California for the County of Los Angeles, Case No. BC583875) with respect to the settlement of
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1 SETTLEMENT AGREEMENT This Settlement Agreement is made by and between the undersigned parties on behalf of CROCS RETAIL, LLC (formerly known as CROCS RETAIL, INC. and improperly sued as CROCS RETAIL, INC. and CROCS, INC.) ("Defendant") and the individual named Plaintiffs, ILYA ZAYDENBERG, CHRISTOPHER S. DUREE AND RICHARD MORELY, and the proposed classes and each of their members (collectively "Plaintiffs") in Zaydenberg v. Crocs Retail, Inc., et. al, (Superior Court of the State of California for the County of Los Angeles, Case No. BC554214) and DuRee, et. al. v. Crocs, Inc., et. al. (Superior Court of the State of California for the County of Los Angeles, Case No. BC583875) with respect to the settlement of all claims pled in the currently operative complaints filed in the cases referenced above. I. NATURE OF THE CASE AND THE PARTIES' SETTLEMENT 1. The Parties and Class Counsel. The Plaintiffs and the Defendant are collectively referred to as "the Parties". "Class Counsel" refers to the law firms of Lawyers for Justice, PC, Justice Law Coiporation and RGLawyers, LLP. 2. The Class Action. On April 8, 2014, Zaydenberg filed a Class Action Complaint in the Los Angeles County Superior Court, on behalf of persons who have been or currently are employed by Defendant within the State of California as hourly employees during the Class Period. On May 20, 2015, Zaydenberg filed a Joint Stipulation and Second Amended Class Action Complaint on behalf of all current and fonner hourly employees of Defendant and all current and fonner salaried employees of Defendant during the Class Period. On June 3, 2015 DuRee and Morely filed a Class Action Complaint in the Los Angeles Superior Court on behalf of all current and fonner exempt and nonexempt employees of Defendant during the Class Period. On June 29, 2015, the Honorable John Wiley Jr. entered Orders in both cases (Case No. BC and Case No. BC583875) acknowledging that the cases are related under Local Rule 3.3(f). For purposes of this Settlement Agreement both cases and all related complaints filed in each case will be collectively refened to as the "Class Action." 3. Plaintiffs and Their Claims. Plaintiffs worked as hourly and/or salaried employees at various of Defendants' locations in California. The Class Action alleges that Defendant: did not properly pay overtime, meal period premiums, rest period premiums, business expenses or minimum wage; did not pay wages or final wages in a timely manner; did not provide compliant wage statements or keep required payroll records; did not pay wages set by a statute or contract; and engaged in unfair business practices. The Class Action also includes a claim for remedies under the California Private Attorneys General Act of The Mediation. The Parties attended a mediation on June 26, The mediation was conducted by Attorney David Rotman, a highly experienced professional mediator, and resulted in a settlement of this case. The terms of the Parties' agreement are set forth herein and this Settlement Agreement is a result of the Parties' arms-length negotiations. 5. The Settlement Class and Class Activities. The persons covered under this Settlement Agreement ("the Settlement Class" or "Class Members") include: {00I35075.DOCX/ / } Page 1
2 All California employees of Defendant employed during the time frame from August 8, 2010 until the date the Court grants preliminary approval of this settlement (the "Class Period"), who Defendants classified as exempt or nonexempt. In the event either preliminary or final approval of the settlement memorialized by this Settlement Agreement is not obtained or, if obtained, is reversed upon appeal, the Parties shall be returned to their respective positions in the Class Action as they existed immediately prior to the execution of this Settlement Agreement. Furthermore, nothing said or represented in connection with obtaining approval of the Court with respect to this settlement, either on a preliminary or final basis, shall be admissible for any purpose other than to obtain approval by the Court of this settlement. 6. Non-admissions. Defendant denies any liability or wrongdoing of any kind associated with the claims alleged in the Class Action, and further contend that, for any purpose other than settlement, this action is not appropriate for class treatment. Defendant contends, among other things, that it complied at all times with the California Labor Code. Plaintiffs believe they filed a meritorious action based on alleged violations of California's wage and hour laws and believe that class certification is appropriate because the requisites for class certification can be satisfied in this case. 7. Investigation. Class Counsel have investigated the facts of the Class Action, including an extensive review of voluminous documents and the deposition of Defendants' Person Most Qualified on the issues and claims asserted in the Class Action, and have diligently pursued an investigation of the claims against Defendant. Based on their own independent investigation and evaluation, the individually named Plaintiffs and Class Counsel believe that this Settlement Agreement is fair, reasonable, and adequate and is in the best interests of the Settlement Class in light of all known facts and circumstances, including the risk of significant delay, failure of a motion for class certification, decertification, defenses asserted by Defendant, and potential appellate issues. 8. Cooperation. The Parties agree to cooperate and take all steps necessary and appropriate to effectuate the terms of this Settlement Agreement. 9. Class Certification. For purposes of the settlement set forth herein only, Plaintiffs contend and Defendant will not dispute the elements for certifying the Settlement Class. In the event the settlement is not approved by the Court this Settlement Agreement, inclusive of this Paragraph, shall be rendered null and void. II. TERMS OF SETTLEMENT 10. Purpose of the Parties. The Parties agree that the Class Action and any claims arising out of the dispute described in this Settlement Agreement be settled on the terms described herein as between the Settlement Class and Defendant, subject to the approval of the Court. 11. Certification of a Settlement Class. For the purpose of effectuating the settlement memorialized by this Settlement Agreement, the parties agree to stipulate, as part of /oo dock/ i } Page 2
3 the settlement and in connection with a motion for preliminary approval of a class settlement, to the certification of a Settlement Class as defined above in Paragraph 1(5). In the event either preliminary or final approval of the settlement memorialized by this Settlement Agreement is not obtained or, if obtained, is reversed upon appeal, the Parties shall be returned to their respective positions in the Class Action as they existed immediately prior to the execution of this Agreement. Furthennore, nothing said or represented in connection with obtaining approval of the Court with respect to this settlement, either on a preliminary or final basis, shall be admissible for any purpose other than to obtain approval by the Court of this settlement. 12. Settlement "Effective Date." The settlement embodied in this Settlement Agreement shall become effective on the earlier of: a. the Court's final approval of settlement if no objections have been filed by members of the Settlement Class, or upon final approval and any objection has been withdrawn; b. if an objection has been filed and not withdrawn, the time to appeal a ruling on the objection has expired and no appeal has been filed; or c. the final resolution of any appeal that has been filed. 13. Gross Settlement Fund. In consideration for release of the claims of the Settlement Class against Defendant (as described more fully in Section V, below), Defendant agrees to create a "Gross Settlement Fund" of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000). The Gross Settlement Fund shall be comprised of the amount to be paid for approved claims, attorneys' fees, costs and expenses awarded by the Court, incentive payments to the class representatives awarded by the Court, and the costs of notice and administration of the settlement. a. Members of the Settlement Class shall not be required to present a claim in order to share in the settlement. Each member of the Settlement Class will be provided with a court approved Notice of Class Action Settlement describing the terms of the settlement, and a Notice of Anticipated Settlement Share Amount, setting forth the Settlement Administrator's best estimate of the amount to be awarded to each individual member of the Settlement Class. b. Subject to court approval, Class Counsel shall move the Court that the named Plaintiffs in the Class Action (Zaydenberg, DuRee and Morely) shall be paid a reasonable incentive compensation of up to $5, each. Such incentive compensation shall be paid out of the Gross Settlement Fund. c. Class Counsel shall apply to the Court for an award of attorneys' fees and costs. Defendant will not oppose an application for a reasonable combined award of attorneys' fees up to THIRTY-FIVE PERCENT (35%) and costs not to exceed $30, of the Gross Settlement Fund. Amounts awarded by the Court for attorneys' fees and costs shall be paid from the Gross Settlement Fund dock/ I } Page 3
4 14. Net Settlement Fund. The "Net Settlement Fund" is the balance of the Gross Settlement Fund after payments have been made from the Gross Settlement Fund for attorneys' fees, costs, the named Plaintiffs' incentive compensation, the Private Attorneys General Act payment, and costs of notice and administration of the settlement. 15. Payment to Class Members from Net Settlement Fund. Each member of the Settlement Class who does not opt out ("Qualified Claimant") will receive a Settlement Share. Settlement Shares will be determined as follows: a. Qualified Claimants will receive a share of the Net Settlement Fund with the numerator being the Qualified Claimant's Total Gross Wages earned during the Class Period as a Class Member and the denominator being all Qualified Claimants' Total Gross Wages during the Class Period. The resulting fraction will be multiplied by the Net Settlement Fund to detennine the Qualified Claimant's individual settlement share. These calculations shall be constructed from Defendant's records. 16. Uncashed Checks. All settlement checks shall expire after 180 days of initial issuance. If any checks remain uncashed or not deposited by the expiration of the 180 days, the Settlement Administrator will pay the funds represented by such un-redeemed checks to the California Department of Industrial Relations Unclaimed Wages Fund, with an identification of the Qualified Claimant to whom the funds belong. 17. PAGA Payment. Pursuant to the Private Attorneys General Act of 2004, a payment in the amount of $5,000 for alleged Labor Code violations shall be paid out of the Gross Settlement Fund, 75% or $3,750 of which shall be paid to the California Labor and Workforce Development Agency ("LWDA") and 25% or $1,250 to Settlement Class members, on a pro rata basis. 18. Taxes. The Settlement Administrator will make wage deductions and report payments on IRS Forms W-2 and 1099 as appropriate. The Parties allocate the Net Settlement Fund as follows: 30% to wages, 35% to interest, and 35% to penalties. Members of the Settlement Class shall be responsible for the payment of any taxes attributable to such payments and hereby agree to indemnify and hold Defendants harmless for tax liability, any failure to withhold, and interest or penalties imposed thereon. in. SETTLEMENT ADMINISTRATOR 19. Appointment. The Parties have agreed to the appointment of ILYM Group, Inc. to perform the duties of a Settlement Administrator for the purpose of coordinating notice, issuing and mailing settlement checks and reporting payments to the IRS and to members of the Settlement Class. 20. Administration Fees. The Parties have agreed that costs of providing notice to the Settlement Class and otherwise administering this settlement will not exceed $13, If the Settlement Administrator's fees and costs are less than that amount, then the residual shall be {00I35075.DOCX/ 1 } Page 4
5 added to the Net Settlement Fund for distribution to the participating Settlement Class members on a pro rata basis. 21. Resolution Of Disputes. All disputes relating to the Settlement Administrator's ability and need to perform duties shall be referred to the Court, if necessary, which will have continuing jurisdiction over this Settlement Agreement until all obligations contemplated by the Settlement Agreement have been fully earned out. IV. NOTICE TO THE SETTLEMENT CLASS 22. Notice of Settlement. Within 15 calendar days after preliminary approval of this Agreement by the Court, Defendant will provide to the Settlement Administrator all of the following information about each Class Member who meets the class definition during the Class Period in a format requested by the Settlement Administrator: (1) name, (2) last known mailing address and telephone number(s), (3) social security number, (4) dates of employment as a Class Member; and (5) total gross wages paid during the Class Period as a Settlement Class Member. The Settlement Administrator will perform address updates and verifications as necessary prior to the first mailing. Within 10 calendar days after receipt of the Class List from Defendant, and subject to the approval of the Court, the Claims Administrator will send a Notice of Class Action Settlement ("Notice"), attached as Exhibit 1, to each Settlement Class Member by first class mail. The Notice of Class Action Settlement shall be available for viewing on the Settlement Administrator's Website in the form attached hereto as Exhibit 1. The Notice of Class Action Settlement will instruct members of the Settlement Class as to the methods by which they may obtain additional infonnation regarding this settlement. For members of the Settlement Class whose notice is returned to the Settlement Administrator undelivered there will be an additional attempt to secure a correct address using "skip tracing" and, if such "skip tracing" is successful, a subsequent notice shall be sent to the new address within seven calendar days of receipt of the returned mail. The Settlement Administrator shall post on their website from which the Settlement Class can access the settlement documents and infonnation including the final judgment in satisfaction with California Rules of Court, Rule 3.771(b) 23. Notice of Settlement Share. The Notice of Class Action Settlement shall include a Notice of Anticipated Settlement Share which will provide Class Members with the Administrator's best estimate of the settlement proceeds each individual will receive if all requested amounts are awarded by the Court. 24. Opt Out Procedure. Members of the Settlement Class shall have 30 days from the distribution of the Notice to Opt Out of the Settlement. To be valid, a written request to opt out must: (1) state the Class Member's name, address and telephone number; (2) that the Class Member wishes to opt out from the Settlement; (3) be signed by the Class Member; and (4) be mailed first-class postage pre-paid by [date] to the Settlement Administrator. The date of the post-mark will detennine if it was timely mailed. 25. Objections. The Notice of Class Action Settlement shall provide that any member of the Settlement Class who objects to the settlement must serve on the Settlement Administrator { DOCX/ 1 } Page 5
6 a written statement objecting to the settlement or a written notice of intention to appear at the Final Approval hearing and object at that time. Such written statement or notice must be served on the Settlement Administrator within 30 calendar days following the date of the Notice (and in the case of a r ed Notice, the date of the r ed Notice). Members of the Settlement Class who fail to serve timely written objections or notice of intention to appear and object in the maimer specified above shall be deemed to have waived any objections and shall be foreclosed from making any objection (whether by appeal or otherwise) to the settlement. 26. Resolution of Claim Disputes. Class Members who dispute their Anticipated Settlement Share may do so by initially contacting the Settlement Administrator by telephone. The Settlement Administrator shall have two (2) business days from receipt of such dispute within which to notify Class Counsel and Defendant's Counsel. The Parties' Counsel will make a good faith effort to resolve the dispute informally. If they camiot agree within 10 calendar days' time, the dispute shall be submitted to the Settlement Administrator, who shall examine Defendant's records and any submission by the Class Member in an attempt to resolve the dispute. In making this decision, in the absence of contrary evidence (contrary evidence may solely be based on the declaration under penalty of perjury of a disputing Class Member), Defendant's records shall be dispositive. No claimant may increase the size of his or her claim by arguing that the Defendant's records are incorrect without providing documentation corroborating his or her position. The decision of the Settlement Administrator shall be final and non-appealable. 27. Funding of Settlement. Within 10 business days of the Settlement Effective Date, Defendant shall complete transfer of the Gross Settlement Fund to the Settlement Administrator. 28. Distribution of Settlement Funds. Funds shall be distributed to the Settlement Class, Class Counsel and the named Plaintiffs within 10 business days after the funding of the settlement as set forth in paragraph 27. V. RELEASE BY THE NAMED PLAINTIFFS AND THE SETTLEMENT CLASS 29. Scope of Release. Upon the final approval by the Court of this Settlement Agreement, and except as to such rights or claims as may be created by this Settlement Agreement, each member of the Settlement Class fully releases and discharges Defendant and all of its past, present, and future parent companies, subsidiaries, affiliates, divisions, and agents, and all of their respective employees, members, officers, directors, partners, legal representatives, accountants, trustees, executors, administrators, real or alleged alter egos, predecessors, successors, transferees, assigns and insurers (the "Released Parties"), from liability for the claims that were asserted in the Class Action, and arising out of the acts, facts, transactions, occurrences, representations, or omissions set forth in the Class Action, for the time frame from August 8, 2010 until the date the Court grants final approval of this settlement. Claims that shall not be released include claims for unemployment compensation, workers' compensation, employment discrimination, and retaliation, except that all claims are being released by the named Plaintiffs (Zaydenberg, DuRee and Merely) to the fullest extent permitted by law. { docx/ / / Page 6
7 30. Named Plaintiffs Release. In addition to the releases made by the members of the Settlement Class, Ilya Zaydenberg, Christopher DuRee and Richard Morely make the additional following general release of all claims, known or unknown, in exchange and consideration of the payments set forth above. These named Plaintiffs agree to a general release of the Released Parties from all claims, demands, rights, liabilities, grievances, demands for arbitration, and causes of action of every nature and description whatsoever, known or unknown, pending or threatened, asserted or that might have been asserted, whether brought in tort or in contract, whether under state or federal or local law. This general release includes all employment-related and non-employment-related claims, whether known or unknown, arising during the Class Period. Except as otherwise specifically provided under this Settlement Agreement, the named Plaintiffs expressly waive and relinquish all rights and benefits afforded by Section 1542 of the Civil Code of the State of California, which states: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." VL MISCELLANEOUS PROVISIONS 31. Cooperation and Approvals. The Parties and their counsel will cooperate in obtaining the Court's approval of the settlement and in preparing and executing all documents relating thereto. 32. Confidentiality. The negotiations, terms and existence of this Settlement Agreement will remain strictly confidential and shall not be discussed with anyone other than the parties of record, counsel of record, their retained consultants, and the mediator. Any confidentiality associated with the tenns of this settlement shall expire upon the filing of a motion for preliminary approval of the settlement, except: (i) the negotiations and discussions preceding submission of the settlement to the Court for approval, and any negotiations and discussions between the time of preliminary approval and final approval, shall remain strictly confidential (unless otherwise ordered by the Court); and (ii) Defendant may disclose the settlement in filings that it is required to make with the Securities and Exchange Commission, including 10-Q and 10-K filings. 33. Press Contact. Prior to final approval by the Court, neither side shall make any public statements in any format or to any media whatsoever (including the internet) concerning the settlement, and all Parties and counsel shall decline to respond to media inquiries concerning the settlement. 34. Notice to Court and Status Quo. The Parties shall notify the Court of their intent to resolve the Class Action and request that all pending motions, deadlines, and {00I35075.DOCX/ 1 } Page 7
8 proceedings be stayed. In the event that no final, non-appealable order approving the settlement is entered, this Settlement Agreement shall be deemed null, void, and unenforceable and the Parties shall be returned to their status quo as of the date notice of the settlement was provided to the Court. 35. Resolution of Disputes. The Parties agree that this Settlement Agreement shall be binding and enforceable pursuant to California Code of Civil Procedure section 664.6, with any disputes reviewable by the Court in which the Class Action was brought. 36. Venue. The Parties agree that venue for purposes of obtaining preliminary and final Court approval shall be with the Superior Court of the State of California for the County of Las Angeles, the Honorable John Wiley Jr., presiding. {00I35075.DOCX/ 1 } Page 8
9 Dated: /W;r sporf u On behalf of Named Plaintiffs and the Settlement Class: Counsel for Named Plaintiffs and The Settlement Class Ilya Z^dcnbcrg Plaintiff and Cjdss Representative Edwin Aiwazian Lawyers for Justice, PC Christopher DuRec Plaintiff and Class Representative Douglas Han Justice Law Corporation Richard Merely Plaintiff and Class Representative Solomon Gresen RGLawyers, LLP On behalf of Defendant: Counsel for Defendants CROCS By:, Its:i \J P ^ a L * A O Charles W. Wecse Lewis, Bess, Williams & Wecse P.C. 10UIJ5075 DOCX 1/ Pages
10 Dated: On behalf of Named Plaintiffs and the Settlement Class: Counsel for Named Plaintiffs and The Settlement Class Ilya Zaydenberg Plaintiff and Class Representative Edwin Aiwazian Lawyers for Justice, PC Christopher DuRee Plaintiff and Class Representative Douglas Han Justice Law Corporation C Richam Morel y Plaintiff and Class Representative Soloijj RGMi\ltye /re en rs,! XP On behalf of Defendant: Counsel for Defendants CROCS RETAIL, LLC By:. Its: Charles W. Weese Lewis, Bess, Williams & Weese P.C. { DOCK/ I } Page 8
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