-----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, Nh7KCOEp+MDFg6qURVtzCJOjvskgV/HOSzQC53HotUzzznqP+9sFOIB35hv74WIz l1xFyzKv3y3khP2jDN+LOA== 0001021408-02-009134.txt : 20020703 0001021408-02-009134.hdr.sgml : 20020703 20020702205207 ACCESSION NUMBER: 0001021408-02-009134 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20020703 EFFECTIVENESS DATE: 20020703 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: 1933 Act SEC FILE NUMBER: 333-91864 FILM NUMBER: 02695533 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 ds8.txt FORM S-8 As filed with the Securities and Exchange Commission on July 3, 2002 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 (I.R.S. Employer of Incorporation or Organization) Identification Number) 31248 Oak Crest Drive Westlake Village, California 91361 (Address of Principal Executive Offices) (Zip Code) 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 (Name and Address of Agent for Service) (818) 706-5100 (Telephone Number, Including Area Code, of Agent for Service) Copies to: JONATHAN K. LAYNE Gibson, Dunn & Crutcher LLP 2029 Century Park East, Los Angeles, CA 90067 (310) 552-8500
================================================================================================================== CALCULATION OF REGISTRATION FEE ================================================================================================================== Proposed Title of Securities Amount to Be Proposed Maximum Maximum Amount of to be registered Registered (1) Offering Price Per Aggregate Registration Share (2) Offering Price (2) Fee (3) - ------------------------------------------------------------------------------------------------------------------ Common Stock, par value $0.01 per share. 600,000 $25.225 $15,135,000 $1,393.00 ==================================================================================================================
(1) Pursuant to Rule 416(a), also covers additional securities that may be offered as a result of stock splits, stock dividends or similar transactions. (2) Estimated solely for the purpose of determining the registration fee. (3) Calculated pursuant to Rule 457(c) and Rule 457(h) based upon the average of the high and low prices of the Class A Common Stock of K-SWISS Inc. as quoted on the Nasdaq National Market on June 28, 2002. ================================================================================ INTRODUCTION This Registration Statement on Form S-8 is filed by K-SWISS Inc., a Delaware corporation (the "Company," "Corporation" or "Registrant"), for the purpose of registering 600,000 additional shares of Class A Common Stock, par value $.01 per share (the "Common Stock") of the same class as other securities for which a registration statement on Form S-8 was filed with respect to the K-SWISS Inc. 1999 Stock Incentive Plan (the "Plan"). Pursuant to General Instruction E of Form S-8, the Registration Statement on Form S-8 (File No. 333-79641) filed on May 28, 1999, by the Registrant with the Securities and Exchange Commission (the "Commission") is hereby incorporated by reference. PART I INFORMATION REQUIRED IN SECTION 10(a) PROSPECTUS Item 1. Plan Information. Not filed as part of this Registration Statement pursuant to Note to Part 1 of Form S-8. Item 2. Registrant Information and Employee Plan Annual Information. Not filed as part of this Registration Statement pursuant to Note to Part 1 of Form S-8. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Documents by Reference. The following documents, which previously have been filed by the Company with the Securities and Exchange Commission (the "Commission"), are incorporated herein by reference and made a part hereof: (i) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001. For purposes of this Registration Statement, such Annual Report on Form 10-K shall be deemed to be modified only to the extent set forth below: Selected Financial Data The selected consolidated financial data presented below for each of the five years in the period ended December 31, 2001 have been derived from audited financial statements. The earnings per share and weighted average number of shares outstanding reflect a two-for-one stock split of the Company's Class A and Class B Common Stock distributed on June 21, 2002.
Year ended December 31, ----------------------- 2001 2000 1999 1998 1997 ---------------------------------------------------------------------- (In thousands, except per share data) Income Statement Data Revenues ............... $236,073 $221,629 $285,497 $161,540 $116,213 Cost of goods sold ..... 138,371 132,888 162,658 90,925 70,769 -------- -------- -------- -------- -------- Gross Profit .......... 97,702 88,741 122,839 70,615 45,444 Selling, general and administrative expenses .............. 60,757 57,300 67,885 51,220 40,074 -------- -------- -------- -------- --------
2 Operating profit ............... 36,945 31,441 54,954 19,395 5,370 Interest income, net ............ 1,804 3,597 1,784 1,853 1,823 -------- -------- --------- -------- -------- Earnings before income taxes ................. 38,749 35,038 56,738 21,248 7,193 Income tax expense .............. 15,440 13,979 22,454 8,702 3,020 -------- -------- --------- -------- -------- Net earnings .................. $ 23,309 $ 21,059 $ 34,284 $ 12,546 $ 4,173 ======== ======== ========= ======== ======== Earnings per share Basic ........................... $ 1.21 $ 1.02 $ 1.56 $ .57 $ .18 ======== ======== ========= ======== ======== Diluted ......................... $ 1.14 $ .98 $ 1.50 $ .55 $ .17 ======== ======== ========= ======== ======== Weighted average number of shares outstanding Basic ........................... 19,295 20,566 21,944 21,828 23,376 Diluted (1) ..................... 20,474 21,500 22,903 22,863 23,854 Balance Sheet Data (at period end) Current assets .................. $140,888 $142,677 $ 131,230 $102,002 $ 91,053 Current liabilities ............. 21,934 22,109 17,442 18,703 14,662 Total assets .................... 160,799 157,427 146,772 115,465 101,195 Total debt(2) ................... 0 1,046 853 655 1,142 Stockholders' equity ............ 124,359 120,219 112,030 83,268 75,865
______________ (1) Includes common stock and dilutive potential common stock (options). (2) Includes all interest-bearing debt and capital lease obligations, but excludes outstanding letters of credit ($3,517,000, $5,021,000, $8,765,000, $7,703,000 and $12,156,000 as of December 31, 2001, 2000, 1999, 1998 and 1997). (ii) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2002; (iii) The Company's Current Report on Form 8-K filed with the Commission on May 24, 2002; (iv) 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 Annual Report referred to in (i) above; and (v) The description of the Company's Class A Common Stock 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 reports and other documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Registration Statement and prior to the filing of a post-effective amendment hereto, which indicates that all securities offered hereunder have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. For purposes of this Registration Statement, any document or any statement contained in a document incorporated or deemed to be incorporated herein by reference shall be deemed to be modified or superseded to the extent that a subsequently filed document or a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated herein by reference modifies or supersedes such document or such statement in such document. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Registration Statement. 3 Item 4. Description of Securities. Not applicable. Item 5. Interests of Named Experts and Counsel. Not applicable. Item 6. Indemnification of Directors and Officers. Not applicable pursuant to General Instruction E to Form S-8. Item 7. Exemption from Registration Claimed. Not applicable. Item 8. Exhibits. Unless otherwise indicated below as being incorporated by reference to another filing of the Company with the Commission, each of the following exhibits is filed herewith: The following exhibits are filed herewith: Exhibit No. Description 4.1 K-SWISS Inc. 1999 Stock Incentive Plan, as amended. 4.2 K-SWISS Inc. Restated Certificate of Incorporation, as amended. 5.1 Legal Opinion of Gibson, Dunn & Crutcher LLP. 23.1 Consent of Gibson, Dunn & Crutcher LLP (contained in Exhibit 5.1). 23.2 Consent of Grant Thornton LLP, Independent Auditors. 24.1 Power of Attorney (contained on signature page hereto). Item 9. Undertakings. Not applicable pursuant to General Instruction E to Form S-8. 4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, there-unto duly authorized, in the City of Westlake Village, State of California, on this 24th day of June, 2002. K-SWISS Inc. By: /s/ George Powlick ------------------------------------ Vice President-Finance, Chief Financial Officer and Secretary Each person whose signature appears below constitutes and appoints Steven Nichols and George Powlick, and each of them, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, severally, 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, and each of them, 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 any of them or their or his substitute or 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 by the following persons in the capacities and on the dates indicated.
Signature Title Date - --------- ----- ---- /s/ Steven Nichols Chairman of the Board of Directors, June 24, 2002 - ------------------------------- Steven Nichols President and Chief Executive Officer /s/ George Powlick Vice President-Finance, Chief June 24, 2002 - ------------------------------- George Powlick Financial Officer, Secretary and Director /s/ Janice Smith Corporate Controller June 24, 2002 - ------------------------------- Janice Smith /s/ Lawrence Feldman Director June 24, 2002 - ------------------------------- Lawrence Feldman /s/ Stephen Fine Director June 24, 2002 - ------------------------------- Stephen Fine /s/ David Lewin Director June 24, 2002 - ------------------------------- David Lewin /s/ Martyn Wilford Director June 24, 2002 - ------------------------------- Martyn Wilford
5 INDEX TO EXHIBITS
Exhibit No. Description ----------- ----------- 4.1 K-SWISS Inc. 1999 Stock Incentive Plan, as amended. 4.2 K-SWISS Inc. Restated Certificate of Incorporation, as amended. 5.1 Legal Opinion of Gibson, Dunn & Crutcher LLP. 23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1). 23.2 Consent of Grant Thornton LLP, Independent Auditors. 24.1 Power of Attorney (contained on signature page hereto).
6 EX-4.1 3 dex41.txt 1999 STOCK INCENTIVE PLAN, AS AMENDED AND RESTATED Exhibit 4.1 K.Swiss Inc. 1999 STOCK INCENTIVE PLAN (Amended and Restated effective February 13, 2002, as Approved by Stockholders May 23, 2002 and as Adjusted to Reflect a 2-for-1 Stock Split Distributed June 21, 2002) Section 1. PURPOSE OF PLAN This Amended and Restated 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, consultant 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-l 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 1,800,000, as amended and restated, 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 1,800,000, as amended and restated, 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 600,000, 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: (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 and consultants. (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 (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 1999 Stock Incentive Plan originally became effective on April 12, 1999. The amendments to the 1999 Stock Incentive Plan reflected in this Amended and Restated 1999 Stock Incentive Plan shall be effective as of February 13, 2002; provided, however, that no Class A Shares may be issued under this Amended and Restated 1999 Stock Incentive Plan until it has been approved, directly or indirectly, by (a) the affirmative votes of the holders of a majority of the securities of the Company present, or represented, and entitled to `vote at a meeting duly held in accordance with the laws of the State of Delaware or (b) the written consent of the holders of a majority of the securities of the Company entitled to vote. 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 4,000 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: (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 options 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 this Plan) as of a date, before or not later than sixty days after such Change in Control, specified by the Committee, 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 this Plan and Awards granted under this 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 shareholders 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. EX-4.2 4 dex42.txt RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED EXHIBIT 4.2 CERTIFICATE OF AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF K-SWISS INC. (A DELAWARE CORPORATION) (Pursuant to Section 242 of the General Corporation Law of the State of Delaware) K-SWISS Inc. (the "Corporation"), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify that: FIRST: The Board of Directors of the Corporation, by unanimous written consent, adopted a resolution setting forth and declaring a proposed amendment to the Corporation's Amended and Restated Certificate of Incorporation to be advisable and calling for consideration thereof by the stockholders of the Corporation. The resolution setting forth the proposed amendment is as follows: WHEREAS, the Board of Directors deems it appropriate and in the best interests of the Corporation and its stockholders to increase the number of shares of Class A Common Stock that the Corporation is authorized to issue; WHEREAS, under the Corporation's Amended and Restated Certificate of Incorporation (the "Restated Certificate of Incorporation"), the affirmative vote of 80% of the Voting Power (as defined therein) of the Corporation is required to effect the proposed amendment to the Restated Certificate of Incorporation to increase the Corporation's authorized share capital; WHEREAS, under the General Corporation Law of the State of Delaware, the affirmative vote of the holders of a majority of the Corporations's Class A Common Stock is required to increase the number of shares of Class A Common Stock that the Corporation is authorized to issue under the Restated Certificate of Incorporation; and WHEREAS, under the General Corporation Law of the State of Delaware, to effect an increase in the authorized share capital of the Corporation, the Board of Directors is required to adopt a resolution setting forth the amendment to the Restated Certificate of Incorporation and then to propose the amendment for approval by the stockholders of the Corporation; NOW, THEREFORE, BE IT RESOLVED, that, upon approval by holders of the requisite number of shares of the Corporation's Common Stock pursuant to the Restated Certificate of Incorporation and the General Corporation Law of the State of Delaware, Section I of Article V of the Corporation's Restated Certificate of Incorporation shall be amended and restated as follows: "SECTION 1. Number of Authorized Shares. The total number of shares of --------------------------- all classes of stock that the Corporation shall have authority to issue is forty-eight million (48,000,000) shares, consisting of forty-six million (46,000,000) shares of common stock, par value $0.01 per share (the "Common Stock"), and two million (2,000,000) shares of preferred stock, par value $0.01 per share (the "Preferred Stock"). Further, the second sentence of SECTION 2 of Article V of the Corporation's Amended and Restated Certificate of Incorporation shall be amended and restated as follows: "The authorized number of shares of Class A Common Stock, shall be thirty-six million (36,000,000), and the authorized number of shares of Class B Common Stock shall be ten million (10,000,000); provided, that (a) the authorized number of shares of Class A Common Stock shall be increased by any concurrent decrease determined by the Board of Directors in the authorized number of shares of Class B Common Stock and (b) the authorized number of shares of Class A Common Stock shall not be reduced, and the authorized number of shares of Class B Common Stock shall not be increased." SECOND: In excess of 80% of the Voting Power of the Corporation considered and voted in favor of the amendment. THIRD: Said amendment was duly adopted by the stockholders of the corporation at the Corporation's Annual Meeting of Stockholders on May 23, 2002. IN WITNESS WHEREOF, the undersigned has executed this Certificate of Amendment on this 13th day of June, 2002. K-SWISS INC. By: /s/ George Powlick ----------------------- George Powlick Secretary of K-SWISS Inc. 2 CERTIFICATE OF CORRECTION Certificate of Correction Filed To Correct The Restated Certificate of Incorporation of K-SWISS INC. Filed in the Office of The Secretary of State of Delaware on June 8, 1990, And Recorded in The Office of the Recorder of Deeds For New Castle County, Delaware On June 11, 1990 Steven Nichols and George Powlick hereby certify that: 1. They are the President and Secretary, respectively, of K-Swiss Inc., a Delaware corporation (the "Corporation"). 2. A Restated Certificate of Incorporation (the "Restated Certificate") of the Corporation was filed by the Secretary of State of Delaware on June 8, 1990 and recorded in the Office of the Recorder of Deeds of New Castle County on June 11, 1990, and said Restated Certificate requires correction as permitted by subsection (f) of Section 103 of The General Corporation Law of the State of Delaware. 3. The inaccuracy or defect of said Restated Certificate is as follows: Article V, Section 2 of said Restated Certificate refers to the Certificate of Designations of Class A Common Stock (the "Class A Designations"), which was originally filed by the Secretary of State of Delaware on May 3, 1990 and recorded in the Office of the Recorder of Deeds of New Castle County on May 11, 1990, and the Certificate of Designations of Class B Common Stock (the "Class B Designations" and collectively with the Class A Designations, the "Certificates of Designations"), which was originally filed by the Secretary of State of Delaware on May 3, 1990 and recorded in the Office of the Recorder of Deeds in New Castle County on May 11, 1990. Article V, Section 2 of said Restated Certificate does not set forth in full the provisions of the Certificates of Designations. Said Certificates of Designations remained in full force and effect notwithstanding the filing of said Restated Certificate, and it was not the intent of the filing of said Restated Certificate to supersede said Certificates of Designations. This Certificate of Correction reflects the intent of the Board of Directors and the stockholders of the Corporation, and the effect of the action of the Corporation, in adopting and filing said Restated Certificate, which incorporates by reference the Certificates of Designations. On the basis of the foregoing, Article V, Section 2 of said Restated Certificate is corrected to read, in its entirety, as follows: Section 2. Common Stock. ------------ The Common Stock shall consist solely of "Class A Common Stock" and "Class B Common Stock." The authorized number of shares of Class A Common Stock shall be eighteen million (18,000,000) and the authorized number of shares of Class B Common Stock shall be ten million (10,000,000); provided that (a) the authorized number of shares of Class A Common Stock shall be increased by any concurrent decrease determined by the Board in the authorized number of shares of Class B Common Stock and (b) the authorized number of shares of Class A Common Stock shall not be reduced and the authorized number of shares of Class B Common Stock shall not be increased. Subject to the foregoing, the Board is hereby authorized to fix the designations, powers and preferences, and relative, participating, optional or other rights, if any, of the Class A Common Stock and of the Class B Common Stock and qualifications, limitations or restrictions thereof, including, without limitation, dividend rights (and whether dividends are cumulative), conversion rights, if any, voting rights (including the number of votes, if any, per share, as well as the number of members, if any, of the Board or the percentage of members, if any, of the Board each class or series of Common Stock may be entitled to elect), rights and terms of redemption (including sinking fund provisions, if any), redemption price and liquidation preferences of the Class A Common Stock and the Class B Common Stock. The Board of Directors of the Corporation may authorize the issuance of shares of Class A Common Stock and shares of Class B Common Stock, from time to time, subject to the foregoing and to provisions of the Certificate of Designations of Class A Common Stock and the Certificate of Designations of Class B Common Stock, respectively. Notwithstanding the foregoing, the Board shall have no power to alter the rights with respect to Class A Common Stock or Class B Common Stock once such rights have been fixed by the Board. The Board of Directors of the Corporation has previously fixed the designations, powers and preferences, and relative, participating, optional and other rights of the Class A Common Stock and the Class B Common Stock, and the qualifications, limitations or restrictions thereof, as follows: Section 2.1 Designations of Class A Common Stock. ------------------------------------ Section 2.1.1 Dividends and Distributions. ---------------------------- The holders of shares of Class A Common Stock, along with holders of shares of Class B Common Stock and the holders of any other duly designated class or series of the Corporation's Common Stock shall be entitled to receive such dividends, payable in cash or otherwise, as may be declared thereon by the Board from time to time out of assets or funds of the Corporation legally available therefor, provided that each share of Class A Common Stock and Class B Common Stock shall be equal in respect of rights to dividends and other distributions in cash, stock or property of the Corporation, and provided that in the case of dividends or other distributions payable in Class A Common Stock or Class B Common Stock, including distributions pursuant to 2 stock split-ups or divisions of Class A Common Stock or Class B Common Stock which occur after the first date upon which the Corporation has issued shares of both Class A Common Stock and Class B Common Stock, only shares of Class A Common Stock shall be distributed with respect to Class A Common Stock and only shares of Class B Common Stock shall be distributed with respect to Class B Common Stock, unless the Board of Directors of the Corporation determines in its discretion that it is more desirable to distribute shares of Class A Common Stock with respect to Class B Common Stock, in which case shares of Class A Common Stock shall be distributed with respect to Class B Common Stock. Section 2.1.2 Voting Rights. The holders of shares of Class A Common Stock ------------- shall have the following voting rights: (a) Each share of Class A Common Stock shall entitle the holder thereof to one vote on all matters submitted to a vote of the stockholders of the Corporation. (b) Except as otherwise provided in this Certificate of Incorporation or by law, the holders of shares of Class A Common Stock and the holders of shares of Class B Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation; provided, however, that in the election of directors the holders of shares of Class A Common Stock shall vote as one separate class and the holders of shares of Class B Common Stock shall vote as one separate class. (c) In the election of directors, the holders of shares of Class A Common Stock shall have the following voting rights: Commencing with the first annual meeting of stockholders held after the issuance of shares of Class A Common Stock, the holders of shares of Class A Common Stock shall be entitled to elect two of the directors of the Corporation; provided, however, that (A) if the authorized number of directors of the Corporation, excluding the number of directors, if any, authorized pursuant to the second sentence of Article VIII of this Certificate of Incorporation, is greater than or equal to 11 and less than or equal to 15, the holders of shares of Class A Common Stock shall be entitled to elect three of the directors of the Corporation; and (B) if the authorized number of directors of the Corporation, excluding the number of directors, if any, authorized pursuant to the second sentence of Article VIII of this Certificate of Incorporation, is greater than 15, the holders of shares of 3 Class A Common Stock shall be entitled to elect four of the directors of the Corporation. Notwithstanding the foregoing, if at any time no shares of Class B Common Stock are outstanding, holders of Class A Common Stock shall be entitled to elect all of the directors of the Corporation (excluding directors, if any, authorized pursuant to the second sentence of Article VIII of this Certificate of Incorporation). The directors so elected by holders of shares of Class A Common Stock, voting as a class, shall serve until the annual meeting at which the term of office of such director's class shall expire or until such director's successor shall be elected and shall qualify, and at each subsequent meeting of stockholders at which the directorship of any director elected by the vote of holders of shares of Class A Common Stock under the voting rights set forth in this paragraph is up for election, said class voting rights shall apply in the reelection of such director or in the election of such director's successor. (d) Nothing herein shall prevent the Board of Directors from taking any action (i) to fix or alter the voting powers, designations, preferences and relative, participating, optional or other rights, if any, or the qualifications, limitations or restrictions of the Class A Common Stock, provided that at the time such action becomes effective, no shares of Class A Common Stock shall have been issued, or (ii) to increase the number of authorized shares of Class A Common Stock in a number equal to any concurrent decrease in the number of authorized shares of Class B Common Stock; provided that the Board of Directors may not take any action to decrease the number of authorized shares of Class A Common Stock. Any shares of Class A Common Stock purchased or otherwise acquired by the Corporation may be held as treasury shares or may be retired and canceled and reissued. Section 2.1.3 Liquidation Dissolution or Winding Up. In the event of any ------------------------------------- dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of each series of Preferred Stock shall be entitled to receive, out of the net assets of the Corporation, an amount for each share of such series of Preferred Stock equal to the amount fixed and determined by the Board in any resolution or resolutions provided for the issuance of such series, plus an amount equal to all dividends accrued and unpaid on shares of such series to the date fixed for distribution, before any of the assets of the Corporation shall be distributed or paid over to the holders of Class A Common Stock or Class B Common Stock. After payment in full of said amounts to the 4 holders of Preferred Stock of all series, the remaining assets of the Corporation shall be divided among and paid ratably to the holders of Class A Common Stock and Class B Common Stock. Section 2.1.4 No Redemption. The shares of Class A Common Stock shall not ------------- be redeemable. Notwithstanding the foregoing, the Corporation may acquire shares of Class A Common Stock in any other manner permitted by law or by this Certificate of Incorporation. Section 2.1.5 Nonconvertibiity of Class A Common Stock. The shares of ---------------------------------------- Class A Common Stock shall not be convertible into any other class or series of the Corporation's securities. Section 2.1.6 Amendment. This Certificate of Incorporation shall not be --------- amended in any manner that would materially and adversely alter or change the powers or special rights of the Class A Common Stock without the affirmative vote of the holders of at least 66-2/3% of the outstanding shares of Class A Common Stock. Section 2.2 Designations of Class B Common Stock. ------------------------------------ Section 2.2.1 Dividends and Distributions. --------------------------- The holders of shares of Class B Common Stock, along with holders of shares of Class A Common Stock and the holders of any other duly designated class or series of Common Stock shall be entitled to receive such dividends, payable in cash or otherwise, as may be declared thereon by the Board from time to time out of assets or funds of the Corporation legally available therefor, provided that each share of Class A Common Stock and Class B Common Stock shall be equal in respect of rights to dividends and other distributions in cash, stock or property of the Corporation, and provided that in the case of dividends or other distributions payable in Class B Common Stock or Class A Common Stock, including distributions pursuant to stock split-ups or divisions of Class B Common Stock or Class A Common Stock which occur after the first date upon which the Corporation has issued shares of both Class B Common Stock and Class A Common Stock, only shares of Class A Common Stock shall be distributed with respect to Class A Common Stock and only shares of Class B Common Stock shall be distributed with respect to Class B Common Stock, unless the Board of Directors of the Corporation determines in its discretion that it is more desirable to distribute shares of Class A Common Stock with respect to Class B Common Stock, in which case shares of Class 5 A Common Stock shall be distributed with respect to Class B Common Stock. Section 2.2.2. Voting Rights. The holders of shares of Class B Common Stock ------------- shall have the following voting rights: (a) Each share of Class B Common Stock shall entitle the holder thereof to ten votes on all matters submitted to a vote of the stockholders of the Corporation. (b) Except as otherwise provided in this Certificate of Incorporation or by law, the holders of shares of Class B Common Stock and the holders of shares of Class A Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation; provided, however, that in the election of directors the holders of shares of Class B Common Stock shall vote as one separate class and the holders of shares of Class A Common Stock shall vote as one separate class. (c) In the election of directors, the holders of shares of Class B Common Stock shall have the following voting rights: So long as any shares of Class B Common Stock are outstanding, the holders of shares of Class B Common Stock shall be entitled to elect all of the directors at the first annual meeting of stockholders of the Corporation; provided, however, that so long as any shares of Class B Common Stock are outstanding after the issuance by the Corporation of shares of Class A Common Stock, the holders of Class B Common Stock shall be entitled to elect all of the directors except that number of directors entitled to be elected by holders of Class A Common Stock. The directors so elected by holders of shares of Class B Common Stock, voting as a class, shall serve until the annual meeting at which the term of office of such director's class shall expire or until such director's successor shall be elected and shall qualify, and at each subsequent meeting of stockholders at which the directorship of any director elected by the vote of holders of shares of Class B Common Stock under the voting rights set forth in this paragraph is up for election, said class voting rights shall apply in the reelection of such director or in the election of such director's successor. (d) Nothing herein shall prevent the Board of Directors from taking any action (i) to fix or alter the voting powers, designations, preferences and relative, participating, optional or other rights, if any, or the qualifications, limitations or restrictions of the Class B 6 Common Stock, provided that at the time such action becomes effective, no shares of Class B Common Stock shall have been issued, or (ii) to decrease the number of authorized shares of Class B Common Stock in a number equal to any concurrent increase in the number of authorized shares of Class A Common Stock, but not below the number of shares of Class B Common Stock then outstanding; provided that the Board of Directors may not take any action to increase the number of authorized shares of Class B Common Stock. Any shares of Class B Common Stock purchased or otherwise acquired by the Corporation shall be retired and canceled and shall not be reissued. Section 2.2.3 Transfer of Class B Stock. -------------------------- A. Except as provided in Section 2.2.3(B) hereof or pursuant to a written proxy executed on the Record Date (as defined in Section 2.2.3(A)(iii) below) and disclosed in writing to the Corporation on or before the Record Date, no person holding shares of Class B Common Stock or any beneficial interest therein (a "Class B Holder") may voluntarily or involuntarily transfer (including without limitation the power to vote such Class B Shares by proxy or otherwise), sell, assign, devise or bequeath any of such Class B Holder's interest in his Class B Shares, and the Corporation and the transfer agent for the Class B Common Stock, if any (the "Transfer Agent"), shall not register the transfer of such shares of Class B Common Stock, whether by sale, grant of proxy, assignment, gift, devise, bequest, appointment or otherwise, except to a "Permitted Transferee" of such Class B Holder which term shall include the Corporation and shall have the following additional meanings in the following cases: (i) In the case of a Class B Holder who is a natural person holding record and beneficial ownership of the shares of Class B Common Stock in question, "Permitted Transferee" means: (a) the spouse of such Class B Holder (the "Spouse"); (b) a lineal descendant of a great grandparent of such Class B Holder or of the Spouse (a "Descendant"); (c) the trustee of a trust (including a voting trust) for the benefit of such Class B Holder, the Spouse, other Descendant, or an organization contributions to which are deductible for federal income, estate or gift tax purposes (a "Charitable Organization"), and for the benefit of no other person; provided that such trust may grant a general or special power of appointment to the Spouse or to the Descendants and may permit trust assets to be used to pay taxes, legacies and other obligations of the trust or of the estate of such Class B Holder payable by reason of the death of such Class B Holder or the death of the Spouse or a 7 Descendant, and that such trust (subject to the grant of a power of appointment as provided above) must prohibit transfer of shares of Class B Common Stock or a beneficial interest therein to persons other than Permitted Transferees as defined in subparagaph (ii) of this Section 2.2.3(A) (a "Trust"); (d) a Charitable Organization established by such Class B Holder or a Descendant; (e) an Individual Retirement Account, as defined in Section 408(a) of the Internal Revenue Code, of which such Class B Holder is a participant or beneficiary, provided that such Class B Holder is vested with the power to direct the investment of funds deposited into such Individual Retirement Account and to control the voting of securities held by such Individual Retirement Account (an "IRA"); (f) a pension, profit sharing, stock bonus or other type of plan or trust of which such Class B Holder is a participant or beneficiary and which satisfies the requirements for qualification under Section 401 of the Internal Revenue Code, provided that such Class B Holder is vested with the power to direct the investment of funds deposited into such plan or trust and to control the voting of securities held by such plan or trust, (a "Plan"); (g) a corporation all of the outstanding capital stock of which is owned by, or a partnership all of the partners of which are, such Class B Holder, the Spouse and/or other Descendants, provided that if any share (or any interest in any share) of capital stock of such a corporation (or of any survivor of a merger or consolidation of such corporation), or any partnership interest in such a partnership, is acquired by any person who is not within such class of persons, all shares of Class B Common Stock then held by such corporation or partnership, as the case may be, shall be deemed without further act on anyone's part to be converted into shares of Class A Common Stock and stock certificates formerly representing such shares of Class B Common Stock shall thereupon and thereafter be deemed to represent the like number of shares of Class A Common Stock in the manner set forth in Section 2.2.4(C) hereof; and (h) in the event of the death of such Class B Holder, such Class B Holder's estate. (ii) In the case of a Class B Holder holding the shares of Class B Common Stock in question as trustee of an IRA, a Plan or a Trust other than a Trust described in subparagraph (iii) of this Section 2.2.3(A), "Permitted Transferee" means: (a) the participant or beneficiary of such IRA, such Plan or such Trust, or the person who transferred such shares of Class B Common Stock to such IRA, such Plan or such Trust, and (b) a Permitted Transferee of any such person or persons determined pursuant to subparagraph (i) of this Section 2.2.3(A). 8 (iii) In the case of a Class B Holder holding the shares of Class B Common Stock in question as trustee pursuant to a Trust which was irrevocable on the Record Date (as defined below), "Permitted Transferee" means any person as of the Record Date to whom or for whose benefit principal may be distributed either during or at the end of the term of such Trust whether by power of appointment or otherwise. For purposes of this Certificate of Incorporation, there shall be one "Record Date," which date shall be the record date for determining the persons to whom the Class B Common Stock is first distributed by the Corporation other than the date on which the Corporation first distributed Class B Common Stock to a corporation that immediately after such distribution owned all of the issued and outstanding shares of capital stock of the Corporation. (iv) In the case of Class B Holder holding record (but not beneficial) ownership of the shares of Class B Common Stock in question as nominee for the person who was the beneficial owner thereof on the Record Date, "Permitted Transferee" means such beneficial owner and a Permitted Transferee of such beneficial owner determined pursuant to subparagraphs (i), (ii), (iii), (v) or (vi) of this Section 2.2.3(A), as the case may be. (v) In the case of a Class B Holder which is a partnership holding record and beneficial ownership of the shares of Class B Common Stock in question, "Permitted Transferee" means any partner of such partnership, provided that such partner was a partner in the partnership at the time it first became a Class B Holder. (vi) In the case of a Class B Holder which is a corporation other than a Charitable Organization described in clause (d) of subparagraph (i) of this Section 2.2.3(A) holding record and beneficial ownership of the shares of Class B Common Stock in question (a "Corporate Holder"), "Permitted Transferee" means (a) any shareholder of such Corporate Holder as of the Record Date or any Permitted Transferee of any such shareholder determined pursuant to subparagraph (i) of this Section 2.2.3(A); and (b) the survivor (the "Survivor") of a merger or consolidation of such Corporate Holder, so long as such Survivor is controlled, directly or indirectly, by those shareholders of the Corporate Holder who were shareholders of such Corporate Holder as of the Record Date or any Permitted Transferees of such shareholders determined pursuant to subparagraph (i) of this Section 2.2.3(A). 9 (vii) In the case of a Class B Holder which is the estate of a deceased Class B Holder, or which is the estate of a bankrupt or insolvent Class B Holder, and provided such deceased, bankrupt or insolvent Class B Holder, as the case may be, held record and beneficial ownership of the shares of Class B Common Stock in question, "Permitted Transferee" means a Permitted Transferee of such deceased, bankrupt or insolvent Class B Holder as determined pursuant to subparagraphs (i), (v) or (vi) of this Section 2.2.3(A), as the case may be. B. Notwithstanding anything to the contrary set forth herein, any Class B Holder may pledge such Holder's shares of Class B Common Stock to a pledgee pursuant to a bona fide pledge of such shares as collateral security for indebtedness due to the pledgee, provided that such shares shall not be transferred to, registered in the name of or voted by the pledgee and shall remain subject to the provisions of this Section 2.2.3. In the event of foreclosure or other similar action by the pledgee, such pledged shares of Class B Common Stock may only be transferred to a Permitted Transferee of the pledgor or converted into shares of Class A Common Stock, as the pledgee may elect. C. For purpose of this Section 2.2.3: (i) The relationship of any person that is derived by or through legal adoption shall be considered a natural relationship. (ii) Each joint owner of shares or owner of a community property interest in shares of Class B Common Stock shall be considered a "Class B Holder" of such shares. (iii) A minor for whom shares of Class B Common Stock are held pursuant to a Uniform Transfer to Minors Act or similar law shall be considered a Class B Holder of such shares. (iv) Unless otherwise specified, the term "person" means and includes natural persons, corporations, partnerships, unincorporated associations, firms, joint ventures, trusts and all other entities. D. Any purported transfer of shares of Class B Common Stock not permitted hereunder shall be void and of no effect, and the purported transferee shall have no rights as a stockholder of the Corporation and no other rights against or with respect to the Corporation. The Corporation may, as a condition to the transfer or the registration of transfer of shares of Class B Common 10 Stock to a purported Permitted Transferee, require the furnishing of such affidavits or other proof as it deems necessary to establish that such transferee is a Permitted Transferee. Each certificate representing shares of Class B Common Stock shall be endorsed with a legend that states that shares of Class B Common stock are not transferable other than to certain transferees and are subject to certain restrictions as set forth in the Certificate of Designations of Class B Common Stock previously filed by the Corporation with the Secretary of State of the State of Delaware. Section 2.2.4 Conversion of Class B Common Stock. ---------------------------------- A. Each share of Class B Common Stock, at the option of its holder, may at any time be converted into one (1) fully paid and nonassessable share of Class A Common Stock, subject to adjustment as set forth in paragraph E of this Section 2.2.4. Such right shall be exercised by the surrender of the certificate representing such share of Class B Common Stock to be converted to the Corporation at any time during normal business hours at the principal executive offices of the Corporation or at the office of the Transfer Agent, accompanied by a written notice of the election by the holder thereof to convert and (if so required by the Corporation or the Transfer Agent) by instruments of transfer, in form satisfactory to the Corporation and to the Transfer Agent, duly executed by such holder or such holder's duly authorized attorney, and transfer tax stamps or funds therefor, if required pursuant to paragraph G of this Section 2.2.4. B. If, on the record date for any annual meeting of stockholders, the number of shares of Class B Common Stock then outstanding is less than 10% of the aggregate number of shares of Class B Common Stock and Class A Common Stock then outstanding, as determined by the Secretary of the Corporation, each share of Class B Common Stock then issued or outstanding shall thereupon be converted automatically into one (1) fully paid and nonassessable share of Class A Common Stock (subject to adjustment as set forth in paragraph E of this Section 2.2.4), and each share of Class B Common Stock then authorized but unissued shall thereupon automatically be deemed an authorized but unissued share of Class A Common Stock (subject to adjustment as set forth in paragraph E of this Section 2.2.4). Upon making such determination, the Secretary of the Corporation shall promptly request from each holder of record of shares of Class B Common Stock that each such holder promptly deliver, and such holder shall promptly deliver, certificates representing all shares of 11 Class B Common Stock held by such holder to the Corporation for conversion hereunder, together with instruments of transfer, in form satisfactory to the Corporation and Transfer Agent, duly executed by such holder or such holder's duly authorized attorney, and together with transfer tax stamps of funds therefor, if required pursuant to paragraph G of this Section 2.2.4. C. If the beneficial ownership (as determined under Rule 13d-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934) of any share or any interest in any share of Class B Common Stock changes, voluntarily or involuntarily, such that each new beneficial owner of such share of Class B Common Stock is not a "Permitted Transferee" (as defined in Section 2.2.3(A) hereof) of the beneficial owner of such share of Class B Common Stock immediately prior to such change in beneficial ownership, then each such share of Class B Common Stock shall thereupon be converted automatically into one (1) fully paid and nonassessable share of Class A Common Stock (subject to adjustment as set forth in paragraph E of this Section 2.2.4). A determination by the Secretary of the Corporation that a change in beneficial ownership requires conversion under this paragraph shall be conclusive. Upon making such determination, the Secretary of the Corporation shall promptly request from the holder of record of each such share of Class B Common Stock that each such holder promptly deliver, and each such holder shall promptly deliver, the certificate representing each such share of Class B Common Stock to the Corporation for conversion hereunder, together with instruments of transfer, in form satisfactory to the Corporation and Transfer Agent, duly executed by such holder or such holder's duly authorized attorney, and together with transfer tax stamps or funds therefor, if required pursuant to paragraph G of this Section 2.2.4. D. As promptly as practicable following the surrender for conversion of a certificate representing shares of Class B Common Stock in the manner provided in paragraphs A, B or C, as applicable, of this Section 2.2.4 and the payment in cash of any amount required by the provisions of paragraphs A, B or C and G of this Section 2.2.4, the Corporation will deliver or cause to be delivered at the office of the Transfer Agent to or upon the written order of the holder of such certificate, a certificate or certificates representing the number of full shares of Class A Common Stock issuable upon such conversion, issued in such name or names as such holder may direct. In the case of a conversion under paragraph A of this Section 2.2.4, such conversion shall be deemed to have been made immediately prior to the close of business on the date of the surrender of the 12 certificate representing shares of Class B Common Stock. In the case of a conversion under paragraph B of this Section 2.2.4, such conversion shall be deemed to have occurred on the record date for such annual meeting on which the condition set forth in paragraph B is determined by the Secretary of the Corporation to have been met. In the case of a conversion under paragraph C of this Section 2.2.4, such conversion shall be deemed to have been made on the date that the beneficial ownership of such share has changed as set forth in paragraph C. Upon the date any conversion under paragraph A of this Section 2.2.4 is made, and all rights of the holder of such shares as such holder shall cease at such time, and the person or persons in whose name or names the certificate or certificates representing the shares of Class A Common Stock are to be issued shall be treated for all purposes as having become the record holder or holders of such shares of Class A Common Stock at such time; provided, however, that any such surrender and payment on any date when the stock transfer books of the Corporation shall be closed shall constitute the person or persons in whose name or names the certificate or certificates representing shares of Class A Common Stock are to be issued as the record holder or holders thereof for all purposes immediately prior to the close of business on the next succeeding day on which stock transfer books are open. Upon the date any conversion under paragraph B of this Section 2.2.4 is made, all rights of the holders of shares of Class B Common Stock shall cease, and such holders shall be treated for all purposes as having become the record holders of such shares of Class A Common Stock at such time. Upon the date any conversion under paragraph C of this Section 2.2.4 is made, all rights of the holder of such shares as such holder shall cease at such time, and new beneficial owner or owners of such shares shall be treated for all purposes as having become the record holder or holders of such shares of Class A Common Stock at such time. E. In the event that the Corporation shall issue shares of Class A Common Stock to the holders of Class A Common Stock as a stock dividend or stock split, or in the event that the Corporation reduces the number of outstanding shares of Class A Common Stock in a reserve stock split or stock combination, then the number of shares of Class A Common Stock issuable upon conversion of a share of Class B Common Stock shall be adjusted such that the holder of the shares of Class B Common Stock shall receive the number of shares of Class A Common Stock that such holder would have received if such conversion had occurred immediately prior to the record date for the first such stock split, stock dividend, reverse stock split or stock combination of the Class A Common Stock, as the case may be. In the event 13 that the Corporation shall issue shares of Class B Common Stock to the holders of Class B Common Stock as a stock dividend or stock split, or in the event that the Corporation reduces the number of outstanding shares of Class B Common Stock in a reverse stock split or stock combination, then the number of shares of Class A Common Stock issuable upon conversion of a share of Class B Common Stock shall be adjusted such that the holder of shares of Class B Common Stock shall receive the number of shares of Class A Common Stock that such holder would have received if such conversion had occurred immediately prior to the record date for the first such stock split, stock dividend, reverse stock split or stock combination of the Class B Common Stock, as the case may be. No adjustment in respect of dividends (other than stock dividends) shall be made upon the conversion of any share of Class B Common Stock, provided, however, that if a share shall be converted subsequent to the record date for the payment of a dividend (other than a stock dividend) or other distribution on shares of Class B Common Stock but prior to such payment, then the registered holder of such share at the close of business on such record date shall be entitled to receive the dividend (other than a stock dividend) or other distribution payable on such share on such date notwithstanding the conversion thereof or the Corporation's default in payment of the dividend (other than a stock dividend) due on such date. F. The Corporation covenants that it will at all times reserve and keep available, solely for the purpose of issue upon conversion of the outstanding shares of Class B Common Stock, such number of shares of Class A Common Stock as shall be issuable upon the conversion of all such outstanding shares of Class B Common Stock, provided that nothing contained herein shall be construed to preclude the Corporation from satisfying its obligations in respect of the conversion of the outstanding shares of Class B Common Stock by delivery of purchased shares of Class A Common Stock which are held in the treasury of the Corporation. The Corporation covenants that if any shares of Class A Common Stock required to be reserved for purposes of conversion hereunder require registration with or approval of any governmental authority under any federal or state law before such shares of Class A Common Stock may be issued upon conversion, the Corporation will cause such shares to be duly registered or approved, as the case may be. The Corporation will endeavor to list the shares of Class A Common Stock required to be delivered upon conversion prior to such delivery upon each national securities exchange upon which the outstanding Class A Common Stock is listed at the time of such delivery. The Corporation covenants that all shares of Class A Common 14 Stock which shall be issued upon conversion of the shares of fully paid and nonassessable Class B Common Stock, will, upon issue, be fully paid and nonassessable and not subject to any preemptive rights. G. The issuance of certificates for shares of Class A Common Stock upon conversion of shares of Class B Common Stock shall be made without charge for any stamp or other similar tax in respect of such issuance. However, if any such certificate is to be issued in a name other than that of the holder of the share or shares of Class B Common Stock converted, then the person or persons requesting the issuance thereof shall pay to the Corporation the amount of any tax which may be payable in respect of any transfer involved in such issuance or shall establish to the satisfaction of the Corporation that such tax has been paid. Section 2.2.5 Liquidation, Dissolution and Winding Up. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of each series of Preferred Stock shall be entitled to receive, out of the net assets of the Corporation, an amount for each share of such series of Preferred Stock equal to the amount fixed and determined by the Board in any resolution or resolutions provided for the issuance of such series, plus an amount equal to all dividends accrued and unpaid on shares of such series to the date fixed for distribution, before any of the assets of the Corporation shall be distributed or paid over to the holders of Class B Common Stock or Class A Common Stock. After payment in full of said amounts to the holders of Preferred Stock of all series, the remaining assets of the Corporation shall be divided among and paid ratably to the holders of Class B Common Stock and Class A Common Stock. Section 2.2.6 No Redemption. The shares of Class B Common Stock shall not be redeemable. Notwithstanding the foregoing, the Corporation may acquire shares of Class B Common Stock in any other manner permitted by law or this Certificate of Incorporation. Section 2.2.7 Issuances of Class B Common Stock. Notwithstanding anything herein to the contrary, the Corporation shall not issue or reissue any shares of Class B Common Stock (other than pursuant to a contractual obligation of the Corporation to The Biltrite Corporation, a Delaware corporation, which contractual obligation exists as of the Record Date (as defined in Section 2.2.3 hereof) or pursuant to a stock split, stock 15 combination or stock dividend) without the prior affirmative vote of the holders of at least 85% of the outstanding shares of Class B Common Stock and the holders of at least a majority of the outstanding shares of Class A Common Stock. Section 2.2.8 Amendment. This Certificate of Incorporation shall not be amended in any manner that would materially and adversely alter or change the powers or special rights of the Class B Common Stock without the affirmative vote of the holders of at least 85% of the outstanding shares of Class B Common Stock. We further declare under penalty of perjury that the matters set forth in this Certificate of Correction are true and correct of our own knowledge. Dated: June 15, 1993 /s/ Steven Nichols ---------------------------------- Steven Nichols, President Attest: /s/ George Powick - ------------------------------------- George Powick, Secretary 16 RESTATED CERTIFICATE OF INCORPORATION OF K-SWISS INC. ARTICLE I: Name The name of the Corporation is K-Swiss Inc. ARTICLE II: Definitions For purposes of this Certificate of Incorporation, the following terms shall have the meanings indicated: (A) "Board" shall mean the Board of Directors of the Corporation. (B) "Sale" shall mean any merger or consolidation of the Corporation or any sale, lease or other disposition of all or substantially all of the Corporation's assets. (C) "Voting Power," with respect to any matter, means the aggregate number of votes of all classes or series of capital stock of the Corporation eligible to be cast with respect to such matter voting as a single class. ARTICLE III: Registered Office The address of the registered office of the Corporation in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle, and the name of its registered agent at that address is The Corporation Trust Company. ARTICLE IV: Purpose The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law. ARTICLE V: Authorized Capital Stock SECTION 1. Number of Authorized Shares. The total number of shares of all classes of stock that the Corporation shall have authority to issue is thirty million (30,000,000) shares, consisting of twenty-eight million (28,000,000) shares of common stock, par value $.01 per share ("the Common Stock"), and two million (2,000,000) shares of preferred stock, par value $.01 per share ("the Preferred Stock"). SECTION 2. Common Stock. The Common Stock shall consist solely of "Class A Common Stock" and "Class B Common Stock." The authorized number of shares of Class A Common Stock shall be eighteen million (18,000,000) and the authorized number of shares of Class B Common Stock shall be ten million (10,000,000); provided that (a) the authorized number of shares of Class A Common Stock shall be increased by any concurrent decrease determined by the Board in the authorized number of shares of Class B Common Stock and (b) the authorized number of shares of Class A Common Stock shall not be reduced and the authorized number of shares of Class B Common Stock shall not be increased. Subject to the foregoing, the Board is hereby authorized to fix the designations, powers and preferences, and relative, participating, optional or other rights, if any, of the Class A Common Stock and of the Class B Common Stock and qualifications, limitations or restrictions thereof, including, without limitation, dividend rights (and whether dividends are cumulative), conversion rights, if any, voting rights (including the number of votes, if any, per share, as well as the number of members, if any, of the Board or the percentage of members, if any, of the Board each, class or series of Common Stock may be entitled to elect), rights and terms of redemption (including sinking fund provisions, if any), redemption price and liquidation preferences of the Class A Common Stock and the Class B Common Stock. The Board of Directors of the Corporation may authorize the issuance of shares of Class A Common Stock and shares of Class B Common Stock, from time to time, subject to the foregoing and to provisions of the Certificate of Designations of Class A Common Stock and the Certificate of Designations of Class B Common Stock, respectively. Notwithstanding the foregoing, the Board shall have no power to alter the rights with respect to Class A Common Stock or Class B Common Stock once such rights have been fixed by the Board. 2 SECTION 3. Preferred Stock. The Board of Directors of the Corporation may authorize the issuance of shares of Preferred Stock from time to time in one or more series. Shares of Preferred Stock that are redeemed, purchased or otherwise acquired by the Corporation may be reissued except as otherwise provided by law. The Board is hereby authorized to fix or alter the designations, powers and preferences, and relative, participating, optional or other rights, if any, and qualifications, limitations or restrictions thereof, including, without limitation, dividend rights (and whether dividends are cumulative), conversion rights, if any, voting rights (including the number of votes, if any, per share, as well as the number of members, if any, or the Board or the percentage of members, if any, of the Board each class or series of Preferred Stock may be entitled to elect), rights and terms of redemption (including sinking fund provisions, if any), redemption price and liquidation preferences of any wholly unissued series of Preferred Stock, and the number of shares constituting any series and the designation thereof, and to increase or decrease the number of shares of such series subsequent to the issuance of shares of such series, but not below the number of shares of such series then outstanding. Notwithstanding the foregoing, the Board shall have no power to alter the rights of any shares of Preferred Stock then outstanding. SECTION 4. Distributions Upon Liquidation. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation in accordance with applicable law, whether voluntary or involuntary, after payment or provision for payment of the debts and other liabilities of the Corporation, the holders of each series of Preferred Stock shall be entitled to receive, out of the net assets of the Corporation, an amount for each share of such series of Preferred Stock equal to the amount fixed and determined by the Board in the resolution or resolutions creating such series and providing for the issuance of such shares, plus an amount equal to all dividends accrued and upaid on shares of such series to the date fixed for distribution, and no more, before any of the assets of the Corporation shall be distributed or paid over to the holders of Common Stock. After payment in full of said amounts to the holders of Preferred Stock of all series, the remaining assets and funds of the Corporation shall be divided among and paid to the holders of shares of each class or series of Common Stock and shares of Common Stock without class or series in 3 accordance with the resolution or resolutions of the Board creating such classes and series and providing for the issuance of such shares. If, upon such dissolution, liquidation or winding up, the assets of the Corporation distributable as aforesaid among the holders of Preferred Stock of all series shall be insufficient to permit full payment to them of said preferential amounts, then such assets shall be distributed ratably among such holders of Preferred Stock in proportion to the respective total amounts which they shall be entitled to receive as provided in this Section 4. ARTICLE VI: Annual Meetings of Stockholders The annual meeting of stockholders shall be held at such time, on such date and at such place (within or without the State of Delaware) as provided in the Bylaws of the Corporation. Subject to any requirement of applicable law, the books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board or in the Bylaws of the Corporation. Elections of directors need not be by written ballot unless the Bylaws of the Corporation shall so provide. ARTICLE VII: Call of Special Meetings of Stockholders Special meetings of stockholders of the Corporation for any purpose or purposes may be called at any time by the Chairman of the Board, the President or a majority of the members of the Board. Special meetings of stockholders of the Corporation may not be called by any other person or persons or in any other manner. ARTICLE VIII: Number of Directors The number of directors that shall constitute the whole Board shall be as specified in Section 3.2 of the Bylaws of the Corporation, as the same may be amended from time to time, but in no event shall such number be less than three (3) nor greater than twenty (20). Notwithstanding the foregoing, during any period in which the holders of any one or more series of Preferred Stock, voting as a class, shall be entitled to elect a specified number of directors by reason of dividend arrearages or other contingencies giving them the right to do so, then and during such time as such right continues, (A) the then otherwise authorized number of directors shall be 4 increased by such specified number of directors and the holders of shares of such series of Preferred Stock, voting as a class, shall be entitled to elect such specified number of directors in accordance with the procedure set forth in the resolution or resolutions of the Board creating such series and providing for the issuance of such shares and (B) each such additional director shall serve until his or her successor shall be elected and shall qualify, or until his or her right to hold such office terminates pursuant to the resolution or resolutions of the Board creating such series of Preferred Stock and providing for the issuance of shares of such series, whichever occurs earlier. Whenever the holders of shares of such series of Preferred Stock are divested of such right to elect directors pursuant to the resolution or resolutions of the Board creating such series and providing for the issuance of such shares, the terms of office of all directors elected by the holders of such series of Preferred Stock pursuant to such rights, or elected to fill any vacancies resulting from the death, resignation or removal of directors so elected by the holders of such series, shall forthwith terminate and the authorized number of directors shall be reduced accordingly. ARTICLE IX: Stockholder Action by Written Consent Any election of directors or other action by the stockholders of the Corporation may be effected at an annual or special meeting of stockholders or by written consent in lieu of such a meeting. The record date with respect to the determination of stockholders entitled to consent in writing to any action shall be the first date on which a signed written consent setting forth the action to be taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Any action by written consent shall be deemed effective as of the first day on which written consents signed by a sufficient number of holders to take such action are delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Any delivery under this Article IX to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. 5 ARTICLE X: Election of Directors SECTION 1. Term of Office. At each annual meeting of stockholders of the Company, directors shall be elected to hold office until the next annual meeting. Each director shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. SECTION 2. Stockholder Nominees. Nominations by stockholders of persons for election to the Board shall be made only in accordance with the procedures set forth in the Bylaws of the Corporation. ARTICLE XI: Liability and Indemnification To the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (provided that the effect of any such amendment shall be prospective only) (the "Delaware law"), a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as director. The Corporation shall indemnify, in the manner and to the fullest extent permitted by the Delaware Law (but in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than permitted prior thereto), any person (or the estate of any person) who is or was a party to, or is threatened to be made a party to, any threatened, pending or completed action, suit or proceeding, whether or not by or in the right of the Corporation, and whether civil, criminal, administrative, investigative or otherwise, 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. The Corporation may, to the fullest extent permitted by the Delaware Law, purchase and maintain insurance on behalf of any such person against any liability which may be asserted against such person. The Corporation may create a trust fund, grant a security interest or use other means (including without limitation a letter of credit) to ensure the payment of such sums as may become necessary to effect the indemnification as provided herein. To the fullest extent permitted by the Delaware Law, the indemnification provided herein shall include expenses (including attorneys' fees), judgments, 6 fines and amounts paid in settlement and any such expenses shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding. The indemnification provided herein shall not be deemed to limit the right of the Corporation to indemnify any other person for any such expenses to the fullest extent permitted by the Delaware Law, nor shall it be deemed exclusive of any other rights to which any person seeking indemnification from the Corporation may be entitled under any agreement, vote of stockholders or disinterested directors, or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office. ARTICLE XII: Amendment of Corporate Documents SECTION 1. Certificate of Incorporation. In addition to any affirmative vote required by applicable law or any other provision of this Certificate of Incorporation or specified in any agreement, and in addition to any voting rights granted to or held by the holders of any series of Common Stock or Preferred Stock, any alteration, amendment, repeal or rescission (any "Change") of any provision of this Certificate of Incorporation (other than any Change that relates solely to Articles I, III or VI hereof) must be approved by a majority of the directors of the Corporation then in office and by the affirmative vote of at least 66-2/3% of the Voting Power. Subject to the foregoing, the Corporation reserves the right to alter, amend, repeal or rescind any provision contained in this Certificate of Incorporation in any manner now or hereafter prescribed by law. SECTION 2. Bylaws. In addition to any affirmative vote required by applicable law and any voting rights granted to or held by the holders of any series of Common Stock or Preferred Stock, any Change to Section 2.3, 2.8, 2.9, 3.1, 3.2, 3.3, 3.5, 3.6, 4.4, 7.1 or 8.3 of the Bylaws of the Corporation which Change is not unanimously approved by the directors of the Corporation then in office must be approved by the affirmative vote of at least 66-2/3% of the Voting Power. Subject to the foregoing, the Board shall have the power to make, alter, amend, repeal or rescind the Bylaws of the Corporation. ARTICLE XIII: Certain Supermajority Provisions So long as any shares of Class B Common Stock are outstanding, in addition to any affirmative vote required by applicable law or any other provision of this Certificate of Incorporation or specified in any agreement, and in addition to any voting rights granted to or held by the holders of any series of Common Stock or Preferred Stock, the following matters must be approved by the affirmative vote of 80% of the Voting Power: (i) any Change in any provision of this Certificate of Incorporation (other than any Change that relates solely to Articles I, III or VI hereof); (ii) any Change to Section 2.3, 2.8, 2.9, 3.1, 3.2, 3.3, 3.5, 3.6, 3.10, 3.11, 3.13, 4.4, 7.1 or 8.3 of the Bylaws of the Corporation which change is not unanimously approved by the directors of the Corporation then in office; and (iii) any Sale of the Corporation. So long as any shares of Class B Common Stock are outstanding, in addition to any affirmative vote required by applicable law or any other provision of this Certificate of Incorporation or specified in any agreement, and in addition to any voting rights granted to or held by the holders of any series of Common Stock or Preferred Stock, the Corporation shall not issue shares of any class or series of Preferred Stock having voting rights in excess of one vote per share without the approval of all of the directors of the Corporation. 8 EX-5.1 5 dex51.txt OPINION OF GIBSON DUNN & CRUTCHER LLP Exhibit 5.1 [Letterhead of Gibson, Dunn & Crutcher LLP] June 24, 2002 K-SWISS Inc. 31248 Oak Crest Drive Westlake Village, California 91361 Re: K-SWISS Inc. Registration Statement on Form S-8 Ladies and Gentlemen: We have acted as counsel to K-Swiss Inc., a Delaware corporation (the "Company"), in connection with the preparation of a Registration Statement on Form S-8 to be filed with the Securities and Exchange Commission (the "Registration Statement") with respect to the registration under the Securities Act of 1933, as amended, of 600,000 shares of Class A Common Stock, $.01 par value (the "Shares"), of the Company (the "Common Stock"), subject to issuance by the Company upon exercise of options granted and to be granted under the Company's 1999 Stock Incentive Plan, as amended, in the form filed as Exhibit 4.1 to the Registrant's Statement (the "Plan"). We have examined the originals or certified copies of such corporate records, certificates of officers of the Company and/or public officials and such other documents and have made such other factual and legal investigations as we have deemed relevant and necessary as the basis for the opinions set forth below. In such examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as conformed or photostatic copies and the authenticity of the originals of such copies. Based on our examination mentioned above, subject to the assumptions stated above and relying on the statements of fact contained in the documents we have examined, we are of the opinion (i) the issuance by the Company of the Shares has been duly authorized and (ii) when issued in accordance with the terms of the Plan, the Shares will be duly and validly issued, fully paid and non-assessable shares of Common Stock. We are admitted to practice in the State of California, and are not admitted to practice in the State of Delaware. However, for the limited purposes of our opinion set forth above, we are generally familiar with the General Corporation Law of the State of Delaware (the "DGCL") as presently in effect and have made such inquiries as we consider necessary to render this opinion with respect to a Delaware corporation. This opinion letter is limited to the laws of the State of California and, to the limited extent set forth above, the DGCL, as such laws presently exist and to the facts as they presently exist. We express no opinion with respect to the effect or applicability of the laws of any other jurisdiction. We assume no obligation to revise or supplement this opinion letter should the laws of such jurisdictions be changed after the date hereof by legislative action, judicial decision or otherwise. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the General Rules and Regulations of the Securities and Exchange Commission. Very truly yours, /s/ GIBSON, DUNN & CRUTCHER LLP ------------------------------- GIBSON, DUNN & CRUTCHER LLP EX-23.2 6 dex232.txt CONSENT OF GRANT THORNTON LLP Exhibit 23.2 CONSENT OF GRANT THORNTON LLP, INDEPENDENT AUDITORS We have issued our report dated January 29, 2002, accompanying the consolidated financial statements of K-Swiss Inc. appearing in the 2001 Annual Report of the Company to its shareholders included in the Annual Report on Form 10-K for the year ended December 31, 2001, which are incorporated by reference in this Registration Statement. We consent to the incorporation by reference in the Registration Statement of the aforementioned report. /s/ Grant Thornton LLP ---------------------- Los Angeles, California June 25, 2002 -----END PRIVACY-ENHANCED MESSAGE-----