false000113210500011321052023-09-212023-09-21

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): September 21, 2023

 

 

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware	001-36401	39-1975614
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

1475 West 9000 South, Suite A West Jordan, Utah	84088
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (801) 566-6681

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value	SPWH	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Appointment of Paul Stone as Chief Executive Officer and President and Changes to the Board of Directors

On September 21, 2023, the Board of Directors (the “Board”) of Sportsman’s Warehouse Holdings, Inc. (the “Company”) appointed Mr. Paul Stone as the Company’s Chief Executive Officer and President, effective November 1, 2023 (the “Effective Date”). The Board also appointed, effective as of the Effective Date, Mr. Stone to the Board as a Class III director, to serve until the Company’s 2026 annual meeting of stockholders and until his successor is duly elected and qualified. Mr. Stone will perform the functions of the Company’s principal executive officer.

 

Paul Stone, 58, previously served as President and Chief Operating Officer of Hertz Global Holdings, Inc. (“Hertz Global”) from October 2021 to September 2023 after previously serving as Interim President and Chief Executive Officer and as a director of Hertz Global between May 2020 and October 2021. From March 2018 to May 2020, he served as Executive Vice President and Chief Retail Operations Officer North America of Hertz Global. Prior to joining Hertz Global, Mr. Stone served as the Chief Retail Officer of Cabela’s Inc., an outdoor outfitter retail company, from November 2015 to December 2017. Prior to joining Cabela’s Inc., Mr. Stone spent 28 years with Sam’s Club, a retail warehouse subsidiary of Walmart Inc., in various leadership roles.

 

In connection with Mr. Stone’s appointment, Joseph P. Schneider, who has been serving as the Company’s Interim Chief Executive Officer and President, will resign on the Effective Date from his role as Interim Chief Executive Officer and President. Mr. Schneider will continue to serve as a Class I director and as Chair of the Board until December 31, 2023. On September 21, 2023, Mr. Schneider informed the Board that he intends to resign as a director and as Chair of the Board, effective December 31, 2023. On September 21, 2023, the Board selected Rich McBee to succeed Mr. Schneider as Chair of the Board, effective January 1, 2024. As a result of these events, the Board will increase the size of the Board from eight (8) members to nine (9) members from November 1, 2023 to December 31, 2023 and return the size of the Board to eight (8) members on January 1, 2024.

 

In connection with his service as a non-employee director from November 1, 2023 to December 31, 2023, Mr. Schneider will receive the Company’s standard non-employee director cash and equity compensation in the form of restricted stock units, each pro-rated for his time of service, under its Non-Employee Directors’ Compensation Policy, which is filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended July 29, 2023, as filed with the Securities and Exchange Commission (the “SEC”) on September 7, 2023.

Employment Arrangements with New Chief Executive Officer and President

On September 22, 2023, the Company entered into an employment agreement with Mr. Stone in connection with his appointment to the position of Chief Executive Officer and President (the “Employment Agreement”) that will become effective on the Effective Date. The Employment Agreement provides for an indefinite term subject to termination by either party. The Employment Agreement provides for an annual base salary of $1,100,000 for Mr. Stone, subject to review and increases by the Company in its sole discretion. The Employment Agreement also provides for a target annual bonus opportunity of 150% of Mr. Stone’s base salary beginning with the Company’s fiscal year 2024, subject to review and adjustment by the Company in its reasonable discretion. Mr. Stone’s annual bonus for fiscal year 2023 will be guaranteed at the full target amount of 150% of his base salary, pro-rated based on the Effective Date. Mr. Stone will also receive a signing bonus in the amount of $350,000, payable on the Effective Date, which signing bonus must be repaid if Mr. Stone resigns without “Good Reason” or is terminated by the Company for “Gross Misconduct” (as such terms are defined in the Employment Agreement) prior to the first anniversary of the Effective Date.

 

On the Effective Date, Mr. Stone will be granted an award of time-based restricted stock units (“RSUs”) with a value of $1.7 million, based on the closing price of the Company’s common stock on the Effective Date, which will vest over three years in three equal installments on each of the first, second and third anniversary of the Effective Date, subject to Mr. Stone’s continued service to the Company. As a signing bonus, on the date occurring six months after the Effective Date, Mr. Stone will be granted time-based RSUs with a value of $400,000, based on the closing price of the Company’s common stock on the date occurring six months after the Effective Date, which will vest over three years in three equal installments on each of the first, second and third anniversary of the grant date. As part of the annual equity awards granted to the Company’s executive officers in 2024, Mr. Stone will be granted (A) time-based RSUs with a value of $1.25 million based on the closing price of the

 

 

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Company’s common stock on the grant date, which will vest over three years in three equal installments on each of the first, second and third anniversary of the grant date, and (B) performance-based RSUs with a grant date fair value of $1.25 million, which will vest over a three-year period based on performance metrics to be determined at the time of grant. The awards granted on the Effective Date and on the date occurring six months after the Effective Date will be granted pursuant to the Sportsman’s Warehouse Holdings, Inc. Inducement Plan (as described below). All other awards referenced above will be granted pursuant to the Sportsman’s Warehouse Holdings, Inc. 2019 Performance Incentive Plan.

 

Pursuant to the Employment Agreement, Mr. Stone will also receive reimbursement up to $90,000 for reasonable relocation expenses and legal fees related to the negotiation of the Employment Agreement, and be eligible to participate in the employee benefit plans available to other executives of the Company.

 

In the event Mr. Stone’s employment is terminated by Company other than because of Mr. Stone’s “Gross Misconduct” or by Mr. Stone for “Good Reason” (as such terms are defined in the Employment Agreement), Mr. Stone will be entitled to receive, subject to him providing a general release of claims in favor of the Company, (i) a lump sum payment equal to 18 months of his then-current base salary (or $1,100,000 if Mr. Stone’s then current Base Salary is less than $1,100,000), (ii) payment of any annual bonus earned for the preceding year for which payment has not yet been received and payment of a pro-rated target annual bonus for the year in which the termination occurs, (iii) reimbursement of COBRA premiums for up to 18 months, and (iv) if such termination occurs on or following a Change in Control during the Change in Control Period (as such terms are defined in the Employment Agreement) of the Company, full acceleration of any outstanding time-based equity awards granted by the Company and any performance-based vesting conditions applicable to any equity awards shall be treated as provided in the applicable award agreement.

 

On September 22, 2023, Mr. Stone also entered into an Employee Confidential Information and Inventions Assignment Agreement (the “CIIAA”) that contains certain restrictive covenants including a confidentiality and non-disclosure agreement, a twelve-month post-termination non-competition clause, a twelve-month post-termination non-solicitation of employees or independent contractors clause, and a non-disparagement clause.

 

The foregoing descriptions of the Employment Agreement and CIIAA are qualified in their entirety by reference to the full text of the Employment Agreement and CIIAA, which are filed as Exhibits 10.1 and 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

 

On the Effective Date, Mr. Stone is expected to enter into an indemnification agreement with the Company in the form previously approved by the Board and filed with the SEC as Exhibit 10.2 to the Company’s Current Report on Form 8-K on April 8, 2019.

 

There are no arrangements or understandings between Mr. Stone and any other persons pursuant to which he was selected as an officer or director of the Company. There are also no family relationships between Mr. Stone and any director or executive officer of the Company and Mr. Stone has no direct or indirect material interest in any related party transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.

Adoption of Inducement Plan

On September 21, 2023, the Board adopted and approved the Sportsman’s Warehouse Holdings, Inc. Inducement Plan (the “Inducement Plan”) to reserve 1,000,000 shares of the Company’s common stock to be used exclusively for grants of awards to individuals that were not previously employees or directors of the Company (or following a bona fide period of non-employment), as an inducement material to the individual’s entry into employment with the Company, pursuant to Nasdaq Listing Rule 5635(c)(4). The Inducement Plan was adopted and approved without stockholder approval pursuant to Nasdaq Listing Rule 5635(c)(4) and will be administered by the Compensation Committee of the Board (the “Compensation Committee”). Awards under the Inducement Plan may only be granted by: (i) the Compensation Committee, provided such committee is comprised solely of “independent directors” (as defined by Nasdaq Listing Rule 5605(a)(2)) or (ii) a majority of the Company’s “independent directors.”

 

The Inducement Plan provides for the grant of options, stock appreciation rights, restricted stock, stock bonuses, stock units, restricted stock units, performance stock, deferred shares, phantom stock, dividend equivalent rights and other cash or share-based awards. In addition, forms of Restricted Stock Unit Award Agreement were adopted and approved for use with the Inducement Plan.

 

 

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The foregoing description of the Inducement Plan is qualified in its entirety by reference to the full text of the Inducement Plan, which is filed as Exhibit 10.3 to this Current Report on Form 8-K and is incorporated herein by reference.

Item 7.01. Regulation FD Disclosure.

On September 26, 2023, the Company issued a press release announcing, amongst other things, the appointment of Mr. Stone as Chief Executive Officer and President of the Company and as a member of the Board, effective the Effective Date, a copy of which is furnished hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information in this Item 7.01 and the related information in Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in any such filing.

Item 8.01. Other Events.

The Description of Capital Stock set forth in Exhibit 99.2 is being filed for the purpose of providing an updated description of the capital stock of the Company.

 

The Description of Capital Stock set forth in Exhibit 99.2 is incorporated herein by reference, modifies and supersedes any prior description of the capital stock of the Company in any registration statement or report filed with the SEC and will be available for incorporation by reference into certain of the Company’s filings with the Commission pursuant to the Securities Act, the Exchange Act, and the rules and forms promulgated thereunder.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit Number		Description
Exhibit 10.1		Employment Agreement, dated September 22, 2023, between the Company and Paul Stone.
Exhibit 10.2		Employee Confidential Information and Inventions Assignment Agreement, dated September 22, 2023, between the Company and Paul Stone.
Exhibit 10.3		Sportsman’s Warehouse Holdings, Inc. Inducement Plan.
Exhibit 99.1		Press release dated September 26, 2023.
Exhibit 99.2		Description of Capital Stock.
Exhibit 104		The Cover Page from this Current Report on Form 8-K formatted in Inline XBRL.

 

 

 

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SPORTSMAN’S WAREHOUSE HOLDINGS, INC.
	By:	/s/ Jeff White
	Name:	Jeff White
	Title:	Secretary and Chief Financial Officer

Date: September 26, 2023

 

 

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Exhibit 10.1

EXECUTIVE Employment Agreement

This Executive Employment Agreement (“Agreement”) is by and between Paul Stone (“Executive”) and Sportsman’s Warehouse Holdings, Inc. (the “Company”).

Whereas, the Company desires to employ Executive as Chief Executive Officer (“CEO”) and to provide Executive with certain compensation and benefits in return for Executive’s services, and Executive agrees to be employed by the Company in such capacity and to receive the compensation and benefits on the terms and conditions set forth herein; and

Whereas, the Company and Executive desire to enter into this Agreement to become effective on November 1, 2023, subject to Executive’s signature below (the “Effective Date”) in order to memorialize the terms and conditions of Executive’s employment by the Company upon and following the Effective Date.

Now, Therefore, in consideration of the mutual promises and covenants contained herein, the parties agree to the following:

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For the avoidance of doubt, all grants of equity awards described in this Section 2.4 are subject to the approval of the Board or a committee thereof, Executive being employed by the Company on the date of the grant and, if required by law, a Form S-8 being filed and effective as of the date of grant.

 

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[signatures to follow on next page]

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In Witness Whereof, the parties have duly executed this Agreement as of September 22, 2023.

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

By: /s/ Martha H. Bejar

Name: Martha H. Bejar

Title: Board of Directors
Nominating and Governance Committee Chair

 

 

Executive

/s/ Paul Stone

Paul Stone

 

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Exhibit A

 

Confidential Information and Invention Assignment Agreement

 

 

[See attached]

Exhibit A – page 1

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SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

EMPLOYEE CONFIDENTIAL INFORMATION AND INVENTIONS ASSIGNMENT AGREEMENT

In consideration of my employment or continued employment by Sportsman’s Warehouse Holdings, Inc. (“Employer”), and its subsidiaries, parents, affiliates, successors and assigns (together with Employer, “Company”), the compensation paid to me now and during my employment with Company, and Company’s agreement to provide me with access to its Confidential Information (as defined below), I enter into this Employee Confidential Information and Inventions Assignment Agreement with Employer (the “Agreement”).

Recitals

WHEREAS, during the course of my employment, I will have access to and knowledge of Company’s trade secrets and Confidential Information; and

WHEREAS, it is of material benefit to restrict the disclosure of Company’s trade secrets and Confidential Information with a nondisclosure, non-solicitation, and non-competition agreement, all of which are reasonable in terms of scope, geography and duration.

Accordingly, in consideration of the mutual promises and covenants contained herein, Employer (on behalf of itself and Company) and I agree as follows:

Exhibit A – page 2

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Exhibit A – page 3

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Exhibit A – page 4

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Exhibit A – page 5

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Exhibit A – page 6

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Exhibit A – page 7

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Exhibit A – page 8

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Exhibit A – page 9

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Exhibit A – page 10

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[Signatures to follow on next page]

Exhibit A – page 11

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This Agreement will be effective as of the date signed by the Employee below.

EMPLOYER: Sportsman’s Warehouse Holdings, Inc.		EMPLOYEE:
(Signature)		(Signature)
(Printed Name)		(Printed Name)
(Title)		(Date Signed)

 

PRIOR INVENTIONS

1. Prior Inventions Disclosure. Except as listed in Section 2 below, the following is a complete list of all Prior Inventions:

No Prior Inventions.

See below:

 

Additional sheets attached.

2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above with respect to the Prior Inventions generally listed below, the intellectual property rights and duty of confidentiality with respect to which I owe to the following party(ies):

	Excluded Invention		Party(ies)		Relationship
1.
2.
3.

Additional sheets attached.

Exhibit A – page 12

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Exhibit B

 

Form of Separation Agreement

 

[The language in this Form of Separation Agreement may change based on local laws, legal developments and evolving best practices as determined by the Company.]

[Date]

 

 

Paul Stone

[Address]

[Address]

Dear Paul:

This letter sets forth the terms of the separation agreement (the “Agreement”) that Sportsman’s Warehouse Holdings, Inc. (the “Company”) is offering you to aid in your employment transition.

[To include relevant Severance Benefits or Change in Control Severance Benefits set forth in the Employment Agreement, as applicable]

Exhibit B – page 1

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Exhibit B – page 2

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Exhibit B – page 3

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Exhibit B – page 4

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Exhibit B – page 5

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(Signatures on following page)

 

 

Exhibit B – page 6

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If this Agreement is acceptable to you, please sign below and return the original to me within twenty-one (21) days, but no earlier than the Separation Date. The Company’s offer contained herein will automatically expire if you do not sign and return it within that timeframe.

Sincerely,

By:
[Name]
[Title]

Attachment(s):

Attachment 1 - Confidential Information and Invention Assignment Agreement

I have read, understand and agree fully to the foregoing Agreement:

Paul Stone

Date

 

 

Exhibit B – page 7

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Exhibit 10.2

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

EMPLOYEE CONFIDENTIAL INFORMATION AND INVENTIONS ASSIGNMENT AGREEMENT

In consideration of my employment or continued employment by Sportsman’s Warehouse Holdings, Inc. (“Employer”), and its subsidiaries, parents, affiliates, successors and assigns (together with Employer, “Company”), the compensation paid to me now and during my employment with Company, and Company’s agreement to provide me with access to its Confidential Information (as defined below), I enter into this Employee Confidential Information and Inventions Assignment Agreement with Employer (the “Agreement”).

Recitals

WHEREAS, during the course of my employment, I will have access to and knowledge of Company’s trade secrets and Confidential Information; and

WHEREAS, it is of material benefit to restrict the disclosure of Company’s trade secrets and Confidential Information with a nondisclosure, non-solicitation, and non-competition agreement, all of which are reasonable in terms of scope, geography and duration.

Accordingly, in consideration of the mutual promises and covenants contained herein, Employer (on behalf of itself and Company) and I agree as follows:

Employee Confidential Information and Inventions Assignment Agreement
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Employee Confidential Information and Inventions Assignment Agreement
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Employee Confidential Information and Inventions Assignment Agreement
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Employee Confidential Information and Inventions Assignment Agreement
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Employee Confidential Information and Inventions Assignment Agreement
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Employee Confidential Information and Inventions Assignment Agreement
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Employee Confidential Information and Inventions Assignment Agreement
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[Signatures to follow on next page]

Employee Confidential Information and Inventions Assignment Agreement
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This Agreement will be effective as of the date signed by the Employee below.

EMPLOYER: Sportsman’s Warehouse Holdings, Inc.		EMPLOYEE:
/s/ Martha Helena Bejar		/s/ Paul Stone
(Signature)		(Signature)
Martha Helena Bejar		Paul Stone
(Printed Name)		(Printed Name)
Independent Directors / Board of Directors		9 – 22 – 23
(Title)		(Date Signed)

 

PRIOR INVENTIONS

1. Prior Inventions Disclosure. Except as listed in Section 2 below, the following is a complete list of all Prior Inventions:

No Prior Inventions.

See below:

 

Additional sheets attached.

2. Due to a prior confidentiality agreement, I cannot complete the disclosure under Section 1 above with respect to the Prior Inventions generally listed below, the intellectual property rights and duty of confidentiality with respect to which I owe to the following party(ies):

	Excluded Invention		Party(ies)		Relationship
1.
2.
3.

 

Additional sheets attached.

Employee Confidential Information and Inventions Assignment Agreement
Exhibit A

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Exhibit 10.3

SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

INDUCEMENT PLAN

 

The only persons eligible to receive grants of awards under this Sportsman’s Warehouse Holdings, Inc. Inducement Plan (this “Plan”) of Sportsman’s Warehouse Holdings, Inc., a Delaware corporation (the “Corporation”) are individuals who satisfy the standards for inducement grants under NASDAQ Marketplace Rule 5635(c)(4) or 5635(c)(3), if applicable, and the related guidance under NASDAQ IM 5635-1. Persons eligible to receive grants of awards under this Plan are referred to in this Plan as “Eligible Persons.” These awards must be approved by either a majority of the Corporation’s “Independent Directors” (as such term is defined in NASDAQ Marketplace Rule 5605(a)(2)) or the Board’s compensation committee, provided such committee is comprised solely of Independent Directors (the “Independent Compensation Committee”) in order to comply with the exemption from the stockholder approval requirement for “inducement grants” provided under Rule 5635(c)(4) of the NASDAQ Marketplace Rules. NASDAQ Marketplace Rule 5635(c)(4) and the related guidance under NASDAQ IM 5635-1 (and any analogous rules or guidance effective after the date hereof) are referred to in this Plan as the “Inducement Award Rules.”

This Plan, through the granting of awards, is intended to provide (i) a material inducement to award recipients to become employees of the Corporation within the meaning of Rule 5635(c)(4) of the NASDAQ Marketplace Rules, (ii) incentives for such persons to exert maximum efforts for the success of the Corporation and any Subsidiary and (iii) a means by which Eligible Persons may be given an opportunity to benefit from increases in value of the Common Stock through the granting of awards.

As used herein, “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation; and “Board” means the Board of Directors of the Corporation.

 

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(a) determine eligibility and, from among those persons determined to be eligible, determine the particular Eligible Persons who will receive an award under this Plan;

(b) grant awards to Eligible Persons, determine the price (if any) at which securities will be offered or awarded and the number of securities to be offered or awarded to any of such persons (in the case of securities-based awards), determine the other specific terms and conditions of awards consistent with the express limits of this Plan, establish the installment(s) (if any) in which such awards shall become exercisable or shall vest (which may include, without limitation, performance and/or time-based schedules), or determine that no delayed exercisability or vesting is required, establish any applicable performance-based exercisability or vesting requirements, determine the circumstances in which any performance-based goals (or the applicable measure of performance) will be adjusted and the nature and impact of any such adjustment, determine the extent (if any) to which any applicable exercise and vesting requirements have been satisfied, establish the events (if any) on which exercisability or vesting may accelerate (which may include, without limitation, retirement and other specified terminations of employment or services, or other circumstances), and establish the events (if any) of termination, expiration or reversion of such awards provided, however, that awards may only be granted by either (i) a majority of the Corporation’s Independent Directors or (ii) the Independent Compensation Committee;

(c) approve the forms of any award agreements (which need not be identical either as to type of award or among participants);

(d) construe and interpret this Plan and any agreements defining the rights and obligations of the Corporation, its Subsidiaries, and participants under this Plan, make any and all determinations under this Plan and any such agreements, further define the terms used in this Plan, and prescribe, amend and rescind rules and regulations relating to the administration of this Plan or the awards granted under this Plan;

(e) cancel, modify, or waive the Corporation’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consent under Section 8.6.4;

(f) accelerate, waive or extend the vesting or exercisability, or modify or extend the term of, any or all such outstanding awards (in the case of options or stock appreciation rights, within the maximum term of such awards) in such circumstances as the Administrator may deem appropriate (including, without limitation, in connection with a retirement or other termination of employment or services, or other circumstances) subject to any required consent under Section 8.6.4;

(g) adjust the number of shares of Common Stock subject to any award, adjust the price of any or all outstanding awards or otherwise waive or change previously imposed terms and conditions, in such circumstances as the Administrator may deem appropriate, in each case subject to Sections 4 and 8.6 (and subject to the no repricing provision below);

(h) determine the date of grant of an award, which may be a designated date after but not before the date of the Administrator’s action to approve the award (unless otherwise designated by the Administrator, the date of grant of an award shall be the date upon which the Administrator took the action approving the award);

(i) determine whether, and the extent to which, adjustments are required pursuant to Section 7.1 hereof and take any other actions contemplated by Section 7 in connection with the occurrence of an event of the type described in Section 7;

(j) acquire or settle (subject to Sections 7 and 8.6) rights under awards in cash, stock of equivalent value, or other consideration (subject to the no repricing provision below); and

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(k) determine the fair market value of the Common Stock or awards under this Plan from time to time and/or the manner in which such value will be determined.

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(a) Shares that are subject to or underlie awards granted under this Plan which expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under this Plan shall not be counted against the Share Limit and shall be available for subsequent awards under this Plan.

(b) Except as provided below, to the extent that shares of Common Stock are delivered pursuant to the exercise of a stock appreciation right granted under this Plan, the number of underlying shares which are actually issued in payment of the award shall be counted against the Share Limit. (For purposes of clarity, if a stock appreciation right relates to 100,000 shares and is exercised in full at a time when the payment due to the participant is 15,000 shares, 15,000 shares shall be counted against the Share Limit with respect to such exercise and the 85,000 shares not issued shall not be counted against the Share Limit and shall be available for subsequent awards under this Plan.)

(c) Shares that are exchanged by a participant or withheld by the Corporation as full or partial payment in connection with any award granted under this Plan, as well as any shares exchanged by a participant or withheld by the Corporation or one of its Subsidiaries to satisfy the tax withholding obligations related to any award granted under this Plan, shall not be counted against the Share Limit and shall be available for subsequent awards under this Plan.

(d) To the extent that an award granted under this Plan is settled in cash or a form other than shares of Common Stock, the shares that would have been delivered had there been no such cash or other settlement shall not be counted against the Share Limit and shall be available for subsequent awards under this Plan.

(e) In the event that shares of Common Stock are delivered in respect of a dividend equivalent right granted under this Plan, the number of shares delivered with respect to the award shall be counted against the Share Limit. (For purposes of clarity, if 1,000 dividend equivalent rights are granted and outstanding when the Corporation pays a dividend, and 50 shares are delivered in payment of those rights with respect to that dividend, 50 shares shall be counted against the Share Limit). Except as otherwise provided by the Administrator, shares delivered in respect of dividend equivalent rights shall not count against any individual award limit under this Plan other than the aggregate Share Limit.

(f) The Corporation may not increase the Share Limit by repurchasing shares of Common Stock on the market (by using cash received through the exercise of stock options or otherwise).

Refer to Section 8.10 for application of the share limits of this Plan, including the limits in Sections 4.2, with respect to assumed awards. Each of the numerical limits and references in Section 4.2 and in this Section 4.3, is subject to adjustment as contemplated by Section 7 and Section 8.10.

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In no event shall any shares newly-issued by the Corporation be issued for less than the minimum lawful consideration for such shares or for consideration other than consideration permitted by applicable state law. Shares of Common Stock used to satisfy the exercise price of an option shall be valued at their fair market value. The Corporation will not be obligated to deliver any shares unless and until it receives full payment of the exercise or purchase price therefor and any related withholding obligations under Section 8.5 and any other conditions to exercise or purchase have been satisfied. Unless otherwise expressly provided in the applicable award agreement, the Administrator may at any time eliminate or limit a participant’s ability to pay any purchase or exercise price of any award or shares by any method other than cash payment to the Corporation.

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(a) transfers to the Corporation (for example, in connection with the expiration or termination of the award),

(b) the designation of a beneficiary to receive benefits in the event of the participant’s death or, if the participant has died, transfers to or exercise by the participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution,

(c) transfers to a family member (or former family member) pursuant to a domestic relations order if received by the Administrator,

(d) if the participant has suffered a disability, permitted transfers or exercises on behalf of the participant by his or her legal representative, or

(e) the authorization by the Administrator of “cashless exercise” procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of awards consistent with applicable laws and any limitations imposed by the Administrator.

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(a) Subject to Section 7.2, upon (or, as may be necessary to effect the adjustment, immediately prior to): any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split; any merger, combination, consolidation, conversion or other reorganization; any spin-off, split-up, or similar extraordinary dividend distribution in respect of the Common Stock; or any exchange of Common Stock or other securities of the Corporation, or any similar, unusual or extraordinary corporate transaction in respect of the Common Stock; then the Administrator shall equitably and proportionately adjust: (1) the number and type of shares of Common Stock (or other securities) that thereafter may be made the subject of awards (including the specific share limits, maximums and numbers of shares set forth elsewhere in this Plan); (2) the number, amount and type of shares of Common Stock (or other securities or property) subject to any outstanding awards; (3) the grant, purchase, or exercise price (which term includes the base price of any SAR or similar right) of any outstanding awards; and/or (4) the securities, cash or other property deliverable upon exercise or payment of any outstanding awards, in each case to the extent necessary to preserve (but not increase) the level of incentives intended by this Plan and the then-outstanding awards.

(b) Without limiting the generality of Section 3.4, any good faith determination by the Administrator as to whether an adjustment is required in the circumstances pursuant to this Section 7.1, and the extent and nature of any such adjustment, shall be conclusive and binding on all persons.

(a) Upon any event in which the Corporation does not survive, or does not survive as a public company in respect of its Common Stock (including, without limitation, a dissolution, merger, combination, consolidation, conversion, exchange of securities, or other reorganization, or a sale of all or substantially all of the business, stock or assets of the Corporation, in any case in connection with which the Corporation does not survive or does not survive as a public company in respect of its Common Stock), then the Administrator may make provision for a cash payment in settlement of, or for the termination, assumption, substitution or exchange of any or all outstanding awards or the cash, securities or property deliverable to the holder of any or all outstanding awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Common Stock upon or in respect of such event. Upon the occurrence of any event described in the preceding sentence in connection with which the Administrator has made provision for the award to be terminated (and the Administrator has not

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made a provision for the substitution, assumption, exchange or other continuation or settlement of the award): (1) unless otherwise provided in the applicable award agreement, each then-outstanding option and SAR shall become fully vested, all shares of restricted stock then outstanding shall fully vest free of restrictions, and each other award granted under this Plan that is then outstanding shall become payable to the holder of such award (with any performance goals applicable to the award in each case being deemed met, unless otherwise provided in the award agreement, at the “target” performance level); and (2) each award (including any award or portion thereof that, by its terms, does not accelerate and vest in the circumstances) shall terminate upon the related event; provided that the holder of an option or SAR shall be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise his or her outstanding vested options and SARs (after giving effect to any accelerated vesting required in the circumstances) in accordance with their terms before the termination of such awards (except that in no case shall more than ten days’ notice of the impending termination be required and any acceleration of vesting and any exercise of any portion of an award that is so accelerated may be made contingent upon the actual occurrence of the event).

(b) Without limiting the preceding paragraph, in connection with any event referred to in the preceding paragraph or any change in control event defined in any applicable award agreement, the Administrator may, in its discretion, provide for the accelerated vesting of any award or awards as and to the extent determined by the Administrator in the circumstances.

(c) For purposes of this Section 7.2, an award shall be deemed to have been “assumed” if (without limiting other circumstances in which an award is assumed) the award continues after an event referred to above in this Section 7.2, and/or is assumed and continued by the surviving entity following such event (including, without limitation, an entity that, as a result of such event, owns the Corporation or all or substantially all of the Corporation’s assets directly or through one or more subsidiaries (a “Parent”)), and confers the right to purchase or receive, as applicable and subject to vesting and the other terms and conditions of the award, for each share of Common Stock subject to the award immediately prior to the event, the consideration (whether cash, shares, or other securities or property) received in the event by the stockholders of the Corporation for each share of Common Stock sold or exchanged in such event (or the consideration received by a majority of the stockholders participating in such event if the stockholders were offered a choice of consideration); provided, however, that if the consideration offered for a share of Common Stock in the event is not solely the ordinary common stock of a successor corporation or a Parent, the Administrator may provide for the consideration to be received upon exercise or payment of the award, for each share subject to the award, to be solely ordinary common stock of the successor corporation or a Parent equal in fair market value to the per share consideration received by the stockholders participating in the event.

(d) The Administrator may adopt such valuation methodologies for outstanding awards as it deems reasonable in the event of a cash or property settlement and, in the case of options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess if any of the per share amount payable upon or in respect of such event over the exercise or base price of the award. In the case of an option, SAR or similar right as to which the per share amount payable upon or in respect of such event is less than or equal to the exercise or base price of the award, the Administrator may terminate such award in connection with an event referred to in this Section 7.2 without any payment in respect of such award.

(e) In any of the events referred to in this Section 7.2, the Administrator may take such action contemplated by this Section 7.2 prior to such event (as opposed to on the occurrence of such event) to the extent that the Administrator deems the action necessary to permit the participant to realize the benefits intended to be conveyed with respect to the underlying shares. Without limiting the generality of the foregoing, the Administrator may deem an acceleration and/or termination to occur immediately prior to the applicable event and, in such circumstances, will reinstate the original terms of the award if an event giving rise to an acceleration and/or termination does not occur.

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(f) Without limiting the generality of Section 3.4, any good faith determination by the Administrator pursuant to its authority under this Section 7.2 shall be conclusive and binding on all persons.

(g) The Administrator may override the provisions of this Section 7.2 by express provision in the award agreement and may accord any Eligible Person a right to refuse any acceleration, whether pursuant to the award agreement or otherwise, in such circumstances as the Administrator may approve.

(a) The Corporation or one of its Subsidiaries shall have the right to require the participant (or the participant’s personal representative or beneficiary, as the case may be) to pay or provide for payment of the amount of any taxes which the Corporation or

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one of its Subsidiaries may be required or permitted to withhold with respect to such award event or payment.

(b) The Corporation or one of its Subsidiaries shall have the right to deduct from any amount otherwise payable in cash (whether related to the award or otherwise) to the participant (or the participant’s personal representative or beneficiary, as the case may be) the amount of any taxes which the Corporation or one of its Subsidiaries may be required or permitted to withhold with respect to such award event or payment.

(c) In any case where a tax is required to be withheld in connection with the delivery of shares of Common Stock under this Plan, the Administrator may in its sole discretion (subject to Section 8.1) require or grant (either at the time of the award or thereafter) to the participant the right to elect, pursuant to such rules and subject to such conditions as the Administrator may establish, that the Corporation reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of shares, valued in a consistent manner at their fair market value or at the sales price in accordance with authorized procedures for cashless exercises, necessary to satisfy any applicable withholding obligation on exercise, vesting or payment.

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Sportsman’s Warehouse Appoints Paul Stone as Chief Executive Officer and Announces Chair Transition

 

Stone Brings More Than 30 Years of Retail Leadership Experience, Including in the Outdoor Specialty Space

 

Chair Joseph Schneider to Retire from Board at the End of the Year

 

Board Designates Rich McBee as Next Independent Chair

 

WEST JORDAN, Utah, September 26, 2023 – Sportsman’s Warehouse Holdings, Inc. (“Sportsman’s Warehouse” or the “Company”) (Nasdaq: SPWH) announced today that its Board of Directors (the “Board”) has appointed Paul Stone as the Chief Executive Officer and President of the Company and as a member of the Board, effective November 1, 2023. Mr. Stone’s appointment follows an extensive search and selection process that considered both internal and external candidates. This process was led by the Board and conducted with the assistance of a leading independent executive search firm.

 

Mr. Stone will succeed Joseph P. Schneider, who has served as Interim Chief Executive Officer and President since April 2023. Mr. Schneider will continue to serve as Independent Chair of the Board until the end of 2023, when he will retire from the Board and director Rich McBee will succeed him as Independent Chair.

 

Mr. Stone is a seasoned executive with direct experience in the outdoor specialty retail space, having served as the Chief Retail Officer of Cabela’s Inc., where he transformed the customer experience and led the modernization of the company’s digitization strategy. Most recently, he served as President and Chief Operating Officer of Hertz Global Holdings, Inc., where he oversaw more than 11,000 locations globally with a strong focus on operations and customer service excellence. He also served as Interim Chief Executive Officer and on the Board of Directors of Hertz from May 2020 to October 2021, and in that role helped drive the company’s successful emergence from bankruptcy.

 

“After carefully considering a wide range of candidates, the Board believes that Paul is the ideal choice to lead Sportsman’s Warehouse through its next chapter of growth,” said Joseph Schneider. “Not only does Paul share the Company’s passion for the outdoors, but he is also an experienced leader who has helped drive significant positive transformation in the retail sector. Paul’s prior retail leadership roles make him especially qualified to execute the Company’s plan to catalyze growth, enhance the focus on our e-commerce platforms and private-label products, and improve our overall customer experience. We are very pleased to welcome him to Sportsman’s Warehouse and believe it is a testament to the strength of our brand that we were able to attract a candidate as highly qualified as Paul.”

 

“As a lifelong outdoorsman, I am thrilled to be joining Sportsman’s Warehouse at such a pivotal time for the Company,” said Mr. Stone. “Sportsman’s Warehouse has taken significant steps over the past several months to enhance shareholder value, including reducing its expense structure and managing inventory,

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and I am excited to begin working with the rest of the talented management team and the Board to build on these actions and set the Company’s strategic pathway.”

 

Martha Bejar, Lead Independent Director of the Board, said, “On behalf of the entire Sportsman’s Warehouse team, I want to express our gratitude to Joe for his many contributions to the Board, first as a director, then as Chair, and finally over the past several months as Interim Chief Executive Officer and President. His continued presence on the Board and in the Chair role until the end of 2023 will help ensure a smooth transition process.”

 

Ms. Bejar added, “Rich is ideally qualified to step into the role of Chair for Sportsman’s Warehouse. His diverse business experience and extensive technology background – as well as his passion for the outdoors – have made him a valuable asset on our Board since he joined in 2018. We are confident he will bring the right perspectives and oversight as we execute our strategy moving forward. Further, after these changes take effect, our Board will be comprised of eight highly qualified members with diverse skillsets and experiences, over fifty percent of whom have joined since August 2022.”

 

About Paul Stone

 

Mr. Stone is a highly experienced executive with more than 30 years of leadership experience in the retail space. Prior to joining Sportsman’s Warehouse, he served as President and Chief Operating Officer of Hertz Global Holdings, Inc. (Nasdaq: HTZ) from October 2021 to September 2023 after previously serving as Interim Chief Executive Officer and on the Board of Directors from May 2020 and October 2021. He previously served as Hertz’s Executive Vice President and Chief Retail Operations Officer for North America from March 2018 to May 2020. Prior to joining Hertz, Mr. Stone served as the Chief Retail Officer of Cabela’s Inc., an outdoor outfitter retail company from November 2015 to December 2017. Prior to joining Cabela’s, Mr. Stone spent 28 years with Sam’s Club, a retail warehouse subsidiary of Walmart Inc., in various leadership roles, where he ultimately oversaw a P&L of approximately $18 billion and 30,000 employees.

 

About Rich McBee

 

Richard McBee has served as a member of the Sportsman’s Warehouse Board since November 2018. He is currently President and Chief Executive Officer of CLEAResult Consulting, Inc., a position he has held since July 2021. Prior to that, he served as President and Chief Executive Officer of Riverbed Technology from October 2019 to June 2021. Previously, he was President and Chief Executive Officer of Mitel Networks Corporation (Nasdaq: MITL) from January 2011 to October 2019, where he led Mitel’s global strategy, business performance, and global execution, and also served on the company’s Board of Directors. He served as President of the Communications and Enterprise Group of Danaher Corporation from 2007 to 2011. He joined Danaher in 2007 as President, Tektronix Communications, following the acquisition by Danaher of Tektronix. Prior to that, Mr. McBee spent 15 years with Tektronix and held a variety of positions of increasing responsibility, including Senior Vice President and General Manager, Communications Business Unit; Senior Vice President of Worldwide Sales, Service, and Marketing; and Vice President of Marketing and Strategic Initiatives.

 

About Sportsman’s Warehouse Holdings, Inc.

 

Sportsman’s Warehouse Holdings, Inc. is an outdoor specialty retailer focused on meeting the needs of the seasoned outdoor veteran, the first-time participant, and everyone in between. We provide outstanding gear and exceptional service to inspire outdoor memories.

 

For press releases and certain additional information about the Company, visit the Investor Relations section of the Company's website at www.sportsmans.com.

 

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Forward-Looking Statements

 

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this press release include, but are not limited to, statements regarding the appointment of Mr. Stone as the Company’s next Chief Executive Officer and President and member of the Board, effective November 1, 2023. Investors can identify these statements by the fact that they use words such as “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “objective,” “plan,” “positioned,” “potential,” “predict,” “should,” “target,” “will,” “would” and similar terms and phrases. These forward-looking statements are based on current expectations, estimates, forecasts, and projections about our business and the industry in which we operate, and our management’s beliefs and assumptions. We derive many of our forward-looking statements from our own operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factors is very difficult, and we cannot anticipate all factors that could affect our actual results. The Company cannot assure investors that future developments affecting the Company will be those that it has anticipated. Actual results may differ materially from these expectations due to many factors including, but not limited to: the impact of the announcement of Mr. Stone’s appointment on the Company’s stock and its employees, suppliers and customers; current and future government regulations relating to the sale of firearms and ammunition, which may impact the supply and demand for the Company’s products and ability to conduct its business; the Company’s retail-based business model, which is impacted by general economic and market conditions and economic, market and financial uncertainties that may cause a decline in consumer spending; the impact of general macroeconomic conditions, such as labor shortages, inflation, rising interest rates, economic slowdowns, recessions or market corrections, liquidity concerns at, and failures of, banks and other financial institutions, and tightening credit markets on the Company’s operations; the Company’s concentration of stores in the Western United States and related weather conditions; competition in the outdoor activities and specialty retail market and the potential for increased competition; changes in consumer demands; the Company’s expansion into new markets and planned growth; and other factors that are set forth in the Company's filings with the Securities and Exchange Commission (the “SEC”), including under the caption “Risk Factors” in the Company’s Form 10-K for the fiscal year ended January 28, 2023, which was filed with the SEC on April 13, 2023, and the Company’s other public filings made with the SEC and available at www.sec.gov. If one or more of these risks or uncertainties materialize, or if any of the Company’s assumptions prove incorrect, the Company’s actual results may vary in material respects from those projected in these forward-looking statements. Any forward-looking statement made by the Company in this press release speaks only as of the date on which the Company makes it. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by any applicable securities laws.

 

 

Investor Contact:

 

Riley Timmer

Vice President, Investor Relations

Sportsman’s Warehouse

(801) 304-2816

investors@sportsmans.com

 

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DESCRIPTION OF CAPITAL STOCK OF SPORTSMAN’S WAREHOUSE HOLDINGS, INC.

References to “we,” “us” and “our” in this section refer to Sportsman’s Warehouse Holdings, Inc.

The following description of our capital stock and provisions of our amended and restated certificate of incorporation (our “certificate of incorporation”) and our third amended and restated bylaws (our “bylaws”) is a summary only and does not purport to be complete. For more detailed information, please see our certificate of incorporation and bylaws, which are filed as exhibits to reports we file with the Securities and Exchange Commission (“SEC”), and the Delaware General Corporation Law.

Authorized Capitalization

Our authorized capital stock consists of 100,000,000 shares of common stock, par value of $0.01 per share, and 20,000,000 shares of preferred stock, par value $0.01 per share. As of August 30, 2023, there were 37,385,485 shares of common stock outstanding and no shares of preferred stock outstanding.

Common Stock

Voting Rights

General. Each holder of our common stock is entitled to one vote for each outstanding share of common stock held by such holder on all matters submitted to a vote of stockholders, including the election or removal of directors. All matters to be voted on by stockholders, other than the election of directors which is discussed below, must be approved by a majority in voting power of our outstanding shares of capital stock present in person, by remote communication, if applicable, or represented by proxy at the meeting of stockholders and entitled to vote on such question, voting as a single class, subject to any voting rights granted to holders of any preferred stock.

Election of Directors. There are no cumulative voting rights for the election of directors. Instead, our bylaws require that, in uncontested elections, each director is elected by a majority of the votes cast with respect to that director’s election. This means that the number of shares voted “for” a director must exceed the number of shares affirmatively voted “against” such director in order for that director to be elected (with “abstentions” and “broker non-votes” not counted as a vote cast either “for” or “against” that director’s election). If an incumbent director fails to receive a majority of the votes cast in an uncontested election, such incumbent director shall promptly tender his or her resignation to our secretary for consideration by the nominating and governance committee (or other committee designated by our board of directors). The nominating and governance committee will then promptly consider any such tendered resignation and will make a recommendation to our board of directors as to whether such tendered resignation should be accepted, rejected, or whether other action should be taken. Our board of directors, within 90 days after the date on which certification of the stockholder vote on the election of directors is made, will publicly disclose its decision and rationale regarding whether to accept, reject or take other action with respect to the tendered resignation in a press release and will also file the appropriate disclosure with the SEC. The nominating and governance committee and our board of directors may consider any factors and other information they deem relevant in deciding whether to accept, reject or take other action with respect to any such tendered resignation. A plurality voting standard will apply in the event of a Contested Election (as defined in our bylaws).

Dividends

Subject to the rights of holders of any then-outstanding shares of our preferred stock, holders of our common stock are entitled to receive ratably any dividends that may be declared by our board of directors out of funds legally available therefor.

Liquidation

In the event of our liquidation, dissolution or winding up, either voluntary or involuntary, holders of our common stock would be entitled to share ratably in all assets available for distribution to stockholders after the payment of or provision for all of our debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock.

 

 

 

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Other Rights

Holders of our common stock do not have preemptive rights to purchase shares of our capital stock. The shares of our common stock are not subject to any redemption provisions and are not convertible into any other shares of our capital stock. The rights, preferences and privileges of holders of our common stock will be subject to those of the holders of any shares of our preferred stock we may issue in the future.

Blank Check Preferred Stock

Under the terms of our certificate of incorporation, our board of directors has the authority, without further action by our stockholders, to issue up to 20,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences.

The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could make it more difficult for a third party to acquire, or could adversely affect the rights of our common stockholders by restricting dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock or delaying or preventing a change in control without further action by the stockholders. As a result of these or other factors, the issuance of preferred stock could have an adverse impact on the market price of our common stock.

As of August 30, 2023, no shares of preferred stock were issued and outstanding. All shares of preferred stock will, when issued, be fully paid and non-assessable and, unless otherwise stated in connection with any offering of a series of preferred stock, will not have any preemptive or similar rights. If we offer any class or series of preferred stock, we will set forth the specific terms of any such class of series, including the price at which the preferred stock may be purchased, the number of shares of preferred stock offered, and the terms, if any, on which the preferred stock may be convertible into common stock or exchangeable for other securities.

Anti-Takeover Effects of Certain Provisions of Delaware Law, the Certificate of Incorporation and the Bylaws

Set forth below is a summary of the relevant provisions of our certificate of incorporation and bylaws and certain applicable sections of the Delaware General Corporation Law. For additional information we refer you to the provisions of our certificate of incorporation, our bylaws and such sections of the Delaware General Corporation Law.

Our certificate of incorporation and bylaws contain provisions that are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and that could make it more difficult to acquire control of our company by means of a tender offer, open market purchases, a proxy contest or otherwise. We expect that these provisions, which are summarized below, will discourage coercive takeover practices or inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors, which we believe may result in an improvement of the terms of any such acquisition in favor of our stockholders. However, they also give our board of directors the power to discourage acquisitions that some stockholders may favor. A description of these provisions is set forth below.

Classified Board (to be phased out by our 2026 annual meeting)

Prior to June 7, 2023, our certificate of incorporation provided that our board of directors, other than those directors elected by the holders of any series of preferred stock, would be divided into three classes. On June 7, 2023, we filed an amendment to our certificate of incorporation to declassify our board of directors over a three-year period commencing with our 2024 annual meeting of stockholders. Pursuant to that amendment, directors (other than those directors elected by the holders of any series of preferred stock) will be elected as follows: (i) directors elected at the 2024 annual meeting of stockholders to succeed those whose term expires at that meeting shall hold office for a term expiring at the annual meeting of stockholders to be held in 2025; (ii) directors elected at the 2025 annual meeting of stockholders to succeed those whose term expires at such meeting shall hold office for a term expiring at the annual meeting of stockholders to be held in 2026; and (iii) beginning with the 2026 annual meeting of stockholders, all

 

 

 

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directors elected at an annual meeting of stockholders to succeed those whose term expires at such meeting shall hold office for a term expiring at the next annual meeting of stockholders.

Removal of Directors Only for Cause

Our certificate of incorporation and bylaws provide that prior to the 2026 annual meeting of stockholders, except for any director elected by the holders of any series of preferred stock, directors can be removed only for cause by the affirmative vote of at least two-thirds of the total voting power of the outstanding shares of capital stock entitled to vote in the election of directors, voting together as a single class. After the 2026 annual meeting of stockholders, except for any director elected by the holders of any series of preferred stock, directors may be removed with or without cause by the affirmative vote of at least two-thirds of the total voting power of the outstanding shares of capital stock entitled to vote in the election of directors, voting together as a single class.

Special Meetings of Stockholders

Our bylaws provide that special meetings of our stockholders may be called only by the board of directors. Stockholders are not permitted to call a special meeting or require our board of directors to call a special meeting.

Supermajority Vote to Amend Certificate of Incorporation and Bylaws

Our certificate of incorporation provides that the approval of at least two-thirds of the outstanding shares of our common stock is required to amend certain provisions of our certificate of incorporation. Our certificate of incorporation and bylaws provide that the approval of holders of at least two-thirds of the outstanding shares of our common stock is required to amend our bylaws. Our bylaws may also be amended by a majority of our board of directors.

No Written Consent of Stockholders

Our certificate of incorporation and bylaws provide that all stockholder actions, other than those actions required or permitted to be taken by holders of any then-outstanding series of preferred stock, are required to be taken by a vote of the stockholders at an annual or special meeting, and that stockholders may not take any action by written consent in lieu of a meeting.

Advance Notice Procedure

Our bylaws provide that only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders. Our bylaws also limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting.

Our bylaws establish an advance notice procedure for stockholders to make nominations of candidates for election as directors or to bring other business before an annual or special meeting of the stockholders. This notice procedure provides that only persons who are nominated by, or at the direction of, our board of directors or any duly authorized committee of the board of directors, or by a stockholder who is entitled to vote at the meeting and who has given timely written notice to us prior to the meeting at which directors are to be elected, will be eligible for election as directors. Further, our bylaws provide that the number of nominees a stockholder may nominate for election at an annual or special meeting of stockholders pursuant to the advance notice procedure shall not exceed the number of directors to be elected at such meeting. The procedure also requires that, in order to raise matters at an annual or special meeting, those matters must be raised before the meeting pursuant to the notice of meeting the company delivers or by, or at the direction of, our board of directors or any duly authorized committee of the board of directors, or by a stockholder who is entitled to vote at the meeting and who has given timely written notice to us of his, her or its intention to raise those matters at the annual or special meeting. If the officer presiding at a meeting determines that a person was not nominated, or other business was not brought before the meeting, in accordance with the notice procedure, that person is not be eligible for election as a director, or that business will not be conducted at the meeting, as applicable.

 

 

 

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Blank Check Preferred Stock

As discussed above, the issuance of preferred stock, while providing flexibility in connection with possible acquisitions, future financings and other corporate purposes, could make it more difficult for a third party to acquire, or could adversely affect the rights of our common stockholders by restricting dividends on the common stock, diluting the voting power of the common stock, impairing the liquidation rights of the common stock or delaying or preventing a change in control without further action by the stockholders.

Authorized but Unissued Shares

Under Delaware law, our authorized but unissued shares of common stock are available for future issuance without stockholder approval. We may use these additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Section 203 of the Delaware General Corporation Law

We are subject to the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. In general, Section 203, subject to certain exceptions, prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of the corporation’s voting stock. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:

 

 

Choice of Forum

Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be, to the fullest extent permitted by law, the exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a breach of fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (c) any action asserting a claim against us arising pursuant to the Delaware General Corporation Law or (d) or any action asserting a claim against us that is governed by the internal affairs doctrine. This exclusive forum provision is intended to apply to claims arising under Delaware state law and would not apply to claims brought pursuant to the Securities Exchange Act of 1934, as amended or the Securities Act of 1933, as amended (the “Securities Act”), or any other claim for which the federal courts have exclusive jurisdiction. The exclusive forum provision in our certificate of incorporation will not relieve us of our duties to comply with the federal securities laws and the rules and regulations thereunder, and our stockholders will not be deemed to have waived our compliance with these laws, rules and regulations.

 

 

 

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Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by applicable law, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and agents, which may discourage such lawsuits against us and our directors, officers, employees and agents.

Limitation on Liability of Directors and Officers

Our certificate of incorporation limits the liability of directors to the fullest extent permitted by Delaware law. The effect of these provisions is to eliminate the rights of us and our stockholders, through stockholders’ derivative suits on behalf of us, to recover monetary damages from a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior. However, exculpation does not apply to any director if the director has acted in bad faith, knowingly or intentionally violated the law, authorized illegal dividends or redemptions or derived an improper benefit from his or her actions as a director.

In addition, our certificate of incorporation allows and our bylaws require that we indemnify our directors and officers to the fullest extent permitted by Delaware law. We also expect to continue to maintain directors’ and officers’ liability insurance. We believe that these indemnification provisions and insurance are useful to attract and retain qualified directors and executive officers.

The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders.

In addition to the indemnification in our certificate of incorporation and bylaws, we have entered into indemnification agreements with each of our current directors and officers. These agreements provide for the indemnification of our directors and officers for all reasonable expenses and liabilities incurred in connection with any action or proceeding brought against them by reason of the fact that they are or were our agents. We believe that these certificate of incorporation and bylaw provisions and indemnification agreements, as well as our maintaining directors’ and officers’ liability insurance, help to attract and retain qualified persons as directors and officers.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Equiniti Group PLC.

Exchange Listing

Our common stock is listed on the Nasdaq Global Select Market under the symbol “SPWH.”

 

 

 

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