
and
(iii) The Committee may, within its discretion, lapse the restrictions,
deferral of settlement, and forfeiture conditions applicable to any other Award
granted under the Plan and such Awards may be deemed fully vested as of the time of
the Change in Control, except to the extent of any waiver by the Participant and
subject to applicable restrictions set forth in Section 9(a) hereof.
(b) Definition of “Change in Control. A “Change in Control” shall be deemed to have occurred upon:
7
(i) Approval by the stockholders of the Company of a reorganization, merger,
consolidation, or other form of corporate transaction or series of transactions, in
each case, with respect to which persons who were the stockholders of the Company
immediately prior to such reorganization, merger, consolidation, or other
transaction do not, immediately thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of directors of the reorganized,
merged, or consolidated company’s then outstanding voting securities, or a
liquidation or dissolution of the Company or the sale of all or substantially all of
the assets of the Company (unless such reorganization, merger, consolidation or
other corporate transaction, liquidation, dissolution or sale (any such event being
referred to as a “Corporate Transaction”) is subsequently abandoned);
(ii) Individuals who, as of the date on which the Award is granted, constitute
the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent to
the date on which the Award was granted whose election, or nomination for election
by the Company’s stockholders, was approved by a vote of at least a majority of the
Directors then comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection with an actual
or threatened election contest relating to the election of the Directors of the
Company) shall be, for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board; or
(iii) the acquisition (other than from the Company) by any person, entity, or
“group”, within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act, of more than 50% of either the then outstanding shares of the
Company’s Stock or the combined voting power of the Company’s then outstanding
voting securities entitled to vote generally in the election of directors
(hereinafter referred to as the ownership of a “Controlling Interest”) excluding,
for this purpose, any acquisitions by (1) the Company or a Related Entity, (2) any
person, entity, or “group” that as of the date on which the Award is granted owns
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Securities Exchange Act) of a Controlling Interest or (3) any employee benefit plan
of the Company a Related Entity.
(c) Definition of “Change in Control Price.” The “Change in Control Price” means an amount in cash equal to the higher of (i) the amount of
cash and fair market value of property that is the highest price per share paid (including
extraordinary dividends) in any Corporate Transaction triggering the Change in Control under
Section 7(b)(i) hereof or any liquidation of shares following a sale of substantially all of the
assets of the Company, or (ii) the highest Fair Market Value per share at any time during the
60-day period preceding and the 60-day period following the Change in Control.
8. Automatic Grant Program
(a) Amount and Date of Grant. During the term of the Plan, the Company shall make automatic grants of Options (“Automatic
Options”) to each Director who is not employed by the Company:
(i) Annual Grants. Each year on the Annual Grant Date, an Automatic Option to acquire 10,000 shares
of Stock shall be granted to each Director for as long as shares of Stock are
available under Section 3(a) hereof. The “Annual Grant Date” shall be the date of
the Company’s annual stockholders meeting commencing as of the first annual meeting
occurring after the Effective Date. Any Director that was granted an Automatic
Option under Section 8(a)(ii) within 90 days of an Annual Grant Date shall be
ineligible to receive an Automatic Option pursuant to this Section 8(a)(i) on such
Annual Grant Date.
(ii) Initial New Director Grants. On the Initial Grant Date, every new member of the Board, who is an Director and
has not previously received an Automatic Option under this Section 8(a)(ii) shall be
granted an Automatic Option to acquire 25,000 shares of Stock for as long
8
as shares
of Stock are available under Section 3(a) hereof. The “Initial Grant Date” shall be
the date that a Director is first appointed or elected to the Board.
(b) Exercise Price. The exercise price per share of Stock subject to each Automatic Option granted under
Section 8(a)(i) or (ii) shall be equal to 100 percent of the Fair Market Value per share of the
Stock on the date such Automatic Option was granted.
(c) Vesting. Each Automatic Option granted pursuant to Section 8(a)(i) or (ii) shall vest and become
exercisable 1/12th per month after the date of grant. Each Automatic Option or portion
thereof shall vest and become exercisable only if the optionholder has not ceased serving as a
Board member as of such vesting date.
(d) Term of Automatic Options. Each Automatic Option shall expire on the tenth anniversary (the “Expiration Date”) of the
date on which such Automatic Option was granted. Except as determined by the Plan Administrator,
should a Director’s service as a Board member cease prior to the Expiration Date for any reason
while an Automatic Option remains outstanding and unexercised, the Automatic Option term shall
immediately be modified and the Automatic Option shall terminate and cease to be outstanding in
accordance with the following provisions:
(i) The Automatic Option shall immediately terminate and cease to be
outstanding with respect to any shares that were not vested at the time of the
optionholder’s cessation of Board service.
(ii) Should an optionholder cease, for any reason other than death, to serve as
a member of the Board, then the optionholder shall have 90 days measured from the
date of such cessation of Board service in which to exercise his or her Automatic
Options that vested prior to the time of such cessation of Board service. In no
event, however, may any Automatic Option be exercised after the Expiration Date of
such Automatic Option.
(iii) Should an optionholder die while serving as a Board member or within 90
days after cessation of Board service, then the personal representative of the
optionholder’s estate (or the person or persons to whom the Automatic Option is
transferred pursuant to the optionholder’s will or in accordance with the laws of
the descent and distribution) shall have a 90-day period measured from the date of
the optionholder’s cessation of Board service in which to exercise the Automatic
Options that vested prior to the time of such cessation of Board service. In no
event, however, may any Automatic Option be exercised after the Expiration Date of
such Automatic Option.
(e) Other Terms. Except as expressly provided otherwise in this Section 8, an Automatic Option shall
be subject to all of the terms and conditions of the Plan. Directors shall be entitled to receive
other awards under the Plan or other plans of the Company in accordance with the terms and
conditions thereof.
9. General Provisions.
(a) Compliance With Legal and Other Requirements. The Company may, to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under any Award until
completion of such registration or qualification of such Stock or other required action under any
federal or state law, rule, or regulation, listing, or other required action with respect to any
stock exchange or automated quotation system upon which the Stock or other Company securities are
listed or quoted, or compliance with any other obligation of the Company, as the Committee or the
Board, may consider appropriate, and may require any Participant to make such representations,
furnish such information and comply with or be subject to such other conditions as it may consider
appropriate in connection with the issuance or delivery of Stock or payment of other benefits in
compliance with applicable laws, rules, and regulations, listing requirements, or other
obligations.
9
(b) Limits on Transferability; Beneficiaries. No Award or other right or interest of a Participant under the Plan, including any Award or
right that constitutes a derivative security as generally defined in Rule 16a-1(c) under the
Exchange Act, shall be pledged, hypothecated, or otherwise encumbered or subject to any lien,
obligation, or liability of such Participant to any party (other than the Company or a Subsidiary),
or assigned or transferred by such Participant otherwise than by will or the laws of descent and
distribution or to a Beneficiary upon the death of a Participant, and such Awards or rights that
may be exercisable shall be exercised during the lifetime of the Participant only by the
Participant or his or her guardian or legal representative, except that Awards and other rights
(other than Incentive Stock Options and Stock Appreciation Rights in tandem therewith) may be
transferred to one or more Beneficiaries or other transferees during the lifetime of the
Participant, and may be exercised by such transferees in accordance with the terms of such Award,
but only if and to the extent such transfers and exercises are permitted by the Committee or the
Board pursuant to the express terms of an Award agreement (subject to any terms and conditions
which the Committee or the Board may impose thereon, and further subject to any prohibitions or
restrictions on such transfers pursuant to Rule 16b-3). A Beneficiary, transferee, or other person
claiming any rights under the Plan from or through any Participant shall be subject to all terms
and conditions of the Plan and any Award agreement applicable to such Participant, except as
otherwise determined by the Committee or the Board, and to any additional terms and conditions
deemed necessary or appropriate by the Committee or the Board.
(c) Adjustments.
(i) Adjustments to Awards. In the event that any dividend or other distribution (whether in the form of
cash, Stock, or other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase, share
exchange, liquidation, dissolution, or other similar corporate transaction or event
affects the Stock and/or such other securities of the Company or any other issuer
such that a substitution, exchange, or adjustment is determined by the Committee or
the Board to be appropriate, then the Committee or the Board shall, in such manner
as it may deem equitable, substitute, exchange, or adjust any or all of (A) the
number and kind of shares of Stock that may be delivered in connection with Awards
granted thereafter, (B) the number and kind of shares of Stock by which annual
per-person Award limitations are measured under Section 4 hereof, (C) the number and
kind of shares of Stock subject to or deliverable in respect of outstanding Awards,
(D) the exercise price, grant price, or purchase price relating to any Award and/or
make provision for payment of cash or other property in respect of any outstanding
Award, and (E) any other aspect of any Award that the Committee or Board determines
to be appropriate.
(ii) Adjustments in Case of Certain Corporate Transactions. In the event of a proposed sale of all or substantially all of the Company’s
assets or any reorganization, merger, consolidation, or other form of corporate
transaction in which the Company does not survive, or in which the shares of Stock
are exchanged for or converted into securities issued by another entity, then the
successor or acquiring entity or an affiliate thereof may, with the consent of the Committee or the Board, assume each outstanding Option
or substitute an equivalent option or right. If the successor or acquiring entity
or an affiliate thereof, does not cause such an assumption or substitution, then
each Option shall terminate upon the consummation of sale, merger, consolidation, or
other corporate transaction. The Committee or the Board shall give written notice
of any proposed transaction referred to in this Section 9(c)(ii) a reasonable period
of time prior to the closing date for such transaction (which notice may be given
either before or after the approval of such transaction), in order that Optionees
may have a reasonable period of time prior to the closing date of such transaction
within which to exercise any Options that are then exercisable (including any
Options that may become exercisable upon the closing date of such transaction). An
Optionee may condition his exercise of any Option upon the consummation of the
transaction.
(iii) Other Adjustments. In addition, the Committee (and the Board if and only to the extent such
authority is not required to be exercised by the Committee to comply with Code
Section 162(m)) is authorized to make adjustments in the terms and conditions of,
and the criteria
10
included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, acquisitions and dispositions of businesses
and assets) affecting the Company, any Related Entity, or any business unit, or the
financial statements of the Company or any Related Entity, or in response to changes
in applicable laws, regulations, accounting principles, tax rates and regulations,
or business conditions or in view of the Committee’s assessment of the business
strategy of the Company, any Related Entity or business unit thereof, performance of
comparable organizations, economic and business conditions, personal performance of
a Participant, and any other circumstances deemed relevant; provided that no such
adjustment shall be authorized or made if and to the extent that such authority or
the making of such adjustment would cause Options, or Stock Appreciation Rights
hereof to Participants designated by the Committee as Covered Employees and intended
to qualify as “performance-based compensation” under Code Section 162(m) and the
regulations thereunder to otherwise fail to qualify as “performance-based
compensation” under Code Section 162(m) and regulations thereunder.
(d) Taxes. The Company and any Related Entity are authorized to withhold from any Award granted, any
payment relating to an Award under the Plan, including from a distribution of Stock, or any payroll
or other payment to a Participant, amounts of withholding and other taxes due or potentially
payable in connection with any transaction involving an Award, and to take such other action as the
Committee or the Board may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax obligations relating to any Award.
This authority shall include authority to withhold or receive Stock or other property and to make
cash payments in respect thereof in satisfaction of a Participant’s tax obligations, either on a
mandatory or elective basis in the discretion of the Committee.
(e) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue, or terminate the Plan, or the Committee’s
authority to grant Awards under the Plan, without the consent of stockholders or Participants,
except that any amendment or alteration to the Plan shall be subject to the approval of the
Company’s stockholders not later than the annual meeting next following such Board action if such
stockholder approval is required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock exchange or automated
quotation system on which the Stock may then be listed or quoted, and the Board may otherwise, in
its discretion, determine to submit other such changes to the Plan to stockholders for approval;
provided that, without the consent of an affected Participant, no such Board action may materially
and adversely affect the rights of such Participant under any previously granted and outstanding
Award. The Committee or the Board may waive any conditions or rights under, or amend, alter,
suspend, discontinue, or terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the consent
of an affected Participant, no such Committee or the Board action may materially and adversely
affect the rights of such Participant under such Award.
(f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any action taken hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the
employ of the Company or a Related Entity; (ii) interfering in any way with the right of the
Company or a Related Entity to terminate any Eligible Person’s or Participant’s Continuous Service
at any time, (iii) giving an Eligible Person or Participant any claim to be granted any Award under
the Plan or to be treated uniformly with other Participants and Employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until the Participant is
duly issued or transferred shares of Stock in accordance with the terms of an Award.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or obligation to deliver
Stock pursuant to an Award, nothing contained in the Plan or any Award shall give any such
Participant any rights that are greater than those of a general creditor of the Company; provided
that the Committee may authorize the creation of trusts and deposit therein cash, Stock, other
Awards, or other property, or make other arrangements to meet the Company’s obligations under the
Plan. Such trusts or other arrangements shall be consistent with the “unfunded” status of the Plan
unless the Committee otherwise determines with the consent of each affected Participant. The
trustee of such trusts may be authorized to dispose of trust assets and
11
reinvest the proceeds in
alternative investments, subject to such terms and conditions as the Committee or the Board may
specify and in accordance with applicable law.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the stockholders of the
Company for approval shall be construed as creating any limitations on the power of the Board or a
committee thereof to adopt such other incentive arrangements as it may deem desirable including
incentive arrangements and awards which do not qualify under Code Section 162(m).
(i) Payments in the Event of Forfeitures; Fractional Shares. Unless otherwise determined by the Committee or the Board, in the event of a forfeiture of
an Award with respect to which a Participant paid cash or other consideration, the Participant
shall be repaid the amount of such cash or other consideration. No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or any Award. The Committee or the Board shall
determine whether cash, other Awards or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
(j) Governing Law. The validity, construction and effect of the Plan, any rules and regulations under the
Plan, and any Award agreement shall be determined in accordance with the laws of the state of
Nevada without giving effect to principles of conflicts of laws, and applicable federal law.
(k) Plan Effective Date and Stockholder Approval; Termination of Plan. The Plan shall become effective on the Effective Date, subject to subsequent approval
within 12 months of its adoption by the Board by stockholders of the Company eligible to vote in
the election of directors, by a vote sufficient to meet the requirements of Code Sections 162(m)
(if applicable) and 422, Rule 16b-3 under the Exchange Act (if applicable), applicable Nasdaq
requirements, and other laws, regulations, and obligations of the Company applicable to the Plan.
Awards may be granted subject to stockholder approval, but may not be exercised or otherwise
settled in the event stockholder approval is not obtained except with respect to Awards granted by
the Company prior to the Company’s first shareholder meeting and that are otherwise in compliance
with Treasury Regulations Section 1.162-27(f)(4)(iii). The Plan shall terminate on the earlier of
(i) ten (10) years from the date of the later of (x) the date this Plan was originally approved by
the Board or the shareholders of the Company, whichever is earlier and (y) the date an increase in
the number of shares reserved for issuance under the Plan is approved by the Board (so long as such
increase is also approved by the shareholders) or (ii) at such time as no shares of Stock remain
available for issuance under the Plan and the Company has no further rights or obligations with
respect to outstanding Awards under the Plan.
10. Definitions. For purposes of the Plan, the following terms shall be defined as set forth below, in
addition to such terms defined in Section 1 hereof.
(a) “Automatic Options” means as defined in Section 8(a).
(b) “Award” means any Option, Stock Appreciation Right (including Limited Stock Appreciation Right),
Restricted Stock, Stock granted as a bonus or in lieu of another award, or Other Stock-Based Award,
together with any other right or interest, granted to a Participant under the Plan.
(c) “Beneficiary” means the person, persons, trust, or trusts that have been designated by a Participant in his
or her most recent written beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant’s death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(b) hereof. If, upon a Participant’s
death, there is no designated Beneficiary or surviving designated Beneficiary, then the term
Beneficiary means the person, persons, trust, or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(d) “Beneficial Owner”, “Beneficially Owning” and “Beneficial Ownership” shall have the meanings ascribed to such terms in Rule 13d-3 under the Exchange Act and any
successor to such Rule.
(e) “Board” means the Company’s Board of Directors.
12
(f) “Change in Control” means a Change in Control as defined with related terms in Section 8 of the Plan.
(g) “Change in Control Price” means the amount calculated in accordance with Section 7(c) of the Plan.
(h) “Code” means the Internal Revenue Code of 1986, as amended from time to time, including regulations
thereunder and successor provisions and regulations thereto.
(i) “Committee” means a committee designated by the Board to administer the Plan. The Board may designate
more than one committee to administer the Plan as to various categories of Eligible Persons. The
Committee shall consist of at least two directors, and each member of which shall be (i) a
“non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, unless
administration of the Plan by “non-employee directors” is not then required in order for exemptions
under Rule 16b-3 to apply to transactions under the Plan, and (ii) an “outside director” within the
meaning of Section 162(m) of the Code, unless administration of the Plan by “outside directors” is
not then required in order to qualify for tax deductibility under Section 162(m) of the Code,
provided, when appropriate, a Committee shall satisfy the then requirements of any stock exchange
or automated quotation system upon which the Stock or other Company securities are listed or
quoted.
(j) “Consultant” means any person (other than an Employee or a Director, solely with respect to rendering
services in such person’s capacity as a director) who is engaged by the Company or any Related
Entity to render consulting or advisory services to the Company or such Related Entity.
(k) “Continuous Service” means uninterrupted provision of services to the Company in any capacity of Employee,
Director, or Consultant. Continuous Service shall not be considered to be interrupted in the case
of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entities, or
any successor entities, in any capacity of Employee Director, or Consultant, or (iii) any change in
status as long as the individual remains in the service of the Company or a Related Entity in any
capacity of Employee, Director, or Consultant (except as otherwise provided in the Option
Agreement). An approved leave of absence shall include sick leave, military leave, or any other
authorized personal leave.
(l) “Corporate Transaction” means a Corporate Transaction as defined in Section 7(b)(i) of the Plan.
(m) “Covered Employee” shall have the meaning ascribed to such term under Section 162(m) of
the Code.
(o) “Director” means a member of the Board or the board of directors of any Related Entity.
(p) “Effective Date” means the effective date of the Plan, which shall be the date the Plan is adopted by the
shareholders of the Company.
(q) “Eligible Person” means each Executive Officer of the Company (as defined under the Exchange Act) and other
officers, Directors, and Employees of the Company or of any Related Entity, and Consultants with
the Company or any Related Entity. The foregoing notwithstanding, only employees of the Company or
any Subsidiary shall be Eligible Persons for purposes of receiving any Incentive Stock Options. An
Employee on leave of absence may be considered as still in the employ of the Company or a Related
Entity for purposes of eligibility for participation in the Plan.
(r) “Employee” means any person, including an officer or Director, who is an employee of the Company or any
Related Entity. The Payment of a director’s fee by the Company or a Related Entity shall not be
sufficient to constitute “employment” by the Company.
(s) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, including rules
thereunder and successor provisions and rules thereto.
13
(t) “Executive Officer” means an executive officer of the Company as defined under the Exchange Act.
(u) “Fair Market Value” means the fair market value of Stock, Awards, or other property as determined by the Committee
or the Board, or under procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of any given date after
which the Company is a Publicly Held Corporation shall be the closing sale price per share reported
on a consolidated basis for stock listed on the principal stock exchange or market on which Stock
is traded on the date as of which such value is being determined or, if there is no sale on that
date, then on the last previous day on which a sale was reported.
(v) “Incentive Stock Option” means any Option intended to be designated as an incentive stock option within the meaning of
Section 422 of the Code or any successor provision thereto.
(w) “Incumbent Board” means the Incumbent Board as defined in Section 7(b)(ii) of the Plan.
(x) “Limited Stock Appreciation Right” means a right granted to a Participant under Section 6(c) hereof.
(y) “Option” means a right granted to a Participant under Section 5(b) hereof, to purchase Stock or other
Awards at a specified price during specified time periods.
(z) “Optionee” means a person to whom an Option or Incentive Stock Option is granted under this Plan or any
person who succeeds to the rights of such person under this Plan.
(aa) “Other Stock-Based Awards” means Awards granted to a Participant under Section 5(f) hereof.
(bb) “Participant” means a person who has been granted an Award under the Plan which remains outstanding,
including a person who is no longer an Eligible Person.
(cc) “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used
in Sections 13(d) and 14(d) thereof, and shall include a “group” as defined in Section 13(d)
thereof.
(dd) “Related Entity” means any entity that is directly or indirectly controlled by the Company or any entity in
which the Company has a significant equity interest, as determined by the Board or the Committee.
(ee) “Restricted Stock” means Stock granted to a Participant under Section 5(d) hereof, that is subject to certain
restrictions and to a risk of forfeiture.
(ff) “Rule 16b-3” and “Rule 16a-1(c)(3)” means Rule 16b-3 and Rule 16a-1(c)(3), as from time to time in effect and applicable to the
Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of
the Exchange Act.
(gg) “Stock” means the Company’s Common Stock, and such other securities as may be substituted (or
resubstituted) for Stock pursuant to Section 10(c) hereof.
(hh) “Stock Appreciation Right” means a right granted to a Participant under Section 6(c) hereof.
(ii) “Subsidiary” means a “subsidiary corporation” whether now or hereafter existing, as defined in Section
424(f) of the Code.
14
Exhibit 10.91
EMPLOYMENT AGREEMENT
EMPLOYMENT
AGREEMENT dated as of the 26th day of September, 2011, by and between SMITH &
WESSON HOLDING CORPORATION, a Nevada corporation (“Employer”), and P. JAMES DEBNEY (“Employee”).
WHEREAS, Employer desires to employ Employee as President and Chief Executive Officer, and
Employee desires to accept such employment, upon the terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants set forth in this
Agreement, the parties hereto agree as follows:
1. Employment.
Employer hereby employs Employee, and Employee hereby accepts such employment, as President
and Chief Executive Officer of Employer and of such subsidiaries of Employer as Employer shall
designate and in such other capacities and for such other duties and services as shall from time to
time be mutually agreed upon by Employer and Employee. Employee shall report to the Board of
Directors of Employer.
2. Full Time Occupation and Other Activities.
Employee shall devote Employee’s entire business time, attention, and efforts to the
performance of Employee’s duties under this Agreement; shall serve Employer faithfully and
diligently; and shall not engage in any other employment or other business activities while
employed by Employer. The foregoing limitations shall not be construed as prohibiting Employee
from serving as a director of one or more companies provided that (a) such company does not
compete, directly or indirectly, with Employer; (b) participation on the board of such company does
not significantly interfere with the performance of Employee’s responsibilities under this
Agreement; (c) participation on the board of such company will not adversely affect the reputation
of Employer; (d) such company shall maintain a policy of directors’ and officers’ liability
insurance covering Employee on such terms and conditions and at a level of coverage that the Board
of Directors of Employer determines to be reasonable for a company of such size; and (e) such
company shall enter into an agreement to indemnify Employee, to the fullest extent permissible
under applicable law, for expenses and damages in connection with claims against Employee in
connection with service as a director of such company.
3. Compensation and other Benefits During Term of Employment.
(a) Base Salary. Employer shall pay to Employee a base salary of $450,000 per annum to be paid in equal
monthly installments, or in such other periodic installments upon which Employer and Employee shall
mutually agree. By action and in the sole discretion of the Board of Directors of Employer, the
base salary will be subject to annual review and may be increased based on performance of Employer
and Employee.
(b) Bonus. Employee shall be eligible to participate in executive compensation programs maintained by
Employer for its executive personnel. Employee also shall be eligible to receive an annual bonus
in such an amount, if any, determined by the Board of Directors of Employer or such committee of
the Board of Directors as may be designated by the Board of Directors based upon achievement of
performance goals and any other such factors as may be deemed relevant by the Board of Directors or
committee thereof, which bonus opportunity shall not be less than 100% of base salary at target.
(c) Stock-Based Compensation and Awards. Employee may receive annual stock-based compensation awards, with the amount of such awards
granted and the terms and conditions thereof to be determined from time to time by and in the sole
discretion of the Board of Directors of Employer or a committee thereof.
(d) Fringe Benefits. Employee shall receive a car allowance of $1,000 per month. Employee also shall be
entitled to participate in any group insurance, pension, retirement, vacation, expense
reimbursement, and other plans, programs, and benefits approved by the Board of Directors or a duly
constituted committee of the Board of Directors and made available from time to time to executive
employees of Employer generally during the term of Employee’s employment hereunder. The foregoing
shall not obligate Employer to adopt or maintain any particular plan, program, or benefit.
(e) Vacation. Employee shall be entitled to a paid vacation in accordance with the applicable policies of
Employer in effect from time to time, but not less than four weeks of paid vacation per annum.
(f) Reimbursement for Business Expenses. Employer shall reimburse Employee for all travel, entertainment, and other ordinary and
necessary business expenses incurred by Employee in connection with the business of Employer and
Employee’s duties under this Agreement. The term “business expenses” shall not include any item
not deductible in whole or in part by Employer for federal income tax purposes. To obtain
reimbursement, Employee shall submit to Employer receipts, bills, or sales slips for the expenses
incurred. Reimbursements shall be made by Employer monthly within 10 days of presentation by
Employee of evidence of the expenses incurred.
(g) Reimbursement for Insurance Premiums. Employer shall reimburse Employee for the reasonable insurance premiums (and any taxes
incident thereto) for disability insurance covering up to 75% of Employee’s base salary and for
medical and hospitalization insurance for Employee, Employee’s wife, and Employee’s children under
the age of 25 for whom Employee provides a majority of their financial support.
(h) Key Person Insurance. Employer shall reimburse Employee for the reasonable premiums (and taxes incident thereto)
for a key person term-insurance policy of $5.0 million on the life of Employee with such
beneficiaries as Employee shall select.
2
4. Term of Employment.
(a) Employment
Term. The term of this Agreement shall be for a period commencing as of September 26, 2011 and
continuing until terminated pursuant to Section 4(b) below.
(b) Termination Under Certain Circumstances. Notwithstanding anything to the contrary herein contained:
(i) Death. Employee’s employment shall be automatically terminated, without notice, effective upon the
date of Employee’s death.
(ii) Disability. If Employee shall fail, for a period of more than 60 consecutive days, or for 90 days
within any 180-day period, to perform any of Employee’s duties under this Agreement as the result
of illness or other incapacity, Employer, at its option and upon written notice to Employee, may
terminate Employee’s employment effective on the date of that notice.
(iii) Unilateral Decision of Employer. Employer, at its option, upon written notice to Employee, may terminate Employee’s
employment effective on the date of that notice.
(iv) Unilateral Decision by Employee. Employee, at Employee’s option and upon written notice to Employer, may terminate
Employee’s employment effective on the date of that notice.
(v) Certain Acts. If Employee engages in an act or acts involving a crime, moral turpitude, fraud, or
dishonesty, or if Employee willfully violates in a material respect Employer’s Corporate Governance
Guidelines, Code of Conduct, or Code of Ethics for the CEO and Senior Financial Officers,
including, without limitation, the provisions thereof relating to conflicts of interest or related
party transactions, Employer, at its option and upon written notice to Employee, may terminate
Employee’s employment effective on the date of that notice.
(vi) Change in Control. In the event of a “Change in Control” of Employer (as defined below), Employee, at
Employee’s option and upon written notice to Employer, may terminate Employee’s employment
effective on the date of the notice (which shall not constitute a unilateral decision by Employee
under Section 4(b)(iv) above) unless (A) the provisions of this Agreement remain in full force and
effect as to Employee and (B) Employee suffers no reduction in Employee’s status, duties,
authority, or compensation following such Change in Control, provided that Employee will be
considered to suffer a reduction in Employee’s status, duties, authority, if, after the Change in
Control, (1) Employee is not the chief executive officer of the company that succeeds to the
business of Employer, (2) such company’s common stock is not listed on a national stock exchange
(such as the New York Stock Exchange, the Nasdaq National Market, or the American Stock Exchange),
or (3) such company terminates Employee or reduces Employee’s status, duties, authority, or
compensation within one year of the Change in Control.
3
(c) Result of Termination.
(i) Except as otherwise set forth in this Agreement, in the event of the termination of
Employee’s employment pursuant to Sections 4(b)(i) (“Death”), 4(b)(ii) (“Disability”), 4(b)(iv)
(“Unilateral Decision by Employee”), or 4(b)(v) (“Certain Acts”) above, Employee shall receive no
further compensation under this Agreement.
(ii) In the event of the termination of Employee’s employment pursuant to Section 4(b)(iii)
(“Unilateral Decision of Employer”) above, Employee shall (A) for a period of 18 months after the
effective date of the termination, continue to receive Employee’s base salary as provided in
Section 3(a) above; (B) receive an amount equal to the average of Employee’s cash bonus paid for
each of the two fiscal years immediately preceding Employee’s termination, such amount to be paid
over the period of 18 months after the effective date of the termination; and (C) receive the car
allowance and coverage under Employer’s medical plan to the extent provided for Employee pursuant
to Section 3(d) above at the effective date of the termination, such benefits to be received over
the period of 18 months after the effective date of the termination.
(iii) In the event of the termination of Employee’s employment pursuant to Section 4(b)(vi)
(“Change in Control”) above, Employee shall (A) for a period of 24 months after the effective date
of the termination, continue to receive Employee’s base salary as provided in Section 3(a) above;
(B) receive an amount equal to the average of Employee’s cash bonus paid for each of the two fiscal
years immediately preceding Employee’s termination, such amount to be paid and received over a
period of 18 months after the effective date of the
termination; (C) receive the car allowance for a period of 24 months after the effective date
of the termination; and (D), at Employer’s option, either (x) receive coverage under Employer’s
medical plan to the extent provided for Employee pursuant to Section 3(d) above at the effective
date of the termination, such benefits to be received over a period of 24 months after the
effective date of the termination, or, (y) receive reimbursement for the COBRA premium for such
coverage through the earlier of such 24-month period or the COBRA eligibility period.
(iv) In the event of the termination of Employee’s employment pursuant to Section 4(b)(iii)
(“Unilateral Decision of Employer”) above, Employee shall receive for a period of 36 months
following such termination a cash payment in the amount of $10,000 per 12-month period for
post-termination secretarial support.
(v) In the event of the termination of Employee’s employment hereunder pursuant to Sections
4(b)(iii) (“Unilateral Decision of Employer”) or 4(b)(vi) (“Change in Control”) above, the options
granted under any employment agreement between Employer and Employee that are vested as of the
effective date of the termination, will have a nine-month post-termination exercise period, but not
beyond their original term.
(vi) In the event of the termination of Employee’s employment pursuant to Sections 4(b)(ii)
(“Disability”), 4(b)(iii) (“Unilateral Decision of Employer”), or 4(b)(vi) (“Change in Control”)
above, or in the event Employee voluntarily terminates his employment with at least six months
advance notice to Employer, Employer shall, for a period of 36 months following the effective date
of such termination, continue to pay the life insurance premiums on any then existing life
insurance policy provided by Employer to Employee, up to an annual premium of $20,000 pro-rated on
a monthly basis.
4
(vii) In the event of the termination of Employee’s employment pursuant to Sections 4(b)(i)
(“Death”), 4(b)(ii) (“Disability”), 4(b)(iii) (“Unilateral Decision of Employer”), or 4(b)(vi)
(“Change in Control”) above, Employee shall receive, for the fiscal year of the notice of
termination, any earned bonus, on a pro-rated basis, based on the performance goals actually
achieved for the fiscal year of the notice of termination, as determined in the sole discretion of
the Board of Directors of Employer, at the time such bonuses are paid to other employees.
Any payments made by Employer pursuant to this Section 4(c) (other than the payment, if any,
described in Section 4(c)(vii)) shall be paid on a monthly basis beginning on the first payroll
date following Employee’s Separation from Service within the meaning of Section 409A of the
Internal Revenue Code of 1986, as amended (“Section 409A”), and not in a lump sum and shall be
treated as a series of separate payments for purposes of Section 409A. Employee shall receive no
additional compensation following any termination except as provided herein. In the event of any
termination, Employee shall resign all positions (including positions on the Board of Directors)
with Employer and its subsidiaries. If Employee is a “specified employee” within the meaning of
Section 409A, then payments shall not commence until six months following Employee’s separation
from service to the extent necessary to avoid the imposition of the additional 20% tax under
Section 409A (and in the case of installment payments, the first payment shall include all
installment payments required by this subsection that otherwise would have been made during such
six-month period). If the payment described in Section 4(c)(vi) must be delayed for six months
pursuant to the preceding sentence, Employee shall bear the full
cost of such payment during such delay period. Upon the date such payment would otherwise
commence, Employer shall reimburse Employee for such payments, to the extent that such payments
otherwise would have been paid by Employer had such payments commenced upon Employee’s termination
of employment. Any remaining payments shall be provided by Employer in accordance with the
schedule and procedures specified herein. This Agreement is intended to satisfy the requirements
of Section 409A with respect to amounts subject thereto, and shall be interpreted and construed
consistent with such intent. Except as provided otherwise herein, no reimbursement payable to
Employee pursuant to any provisions of this Agreement or pursuant to any plan or arrangement of
Employer shall be paid later than the last day of the calendar year following the calendar year in
which the related expense was incurred, and no such reimbursement during any calendar year shall
affect the amounts eligible for reimbursement in any other calendar year, except, in each case, to
the extent that the right to reimbursement does not provide for a “deferral of compensation” within
the meaning of Section 409A.
(d) Change in Control. The term “Change in Control” of Employer shall mean a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934 as in effect on the date of this Agreement
or, if Item 6(e) is no longer in effect, any regulations issued by the Securities and Exchange
Commission pursuant to the Securities Exchange Act of 1934 that serve similar purposes; provided
that, without limitation, such a Change in Control shall be deemed to have occurred if and when (i)
any person (as such term is used in
5
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of
1934) directly or indirectly of equity securities of Employer representing 20 percent or more of
the combined voting power of Employer’s then-outstanding equity securities, except that this
provision shall not apply to any person currently owning at least five percent or more of the
combined voting power of Employer’s currently outstanding equity securities or to an acquisition of
up to 20 percent of the then-outstanding voting securities that has been approved by at least 75
percent of the members of the Board of Directors who are not affiliates or associates of such
person; (ii) during the period of this Agreement, individuals who, at the beginning of such period,
constituted the Board of Directors of Employer (the “Original Directors”), cease for any reason to
constitute at least a majority thereof unless the election or nomination for election of each new
director was approved (an “Approved Director”) by the vote of a Board of Directors constituted
entirely of Existing Directors and/or Approved Directors; (iii) a tender offer or exchange offer is
made whereby the effect of such offer is to take over and control Employer, and such offer is
consummated for the equity securities of Employer representing 20 percent or more of the combined
voting power of Employer’s then-outstanding voting securities; (iv) Employer is merged,
consolidated, or enters into a reorganization transaction with another person and, as the result of
such merger, consolidation, or reorganization, less than 75 percent of the outstanding equity
securities of the surviving or resulting person shall then be owned in the aggregate by the former
stockholders of Employer; or (v) Employer transfers substantially all of its assets to another
person or entity that is not a wholly owned subsidiary of Employer. Sales of Employer’s Common
Stock beneficially owned or controlled by Employee shall not be considered in determining whether a
Change in Control has occurred.
5. Competition and Confidential Information.
(a) Interests to be Protected. The parties acknowledge that Employee will perform essential services for Employer, its
employees, and its stockholders during the term of Employee’s employment with Employer. Employee
will be exposed to, have access to, and work with, a considerable amount of Confidential
Information (as defined below). The parties also expressly recognize and acknowledge that the
personnel of Employer have been trained by, and are valuable to, Employer and that Employer will
incur substantial recruiting and training expenses if Employer must hire new personnel or retrain
existing personnel to fill vacancies. The parties expressly recognize that it could seriously
impair the goodwill and diminish the value of Employer’s business should Employee compete with
Employer in any manner whatsoever. The parties acknowledge that this covenant has an extended
duration; however, they agree that this covenant is reasonable and it is necessary for the
protection of Employer, its stockholders, and employees. For these and other reasons, and the fact
that there are many other employment opportunities available to Employee if he should terminate his
employment, the parties are in full and complete agreement that the following restrictive covenants
are fair and reasonable and are entered into freely, voluntarily, and knowingly. Furthermore, each
party was given the opportunity to consult with independent legal counsel before entering into this
Agreement.
6
(b) Non-Competition. During the term of Employee’s employment with Employer and for the period equal to the
longer of 12 months after the termination of Employee’s employment with Employer, regardless of the
reason therefor, and the period during which Employee receives cash severance pursuant to Section
4(c) Employee shall not (whether
directly or indirectly, as owner, principal, agent, stockholder,
director, officer, manager, employee, partner, participant, or in any other capacity) engage or
become financially interested in any competitive business conducted within the Restricted Territory
(as defined below). As used herein, the term “competitive business” shall mean any business that
sells or provides or attempts to sell or provide products or services the same as or substantially
similar to the products or services sold or provided by Employer during Employee’s employment
hereunder, and the term “Restricted Territory” shall mean any state or other geographical in which
Employer sells products or provides services during Employee’s employment hereunder.
(c) Non-Solicitation of Employees. During the term of Employee’s employment and for a period of 24 months after the
termination of Employee’s employment with Employer, regardless of the reason therefor, Employee
shall not directly or indirectly, for Employee, or on behalf of, or in conjunction with, any other
person, company, partnership, corporation, or governmental entity, solicit for employment, seek to
hire, or hire any person or persons who is employed by or was employed by Employer within 12 months
of the termination of Employee’s employment for the purpose of having any such employee engage in
services that are the same as or similar or related to the services that such employee provided for
Employer.
(d) Confidential Information. Employee shall maintain in strict secrecy all confidential or trade secret information
relating to the business of Employer (the “Confidential Information”) obtained by Employee in the
course of Employee’s employment, and Employee shall not, unless first authorized in writing by
Employer, disclose to, or use for Employee’s benefit or for the benefit of, any person, firm, or
entity at any time either during or subsequent to the term of Employee’s employment, any
Confidential Information, except as required in the performance of Employee’s duties on behalf of
Employer. For purposes hereof, Confidential Information shall include without limitation any
materials, trade secrets, knowledge, or information with respect to management, operational, or
investment policies and practices of Employer; any business methods or forms; any names or
addresses of customers or data on customers or suppliers; and any business policies or other
information relating to or dealing with the management, operational, or investment policies or
practices of Employer.
(e) Return of Books, Records, Papers, and Equipment. Upon the termination of Employee’s employment with Employer for any reason, Employee shall
deliver promptly to Employer all files, lists, books, records, manuals, memoranda, drawings, and
specifications; all cost, pricing, and other financial data; all other written or printed materials
and computers, cell phones, PDAs, and other equipment that are the property of Employer (and any
copies of them); and all other materials that may contain Confidential Information relating to the
business of Employer, which Employee may then have in Employee’s possession, whether prepared by
Employee or not.
(f) Disclosure of Information. Employee shall disclose promptly to Employer, or its nominee, any and all ideas, designs,
processes, and improvements of any kind relating to the business of Employer, whether patentable or
not, conceived or made by Employee, either alone or jointly with others, during working hours or
otherwise, during the entire period of Employee’s employment with Employer or within six months
thereafter.
7
(g) Assignment. Employee hereby assigns to Employer or its nominee, the entire right, title, and interest
in and to all inventions, discoveries, and improvements, whether patentable or not, that Employee
may conceive or make during Employee’s employment with Employer, or within six months thereafter,
and which relate to the business of Employer.
(h) Equitable Relief. In the event a violation of any of the restrictions contained in this Section is
established, Employer shall be entitled to preliminary and permanent injunctive relief as well as
damages and an equitable accounting of all earnings, profits, and other benefits arising from such
violation, which right shall be cumulative and in addition to any other rights or remedies to which
Employer may be entitled. In the event of a violation of any provision of subsection (b), (c),
(f), or (g) of this Section, the period for which those provisions would remain in effect shall be
extended for a period of time equal to that period beginning when such violation commenced and
ending when the activities constituting such violation shall have been finally terminated in good
faith.
(i) Restrictions Separable. If the scope of any provision of this Agreement (whether in this Section 5 or otherwise) is
found by a Court to be too broad to permit enforcement to its full extent, then such provision
shall be enforced to the maximum extent permitted by law. The parties agree that the scope of any
provision of this Agreement may be modified by a judge in any proceeding to enforce this Agreement,
so that such provision can be enforced to the maximum extent permitted by law. Each and every
restriction set forth in this Section 5 is independent and severable from the others, and no such
restriction shall be rendered unenforceable by virtue of the fact that, for any reason, any other
or others of them may be unenforceable in whole or in part.
6. Miscellaneous.
(a) Notices. All notices, requests, demands, and other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given, made, and received (i)
if personally delivered, on the date of delivery, (ii) if by facsimile transmission, upon receipt,
(iii) if mailed, three days after deposit in the United States mail, registered or certified,
return receipt requested, postage prepaid, and addressed as provided below, or (iv) if by a courier
delivery service providing overnight or “next-day” delivery, on the next business day after deposit
with such service addressed as follows:
| (1) | If to Employer: |
||
2100 Roosevelt Avenue Springfield, Massachusetts 01104 Attention: Chairman of the Board |
8
with a copy given in the manner prescribed above, to: |
|||
Greenberg Traurig, LLP 2375 East Camelback Road — Suite 700 Phoenix, Arizona 85016 Attention: Robert S. Kant, Esq. Phone: (602) 445-8302 Facsimile: (602) 445-8100 E-Mail: KantR@gtlaw.com |
|||
| (2) | If to Employee: |
||
3 Oxford Road Longmeadow, MA 01106 Phone: (413) 374-7726 E-Mail: james.debney@gmail.com |
Either party may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this Section 6 for the giving
of notice.
(b) Indulgences; Waivers. Neither any failure nor any delay on the part of either party to exercise any right,
remedy, power, or privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, power, or privilege preclude any other or further
exercise of the same or of any other right, remedy, power, or privilege, nor shall any waiver of
any right, remedy, power, or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power, or privilege with respect to any other occurrence. No waiver shall be
binding unless executed in writing by the party making the waiver.
(c) Controlling Law. This Agreement and all questions relating to its validity, interpretation, performance and
enforcement, shall be governed by and construed in accordance with the laws of the state of
Massachusetts, notwithstanding any Massachusetts or other conflict-of-interest provisions to the
contrary.
(d) Binding Nature of Agreement. This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, personal representatives, successors, and assigns, except that no party may
assign or transfer such party’s rights or obligations under this Agreement without the prior
written consent of the other party.
(e) Execution in Counterpart. This Agreement may be executed in any number of counterparts, each of which shall be deemed
to be an original as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become binding when one or
more counterparts hereof, individually or taken together, shall bear the signatures of the parties
reflected hereon as the signatories.
(f) Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no
provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole or in part.
9
(g) Entire Agreement. Except as herein contained, this Agreement contains the entire understanding between the
parties hereto with respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, inducements, and conditions, express or implied,
oral or written, including the Severance and Change in Control Agreement dated October 22, 2010
between Employer and Employee. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement
may not be modified or amended other than by an agreement in writing.
(h) Paragraph Headings. The paragraph headings in this Agreement are for convenience only; they form no part of
this Agreement and shall not affect its interpretation.
(i) Gender. Words used herein, regardless of the number and gender specifically used, shall be deemed
and construed to include any other number, singular or plural, and any other gender, masculine,
feminine, or neuter, as the context requires.
(j) Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted,
including Saturdays, Sundays, and holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday, or holiday, then the final day shall be deemed to be the next
day that is not a Saturday, Sunday, or holiday.
7. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the successors and assigns of
the parties hereto; provided that because the obligations of Employee hereunder involve the
performance of personal services, such obligations shall not be delegated by Employee. For
purposes of this Agreement successors and assigns shall include, but not be limited to, any
individual, corporation, trust, partnership, or other entity that acquires a majority of the stock
or assets of Employer by sale, merger, consolidation, liquidation, or other form of transfer.
Employer will require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business and/or assets of Employer
to expressly assume and agree to perform this Agreement in the same manner and to the same extent
that Employer would be required to perform it if no such succession had taken place. Without
limiting the foregoing, unless the context otherwise requires, the term “Employer” includes all
subsidiaries of Employer.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.
| SMITH & WESSON HOLDING CORPORATION |
||||
| By: | /s/ John B. Furman | |||
| Chairman Compensation Committee | ||||
| /s/ P. James Debney | ||||
| P. James Debney | ||||
10
Exhibit 10.92
Execution Copy
SEPARATION AGREEMENT AND RELEASE
This
Separation Agreement and Release (the “Agreement”) is made and entered into this 26th day
of September, 2011 (the “Execution Date”) by and between SMITH & WESSON HOLDING CORPORATION, a
Nevada corporation (“S&W”) and MICHAEL F. GOLDEN (“Golden”).
RECITALS
A. Golden has served as the President and Chief Executive Officer of S&W since December 2004.
B. The terms and conditions of Golden’s employment as S&W’s President and Chief Executive
Officer are set forth in an Amended and Restated Employment Agreement executed on December 31, 2010
as of July 12, 2010 (the “Employment Agreement”).
C. S&W and Golden have determined that it is an appropriate time to execute the succession
plan that the Board of Directors has been discussing with Golden for more than a year.
D. In recognition of Golden’s long service to S&W, his cooperation in the succession plan
process, and his willingness to surrender various post-employment benefits, S&W and Golden have
reached a mutual agreement concerning Golden’s voluntary separation from employment with S&W, the
terms of which, by mutual agreement, vary from certain terms set forth set forth in the Employment
Agreement.
E. In return for the consideration to be provided to him by S&W as set forth in this
Agreement, Golden has voluntarily resigned his employment with
S&W effective September 26, 2011
(the “Separation Date”).
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual covenants set forth in this
Agreement, the parties hereto as follows:
1. Recitals; Effective Date. The recitals set forth above are true, accurate, and correct,
and are incorporated into the Agreement by this reference and made a material part of the
Agreement. The Agreement shall become effective on the eighth (8th) calendar day after the
Execution Date, so long as Golden has not revoked the Agreement prior to that time pursuant to
Section 14 herein (hereinafter, the “Effective Date”).
2. Employment-Related Compensation. Golden acknowledges and agrees that he has received from
S&W all compensation to which he is entitled for services provided to S&W through the Separation
Date and that he has received reimbursement from S&W of all reasonable business expenses incurred
by him through the Separation Date, if any, in accordance with S&W’s expense reimbursement policy
and practices.
3. Termination of Employment Agreement. In entering into this Agreement, the parties intend
to terminate the Employment Agreement in full and therefore acknowledge and agree that the
Employment Agreement shall be and is terminated as of the Execution Date.
4. Adequacy of Consideration. In consideration of the payment to be made to him by S&W as
provided in Section 5 below, which Golden acknowledges and agrees is sufficient consideration to
support the release of the Releasees identified in Section 6 of this Agreement, and which is in
addition to anything of value to which Golden is entitled, Golden waives all benefits and rights
arising under the Employment Agreement or arising under or out of his status as an employee of S&W,
including any base salary, bonus (including any bonus pursuant to the 2012 cash incentive bonus
plan), fringe benefits, restricted stock unit grants, vacations, reimbursement for business
expenses, reimbursement for insurance premiums (excluding coverage for COBRA), key person
insurance, and reimbursement for spousal attendance, to which he could be entitled under the
Employment Agreement or otherwise. S&W acknowledges and agrees that Golden’s agreement to accept
the payment to be made to him by S&W as provided in Section 5 below and to terminate the Employment
Agreement is sufficient consideration for its agreement to waive all benefits and rights it had
arising under the Employment Agreement, including its right to enforce those restrictive covenants
set forth in Section 5 of the Employment Agreement.
5. One Time Payment. Provided Golden does not revoke this Agreement pursuant to Section 14
herein, S&W shall make a one time, lump sum payment to Golden in
the gross amount of $987,835.00,
from which standard deductions for federal and state withholdings shall be made, within five days
of the Effective Date.
6. Release. Golden, for himself, his spouse, his marital community, and, as applicable, his
agents, attorneys, successors, and assigns, hereby fully, irrevocably, and unconditionally releases
S&W, its predecessors, subsidiaries, parent companies, affiliated entities, and the past and
present officers, directors, employees, fiduciaries, shareholders, agents, successors,
representatives and assigns of each and all of them, and all persons acting by, through, under or
in concert with them (hereinafter collectively referred to as “Releasees”), from any and all
claims, charges, complaints, liabilities, and obligations (collectively, “Claims”), which Golden
may have against S&W or any of the Releasees, whether now known or unknown, and whether asserted or
unasserted, that pertain, relate, or arise out of his employment relationship with S&W, including
the circumstances of his termination of employment and any Claims arising out of or relating to the
Employment Agreement. It is the intent of Golden and S&W that this release be limited solely to
any employment-related Claims, known or unknown, that could be asserted by Golden, including any
Claims under the Age Discrimination in Employment Act. By signing this Agreement, Golden does not
waive any rights or Claims that may arise after the Effective Date, nor does he waive any vested
rights he may have, if any, under any S&W sponsored group benefit plan, nor any Claim that cannot
be released as a matter of applicable law.
7. No Pending Claims; Covenant Not to Sue; Preclusive Effect. Golden represents that he has
not filed, and he agrees not to file, any action or suit against S&W based on any of the Claims
released by this Agreement, and he acknowledges and agrees that this Agreement may be pled as a
complete bar to any action or suit by him asserting any Claims released by this Agreement against
any of the Releasees.
2
8. Return of Property. Except as required in his capacity as a member of S&W’s Board of
Directors, Golden shall promptly return all items of S&W property he has or over which he has
control, including all records, designs, patents, business plans, financial statements, manuals,
memoranda, lists, and other property delivered to or compiled by Golden by or on behalf of S&W (or
its subsidiaries) or its representatives, vendors, or customers that pertain to the business of S&W
(or its subsidiaries), all equipment belonging to S&W, all code and computer programs and
information of whatever nature, tools, manuals, and any and all other materials, documents or
information, including Confidential Information in his possession or control, and that he will
retain no copies thereof. Golden also shall deliver promptly to S&W upon the Separation Date all
correspondence, reports, records, charts, advertising materials, and other similar data pertaining
to the business, activities or future plans of S&W (or its
subsidiaries) that has been collected by Golden.
9. Trade Secrets/Confidentiality. Golden acknowledges that, during the course of his
employment with S&W, he had access to various trade secrets, whether in existence or proposed, and
confidential information of S&W. Such information includes business plans, schematics, blue
prints, software, hardware, financial information, manuals, training programs, profit margins,
marketing plans, customer information, and the specific terms of S&W’s relationships or agreements
with its respective significant vendors or customers. Golden agrees that he shall not disclose such
information or use it in any way, at any time in the future, except to the extent such information
becomes publicly available through lawful and proper means, or to the extent that Golden is
required to disclose such information pursuant to subpoena. If such information is requested
pursuant to a subpoena, Golden must give immediate and timely notice to S&W, so that S&W has a
reasonable opportunity to seek judicial relief to preclude disclosure, if necessary. Without
limitation, the prohibition in this section includes Golden’s use of such information to directly
or indirectly solicit any manufacturer, manufacturer’s representative, or customer of S&W with whom
Golden had contact during his employment, and Golden’s use of such information to directly or
indirectly interfere with the advantageous business relationship(s) between S&W and any of its
customers, vendors or suppliers.
10. Confidential Information. Notwithstanding Golden’s termination of employment with S&W, at
all times following the Separation Date, Golden agrees to maintain in strict secrecy all
confidential or trade secret information relating to the business of S&W (the “Confidential
Information”) obtained by him in the course of his employment, and Golden shall not, unless first
authorized in writing by S&W, disclose to, or use for Golden’s benefit or for the benefit of, any
person, firm, or entity, any Confidential Information, except as required in the performance of his
duties, and consistent with his fiduciary obligations, as a member of S&W’s Board of Directors.
For purposes hereof, Confidential Information shall include without limitation any materials, trade
secrets, knowledge, or information with respect to management, operational, or investment policies
and practices of S&W; any business methods or forms; any names or addresses of customers or data on
customers or suppliers; and any business policies or other information relating to or dealing with
the management, operational, or investment policies or practices of S&W.
3
11. Non-Solicitation.
a. Of Customers. Golden agrees that, for a period of 24 months following the Effective Date,
he will not directly or indirectly, for himself, or on behalf of, or in conjunction with, any other
person, company, partnership, corporation, or governmental entity, solicit or attempt to solicit or
otherwise disrupt or attempt to S&W’s relationship with or business expectancy with any customer of
S&W for the purpose of offering to provide or providing similar products or services as those
offered or provided S&W.. For purposes of this Agreement, “customer” means: (i) any person,
company, business, or any other entity that S&W did business with or that S&W reasonably expected
to do business with; and (ii) with which Golden had contact or learned confidential information
about during the 24 month period prior to the Separation Date, and includes the employees, agents,
and affiliates of the persons or entities which have a relationship with Company, if they have the
authority to make or affect decisions of those entities.
b. Of Employees. Golden agrees that, for a period of 24 months following the Effective
Date, he will not directly or indirectly, for himself, or on behalf of, or in conjunction with, any
other person, company, partnership, corporation, or governmental entity, solicit for employment,
seek to hire, or hire any person or persons who is employed by or was employed by S&W within 12
months of the Separation Date for the purpose of having any such employee engage in services that
are the same as or similar or related to the services that such employee provided for S&W.
12. Knowing and Voluntary; ADEA Waiver. Golden specifically understands and acknowledges that
the Age Discrimination in Employment Act (“ADEA”), as amended, provides him the right to bring a
claim against S&W if he believes that he has been discriminated against on the basis of age.
Golden represents and warrants that he was advised by the Company to consult with an attorney of
his own choosing concerning the provisions set forth herein, and that he has thoroughly discussed
all aspects of the Agreement with counsel of his choosing, or that he had the opportunity to do so.
Golden further represents and warrants that he has carefully read and fully understands all of the
provisions of the Agreement, including the fact that he is releasing all claims and potential
claims against S&W and the other Released Parties, and that he is entering into the Agreement
without coercion and with full knowledge of its significance and the legal consequences thereof.
Golden represents and warrants that as part of the Agreement, he is knowingly and voluntarily
releasing and waiving any claims he believes he may have under the ADEA.
13. Review. A copy of this Agreement was delivered to Golden on September 26, 2011. Golden
is advised that he has twenty-one (21) days from the date this Agreement was delivered to him to
consider this Agreement. If Golden executes the Agreement before the expiration of this 21 day
period, he acknowledges that he has done so for the purpose of expediting payment of the
consideration provided for herein, and that he has expressly waived his right to take 21 days to
consider the Agreement. This Agreement must be signed by Golden and returned to the individual
identified in Section 14 below no later than 21 days after the date it was delivered to Golden. If
this Agreement is not signed and returned by such date, it shall be void and have no legal effect.
4
14. Revocation Period. Golden may revoke this Agreement for a period of seven (7) calendar
days from the date he signs this Agreement. Golden agrees that he must provide written notice of
revocation of this Agreement before the expiration date to Jeffrey D. Buchanan, Executive Vice
President, Chief Financial Officer and Treasurer, Smith & Wesson, 2100 Roosevelt Avenue,
Springfield, MA 01104. Receipt of proper and timely notice of revocation by S&W cancels and voids
this Agreement. Provided that Golden does not provide notice of revocation, the Agreement will
become effective upon expiration of the revocation period, as provided in Paragraph 1 above.
15. Headings. The headings are for convenience of the parties, and are not to be
construed as terms and conditions of this Agreement.
16. Severability. Should any provision in this Agreement be declared or determined to be
illegal or invalid (with the exception of Section 6, in whole or in part), the validity of the
remaining parts, terms, or provisions shall not be affected and the illegal or invalid part, term,
or provisions shall be deemed not to be part of this Agreement.
17. Choice of Law. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts.
18. Amendment. This Agreement shall be binding upon the parties and may not be amended,
supplemented, changed, or modified in any manner, orally or otherwise, except by an instrument in
writing of concurrent or subsequent date signed by the parties.
19. Successors and Assigns. This Agreement is and shall be binding upon and inure to the
benefit of the heirs, executors, successors and assigns of each of the parties.
20. Non-Admission. This Agreement shall not in any way be construed as an admission by S&W
that it has acted wrongfully with respect to Golden, and S&W specifically denies the commission of
any wrongful acts against Golden.
21. Non-Disparagement. Golden agrees that he will not make any written or oral statement or
take any action which he knows or reasonably should know constitutes an untrue, disparaging, or
negative comment concerning S&W. S&W agrees that no authorized representative speaking on S&W’s
behalf will make any written or oral statement or take any action which he or she knows or
reasonably should know constitutes an untrue, disparaging, or negative comment concerning Golden.
If S&W’s Human Resources Department is contacted by prospective employers of Golden, S&W will
provide only the starting and ending dates of Golden’s employment at S&W and the last position
Golden held at S&W. S&W also will advise any such prospective employers that it is S&W’s policy to
release only such information.
22. Counterparts. This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together constitute one and the same instrument.
5
| SMITH & WESSON HOLDING CORPORATION | ||||||
9/26/11
|
By: | /s/ John B. Furman | ||||
Date
|
Its: | |||||
9/26/11
|
/s/ Michael F. Golden | |||||
Date
|
Michael F. Golden | |||||
6
Exhibit
10.93
SMITH & WESSON HOLDING CORPORATION
2011 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Plan is to provide incentive for present and future employees
of the Company and any Designated Subsidiary to acquire a proprietary interest (or increase an
existing proprietary interest) in the Company through the purchase of Common Stock. It is the
Company’s intention that the Plan qualify as an “employee stock purchase plan” under Section 423 of
the Code. Accordingly, the provisions of the Plan shall be administered, interpreted and construed
in a manner consistent with the requirements of that section of the Code.
2. Definitions.
(a) “Applicable Percentage” means the percentage specified in Section 8, subject to adjustment
by the Committee as provided in Section 8.
(b) “Board” means the Board of Directors of the Company.
(c) “Code” means the Internal Revenue Code of 1986, as amended from time to time, including
regulations thereunder, and successor provisions and regulations thereto.
(d) “Committee” means the committee appointed by the Board to administer the Plan as described
in Section 13 of the Plan or, if no such Committee is appointed, the Board.
(e) “Common Stock” means the Company’s common stock, par value $.001 per share.
(f) “Company” means Smith & Wesson Holding Corporation, a Nevada corporation.
(g) “Compensation” means, with respect to each Participant for each pay period, all regular
straight time gross earnings paid to such Participant by the Company or a Designated Subsidiary.
Except as otherwise determined by the Committee, “Compensation” shall not include: (i) commissions,
(ii) payments for overtime, (iii) shift premium, (iv) incentive compensation, (v) incentive
payments, (vi) bonuses, and (vii) other compensation.
(h) “Continuous Status as an Employee” means the absence of any interruption or termination of
service as an Employee. Continuous Status as an Employee shall not be considered interrupted in
the case of a leave of absence agreed to in writing by the Company or the Designated Subsidiary
that employs the Employee, provided that such leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is guaranteed by contract or statute.
(i) “Designated Subsidiaries” means the Subsidiaries that have been designated by the Board
from time to time in its sole discretion as eligible to participate in the Plan.
(j) “Employee” means any person, including an Officer, whose customary employment with the
Company or one of its Designated Subsidiaries is at least 20 hours per week and more than five
months in any calendar year.
(k) “Entry Date” means the first day of each Exercise Period.
(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(m) “Exercise Date” means the last Trading Day ending on or before the March 31 or September
30, as applicable, immediately following the First Offering Date, and the last Trading Day ending
on or before each March 31 or September 30 thereafter.
(n) “Exercise Period” means, for any Offering Period, each period commencing on the Offering
Date and on the day after each Exercise Date, and terminating on the immediately following Exercise
Date.
1
(o) “Exercise Price” means the price per share of Common Stock offered in a given Offering
Period determined as provided in Section 8.
(p) “Fair Market Value” means, with respect to a share of Common Stock, the Fair Market Value
as determined under Section 7(b).
(q) “First Offering Date” means April 1, 2012; provided, however, that if the offering period
under the Company’s 2001 Employee Stock Purchase Plan, as amended (the “Prior Plan”) ends prior to
March 31, 2012, the First Offering Date shall mean the April 1 or October 1, as applicable,
immediately following the end of the offering period under the Prior Plan.
(r) “Offering Date” means the first Trading Day of each Offering Period; provided, that in the
case of an individual who becomes eligible to become a Participant under Section 3 after the first
Trading Day of an Offering Period, the term “Offering Date” shall mean the first Trading Day of the
Exercise Period coinciding with or next succeeding the day on which that individual becomes
eligible to become a Participant. Options granted after the first day of an Offering Period will
be subject to the same terms as the options granted on the first Trading Day of such Offering
Period except that they will have a different grant date (thus, potentially, a different exercise
price) and, because they expire at the same time as the options granted on the first Trading Day of
such Offering Period, a shorter term.
(s) “Offering Period” means, subject to adjustment as provided in Section 4, (i) with respect
to the first Offering Period, the period beginning on the First Offering Date and ending on
September 30 or March 31, as applicable, which is 12 months thereafter, and (ii) with respect to
each Offering Period thereafter, the period beginning on April 1 or October 1, as applicable,
immediately following the end of the previous Offering Period and ending on September 30 or March
31, as applicable, which is 12 months thereafter.
(t) “Officer” means a person who is an officer of the Company within the meaning of Section 16
under the Exchange Act and the rules and regulations promulgated thereunder.
(u) “Participant” means an Employee who has elected to participate in the Plan by filing an
enrollment agreement with the Company as provided in Section 5 of the Plan.
(v) “Plan” shall mean this 2011 Employee Stock Purchase Plan.
(w) “Plan Contributions” means, with respect to each Participant, the after-tax payroll
deductions withheld from the Compensation of the Participant and contributed to the Plan for the
Participant as provided in Section 6 of the Plan.
(x) “Subsidiary” shall mean any corporation, domestic or foreign, of which the Company owns,
directly or indirectly, 50% or more of the total combined voting power of all classes of stock, and
that otherwise qualifies as a “subsidiary corporation” within the meaning of Section 424(f) of the
Code.
(y) “Trading Day” shall mean a day on which the national stock exchanges and the Nasdaq system
are open for trading.
3. Eligibility.
(a) Any Employee who is an Employee as of the Offering Date of a given Offering Period shall
be eligible to participate in such Offering Period under the Plan, subject to the requirements of
Section 5(a) and the limitations imposed by Section 423(b) of the Code; provided, however, that any
Employee who is an Employee as of the First Offering Date shall be eligible to become a Participant
as of such First Offering Date; and further provided, however, that eligible Employees may not
participate in more than one Offering Period at a time.
(b) Notwithstanding any provision of the Plan to the contrary, no Participant shall be granted
an option under the Plan (i) to the extent that if, immediately after the grant, such Employee (or
any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the
Code) would own stock and/or hold outstanding options to purchase stock possessing 5% or more of
the total combined voting power or value of all classes of stock of the Company or of any
Subsidiary of the Company, or (ii) to the extent that his or her rights to
2
purchase stock under all employee stock purchase plans of the Company and its Subsidiaries
intended to qualify under Section 423 of the Code to accrue at a rate which exceeds $25,000 of fair
market value of stock (determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.
4. Offering Periods. The Plan shall generally be implemented by a series of Offering Periods.
The first Offering Period shall commence on the First Offering Date and end on March 31 or
September 30, as applicable, which is 12 months thereafter, and succeeding Offering Periods shall
commence on October 1 or April 1, as applicable, immediately following the end of the previous
Offering Period and end on March 31 or September 30, as applicable, which is 12 months thereafter.
If, however, the Fair Market Value of a share of Common Stock on any Exercise Date (except the
final scheduled Exercise Date of any Offering Period) is lower than the Fair Market Value of a
share of Common Stock on the Offering Date, then the Offering Period in progress shall end
immediately following the close of trading on such Exercise Date, and a new Offering Period shall
begin on the next subsequent April 1 or October 1, as applicable, and shall extend for a 12 month
period ending on September 30 or March 31, as applicable. Subsequent Offering Periods shall
commence on the April 1 or October 1, as applicable, immediately following the end of the previous
Offering Period and shall extend for a 12 month period ending on September 30 or March 31, as
applicable. The Committee shall have the power to make other changes to the duration and/or the
frequency of Offering Periods with respect to future offerings if such change is announced at least
five days prior to the scheduled beginning of the first Offering Period to be affected and the
Offering Period does not exceed 12 months.
5. Election to Participate.
(a) An eligible Employee may elect to participate in the Plan commencing on any Entry Date by
completing an enrollment agreement on the form provided by the Company and filing the enrollment
agreement with the Company on or prior to such Entry Date, unless a later time for filing the
enrollment agreement is set by the Committee for all eligible Employees with respect to a given
offering. The enrollment agreement shall set forth the percentage of the Participant’s
Compensation that is to be withheld by payroll deduction pursuant to the Plan.
(b) Except as otherwise determined by the Committee under rules applicable to all
Participants, payroll deductions for a Participant shall commence on the first payroll date
following the Entry Date on which the Participant elects to participate in accordance with Section
5(a) and shall end on the last payroll date in the Offering Period, unless sooner terminated by the
Participant as provided in Section 11.
(c) Unless a Participant elects otherwise prior to the last Exercise Date of an Offering
Period, including the last Exercise Date prior to termination in the case of an Offering Period
terminated by operation of the rule contained in Section 4 hereof, such Participant shall be deemed
(i) to have elected to participate in the immediately succeeding Offering Period (and, for purposes
of such Offering Period such Participant’s “Entry Date” shall be deemed to be the first day of such
Offering Period) and (ii) to have authorized the same payroll deduction for such immediately
succeeding Offering Period as was in effect for such Participant immediately prior to the
commencement of such succeeding Offering Period.
6. Participant Contributions.
(a) Except as otherwise authorized by the Committee pursuant to Section 6(d) below, all
Participant contributions to the Plan shall be made only by payroll deductions. At the time a
Participant files the enrollment agreement with respect to an Offering Period, the Participant may
authorize payroll deductions to be made on each payroll date during the portion of the Offering
Period that he or she is a Participant in an amount not less than 1% and not more than 20% (or such
greater percentage as the Committee may establish from time to time before an Offering Date) of the
Participant’s Compensation on each payroll date during the portion of the Offering Period that he
or she is a Participant (or subsequent Offering Periods as provided in Section 5(c)). The amount
of payroll deductions shall be a whole percentage (i.e., 1%, 2%, 3%, etc.) of the Participant’s
Compensation.
(b) A Participant may discontinue his or her participation in the Plan as provided in Section
11, or may decrease or increase the rate or amount of his or her payroll deductions during such
Offering Period (within the limitations of Section 6(a) above) by completing and filing with the
Company a new enrollment agreement authorizing a change in the rate or amount of payroll
deductions; provided, that a Participant may not change the rate or amount of his or her payroll
deductions more than once in any Exercise Period. The change in
3
rate or amount shall be effective with the first full payroll period following 10 business
days after the Company’s receipt of the new enrollment agreement.
(c) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of
the Code and Section 3(b) hereof, a Participant’s payroll deductions may be decreased to 0% at such
time during any Exercise Period which is scheduled to end during the current calendar year that the
aggregate of all payroll deductions accumulated with respect to such Exercise Period and any other
Exercise Period ending within the same calendar year are equal to the product of $25,000 multiplied
by the Applicable Percentage for the calendar year. Payroll deductions shall recommence at the
rate provided in the Participant’s enrollment agreement at the beginning of the following Exercise
Period which is scheduled to end in the following calendar year, unless terminated by the
Participant as provided in Section 11.
(d) All Plan Contributions made for a Participant shall be deposited in the Company’s general
corporate account and shall be credited to the Participant’s account under the Plan. No interest
shall accrue or be credited with respect to a Participant’s Plan Contributions. All Plan
Contributions received or held by the Company may be used by the Company for any corporate purpose,
and the Company shall not be obligated to segregate or otherwise set apart such Plan Contributions
from any other corporate funds.
7. Grant of Option.
(a) On a Participant’s Entry Date, subject to the limitations set forth in Sections 3(b) and
12(a), the Participant shall be granted an option to purchase on each subsequent Exercise Date
during the Offering Period in which such Entry Date occurs (at the Exercise Price determined as
provided in Section 8 below) up to a number of shares of Common Stock determined by dividing such
Participant’s Plan Contributions accumulated prior to such Exercise Date and retained in the
Participant’s account as of such Exercise Date by the Exercise Price; provided, that the maximum
number of shares an Employee may purchase during any Exercise Period shall be 12,500 shares. The
Fair Market Value of a share of Common Stock shall be determined as provided in Section 7(b).
(b) The Fair Market Value of a share of Common Stock on a given date shall be determined by
the Committee in its discretion; provided, that if there is a public market for the Common Stock,
the Fair Market Value per share shall be either (i) the closing price of the Common Stock on such
date (or, in the event that the Common Stock is not traded on such date, on the immediately
preceding trading date), as reported by the National Association of Securities Dealers Automated
Quotation (Nasdaq) National Market System, (ii) if such price is not reported, the average of the
bid and asked prices for the Common Stock on such date (or, in the event that the Common Stock is
not traded on such date, on the immediately preceding trading date), as reported by Nasdaq, (iii)
in the event the Common Stock is listed on a stock exchange, the closing price of the Common Stock
on such exchange on such date (or, in the event that the Common Stock is not traded on such date,
on the immediately preceding trading date), as reported in The Wall Street Journal, or (iv) if no
such quotations are available for a date within a reasonable time prior to the valuation date, the
value of the Common Stock as determined by the Committee using any reasonable means.
8. Exercise Price. The Exercise Price per share of Common Stock offered to each Participant
in a given Offering Period shall be the lower of: (i) the Applicable Percentage of the greater of
(A) the Fair Market Value of a share of Common Stock on the Offering Date or (B) the Fair Market
Value of a share of Common Stock on the Entry Date on which the Employee elects to become a
Participant within the Offering Period or (ii) the Applicable Percentage of the Fair Market Value
of a share of Common Stock on the Exercise Date. The Applicable Percentage with respect to each
Offering Period shall be 85%, unless and until such Applicable Percentage is increased by the
Committee, in its sole discretion, provided that any such increase in the Applicable Percentage
with respect to a given Offering Period must be established not less than 15 days prior to the
Offering Date thereof.
9. Exercise of Options. Unless the Participant withdraws from the Plan as provided in Section
11, the Participant’s option for the purchase of shares will be exercised automatically on each
Exercise Date, and the maximum number of full shares subject to such option shall be purchased for
the Participant at the applicable Exercise Price with the accumulated Plan Contributions then
credited to the Participant’s account under the Plan. During a Participant’s lifetime, a
Participant’s option to purchase shares hereunder is exercisable only by the Participant.
4
10. Delivery. As promptly as practicable after each Exercise Date, the Company shall arrange
for the delivery to each Participant (or the Participant’s beneficiary), as appropriate, or to a
custodial account for the benefit of each Participant (or the Participant’s beneficiary) as
appropriate, of the shares purchased upon exercise of such Participant’s option. No fractional
shares shall be purchased; any payroll deductions accumulated in a Participant’s account that are
not sufficient to purchase a full share shall be retained in such Participant’s account for the
subsequent Exercise Period or Offering Period, subject to earlier withdrawal by the participant as
provided in Section 11 below. Any other amounts left over in a participant’s account after a
Exercise Date shall be returned to the Participant as soon as administratively practicable.
11. Withdrawal; Termination of Employment.
(a) A Participant may withdraw from the Plan at any time by giving written notice to the
Company. All of the Plan Contributions credited to the Participant’s account and not yet invested
in Common Stock will be paid to the Participant as soon as administratively practicable after
receipt of the Participant’s notice of withdrawal, the Participant’s option to purchase shares
pursuant to the Plan automatically will be terminated, and no further payroll deductions for the
purchase of shares will be made for the Participant’s account. Payroll deductions will not resume
on behalf of a Participant who has withdrawn from the Plan (a “Former Participant”) unless the
Former Participant enrolls in a subsequent Offering Period in accordance with Section 5(a).
(b) Upon termination of the Participant’s Continuous Status as an Employee prior to any
Exercise Date for any reason, including retirement or death, the Plan Contributions credited to the
Participant’s account and not yet invested in Common Stock will be returned to the Participant or,
in the case of death, to the Participant’s beneficiary as determined pursuant to Section 14, and
the Participant’s option to purchase shares under the Plan will automatically terminate.
(c) A Participant’s withdrawal from an Offering Period will not have any effect upon the
Participant’s eligibility to participate in succeeding Offering Periods or in any similar plan
which may hereafter be adopted by the Company.
12. Stock.
(a) Subject to adjustment as provided in Section 17, the maximum number of shares of the
Company’s Common Stock that shall be made available for sale under the Plan shall be equal to any
shares available for issuance under the Prior Plan on the First Offering Date (and such shares
shall no longer be available for issuance under the Prior Plan), but not to exceed 6,000,000
shares. Shares of Common Stock subject to the Plan may be newly issued shares or shares reacquired
in private transactions or open market purchases. If and to the extent that any right to purchase
reserved shares shall not be exercised by any Participant for any reason or if such right to
purchase shall terminate as provided herein, shares that have not been so purchased hereunder shall
again become available for the purpose of the Plan unless the Plan shall have been terminated, but
all shares sold under the Plan, regardless of source, shall be counted against the limitation set
forth above.
(b) A Participant will have no interest or voting right in shares covered by his option until
such option has been exercised.
(c) Shares to be delivered to a Participant under the Plan will be registered in the name of
the Participant or in the name of the Participant and his or her spouse, as requested by the
Participant.
13. Administration.
(a) The Plan shall be administered by the Committee. The Committee shall have the authority
to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan,
and to make all other determinations necessary or advisable for the administration of the Plan.
The administration, interpretation, or application of the Plan by the Committee shall be final,
conclusive and binding upon all persons.
(b) Notwithstanding the provisions of Subsection (a) of this Section 13, in the event that
Rule 16b-3 promulgated under the Exchange Act or any successor provision thereto (“Rule 16b-3”)
provides specific requirements for the administrators of plans of this type, the Plan shall only be
administered by such body and in
5
such a manner as shall comply with the applicable requirements of Rule 16b-3. Unless
permitted by Rule 16b-3, no discretion concerning decisions regarding the Plan shall be afforded to
any person that is not “disinterested” as that term is used in Rule 16b-3.
14. Designation of Beneficiary.
(a) A Participant may file a written designation of a beneficiary who is to receive any shares
and cash, if any, from the Participant’s account under the Plan in the event of the Participant’s
death subsequent to an Exercise Date on which the Participant’s option hereunder is exercised but
prior to delivery to the Participant of such shares and cash. In addition, a Participant may file
a written designation of a beneficiary who is to receive any cash from the Participant’s account
under the Plan in the event of the Participant’s death prior to the exercise of the option.
(b) A Participant’s beneficiary designation may be changed by the Participant at any time by
written notice. In the event of the death of a Participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such Participant’s death, the
Company shall deliver such shares and/or cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to the knowledge of the
Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to
any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative
is known to the Company, then to such other person as the Company may designate.
15. Transferability. Neither Plan Contributions credited to a Participant’s account nor any
rights to exercise any option or receive shares of Common Stock under the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way (other than by will or the laws of descent
and distribution, or as provided in Section 14). Any attempted assignment, transfer, pledge or
other distribution shall be without effect, except that the Company may treat such act as an
election to withdraw funds in accordance with Section 11.
16. Participant Accounts. Individual accounts will be maintained for each Participant in the
Plan to account for the balance of his Plan Contributions and options issued and shares purchased
under the Plan. Statements of account will be given to Participants semi-annually in due course
following each Exercise Date, which statements will set forth the amounts of payroll deductions,
the per share purchase price, the number of shares purchased and the remaining cash balance, if
any.
17. Adjustments Upon Changes in Capitalization; Corporate Transactions.
(a) If the outstanding shares of Common Stock are increased or decreased, or are changed into
or are exchanged for a different number or kind of shares, as a result of one or more
reorganizations, restructurings, recapitalizations, reclassifications, stock splits, reverse stock
splits, stock dividends stock repurchases, or the like, equitable and proportionate adjustments
shall be made by the Committee in the number and/or kind of shares, and the per-share option price
thereof, which may be issued in the aggregate and to any Participant upon exercise of options
granted under the Plan.
(b) In the event of the proposed dissolution or liquidation of the Company, the Offering
Period will terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Committee. In the event of a proposed sale of all or substantially all
of the Company’s assets, or the merger of the Company with or into another corporation (each, a
“Sale Transaction”), each option under the Plan shall be assumed or an equivalent option shall be
substituted by such successor corporation or a parent or subsidiary of such successor corporation,
unless the Committee determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, to shorten the Exercise Period then in progress by setting a new
Exercise Date (the “New Exercise Date”). If the Committee shortens the Exercise Period then in
progress in lieu of assumption or substitution in the event of a Sale Transaction, the Committee
shall notify each Participant in writing, at least 10 days prior to the New Exercise Date, that the
exercise date for such Participant’s option has been changed to the New Exercise Date and that such
Participant’s option will be exercised automatically on the New Exercise Date, unless prior to such
date the Participant has withdrawn from the Plan as provided in Section 11. For purposes of this
Section 17(b), an option granted under the Plan shall be deemed to have been assumed if, following
the Sale Transaction, the option confers the right to purchase, for each share of option stock
subject to the option immediately prior to the Sale Transaction, the consideration (whether stock,
cash or other securities or property)
6
received in the Sale Transaction by holders of Common Stock for each share of Common Stock
held on the effective date of the Sale Transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, that if the consideration received in the Sale Transaction was
not solely common stock of the successor corporation or its parent (as defined in Section 424(e) of
the Code), the Committee may, with the consent of the successor corporation and the Participant,
provide for the consideration to be received upon exercise of the option to be solely common stock
of the successor corporation or its parent equal in fair market value to the per share
consideration received by the holders of Common Stock in the Sale Transaction.
(c) In all cases, the Committee shall have sole discretion to exercise any of the powers and
authority provided under this Section 17, and the Committee’s actions hereunder shall be final and
binding on all Participants. No fractional shares of stock shall be issued under the Plan pursuant
to any adjustment authorized under the provisions of this Section 17.
18. Amendment of the Plan. The Board or the Committee may at any time, or from time to time,
amend the Plan in any respect; provided, that (i) no such amendment may make any change in any
option theretofore granted which adversely affects the rights of any Participant and (ii) the Plan
may not be amended in any way that will cause rights issued under the Plan to fail to meet the
requirements for employee stock purchase plans as defined in Section 423 of the Code or any
successor thereto. To the extent necessary to comply with Rule 16b-3 under the Exchange Act,
Section 423 of the Code, or any other applicable law or regulation), the Company shall obtain
stockholder approval of any such amendment.
19. Termination of the Plan. The Plan and all rights of Employees hereunder shall terminate
on the earliest of:
(a) the Exercise Date that Participants become entitled to purchase a number of shares greater
than the number of reserved shares remaining available for purchase under the Plan;
(b) such date as is determined by the Board in its discretion; or
(c) March 31, 2022.
In the event that the Plan terminates under circumstances described in Section 19(a) above,
reserved shares remaining as of the termination date shall be sold to Participants on a pro rata
basis.
20. Notices. All notices or other communications by a Participant to the Company under or in
connection with the Plan shall be deemed to have been duly given when received in the form
specified by the Company at the location, or by the person, designated by the Company for the
receipt thereof.
21. Effective Date. Subject to adoption of the Plan by the Board, the Plan shall become
effective on the First Offering Date. The Board shall submit the Plan to the stockholders of the
Company for approval within 12 months after the date the Plan is adopted by the Board.
22. Conditions Upon Issuance of Shares.
(a) The Plan, the grant and exercise of options to purchase shares under the Plan, and the
Company’s obligation to sell and deliver shares upon the exercise of options to purchase shares
shall be subject to compliance with all applicable federal, state and foreign laws, rules and
regulations and the requirements of any stock exchange on which the shares may then be listed.
(b) The Company may make such provisions as it deems appropriate for withholding by the
Company pursuant to federal or state tax laws of such amounts as the Company determines it is
required to withhold in connection with the purchase or sale by a Participant of any Common Stock
acquired pursuant to the Plan. The Company may require a Participant to satisfy any relevant tax
requirements before authorizing any issuance of Common Stock to such Participant.
7
23. Expenses of the Plan. All costs and expenses incurred in administering the Plan shall be
paid by the Company, except that any stamp duties or transfer taxes applicable to participation in
the Plan may be charged to the account of such Participant by the Company.
24. No Employment Rights. The Plan does not, directly or indirectly, create any right for the
benefit of any employee or class of employees to purchase any shares under the Plan, or create in
any employee or class of employees any right with respect to continuation of employment by the
Company, and it shall not be deemed to interfere in any way with the Company’s right to terminate,
or otherwise modify, an employee’s employment at any time.
25. Applicable Law. The laws of the state of Nevada shall govern all matter relating to this
Plan except to the extent (if any) superseded by the laws of the United States.
26. Additional Restrictions of Rule 16b-3. The terms and conditions of options granted
hereunder to, and the purchase of shares by, persons subject to Section 16 of the Exchange Act
shall comply with the applicable provisions of Rule 16b-3. This Plan shall be deemed to contain,
and such options shall contain, and the shares issued upon exercise thereof shall be subject to,
such additional conditions and restrictions as may be required by Rule 16b-3 to qualify for the
maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions.
8
Exhibit 99.1
| Contacts: Liz Sharp, VP Investor Relations Smith & Wesson Holding Corp. (413) 747-3304 lsharp@smith-wesson.com |
 |
Smith & Wesson Announces CEO Transition
Firearm President P. James Debney Appointed to Succeed CEO Michael F. Golden;
Golden Appointed Co-Vice Chairman of Board of Directors
Golden Appointed Co-Vice Chairman of Board of Directors
SPRINGFIELD, Mass., September 27, 2011 — Smith & Wesson Holding Corporation (NASDAQ Global Select:
SWHC), a leader in the business of safety, security, protection, and sport, today announced that,
in accordance with the company’s comprehensive management succession planning process, P. James
Debney has been appointed President, Chief Executive Officer, and a member of the Board of
Directors, effective immediately. Debney previously served as Vice President of Smith & Wesson
Holding Corporation and President of the company’s firearm division. Michael F. Golden, who has
been Smith & Wesson’s President and Chief Executive Officer, will continue as a member of the Board
of Directors and has been appointed as Co-Vice Chairman of the Board.
Barry M. Monheit, Chairman of the Board of Smith & Wesson, said, “On behalf of the Board of
Directors, I would like to thank Mike Golden for his many contributions over the past seven years.
Under his leadership, we expanded our sales channels and introduced a number of exciting new
products that supported our firearm revenue growth, extended our market reach, and built upon the
awareness of our iconic Smith & Wesson brand.”
Mike F. Golden commented, “I would like to congratulate James on this well deserved promotion.
During his tenure, our firearm division delivered growth, product innovation, and the expansion of
our company’s brand in the firearm industry with consumers and professionals alike. I look forward
to working with James to deliver a seamless transition, while continuing to serve as a resource to
the company in my role on the Board.”
P. James Debney stated, “My experience in the firearm division has provided me a deep appreciation
for our product innovation, our commitment to customers, and our talented and dedicated employees.
I am honored to have the opportunity to lead Smith & Wesson into its very exciting future.”
Debney, (44), has been President of Smith & Wesson’s firearm division since November 2009. Prior
to that, he was President of Presto Products Company, a $500 million plastic products business unit
formerly of Alcoa Consumer Products. At Presto, he created and executed sales, marketing, and
operations strategies as
well as oversaw all aspects of the growing business, composed of four business units with five
manufacturing facilities in the United States and partnerships in Asia. Prior to Presto Products,
Debney held a series of increasingly responsible operations management and business leadership
roles with Baco Consumer Products, also a business unit formerly of Alcoa. Debney holds a
Bachelor of Science in Chemistry with Honors from the University of Manchester,
Institute of Science and Technology, and a Certificate of Business Administration from
the University of Keele, both in the United Kingdom.
Conference Call and Webcast
The company will host a conference call and webcast today, September 27, 2011, at 5:00 p.m.
Eastern Time (2:00 p.m. Pacific Time). Speakers on the conference call will include P. James
Debney, Smith & Wesson President and Chief Executive Officer, Michael F. Golden, Co-Vice Chairman
of the Board of Directors, and Jeffrey D. Buchanan, Executive Vice President and Chief Financial
Officer. The conference call may include forward-looking statements. Those interested in listening
to the call via telephone may call directly at 617-614-2714 and reference conference code 94532462.
No RSVP is necessary. The conference call audio webcast can also be accessed live and for replay
on the company’s website at www.smith-wesson.com, under the Investor Relations section. The
company will maintain an audio replay of this conference call on its website for a period of time
after the call. No other audio replay will be available.
About Smith & Wesson
Smith & Wesson Holding Corporation (NASDAQ Global Select: SWHC) is a U.S.-based, global provider of
products and services for safety, security, protection, and sport. The company delivers a broad
portfolio of firearms and related training to the military, law enforcement, and sports markets,
and designs and constructs facility perimeter security solutions for military and commercial
applications. Smith & Wesson Holding Corporation companies include Smith & Wesson Corp., the
globally recognized manufacturer of quality firearms; Smith & Wesson Security Solutions, Inc., a
full-service perimeter security integrator, barrier manufacturer, and installer; and
Thompson/Center Arms Company, Inc., a premier designer and manufacturer of premium hunting
firearms. Smith & Wesson facilities are located in Massachusetts, Maine, and Tennessee. For more
information on Smith & Wesson and its companies, call (800) 331-0852 or log on to
www.smith-wesson.com.
Safe Harbor Statement
Certain statements contained in this press release may be deemed to be forward-looking statements
under federal securities laws, and the company intends that such forward-looking statements be
subject to the safe-harbor created thereby. Such forward-looking statements include statements
regarding the company’s goals, strategies, and prospects. The company cautions that these
statements are qualified by important factors that could cause actual results to
differ materially from those reflected by such forward-looking statements. Such factors include the
ability of the company to smoothly transition management; the demand for the company’s products;
the company’s growth opportunities; and other risks detailed from time to time in the company’s
reports filed with the SEC.
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