INDEMNIFICATION AGREEMENT
THIS
INDEMNIFICATION AGREEMENT is made effective as of the 7th day of
June 1999, by and between Skechers U.S.A., Inc., a Delaware
corporation (the “Company”) and David Weinberg
(“Indemnitee”).
WHEREAS, it is
essential to the Company to retain and attract as directors and
executive officers the most capable persons available;
WHEREAS,
Indemnitee has recently become, or continues to serve as Executive
Vice President and Chief Financial Officer of the
Company;
WHEREAS, the
Bylaws and the Certificate of Incorporation of the Company require
the Company to indemnify its directors and officers to the fullest
extent permitted by law and Indemnitee is serving as a director or
executive officer of the Company, in part, in reliance on such
Bylaws and Certificate of Incorporation; and
WHEREAS, in
recognition of Indemnitee’s need for substantial protection
against personal liability, to maintain Indemnitee’s
continued service to the Company in an effective manner in reliance
on the aforesaid Bylaws and Certificate of Incorporation, in part,
to provide Indemnitee with specific contractual assurance that the
protection promised by such Bylaws and Certificate of Incorporation
will be available to Indemnitee (regardless of, among other things,
any amendment to or revocation of such Bylaws and Certificate of
Incorporation or any change in the composition of the
Company’s Board of Directors or any acquisition transaction
relating to the Company), the Company desires to provide in this
Agreement for the indemnification of and the advance of expenses to
Indemnitee to the fullest extent (whether partial or complete)
permitted by law, as set forth in this Agreement and, to the extent
officers’ and directors’ liability insurance is
maintained by the Company, to provide for continued coverage of
Indemnitee under the Company’s officers’ and
directors’ liability insurance policies.
NOW, THEREFORE,
in consideration of the covenants contained herein and of
Indemnitee’s continuing service to the Company directly, or
at its request, other enterprises, and intending to be legally
bound thereby, the parties hereto agree as follows:
(a) Acquiring
Person: shall mean any Person other than: (i) the Company;
(ii) any of the Company’s Subsidiaries; (iii) any
employee benefit plan of the Company or of a Subsidiary of the
Company or of a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company; (iv) any trustee
or other fiduciary holding securities under an employee benefit
plan of the Company or of a Subsidiary of the Company or of a
corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership
of
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stock of the
Company; or (v) The Greenberg Family Trust.
(b) Change in
Control: shall be deemed to have occurred if: (i) any Acquiring
Person is, or becomes the “beneficial owner” (as
defined in Rule 13d-3 and 14d-1 under the Securities and Exchange
Act of 1934, as amended (the “Exchange Act”)), directly
or indirectly, of securities of the Company representing 20% or
more of the combined voting power or more of the then outstanding
Voting Securities of the Company; or (ii) members of the
Incumbent Board cease for any reason to constitute at least a
majority of the Board of Directors of the Company; or (iii) a
public announcement is made of a tender or exchange offer by an
Acquiring Person for 50% or more of the outstanding Voting
Securities of the Company, and the Board of Directors of the
Company approves or fails to oppose that tender or exchange offer
in its statements in Schedule 14D-9 under the Exchange Act; or
(iv) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation,
partnership or other entity (or, if no such approval is required,
the consummation of such a merger or consolidation of the Company),
other than a merger or consolidation that would result in the
Voting Securities of the Company outstanding immediately prior to
the consummation thereof continuing to represent, either by
remaining outstanding or by being converted into Voting Securities
of the surviving entity or its parent, at least 80% of the total
Voting Securities outstanding immediately after that merger or
consolidation; or (v) the stockholders of the Company approve
a plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially all
of the Company’s assets (or, if no such approval is required,
the consummation of such a liquidation, sale, or disposition in one
transaction or series of related transactions) other than a
liquidation, sale, or disposition of all or substantially all of
the Company’s assets in one transaction or a series of
related transactions to a corporation owned directly or indirectly
by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(c) Claim:
any threatened, pending, or completed action, suit, proceeding or
alternative dispute resolution mechanism (including, without
limitation, securities laws actions, suits, and proceedings), or
any inquiry, hearing or investigation (including discovery),
whether conducted by the Company or any other party, that
Indemnitee in good faith believes might lead to the institution of
any action, suit, proceeding or alternative dispute resolution
mechanism whether civil, criminal, administrative, investigative,
or other.
(d) Expenses:
include attorneys’ fees and all other costs, travel expenses,
fees of experts, transcript costs, filing fees, witness fees,
telephone charges, postage, delivery service fees, expenses and
obligations of any nature whatsoever paid or incurred in connection
with investigating, defending, being a witness in or participating
in (including on appeal), or preparing to defend, be a witness in
or participate in any Claim relating to any Indemnifiable
Event.
(e) Incumbent
Board: individuals, who, as of June 7, 1999 constitute the
Board of Directors of the Company and any other individual who
becomes a director of the Company after that date and whose
election or appointment by the Board of
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Directors 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.
(f) Indemnifiable
Event: any event or occurrence related to the fact that Indemnitee
is or was a director, officer, employee, agent, or fiduciary of the
Company, or is or was serving at the request of the Company as a
director, officer, employee, trustee, agent, or fiduciary of
another corporation, partnership, joint venture, employee benefit
plan, trust, or other enterprise, or by reason of anything done or
not done by Indemnitee in any such capacity. For purposes of this
Agreement, the Company agrees that Indemnitee’s service on
behalf of or with respect to any Subsidiary of the Company shall be
deemed to be at the request of the Company.
(g) Independent
Legal Counsel: special, independent counsel selected by Indemnitee
and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed
services for the Company or for Indemnitee within the last five
years (other than as Independent Legal Counsel under this Agreement
or similar agreements). Independent Legal Counsel shall not be any
person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing
either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement, nor shall
Independent Legal Counsel be any person who has been sanctioned or
censured for ethical violations of applicable standards of
professional conduct.
(h) Person:
any person or entity of any nature whatsoever, specifically
including an individual, a firm, a company, a corporation, a
partnership, a limited liability company, a trust, or other entity.
A Person, together with that Person’s Affiliates and
Associates (as those terms are defined in Rule 12b-2 under the
Exchange Act), and any Persons acting as a partnership, limited
partnership, joint venture, association, syndicate, or other group
(whether or not formally organized), or otherwise acting jointly or
in concert or in a coordinated or consciously parallel manner
(whether or not pursuant to any express agreement), for the purpose
of acquiring, holding, voting, or disposing of securities of the
Company with such Person, shall be deemed a single
“Person.”
(i) Potential
Change in Control: shall be deemed to have occurred if (i) the
Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control; (ii) any
Person (including the Company) publicly announces an intention to
take or to consider taking actions that, if consummated, would
constitute a Change in Control; (iii) any Acquiring Person who
is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined
voting power of the then outstanding Voting Securities of the
Company increases its beneficial ownership of such securities by 5%
or more over the percentage so owned by that Person on the date of
this Agreement; or (iv) the Board of Directors of the Company
adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.
(j) Reviewing
Party: any appropriate person or body consisting of a
member
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or members of
the Company’s Board of Directors or any other person or body
appointed by the Board who is not a party to the particular Claim
for which Indemnitee is seeking indemnification or Independent
Legal Counsel.
(k) Subsidiary:
with respect to any Person, any corporation or other entity of
which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by
that Person.
(l) Voting
Securities: any securities that vote generally in the election of
directors, in the admission of general partners, or in the
selection of any other similar governing body.
2. BASIC
INDEMNIFICATION AND EXPENSE REIMBURSEMENT ARRANGEMENT
(a) If
Indemnitee was, is, or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness
or other participant in, a Claim by reason of (or arising in part
out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee to the fullest extent permitted by law as soon as
practicable but in any event no later than 30 days after written
demand is presented to the Company, against any and all Expenses,
judgments, fines, penalties, or amounts paid in settlement
(including all interest, assessments, and other charges paid or
payable in connection with or in respect of such Expenses,
judgments, fines, penalties, or amounts paid in settlement) of or
with respect to that Claim and any federal, state, local or foreign
taxes imposed on the Indemnitee as a result of the actual or deemed
receipt of any payments under this Agreement (including the
creation of the trust referred to in Section 4 hereof).
Notwithstanding anything in this Agreement to the contrary and
except as provided in Section 5, prior to a Change in Control,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by Indemnitee
against the Company or any director or officer of the Company
unless the Company has joined in or consented to the initiation of
such Claim. Notwithstanding the foregoing, the obligations of the
Company under Section 2(a) shall be subject to the condition that
the Reviewing Party shall not have determined (in a written
opinion, in any case in which Independent Legal Counsel referred to
in Section 3 hereof is involved) that Indemnitee would not be
permitted to be indemnified under applicable law. Nothing contained
in this Agreement shall require any determination under this
Section 2(a) to be m
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