-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OI/RoHWxhtlhY7MLKIj+ry3v3N/noiJ0EHq42FeQXmuQh3pkfsMQuwWFymznyghy YhKvTYQ2F/Y095y1LG+rOQ== 0000898430-99-002308.txt : 19990624 0000898430-99-002308.hdr.sgml : 19990624 ACCESSION NUMBER: 0000898430-99-002308 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990528 EFFECTIVENESS DATE: 19990528 FILER: COMPANY DATA: COMPANY CONFORMED NAME: K SWISS INC CENTRAL INDEX KEY: 0000862480 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 954265988 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-79641 FILM NUMBER: 99637810 BUSINESS ADDRESS: STREET 1: 31248 OAK CREST DRIVE CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 BUSINESS PHONE: 8187065100 MAIL ADDRESS: STREET 1: 31248 OAK CREST DR CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on May 28, 1999 Registration No. 333-________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 ________________________ FORM S-8 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 ________________________ K.SWISS INC. (Exact name of registrant as specified in its charter) Delaware 95-4265988 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 31248 Oak Crest Drive Westlake Village, California 91361 (818) 706-5100 (Address of principal executive offices) ____________________________ K.SWISS INC. 1999 STOCK INCENTIVE PLAN (Full title of the plan) ____________________________ GEORGE POWLICK Vice President-Finance, Chief Financial Officer and Secretary K.Swiss Inc. 31248 Oak Crest Drive Westlake Village, California 91361 (818) 706-5100 (Name and address of agent for service of process) ____ CALCULATION OF REGISTRATION FEE
================================================================================================================================== Proposed Maximum Proposed Maximum Amount of Title of Each Class of Securities to be Amount to be Offering Price Per Aggregate Registration Registered Registered Share(1) Offering Price(1) Fee(1) - ---------------------------------------------------------------------------------------------------------------------------------- Class A Common Stock, par value $.01 per share 600,000 shares $49.1875 $29,512,500 $8,204 ==================================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(h) on the basis of the average of the high and low prices of the Class A Common Stock of K.Swiss Inc. quoted on the Nasdaq National Market on May 21, 1999. PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS Item 1. Plan Information* Item 2. Registrant Information and Employee Plan Annual Information* *Information required by Part I to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with the Note to Part I of Form S-8. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference The following documents filed by the Company with the Securities and Exchange Commission (the "Commission") are hereby incorporated by reference: (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998; (b) The Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999; (c) All other reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since the end of the fiscal year covered by the registrant document referred to in (a) above; (d) The description of the Company's Class A Common Stock which is contained in the Company's Registration Statement on Form 8-A dated June 4, 1990, including any amendment or report filed with the Commission for the purpose of updating such description. All documents subsequently filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. Copies of these documents will not be filed with this Registration Statement. Any statement contained herein or in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Registration Statement to the extent that such statement is modified or superseded by a subsequently filed document which also is or is deemed to be incorporated by reference herein. Any such statement so modified or superseded shall not be deemed to constitute a part of this Registration Statement except as so modified or superseded. Item 4. Description of Securities. Not applicable. Item 5. Interests of Named Experts and Counsel. Jonathan K. Layne, a partner in the Los Angeles office of Gibson, Dunn & Crutcher LLP, counsel to the Company, has been a director of the Company since 1990, and beneficially owned 2,000 shares of the Company's Class A Common Stock as of May 25, 1999. Item 6. Indemnification of Directors and Officers. Section 145 of the Delaware General Corporation Law (the "DGCL") provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal or investigative (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. Section 145 further provides that a corporation similarly may indemnify any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor, against expenses actually and reasonably incurred in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or such other court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 102(b)(7) of the DGCL permits a corporation to include in its certificate of incorporation a provision eliminating or limiting the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (relating to unlawful payment of dividends and unlawful stock purchase and redemption) or (iv) for any transaction from which the director derived an improper personal benefit. The Registrant's Amended and Restated Certificate of Incorporation provides for the indemnification by the Registrant of each director, officer and employee of the Registrant to the fullest extent permitted by the DGCL. As of May 3, 1990, the Registrant entered into, and the stockholders of the Registrant ratified, separate but identical indemnity agreements (the "Indemnity Agreements") with each director of the Registrant and certain officers of the Registrant. Pursuant to the terms and conditions of the Indemnity Agreements, the Registrant indemnified each indemnitee against any amounts which the indemnitee becomes legally obligated to pay in connection with any claim against the indemnitee based upon any act, omission, neglect or breach of duty which the indemnitee may commit, omit or suffer while acting in his capacity as a director and/or officer of the Registrant; provided, however, that such claim: (i) is not based upon the indemnitee's gaining in fact any personal profit or advantage to which the indemnitee is not legally entitled; (ii) is not for an accounting of profits in fact made from the purchase or sale by the indemnitee of securities of the Registrant within the meaning of Section 16(b) of the Exchange Act or similar provisions of any state law; and (iii) is not based upon the indemnitee's knowingly fraudulent, deliberately dishonest or willful misconduct. The Indemnity Agreements provide that all costs and expenses incurred by the indemnitee in defending or investigating such claim shall be paid by the Registrant in advance of the final disposition thereof unless a determination is made by the disinterested directors of the Registrant, independent legal counsel, the stockholders of the Registrant or a court of competent jurisdiction that: (i) the indemnitee did not act in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Registrant; (ii) in the case of any criminal action or proceeding, the indemnitee had reasonable cause to believe his conduct was unlawful; or (iii) the indemnitee intentionally breached his duty to the Registrant or its stockholders. Each indemnitee has undertaken to repay the Registrant for any costs or expenses so advanced if it shall ultimately be determined by a court of 2 competent jurisdiction in a final, nonappealable adjudication that the indemnitee is not entitled to indemnification under the Indemnity Agreements. The Registrant has a liability insurance policy in effect which covers certain claims against any officer or director of the Registrant by reason of certain breaches of duty, neglect, errors or omissions committed by such person in his or her capacity as an officer or director. Item 7. Exemption from Registration Claimed. Not applicable. Item 8. Exhibits. 4.1 K.Swiss Inc. 1999 Stock Incentive Plan. 4.2 Amended and Restated Certificate of Incorporation of K.Swiss Inc. (incorporated by reference to Exhibit 3.4 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 4.3 Amended and Restated Bylaws of K.Swiss Inc. (incorporated by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). 4.4 Certificate of Designations of Class A Common Stock (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 4.5 Certificate of Designations of Class B Common Stock (incorporated by reference to Exhibit 3.3 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 4.6 Specimen K.Swiss Inc. Class A Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 4.7 Specimen K.Swiss Inc. Class B Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 5.1 Opinion of Gibson, Dunn & Crutcher LLP. 23.1 Consent of Grant Thornton LLP. 23.2 Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5.1). 24.1 Power of Attorney (included on the signature page hereto). Item 9. Undertakings. (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the 3 Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Westlake Village, State of California, on this 28th day of May, 1999. K.SWISS INC. By: /s/ George Powlick ------------------ George Powlick Vice President-Finance, Chief Financial Officer and Secretary POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature to this Registration Statement appears below hereby constitutes and appoints Steven Nichols and George Powlick, and each or any of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or their substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
Signature Title Date --------- ----- ---- /s/ Steven Nichols Chairman of the Board, President and May 28, 1999 - --------------------------------------- Chief Executive Officer and Director Steven Nichols /s/ George Powlick Vice President-Finance, Chief Financial May 28, 1999 - --------------------------------------- Officer, Secretary and Director George Powlick (Principal Financial and Accounting Officer) /s/ Lawrence Feldman Director May 28, 1999 - --------------------------------------- Lawrence Feldman /s/ Jonathan Layne Director May 28, 1999 - --------------------------------------- Jonathan Layne /s/ Martyn Wilford Director May 28, 1999 - --------------------------------------- Martyn Wilford
5 EXHIBIT INDEX Exhibit No. Description - --- ----------- 4.1 K.Swiss Inc. 1999 Stock Incentive Plan. 4.2 Amended and Restated Certificate of Incorporation of K.Swiss Inc. (incorporated by reference to Exhibit 3.4 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 4.3 Amended and Restated Bylaws of K.Swiss Inc. (incorporated by reference to Exhibit 3.4 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991). 4.4 Certificate of Designations of Class A Common Stock (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 4.5 Certificate of Designations of Class B Common Stock (incorporated by reference to Exhibit 3.3 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 4.6 Specimen K.Swiss Inc. Class A Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 4.7 Specimen K.Swiss Inc. Class B Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company's Registration Statement on Form S-1 (Registration No. 33-34369)). 5.1 Opinion of Gibson, Dunn & Crutcher LLP. 23.1 Consent of Grant Thornton LLP. 23.2 Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5.1). 24.1 Power of Attorney (included on the signature page hereto). EX-4.1 2 STOCK INCENTIVE PLAN EXHIBIT 4.1 K.SWISS INC. 1999 STOCK INCENTIVE PLAN Section 1. PURPOSE OF PLAN This 1999 Stock Incentive Plan (this "Plan") of K.Swiss Inc., a Delaware corporation (the "Company"), is intended to serve as an incentive to, and to encourage stock ownership by, certain employees and non-employee directors, so that they may acquire or increase their proprietary interests in the success of the Company and to encourage them to remain in the Company's service. Section 2. PERSONS ELIGIBLE UNDER PLAN Any employee or director of the Company or any of its subsidiaries or affiliates (an "Eligible Person") shall be eligible to be considered for the grant of Awards (as hereinafter defined) hereunder. Any director of the Company who is not an employee (a "Non-Employee Director") shall be eligible to be considered for the grant of Non-Employee Director Options (as hereinafter defined) pursuant to Section 10 hereof, but shall not otherwise participate in this Plan. For purposes of this Plan, the Chairman of the Board's status as a Non-Employee Director shall be determined by the Board of Directors of the Company (the "Board"). Section 3. AWARDS (A) The Board or the Committee (as hereinafter defined) is authorized under this Plan to approve any type of arrangement with an Eligible Person that is not inconsistent with the provisions of this Plan and that, by its terms, involves or might involve the issuance of (1) shares of Class A Common Stock, par value $0.01 per share, of the Company or of any other class of security of the Company which is convertible into shares of the Company's Class A Common Stock (the "Shares") or (2) a right or interest with an exercise or conversion privilege at a price related to the Shares or with a value derived from the value of the Shares, which right or interest may, but need not, constitute a "Derivative Security," as such term is defined in Rule 16a-1 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such Rule may be amended from time to time. The entering into of any such arrangement is referred to herein as the "grant" of an "Award." (B) Awards are not restricted to any specified form or structure and may include, without limitation, grants, sales or bonuses of stock, restricted stock, stock options, reload stock options, stock purchase warrants, other rights to acquire stock, securities convertible into or redeemable for stock, stock appreciation rights, limited stock appreciation rights, phantom stock, dividend equivalents, performance units or performance shares, and an Award may consist of one such security or benefit, or two or more of them in tandem or in the alternative. The terms upon which an Award is granted shall be evidenced by a written agreement executed by the Company and the Eligible Person to whom such Award is granted. (C) Subject to paragraph (D)(2) below, Awards may be granted, and Shares may be issued pursuant to an Award, for any lawful consideration as determined by the Board or the Committee, including, without limitation, services rendered by the Eligible Person. (D) Subject to the provisions of this Plan, the Board or the Committee shall determine all of the terms and conditions of each Award granted under this Plan, which terms and conditions may (but need not) include, among other things: (1) provisions permitting any holder of an Award to pay the purchase price of the Shares or other property issuable pursuant to such Award, and/or such holder's tax withholding obligation with respect to such issuance, in whole or in part, by any one or more of the following means: (a) the delivery of cash; (b) the delivery of other property; (c) the delivery of previously owned shares of capital stock of the Company (including "pyramiding"); (d) a reduction in the amount of Shares or other property otherwise issuable pursuant to such Award; or (e) the delivery of a promissory note of the holder or of a third party; (2) provisions specifying the exercise or settlement price for any Award, or specifying the method by which such price is determined, provided that the exercise or settlement price of any Award that is an option to acquire a Share or a right to appreciation with respect to a Share or a similar Award, and that is intended to qualify as "performance-based compensation" for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), shall be not less than the fair market value of a Share on the date such Award is granted; (3) provisions relating to the exercisability and/or vesting of Awards, lapse and non-lapse restrictions upon the Shares obtained or obtainable under Awards or under this Plan and the termination, expiration and/or forfeiture of Awards; (4) provisions conditioning or accelerating the grant of an Award or the receipt of benefits pursuant to such Award upon the occurrence of specified events, including, without limitation, the achievement of performance goals, the exercise or settlement of a previous Award, the satisfaction of an event or condition within the control of the recipient of the Award or within the control of others, a change of control of the Company, an acquisition of a specified percentage of the voting power of the Company, the dissolution or liquidation of the Company, a sale of substantially all of the property and assets of the Company or an event of the type described in Section 7 hereof; (5) provisions required in order for such Award to qualify (a) as an incentive stock option under Section 422 of the Code (an "Incentive Stock Option"), (b) as "performance based compensation" under Section 162(m) of the Code, and/or (c) for an exemption from Section 16 of the Exchange Act; and/or (6) provisions restricting the transferability of Awards or Shares issued under Awards. Section 4. STOCK SUBJECT TO PLAN (A) The aggregate number of Shares that may be issued pursuant to all Incentive Stock Options granted under this Plan shall not exceed 600,000, subject to adjustment as provided in Section 7 hereof. (B) At any time, the aggregate number of Shares issued and issuable pursuant to all Awards (including all Incentive Stock Options and Awards that constitute a right or interest with an exercise or conversion privilege at a price related to the Shares or with a value derived from the value of Shares) granted under this Plan shall not exceed 600,000, subject to adjustment as provided in Section 7 hereof. (C) The aggregate number of Shares subject to Awards granted during any calendar year to any one Eligible Person (including the number of shares involved in Awards having a value derived from the value of Shares) shall not exceed 300,000, subject to adjustment as provided in Section 7 hereof. (D) For purposes of Section 4(B) hereof, the aggregate number of Shares issued and issuable pursuant to Awards granted under this Plan shall at any time be deemed to be equal to the sum of the following: 2 (i) the number of Shares that were issued prior to such time pursuant to Awards granted under this Plan, other than Shares that were subsequently reacquired by the Company pursuant to the terms and conditions of such Awards and with respect to which the holder thereof received no benefits of ownership such as dividends; plus ---- (ii) the number of Shares that were otherwise issuable prior to such time pursuant to Awards granted under this Plan, but that were withheld by the Company as payment of the purchase price of the Shares issued pursuant to such Awards or as payment of the recipient's tax withholding obligation with respect to such issuance; plus ---- (iii) the maximum number of Shares that are or may be issuable at or after such time pursuant to Awards granted under this Plan prior to such time. Section 5. NATURE AND DURATION OF PLAN (A) This Plan is intended to constitute an unfunded arrangement for a select group of management or other key employees. (B) Any Awards granted under this Plan shall be granted within ten years from the Effective Date of this Plan (as provided in Section 9)(the "Expiration Date"). Although Shares may be issued after the Expiration Date pursuant to Awards made prior to such date, no Shares shall be issued under this Plan after the tenth anniversary of the Expiration Date. Section 6. ADMINISTRATION OF PLAN (A) This Plan shall be administered by the Board or a committee of the Board (the "Committee") consisting of two or more directors, each of whom is (i) a "Non-Employee Director" (as such term is defined in Rule 16b-3 promulgated under the Exchange Act), and (ii) with respect to any Award intended to qualify for the "performance-based compensation" exception of Section 162(m) of the Code, is an "outside director" within the meaning of Section 162(m) of the Code. The Board shall have the discretion to appoint, add, remove or replace members of the Committee, and shall have the sole authority to fill vacancies on the Committee. (B) Subject to the provisions of this Plan, the Board or the Committee shall be authorized and empowered to do all things necessary or desirable in connection with the administration of this Plan with respect to the Awards over which the Board or such Committee has authority, including, without limitation, the following: (1) adopt, amend and rescind rules and regulations relating to this Plan; (2) determine which persons are Eligible Persons and to which of such Eligible Persons, if any, and when Awards shall be granted hereunder; (3) grant Awards to Eligible Persons and determine the terms and conditions thereof, including the number of Shares subject thereto and the circumstances under which Awards become exercisable or vested or are forfeited or expire, which terms may but need not be conditioned upon the passage of time, continued employment, the satisfaction of performance criteria, the occurrence of certain events (including events which the Board or the Committee determine constitute a change of control), or other factors; (4) determine whether, and the extent to which adjustments are required pursuant to Section 7 hereof; (5) interpret and construe any terms and conditions of, and define any terms used in, this Plan, any rules and regulations under this Plan and/or any Award granted under this Plan; and 3 (6) determine the terms and conditions of the Non-Employee Director Options that are granted hereunder, other than the terms and conditions specified in Section 10 hereof. (C) All decisions, determinations, and interpretations of the Committee shall be final and conclusive upon any Eligible Person to whom an Award has been granted and to any other person holding an Award. (D) The Committee may, in the terms of an Award or otherwise, temporarily suspend the exercisability of an Award and/or the issuance of Shares under an Award if the Committee determines that securities law or other considerations so warrant. Section 7. ADJUSTMENTS If the outstanding securities of the class then subject to this Plan are increased, decreased or exchanged for or converted into cash, property or a different number or kind of shares or securities, or if cash, property or shares or securities are distributed in respect of such outstanding securities, in either case as a result of a reorganization, merger, consolidation, recapitalization, restructuring, reclassification, dividend (other than a regular, quarterly cash dividend) or other distribution, stock split, reverse stock split, spin-off or the like, or if substantially all of the property and assets of the Company are sold, then, unless the terms of such transaction shall provide otherwise, the Board or the Committee may make appropriate and proportionate adjustments in (A) the number and type of shares or other securities or cash or other property that may be acquired pursuant to Awards theretofore granted under this Plan and the exercise or settlement price of such Awards, (B) the aggregate number and type of shares or other securities that may be issued pursuant to all Awards thereafter granted under this Plan, (C) the aggregate number of Shares that may be issued pursuant to Incentive Stock Options that may be granted under this Plan, and (D) the aggregate number of Shares that may be subject to Awards granted during any calendar year to any one Eligible Person; provided, however, that notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 7 to the extent that it would (and the adjustment shall be modified appropriately so that it does not) (1) cause an Award intended to qualify for the "performance based compensation" exception under Section 162(m) of the Code to not so qualify, or (2) without the consent of the Company and the holder of the Incentive Stock Option, cause an Award intended to qualify as an Incentive Stock Option to not so qualify. Section 8. AMENDMENT AND TERMINATION OF PLAN The Board may amend, alter or discontinue this Plan or any agreement evidencing an Award made under this Plan, but no amendment or alteration shall be made which would impair the rights of any Award holder, without such holder's consent, under any Award theretofore granted, provided that no such consent shall be required if the Board or the Committee determines in its sole discretion and prior to the date of any change of control (as defined, if applicable, in the agreement evidencing such Award) that such amendment or alteration is not reasonably likely to significantly diminish the benefits provided under such Award, or that any such diminution has been adequately compensated. Section 9. EFFECTIVE DATE OF PLAN The Effective Date of this Plan shall be the date upon which it was approved by the Board, subject however to approval of this Plan by the affirmative votes of the holders of a majority of the securities of the Company present, or represented, and entitled to vote at the Company's annual meeting of stockholders. Section 10. NON-EMPLOYEE DIRECTOR OPTIONS (A) The Board or the Committee is authorized under this Plan to grant each Non-Employee Director an option (a "Non-Employee Director Option") to purchase up to 2,000 Shares during a calendar year, subject to adjustment as provided in Section 7 hereof. (B) Each Non-Employee Director Option granted under this Plan shall expire upon the first to occur of the following: 4 (1) Twenty-four (24) months after the date upon which the optionee shall cease to be a director of the Company; or (2) The tenth anniversary of the Date of Grant of such Non-Employee Director Option. (C) Each Non-Employee Director Option shall have an exercise price equal to the greater of (1) the aggregate fair market value on the Date of Grant of such option of the Shares subject thereto or (2) the aggregate par value of such Shares on such date. (D) All outstanding Non-Employee Director Options theretofore granted under this Plan shall become fully exercisable upon the first to occur of the following: (1) the date of stockholder approval of a reorganization, merger or consolidation of the Company as a result of which the outstanding securities of the class then subject to this Plan are exchanged for or converted into cash, property and/or securities not issued by the Company or by a company whose common equity holders immediately after such transaction consist only of persons who are holders of the common equity of the Company immediately before such transaction; (2) the first date upon which the directors of the Company who were nominated by the Board for election as directors shall cease to constitute a majority of the authorized number of directors of the Company; (3) the dissolution or liquidation of the Company; or (4) the sale of all or substantially all of the property and assets of the Company. Section 11. EXTRAORDINARY CORPORATE TRANSACTIONS. (A) The Committee may provide, either at the time an Award is granted or thereafter, that a Change in Control shall have such effect as specified by the Committee, or no effect, as the Committee in its sole discretion may provide. Without limiting the foregoing, the Committee may but need not provide, either at the time an Award is granted or thereafter, that if a Change in Control occurs, then effective as of a date selected by the Committee, the Committee (which for purposes of the Change in Controls described in (iii) and (v) of Section 11(B) shall be the Committee as constituted prior to the occurrence of such Change in Control) acting in its sole discretion without the consent or approval of any Eligible Person, will effect one or more of the following alternatives or combination of alternatives with respect to any or all outstanding Awards (which alternatives may be conditional on the occurrence of such of the Change in Control specified in clause (i) through (v) of Section 11(B) which gives rise to the Change in Control and which may vary among individual Eligible Persons): (1) in the case of a Change in Control specified in clauses (i), (ii) or (iv) of Section 11(B), accelerate the time at which Awards then outstanding may be exercised in full for a limited period of time on or before a specified date (which will permit the Eligible Person to participate with the Class A Common Stock received upon exercise of such Award in the event of a Change in Control specified in clauses (i), (ii) or (iv), as the case may be) fixed by the Committee, after which specified date all unexercised Awards and all rights of Eligible Persons thereunder shall terminate; (2) accelerate the time at which Awards then outstanding may be exercised so that such Awards shall be exercisable in full for their then remaining term and shall be subject to assumption and/or adjustment pursuant to Section 7; or (3) require the mandatory surrender to the Company of outstanding Awards held by such Eligible Person (irrespective of whether such Awards are then exercisable under the provisions of the Plan) as of a date, before or not later than sixty days after such Change in Control, specified by the Committee, 5 and in such event the Committee shall thereupon cancel such Awards and the Company shall pay to each Eligible Person an amount of cash equal to the excess of the fair market value of the aggregate shares subject to such Award over the aggregate Award price of such shares. Notwithstanding the foregoing, with the consent of the Eligible Person, the Committee may in lieu of the foregoing make such provision with respect of any Change in Control as it deems appropriate. (B) For purposes of the Plan and Awards granted under the Plan, the term "Change in Control" shall mean (i) any merger or consolidation in which the Company shall not be the surviving entity (or survives only as a subsidiary of another entity whose stockholders did not own all or substantially all of the Company's Common Stock immediately prior to such transaction), (ii) the sale of all or substantially all of the Company's assets to any other person or entity (other than a wholly-owned subsidiary), (iii) the acquisition of beneficial ownership or control of (including, without limitation, power to vote) more than 50% of the outstanding shares of Common Stock by any person or entity (including a "group" as defined by or under Section 13(d)(3) of the Exchange Act), (iv) the dissolution or liquidation of the Company, (v) a contested election of directors, as a result of which or in connection with which the persons who were directors of the Company before such election or their nominees cease to constitute a majority of the Board, or (vi) any other event specified by the Committee, regardless of whether at the time an Award is granted or thereafter. Section 12. COMPLIANCE WITH OTHER LAWS AND REGULATIONS This Plan, the grant and exercise of Awards thereunder, and the obligation of the Company to sell and deliver shares under such Awards, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any governmental or regulatory agency as may be required. The Company shall not be required to issue or deliver any certificates for shares of Class A Common Stock prior to the completion of any registration or qualification of the Shares under any federal or state law or issuance of any ruling or regulation of any government body which the Company shall, in its sole discretion, determine to be necessary or advisable. Section 13. NO RIGHT TO COMPANY EMPLOYMENT Nothing in this Plan or as a result of any Award granted pursuant to this Plan shall confer on any individual any right to continue in the employ of the Company or interfere in any way with the right of the Company to terminate an individual's employment at any time. The agreement evidencing an Award may contain such provisions as the Committee may approve with respect to the effect of approved leaves of absence. Section 14. LIABILITY OF COMPANY The Company and any affiliate which is in existence or hereafter comes into existence shall not be liable to an Eligible Person or other persons as to: (A) The non-issuance or sale of Shares as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder; and (B) Any tax consequence expected, but not realized, by any Eligible Person or other person due to the issuance, exercise, settlement, cancellation or other transaction involving any Award granted hereunder. Section 15. GOVERNING LAW This Plan and any Awards and agreements hereunder shall be interpreted and construed in accordance with the laws of the State of Delaware and applicable federal law. 6 IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the foregoing by the Board, K.Swiss Inc. has caused these presents to be duly executed in its name and behalf by its proper officers thereunto duly authorized as of this 12th day of April, 1999. K.SWISS INC. By: /s/ Steven Nichols ------------------ Steven Nichols Chairman of the Board and President ATTEST: By: /s/ George Powlick ------------------ George Powlick Secretary 7 EX-5.1 3 OPINION OF GIBSON DUNN & CRUTCHER EXHIBIT 5.1 [GIBSON, DUNN & CRUTCHER LLP LETTERHEAD] May 28, 1999 K.Swiss Inc. 31248 Oak Crest Drive Westlake Village, California 91361 Re: K.Swiss Inc. -- Registration Statement on Form S-8 Ladies and Gentlemen: As special counsel to K.Swiss Inc., a Delaware corporation (the "Company"), we are familiar with the activities of the Company and its corporate records. We have participated in the authorization and preparation of the K.Swiss Inc. 1999 Stock Incentive Plan (the "Plan") and the Registration Statement on Form S- 8 (the "Registration Statement") being filed by the Company under the Securities Act of 1933, as amended, for the purpose of registering 600,000 shares of Class A Common Stock, par value $.01 per share, of the Company for use in connection with the Plan (the "Shares"). On the basis of our knowledge of the Company's activities and its corporate records, we are of the opinion that the Shares will be legally issued, fully paid and nonassessable when issued and paid for in accordance with the Plan. We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement. Sincerely, /s/ Gibson, Dunn & Crutcher LLP GIBSON, DUNN & CRUTCHER LLP EX-23.1 4 CONSENT OF GRANT THORNTON LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS --------------------------------------------------- We consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated January 29, 1999, except for Note O as to which the date is February 8, 1999, included in K.Swiss Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1998. GRANT THORNTON LLP Los Angeles, California May 28, 1999 -----END PRIVACY-ENHANCED MESSAGE-----