UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549  
FORM 10-K  
(Mark One)  
ý       Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  
For the fiscal year ended December 31, 2017  
OR  
o          Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934  
for the transition period from                      to                 .  
Commission file number:  1-13429  
Simpson Manufacturing Co., Inc .
(Exact name of registrant as specified in its charter)  
Delaware
 
94-3196943
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)
 
5956 W. Las Positas Blvd., Pleasanton, CA 94588
(Address of principal executive offices)  
Registrant’s telephone number, including area code:  (925) 560-9000  
Securities registered pursuant to Section 12(b) of the Act:  
Common Stock, par value $0.01
 
New York Stock Exchange, Inc.
(Title of each class)
 
(Name of each exchange on which registered)
 
Securities registered pursuant to Section 12(g) of the Act:  
None
(Title of class)  
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes   ý   No   o  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes   o   No   ý
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   ý   No   o  
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   ý   No   o  
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ] 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer   x
 
Accelerated filer   o
Non-accelerated filer    o (Do not check if a smaller reporting company)
 
Smaller reporting company   o
 
 
Emerging growth company    o
 
If an emerging growth company, indicate by check mark if the registrant has elected has elected not to use the extended transition period for complying with the new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchanged Act o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   o   No   ý  
As of June 30, 2017, there were outstanding 47,273,393 shares of the registrant’s common stock, par value $0.01, which is the only outstanding class of common or voting stock of the registrant. The aggregate market value of the shares of common stock held by non-affiliates of the registrant (based on the closing price for the common stock on the New York Stock Exchange on June 30, 2017) was approximately $1,755,382,642.

As of February 26, 2018, 46,684,831 shares of the registrant’s common stock were outstanding.  

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Documents Incorporated by Reference  
 
Portions of the registrant's definitive Proxy Statement for its 2018 annual meeting of the stockholders (the "2018 Annual Meeting") are incorporated herein by reference in Part III of this Annual Report on Form 10-K to the extent stated herein. Such Proxy Statement will be filed with the Securities and Exchange Commission (the "SEC") within 120 days of the registrant's fiscal year ended December 31, 2017 .

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NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements relating to events or results that may occur in the future are forward-looking statements, including but not limited to, statements regarding our plans, sales, sales trends, sales growth rates, revenues, profits, costs, working capital, balance sheet, inventories, products (including software and concrete offerings), relationships with contractors and partners (including our collaboration with The Home Depot, Inc.), market strategies, market shares, expenses (including operating expenses and research, development and engineering investments), unrecognized costs (including those with respect to unvested stock-based compensation), cost savings or reduction measures, repatriation of funds, factory utilization rates, results of operations, tax liabilities, losses, capital spending, housing starts, price changes (including product prices and raw material, such as steel, prices), profitability, profit margins, effective tax rates, depreciation or amortization expenses, amortization periods, returns on invested capital, stock repurchases, dividends, compensation arrangements, prospective adoption of new accounting standards, effects of changes in accounting standards and tax laws, effects and expenses of (including eventual gains or losses related to) mergers and acquisitions and related integrations, effects and expenses of equity investments, effects and expenses of relocating manufacturing facilities, effects of changes in foreign exchange rates or interest rates, effects and costs of facility consolidations and expansions (including related savings), success, effects and costs of software program implementations (including related capital expenditures and savings), labor relations, needs for additional facilities, materials and personnel, effects and costs of credit facilities and capital lease obligations, headcount, engagement of consultants, the Company’s 2020 Plan (discussed under “Management's Discussion and Analysis of Financial Condition and Results of Operations” below), the Company’s efforts and costs to implement the 2020 Plan, the effects of the 2020 Plan and the projected impact of any of the foregoing on our business, financial condition and results of operations. Forward-looking statements generally can be identified by words such as “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” “plan,” “target,” “continue,” “predict,” “project,” “change,” “result,” “future,” “will,” “could,” “can,” “may,” “likely,” “potentially,” or similar expressions. Forward-looking statements are necessarily speculative in nature, are based on numerous assumptions, and involve known and unknown risks, uncertainties and other factors (some of which are beyond our control) that could significantly affect our operations and may cause our actual actions, results, financial condition, performance or achievements to be substantially different from any future actions, results, financial condition, performance or achievements expressed or implied by any such forward-looking statements. Those factors include, but are not limited to: (i) the impact, execution and effectiveness of the Company’s current strategic plan, the 2020 Plan, and the efforts and costs to implement the plan; (ii) general economic cycles and construction business conditions; (iii) customer acceptance of our products; (iv) product liability claims, contractual liability, engineering and design liability and similar liabilities or claims, (v) relationships with partners, suppliers and customers and their financial conditions; (vi) materials and manufacturing costs; (vii) changes in capital and credit market conditions; (viii) technological developments, including system updates and conversions; (ix) increased competition; (x) changes in laws or industry practices; (xi) litigation risks and actions by activist shareholders, (xii) changes in market conditions; (xiii) governmental and business conditions in countries where our products are manufactured and sold; (xiv) natural disasters and other factors that are beyond the Company’s reasonable control; (xv) changes in trade regulations or U.S. and international taxes, tariffs and duties including those imposed on the Company’s income, imports, exports and repatriation of funds; (xvi) effects of merger or acquisition activities or the lack thereof; (xvii) actual or potential takeover or other change-of-control threats; (xviii) changes in our plans, strategies, objectives, assumptions, expectations or intentions; and (xix) other risks and uncertainties indicated from time to time in our filings with the U.S. Securities and Exchange Commission, including this Annual Report on Form 10-K. See below “Part I, Item 1A - Risk Factors.” Each forward-looking statement contained in this Annual Report on Form 10-K is specifically qualified in its entirety by the aforementioned factors. In light of the foregoing, investors are advised to carefully read this Annual Report on Form 10-K in connection with the important disclaimers set forth above and are urged not to rely on any forward-looking statements in reaching any conclusions or making any investment decisions about us or our securities. All forward-looking statements hereunder are made as of the date of this Annual Report on Form 10-K and are subject to change. Except as required by law, we do not intend and undertake no obligation to update, revise or publicly release any updates or revisions to any forward-looking statements hereunder, whether as a result of the receipt of new information, the occurrence of future events, the change of circumstances or otherwise. We further do not accept any responsibility for any projections or reports published by analysts, investors or other third parties.

Each of the terms the “Company,” “we,” “our,” “us” and similar terms used herein refer collectively to Simpson Manufacturing Co., Inc., a Delaware corporation and its wholly-owned subsidiaries, including Simpson Strong-Tie Company Inc., unless otherwise stated.

“Strong-Tie” and our other trademarks appearing in this report are our property. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies’ trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies.

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PART I
 
Item 1. Business.
 
Company Background

The Company is focused on making buildings safe and secure. The Company, through its wholly owned subsidiary, Simpson Strong-Tie Company Inc. ("SST"), designs, engineers and is a leading manufacturer of wood construction products, including connectors, truss plates, fastening systems, fasteners and pre-fabricated lateral systems used in light-frame construction, and concrete construction products used for concrete, masonry, steel construction and for concrete repair, protection and strengthening, including adhesives, chemicals, mechanical anchors, carbide drill bits, powder actuated tools and fiber reinforced materials. The Company markets its products to the residential construction, light industrial and commercial construction, remodeling and do-it-yourself (“DIY”) markets. The Company also provides engineering services in support of some of its products and increasingly offers design and other software that facilitates the specification, selection and use of its products. The Company has continuously manufactured structural connectors since 1956 and believes that the Simpson Strong-Tie brand benefits from strong brand name recognition among architects and engineers who frequently request the use of the Company’s products.

Business Strategy

The Company attracts and retains customers by designing, manufacturing and selling products that are of high quality and performance, easy to use and cost-effective for customers. The Company aims to manufacture and warehouse its products in geographic proximity to its markets to provide availability and rapid delivery of products to customers and prompt response to customer requests for specially designed products and services. The Company maintains levels of inventory intended to operate with little backlog and fill most customer orders within a few days. High levels of manufacturing automation and flexibility allow the Company to maintain its quality standards while continuing to provide prompt delivery.

The Company intends to continue efforts to increase market share in both the wood construction and concrete construction product groups by:

maintaining frequent contact with customers and private organizations that provide information to building code officials;
continuing to sponsor seminars to inform architects, engineers, contractors and building officials on appropriate use, proper installation and identification of the Company’s products;
continuing to invest in mobile, web and software applications for customers, utilizing social media, blog posts and videos to connect and engage with customers and to help them do their jobs more efficiently; and
continuing to diversify product offerings to be less dependent on United States residential housing.

The Company’s long-term strategy is to develop, acquire or invest in product lines or businesses that have the potential to increase the Company’s earnings per share over time and that:

complement the Company’s existing product lines;
can be marketed through the Company’s existing distribution channels;
might benefit from use of the Company’s brand names and expertise;
are responsive to needs of the Company’s customers;
expand the Company’s markets geographically; and
reduce the Company’s dependence on the United States residential construction market.

New Products. The Company commits substantial resources to new product development. The majority of SST’s products have been developed through its internal research and development program. SST’s research and development expense for the three years ended December 31, 2017 , 2016 and 2015 , was $10.6 million , $10.8 million , and $12.0 million , respectively. The Company believes it is the only United States manufacturer with the capability to test multi-story wall systems, thus enabling full scale testing rather than analysis alone to prove system performance. The Company’s engineering, sales, product management, and marketing teams work together with architects, engineers, building inspectors, code officials and customers in the new product development process.

The Company’s product research and development is based largely on products or solutions that are identified within the Company or as customers communicate to the Company as well as the Company’s strategic initiatives to develop new markets or product lines. The Company’s strategy is to develop new products on a proprietary basis, to seek patents when appropriate and to rely on trade secret protection for others. The Company typically develops 15 to 25 new products each year.

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The Company expanded its product offering in 2017 by adding:

new connectors for wood framing applications;
new connectors for cold formed steel applications;
new screws, tools and products for deck, fascia and drywall applications;
new mechanical anchors and a new epoxy adhesive;
new fiber reinforced cementitious mortar product; and
new decorative hardware and connectors for outdoor living spaces.

The Company intends to continue to expand its product offering.

Distribution channels. The Company seeks to expand its product and distribution coverage through several channels:

Distributors. The Company regularly evaluates its distribution coverage and the service levels provided by its distributors, and from time to time implements changes. The Company evaluates distributor product mix and conducts promotions to encourage distributors to add the Company’s products that complement the mix of product offerings in their markets.
Home Centers. The Company intends to increase penetration of the DIY markets by continuing to solicit home centers and increase product offerings. The Company’s sales force maintains on-going contact with home centers to work with them in a broad range of areas, including inventory levels, retail display maintenance and product knowledge training. The Company’s strategy is to ensure that the home center retail stores are fully stocked with adequate supplies of the Company’s products carried by those stores. The Company has further developed extensive bar coding and merchandising aids and has devoted a portion of its research efforts to the development of DIY products. The Company’s sales to home centers increased year-over-year in 2017 , 2016 and 2015 .
Dealers. In some markets, the Company sells its products directly to lumber dealers and cooperatives.
OEM Relationships. The Company works closely with manufacturers of engineered wood products and OEMs to develop and expand the application and sales of its engineered wood connector and fastener products. The Company has relationships with several of the largest manufacturers of engineered wood products.
International Sales . The Company has established a presence in the European Community through acquisition of companies with existing customer bases and through servicing United States-based customers operating in Europe. The Company also distributes connector, anchor and epoxy products in Mexico, Chile, Australia, New Zealand, South Africa and the Middle East.

See “Item 1A — Risk Factors,” “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Note 14 — Segment Information” to the accompanying audited consolidated financial statements included in Part II, Item 8 — "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K (the "Company’s Consolidated Financial Statements").

Operating Segments and Geographic Areas

The Company is organized into three operating segments consisting of the North America, Europe and Asia/Pacific segments. The North America segment includes operations primarily in the United States and Canada. The Europe segment includes operations primarily in France, the United Kingdom, Germany, Denmark, Switzerland, Portugal, Poland, The Netherlands, Belgium, Sweden and Norway. The Asia/Pacific segment includes operations primarily in Australia, New Zealand, South Africa, China, Taiwan, and Vietnam. These segments are similar in several ways, including similarities in the products manufactured and distributed, the types of materials used, the production processes, the distribution channels and the product applications. See “Note 14 — Segment Information” to the Company’s Consolidated Financial Statements for information regarding the assets, revenue and performance of each of the Company’s operating segments and geographic areas. Also see “Item 1A — Risk Factors.”

Products and Services

The Company manufactures and markets building and construction products and is a recognized brand name in residential and commercial applications. The product lines historically have encompassed connectors, anchors, fasteners, lateral resistive systems, truss plates, as well as repair and strengthening product lines for the marine, industrial and transportation markets. See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Note 14 — Segment Information” to the Company’s Consolidated Financial Statements for financial information regarding revenues by product category.


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Most of the Company’s products are approved by building code evaluation agencies. To achieve such approvals, the Company conducts extensive product testing, which is witnessed and certified by independent testing laboratories. The tests also provide the basis of load ratings for the Company’s structural products. This test and load information is used by architects, engineers, contractors, building officials and homeowners and is useful across all applications of the Company’s products, ranging from the deck constructed by a homeowner to a multi-story structure designed by an architect or engineer.

Wood Construction Products. As described below, the Company’s wood construction products include (1) connectors, (2) truss plates, (3) fastening systems and (4) lateral systems, and are typically made of steel. The Company produces and markets over 16,000 standard and custom wood construction products. These products are used primarily to strengthen, support and connect wood applications in residential and commercial construction and DIY projects. The Company’s wood construction products contribute to structural integrity and resistance to seismic, wind and other forces.

1.
The Company’s connectors are prefabricated metal products that attach wood, concrete, masonry or steel together. Connectors are essential for tying wood construction elements together and create safer and stronger buildings.
2.
The Company’s truss connector plates and software are marketed under the name Integrated Component Systems. Truss plates are toothed metal plates that join wood members together to form a truss. The Company continues to develop sophisticated software to assist truss and component manufacturers’ in modeling, designing trusses and selecting the appropriate truss plates for the applicable jobs.
3.
The Company’s fastener line includes various nails, screws and staples. Complementing these products is the Quik Drive auto-feed screw driving system used in numerous applications such as decking, subfloors, drywall and roofing.
4.
The Company’s lateral resistive systems are assemblies used to resist earthquake or wind forces and include Steel and Wood Shearwalls, Anchor Tiedown Systems (“ATS”) and steel moment frames.

Concrete Construction Products. As described below, the Company’s concrete construction products include (1) anchor products, and (2) repair, protection and strengthening products. The Company produces and markets over 1,300 standard and custom concrete construction products. The Company’s concrete construction products are composed of various materials including steel, chemicals and carbon fiber. They are used primarily to anchor, protect and strengthen concrete, brick and masonry applications in industrial, infrastructure, residential commercial and DYI projects. The Company’s concrete construction products contribute to structural integrity and resistance to seismic, wind and other forces. These products are sold in all segments of the Company worldwide.

1.
The Company’s concrete construction anchor products include adhesives, mechanical anchors, carbide drill bits and powder-actuated pins and tools used for numerous applications of anchoring or attaching elements onto concrete, brick, masonry and steel.
2.
The Company's concrete construction repair, protection and strengthening products include grouts, coatings, sealers, mortars, fiberglass and fiber-reinforced polymer systems and asphalt products.

Engineering and Design Services. The Company’s engineers not only design and test products, but also provide engineering support for customers in connection with a number of products that the Company manufactures and sells. This support might range from the discussion of a load value in a catalog to testing the suitability of an existing product in a unique application. For certain product lines, industry norms require that the Company’s engineers are more involved in the sales process. For example, in connection with the sale of our truss plates, the Company’s engineers review the output of the Company’s software to assist customers in ensuring that trusses are properly designed and specified, and in some instances seal design diagrams. Generally, in connection with any engineering services the Company provides, the Company’s engineers serve as a point of reference and support for the customer’s engineers and other service professionals, who ultimately determine and are responsible for the engineering approach to any project.

Sales and Marketing

The Company’s sales and marketing programs are implemented through its branch system. The Company currently maintains branches in California, Texas, Ohio, Canada, England, France, Germany, Denmark, Switzerland, Poland, Portugal, Austria, The Netherlands, Ireland, Belgium, Sweden, Norway, Spain, Australia, New Zealand, South Africa and Chile. Each branch is served by its own sales force, warehouse and office facilities, while some branches have their own manufacturing facilities. Each branch is responsible for setting and executing sales and marketing strategies that are consistent both with the markets in the geographic area that the branch serves and with the goals of the Company. Branch sales forces in North America are supported by marketing managers in the home office in Pleasanton, California. The home office also coordinates issues affecting customers that operate in multiple regions. The sales force maintains close working relationships with customers, develops new business, calls on architects, engineers and building officials and participates in a range of educational seminars.


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The Company dedicates substantial resources to customer service. The Company produces numerous publications and point-of-sale marketing aids to serve specifiers, distributors, retailers and users for the various markets that it serves. These publications include general catalogs, as well as various specific catalogs, such as those for its fastener products. The catalogs and publications describe the products and provide load and installation information. The Company also maintains several linked websites centered on www.strongtie.com, which include catalogs, product and technical information, code reports and other general information related to the Company, its product lines and promotional programs. The contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.

Manufacturing Process

The Company designs and manufactures most of its products. The Company has developed and uses automated manufacturing processes for many of its products. The Company’s innovative manufacturing systems and techniques have allowed it to control manufacturing costs, even while developing both new products and products that meet customized requirements and specifications. The Company’s development of specialized manufacturing processes has also permitted increased operating flexibility and enhanced product design innovation. As part of ongoing continuous improvement processes in its factories, the Company’s major North American and European manufacturing facilities initiated lean manufacturing practices to improve efficiency and customer service. The Company sources some products from third-party vendors, both domestically and internationally. The Company has 27 manufacturing locations in the United States, Canada, France, Denmark, Germany, Switzerland, Poland, Portugal, Belgium, Sweden, China and England.

Quality Control. The Company has developed a quality system that manages defined procedures to ensure consistent product quality and also meets the requirements of product evaluation reports of the International Code Council (ICC) and the International Association of Plumbers and Mechanical Officials Uniform Evaluation Services (IAPMO-UES). Since 1996, the Company’s quality system has been registered under ISO 9001, an internationally recognized set of quality-assurance standards. The Company believes that ISO registration is a valuable tool for maintaining and promoting its high quality standards. As the Company establishes new business locations through expansion or acquisitions, projects are established to integrate the Company’s quality systems and achieve ISO 9001 registration. In addition, the Company has six testing laboratories accredited to ISO standard 17025, an internationally accepted standard that provides requirements for the competence of testing and calibration laboratories. The Company implements testing requirements through systematic control of its processes, enhancing the Company’s standard for quality products, whether produced by the Company or purchased from others.

Wood Construction Products Manufacturing. Most of the Company’s wood construction products are produced with a high level of automation. The Company has significant press capacity and has multiple dies for some of its high volume products to enable production of these products close to the customer and to provide back-up capacity. The balance of production is accomplished through a combination of manual, blanking and numerically controlled (NC) processes that include robotic welders, lasers and turret punches. This capability allows the Company to produce products with little redesign or set-up time, facilitating rapid turnaround for customers. The Company also has smaller specialty production facilities, which primarily use batch production with some automated lines.

Concrete Construction Products Manufacturing. The Company manufactures its concrete construction products at its facilities in Zhangjiagang, China; West Chicago, Illinois; Cardet, France; Seewen, Switzerland; Malbork, Poland; Elvas, Portugal and Madrid, Spain. The mechanical anchor products are produced with a high level of automation. Some products, such as epoxy and adhesive anchors, are mixed in batches and are then loaded into one-part or two-part dispensers, which mix the product on the job site because set-up times are usually very short. In addition, the Company purchases a number of products, powder actuated pins, tools and accessories and certain of its mechanical anchoring products, from various sources around the world. These purchased products undergo inspections on a sample basis for conformance with ordered specifications and tolerances before being distributed.

Regulation

Environmental Regulation. The Company itself is subject to environmental laws and regulations governing emissions into the air, discharges into water, and generation, handling, storage, transportation, treatment and disposal of waste materials. The Company is also subject to other federal and state laws and regulations regarding health and safety matters. The Company believes that it has obtained all material licenses and permits required by environmental, health and safety laws and regulations in connection with the Company’s operations and that its policies and procedures comply in all material respects with existing environmental, health and safety laws and regulations. See “Item 1A — Risk Factors.”

Other. The Company’s product lines are subject to federal, state, county, municipal and other governmental and quasi-governmental regulations that affect product development, design, testing, analysis, load rating, application, marketing, sales, exportation, installation and use.

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The Company considers product evaluation, recognition and listing to the building code as a significant tool that facilitates and expedites the use of the Company’s products by design professionals, building officials, inspectors, builders, home centers and contractors. Industry members are more likely to use building products that have the appropriate recognition and listing than products that lack this acceptance. The Company devotes considerable time and testing resources to obtaining and maintaining appropriate listings for its products. The Company actively participates in industry related professional associations and building code committees both to keep abreast of regulatory changes and to provide comments and expertise to these regulatory agencies.

A substantial portion of the Company’s products have been evaluated and are recognized by governmental and product evaluation agencies. Some of the entities that recognize the Company’s products include the International Code Council Uniform Evaluation Service (ICC-ES), IAPMO-UES, the City of Los Angeles (LARR’s), California Division of the State Architect, the State of Florida, Underwriters Laboratory (UL), Factory Mutual (FM) and state departments of transportation. In Europe, the Company’s structural products meet European Technical Agreement (ETA) regulations.

Competition

The Company faces a variety of competition in all of the markets in which it participates. This competition ranges from subsidiaries of large national or international corporations to small regional manufacturers. While price is an important factor, the Company also competes on the basis of quality, breadth of product line, proprietary technology, technical support, availability of inventory, service (including custom design and manufacturing), field support and product innovation. As a result of differences in structural design and building practices and codes, the Company’s markets tend to differ by region. Within these regions, the Company competes with companies of varying size, several of which also distribute their products nationally or internationally. See “Item 1A — Risk Factors.”

Raw Materials

The principal raw material used by the Company is steel, including stainless steel. The Company also uses materials such as carbon fiber, fiberglass, mortars, grouts, epoxies and acrylics in the manufacture of its chemical anchoring and reinforcing products. The Company purchases raw materials from a variety of commercial sources. The Company’s practice is to seek cost savings and enhanced quality by purchasing from a limited number of suppliers.

The steel industry is highly cyclical and prices for the Company’s raw materials are influenced by numerous factors beyond the Company’s control. The steel market continues to be dynamic, with a high degree of uncertainty about future pricing trends. Given current conditions, anti-dumping and countervailing duty trade cases filed by United States steel producers in 2015 and 2016, and the current political climate regarding international trade, the Company currently expects that the high degree of uncertainty regarding steel prices will continue. Numerous factors may cause steel prices to increase in the future. In addition to increases in steel prices, steel mills may add surcharges for zinc, energy and freight in response to increases in their costs. See “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Company historically has not attempted to hedge against changes in prices of steel or other raw materials.

Patents and Proprietary Rights

The Company has United States and foreign patents, the majority of which cover products that the Company currently manufactures and markets. These patents, and applications for new patents, cover various design aspects of the Company’s products, as well as processes used in their manufacture. The Company continues to develop new potentially patentable products, product enhancements and product designs. Although the Company does not intend to apply for additional foreign patents covering existing products, the Company has developed an international patent program to protect new products that it may develop. In addition to seeking patent protection, the Company relies on unpatented proprietary technology to maintain its competitive position. See “Item 1A — Risk Factors.”

Acquisitions and Expansion into New Markets

In January 2017, the Company acquired CG Visions, Inc. ("CG Visions"), an Indiana corporation, for $20.8 million . CG Visions provides scalable technologies and services in building information modeling ("BIM") technologies, estimation tools and software solutions to a number of the top 100 mid-sized to large builders in the United States, which are expected to complement and support the Company's sales in North America. During the third quarter of 2017, the Company finalized its fair value measurement of assets acquired and liabilities assumed in this acquisition. CG Visions assets and liabilities included other current assets of $0.5 million , noncurrent assets of $20.4 million , current liabilities and contingent consideration of $1.1 million . Included in noncurrent assets was goodwill of $10.1 million , which was assigned to the North America segment, and intangible assets of $10.3 million ,

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both of which are not subject to tax-deductible amortization. The estimated weighted-average amortization period for the intangible assets is 7 years.

In January 2017, the Company acquired Gbo Fastening Systems AB ("Gbo Fastening Systems"), a Sweden limited company, for $10.2 million . Gbo Fastening Systems manufactures and sells a complete line of CE-marked structural fasteners as well as fastener dimensioning software for wood construction applications, currently sold mostly in northern and eastern Europe, which are expected to complement the Company's line of wood construction products in Europe. The Gbo Fastening Systems acquisition resulted in a $6.3 million gain on bargain purchase of a business, which was included in the Company's condensed consolidated statements of operation.

In August 2016, the Company purchased all of the outstanding shares of Multi Services Dêcoupe S.A. ("MS Decoupe"), a Belgium public limited company, for $6.9 million. MS Decoupe primarily manufactures and distributes wood construction, plastic, and metal labeling products in Belgium and the Netherlands, including distributing the Company's products manufactured at the Company's production facility in France. With this acquisition, the Company will offer the Belgium market a wider-range of its products, shorten delivery lead times, and expand the Company's sales presence into the Netherlands market. During the third quarter of 2017, the Company finalized its fair value measurement of assets acquired and liabilities assumed in this acquisition. MS Decoupe assets and liabilities included cash and cash equivalents of $1.4 million, other current assets of $1.6 million, noncurrent assets of $5.0 million, current liabilities of $0.6 million and noncurrent deferred income tax liabilities of $1.0 million. Included in noncurrent assets was goodwill of $1.4 million, which was assigned to the Europe segment, and intangible assets of $1.7 million, both of which are not subject to tax-deductible amortization. The estimated weighted-average amortization period for the intangible assets is 10 years.

In December 2015, the Company purchased all of the business assets including intellectual property from Blue Heron Enterprises, LLC, and Fox Chase Enterprises, LLC (collectively, "EBTY"), both New Jersey limited liability companies, for $3.4 million in cash. EBTY manufactured and sold hidden deck clips using a patented design. EBTY's patented design complements the Company's line of hidden clips and fastener systems. The Company's measurement of assets acquired included goodwill of $2.0 million , which was assigned to the North America segment, and intangible assets of $1.1 million , both of which are subject to tax-deductible amortization. Net assets consisting of inventory and equipment accounted for the balance of the purchase price. The weighted-average amortization period for the intangible assets is 7 years.

The Company’s growth potential depends, to some extent, on its ability to penetrate new markets, both domestically and internationally. See “Item 1 — Business Strategy” above. The Company may pursue acquisitions of product lines or businesses including if the right opportunity were to arise in its core fastener space. See “Note 13 — Acquisitions and Dispositions” and “Note 15 — Subsequent Events” to the Company’s Consolidated Financial Statements, as well as “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Seasonality and Cyclicality

The Company’s sales are seasonal and cyclical. Operating results vary from quarter to quarter and with economic cycles. The Company’s sales are also dependent, to a large degree, on the North American residential home construction industry. See “Item 1A — Risk Factors” and “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Employees and Labor Relations

As of December 31, 2017 , the Company had 2,902 full-time employees, of whom 1,575 were hourly employees and 1,327 were salaried employees. The Company believes that its overall compensation and benefits for the most part meet or exceed industry averages and that its relations with its employees are good.

As of December 31, 2017, approximately 13% of the Company’s employees are represented by labor unions and are covered by collective bargaining agreements. We have two locations with collective bargaining agreements covering tool and die craftsmen, maintenance workers, and sheet-metal workers. The two union contracts in Stockton, California will expire in July and September 2019, respectively. Moreover, the two contracts in San Bernardino County will expire in June 2018 and February 2021, respectively. We have not begun negotiations to extend the sheetmetal workers union labor contract that will expire in June 2018. Based on current information and subject to future events and circumstances, we believe that, even if new agreements are not reached before the existing labor union contracts expire, it is not expected to have a material adverse effect on the Company's ability to provide products to customers or on the Company's profitability. See “Item 1A — Risk Factors.”


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Available Information

The Company makes available, free of charge, on its website www.simpsonmfg.com, copies of its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) after the Company files them with the U.S. Securities and Exchange Commission (“SEC”). Printed copies of any of these materials will also be provided free of charge on request.

You may read and copy any materials filed by the Company with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

The contents of the websites referred to above are not incorporated into this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only.


Item 1A. Risk Factors.
Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, in addition to other information contained in this Annual Report on Form 10-K, including our consolidated financial statements and related notes thereto, before you decide to buy or hold shares of our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. We may not be able to control any of those risks and uncertainties. If any of those risks and uncertainties, whether described below or not, actually occurs, our business, results of operations, financial condition and future prospects could be materially and adversely affected, and you may lose all or part of your investment.

To facilitate a review of our risk factors, we have organized our risk factors into general groups of risks, including “General Business Risks,” “Products, Services and Sales Risks,” “Technological and Intellectual Property Risks,” “Regulatory Risks,” “Capital Expenditures, Expansions, Acquisitions and Divestitures Risk,” “International Operations Risks,” “Capital Structure Risks,” “Employee Risks” and “Other Risks.” The grouping of risks is to facilitate your review only, and no ranking of importance of risks or other inference should be made on account of such groups.

General Business Risks

Our 2020 Plan may not be effective in achieving our stated strategic and operating objectives, and our efforts may increase costs or otherwise adversely affect our business, results of operations and financial condition.

We are implementing a new strategic plan, the 2020 Plan, centered on focusing on our organic growth, rationalizing our cost structure to improve profitability, improving our working capital management primarily through the reduction of inventory levels and other working capital items such as accounts payable and accounts receivable. While the new strategy calls for increased emphasis on certain operational targets, such as growing our net sales, reducing our operating expenses as a percentage of net sales and decreasing our inventory levels, it moderates focus on other aspects of our operations that used to be part of our prior strategy, such as certain categories of acquisitions (especially in the concrete space).

There can be no guarantee that the new strategy will yield the results that we currently anticipate or results that will exceed those that might be obtained under our prior strategy, if we fail to successfully execute on one or more prongs of the new strategy, even if we successfully implement one or more other prongs.

We may not fully execute on one or more elements of the new strategy due to any number of reasons, including, for instance, because of the division of our management and financial resources among multiple objectives, or other factors beyond our control or not foreseeable.

The successful execution of our new strategy depends on, among other things, our ability to:

Maintain our top-line growth and achieve a net sales compound annual growth rate of approximately 8% from fiscal 2016 through fiscal 2020 by gaining market share in certain products lines;

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Carry out effective cost reduction measures in Europe and our concrete product line, justify certain expense categories for each new period, and by fiscal 2020, reduce our operating expenses as a percent of net sales to be below or at 27%;

Eliminate at least 25% to 30% of our product SKUs, implement Lean principles in our factories, and achieve an additional 30% reduction of our raw materials and finished goods inventory by fiscal 2020; and

Realize return from our investment in software initiatives.

If we cannot address these challenges successfully without interrupting our day-to-day operations, productions and procedures, or overcome execution risks and other critical obstacles that may emerge as we gain experience with our new strategy, we may not be successful in achieving such strategic and operating objectives, we may not be able to expand our business or increase our revenues or profitability at the rates we currently contemplate, if at all, and our efforts to execute the 2020 Plan may increase costs or otherwise adversely affect our business.

As a result, we may refine our strategic and operating objectives, update our current strategic plan, and pursue strategies outside the 2020 Plan that we believe represent great opportunities due to changes in our business, operations and financial condition such as, lower-than-expected revenues, unanticipated expenses, increased competition, unfavorable economic conditions, other risk factors discussed in this Annual Report on Form 10-K, or other unforeseen circumstances.

Business cycles affect our operating results.

Our operating results and our stock price are heavily tied to the health of the building construction industry, with an estimated 60% of our total product sales being dependent on housing starts. The construction industry is subject to significant volatility due to real estate market cycles, fluctuations in interest rates, the availability, or lack thereof, of credit to builders and developers, inflation rates, weather, and other factors and trends.

Further, many of our customers in the construction industry are small and medium-sized businesses. These businesses are more likely to be significantly affected by economic downturns than larger, more established businesses. Uncertainty about current global economic conditions may cause these consumers to postpone or refrain from spending or may cause them to switch to lower-cost alternative products, which could reduce demand for our products and materially and adversely affect our financial condition and operating results.

Additionally, declines in commercial and residential construction, such as housing starts and remodeling projects, which generally occur during economic downturns, have in the past significantly reduced, and in the future can be expected to reduce, the demand for our products and our stock price.

Our sales are seasonal and we have little control over the timing of customer purchases. If we miss seasonal forecasts or customers purchase our products in different quarters than we or analysts expect, our stock could materially decline.

Our sales are seasonal, with operating results varying from quarter to quarter. With some exceptions, our sales and income have historically been lower in the first and fourth quarters than in the second and third quarters, as customers tend to purchase construction materials in the late spring and summer months for the construction season. In addition, weather conditions, such as unseasonably warm, cold or wet weather, which affect, and sometimes delay or accelerate installation of some of our products, may significantly affect our results of operations. Sales that we anticipate in one quarter may occur in another quarter, affecting both quarters’ results and potentially our stock price.

In addition, we typically ship orders as we receive them and maintain inventory levels to allow us to operate with little backlog. The efficiency of our inventory system, and our ability to avoid backlogs and potential loss of customers, is closely tied to our ability to accurately predict seasonal and quarterly variances. Further, our planned expenditures are also based primarily on sales forecasts. When sales do not meet our expectations, our operating results will be reduced for the relevant quarters, as we will have already incurred expenses based on those expectations. This could result in a material decline in our stock price.


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We operate in a competitive industry, and if we fail to anticipate and react appropriately to competitors, technological changes, changing industry trends and other competitive forces our sales and profit margins will decline.

Our ability to compete effectively depends upon our ability to meet changing market conditions and develop enhancements to our products on a timely basis in order to maintain our competitive advantage. Many of our competitors have greater financial and other resources than we do. Our continued growth depends upon our ability to develop additional products, services and technologies that meet our customers’ expectation of our brand and quality. There can be no assurance that we will be successful in developing and marketing new products, product enhancements and additional technologies, that we will not experience difficulties that could delay or prevent the successful development, introduction and marketing of these products, or that our new products and product enhancements will adequately meet the requirements of the marketplace, or will achieve market acceptance.

Further, one of the core elements of our strategy is to provide high quality products and customer services. Many of our competitors are dedicating increasing resources to competing with us, especially as our products and services become more affected by technological advances and software innovations. Some of our competitors have more experience producing software and other technology-driven solutions. As a result, we are dedicating increasing resources to research and development in new and changing technologies in order to stay competitive and provide high quality and innovative products and services. These increased expenditures could reduce our operating results.

Additionally, our ability to compete effectively depends, to a significant extent, on the specification or approval of our products by architects, engineers, building inspectors, building code officials and customers and their acceptance of our premium brand. If a significant segment of those communities were to decide that the design, materials, manufacturing, testing or quality control of our products is inferior to that of any of our competitors or the cost differences between our products and any competitors are not justifiable, our sales and profits would be materially reduced.

Our future growth may depend on our ability to develop new products and penetrate new markets, which could reduce our profitability.

Our future success depends upon our continued investment in research and new product development and our ability to continue to develop new products that allow us to expand into new markets. Expansion into new markets and the development of new products may involve considerable costs and may not generate sufficient revenue to be profitable or cover the costs of development. We might not be able to penetrate these product markets and any market penetration that occurs might not be timely or profitable. We may be unable to recoup part or all of the significant investments we will have made in attempting to penetrate new markets.

Our failure to continue to successfully avoid, manage, defend, litigate and accrue for claims and litigation could negatively impact our results of operations or cash flows.

We are exposed to and become involved in various litigation matters arising out of the ordinary routine conduct of our business, including, from time to time, actual or threatened litigation relating to such items as our products and services, product liability, employment-related claims, our distributors, intellectual property claims and regulatory actions.

The defense of litigation, including fees of legal counsel, expert witnesses and related costs, is expensive and difficult to forecast accurately. In general, such costs are unrecoverable even if we ultimately prevail in litigation and could represent a significant use of our capital resources. To defend lawsuits, it is also necessary for us to divert officers and other employees from their normal business functions to gather evidence, give testimony and otherwise support litigation efforts. We expect to experience higher than normal litigation costs arising from the lawsuits disclosed in this Annual Report on Form 10-K.

If we lose any material litigation, we could face material judgments or awards against us. An unfavorable resolution of one or more of the proceedings in which we are involved now or in the future could have a material adverse effect on our business, assets, cash flow and financial condition.

There can be no assurance that we will be able to continue to successfully avoid, manage and defend such matters. In addition, given the inherent uncertainties in evaluating certain exposures, actual costs to be incurred in future periods may vary from our estimates for such contingent liabilities.


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Product, Services and Sales Risks

Design defects, labeling defects, product formula defects, inaccurate chemical mixes, product recalls and/or product liability claims could harm our reputation, sales and financial results.

We have on occasion found flaws and deficiencies in the design, manufacturing, assembling, labeling, product formulations, chemical mixes or testing of our products. We also have on occasion found flaws and deficiencies in raw materials and finished goods produced by others and used with or incorporated into our products. Some flaws and deficiencies have not been apparent until after the products were installed by customers.

Many of our products are integral to the structural soundness or safety of the structures in which they are used. If any flaws or deficiencies exist in our products and if such flaws or deficiencies are not discovered and corrected before our products are incorporated into structures, the structures could be unsafe or could suffer severe damage, such as collapse or fire, and personal injury or death could result. Errors in the installation of our products, even if the products are free of flaws and deficiencies, could also cause personal injury or death and unsafe structural conditions. To the extent that such damage or injury is not covered by our product liability insurance and we are held to be liable, we could be required to correct such damage and to compensate persons who might have suffered injury or death, and our reputation, business and financial condition could be materially and adversely affected.

Even if a flaw or deficiency is discovered before any damage or injury occurs, we may need to refund customers and/or repair or recall products (to the extent possible), and we may be liable for any costs necessary to replace recalled products or retrofit or remedy the affected structures. Any such recall, retrofit or other remedy could entail substantial costs and adversely affect our reputation, sales and financial condition. We do not carry insurance against recall costs or the adverse business effect of a recall, and our product liability insurance may not cover retrofit or other remedy costs.

As a result of the nature of many of our products and their use in construction projects, claims (including product warranty claims and claims resulting from a natural disaster) may be made against us with regard to damage or destruction of structures incorporating our products whether or not our products failed. Any such claims, if asserted, could require us to expend material time and efforts defending the claim and may materially and adversely affect our business and financial condition. Costs associated with resolving such claims (such as repair or replacement of the affected parts) could be material and may exceed any amounts reserved in our consolidated financial statements.

While we generally attempt to limit our contractual liability and our exposure to price or expense increases, we may have uncapped liabilities or significant exposure under some contracts, and could suffer material losses under such contracts.

We enter into many types of contracts with our customers, suppliers and other third parties, including in connection with our expansion into new markets and new product lines. Under some of these contracts, our overall liability may not be limited to a specified maximum amount or we may have significant potential exposure to price or expense increases. If we receive claims under these contracts or experience significant price increases or comparable expense increases, we may incur liabilities significantly in excess of the revenues associated with such contracts, which could have a material adverse effect on our results of operations.

Our software provides some design functions to customers, and we are involved both in product sales and engineering services. Any software errors or deficiencies or failures in our engineering services could have material adverse effects on our operations and financial condition.

Our design software facilitates the creation by customers of complex construction and building designs and we are involved both in product sales and engineering services. Our software is extremely complex and is continually being modified and improved. As a result, it may contain defects or errors and new versions may introduce new defects and errors. While we have attempted to limit our potential liability for the failure of any designs created by our software, as a result of defects in our software, the structures could be unsafe or could suffer severe damage, such as collapse or fire, and personal injury or death could result. Errors in construction unconnected with our design could also cause personal injury or death and unsafe structural conditions, even if our software design is sufficient. To the extent that a structure designed by our software suffers any failure or deficiency, we could be required to correct deficiencies and may become involved in litigation, even if our software design was not the cause of such deficiency. Further, if any damage or injury is not covered by our insurance and we are held to be liable, we could be required to correct such damage and to compensate persons who might have suffered injury, and our reputation, business and financial condition could be materially and adversely affected.

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While we engage in testing and upgrades, there can be no assurance that, despite our testing and upgrades, errors will not be found in new and existing products resulting in loss of revenues or delay in market acceptance, diversion of development resources, damage to our reputation, adverse litigation, or increased service and warranty costs, any of which would have a material adverse effect upon our business, operating results and financial condition.

We are also involved in providing engineering solutions to our clients. The risks associated with providing these services are materially different than the risks we historically faced when we only produced products. If our engineers prepare, approve or seal drawings that contain defects or otherwise are involved in any design or construction that contains flaws, regardless of whether our engineers caused such flaws, we may be held liable for professional negligence or other damages, which could involve material claims.

We have a few large customers, the loss of any one of which could negatively affect our sales and profits.

Our largest customers accounted for a significant portion of net sales for the years ended December 31, 2017, 2016, and 2015. Any reduction in, or termination of, our sales to these customers would at least temporarily, and possibly on a longer term basis, cause a material reduction in our net sales, income from operations and net income. Such a reduction in or elimination of our sales to any of our largest customers would increase our relative dependence on our remaining large customers.

In addition, our distributor customers have increasingly consolidated over time, which has increased the material adverse effect of losing any one of them and may increase their bargaining power in negotiations with us. These trends could negatively affect our sales and profitability.

Increases in prices of raw materials could negatively affect our sales and profits.

Our principal raw material is steel, including stainless steel. The steel industry can have large fluctuations. Numerous factors beyond our control, such as general economic conditions, competition, worldwide demand, material and labor costs, energy costs, foreign exchange rates, import duties and other trade restrictions influence prices for our raw materials. Further, the domestic steel market is heavily influenced by three major United States manufacturers. We have not always been able, and in the future we might not be able, to increase our product prices in amounts that correspond to increases in costs of raw materials, without materially and adversely affecting our sales and profits.

We have historically not hedged against changes in prices of steel or other raw materials. In past years, however, we have increased our anticipatory purchases of steel in an effort to mitigate the effects of rising steel prices. This strategy, coupled with changing economic conditions, has resulted in substantial fluctuations in our inventory in recent years, which can materially and adversely affect our margins, cash flow and profits.

We depend on third parties for transportation services and the lack of availability of transportation and/or increases in cost could materially and adversely affect our business and operations.

Our business depends on the transportation of both finished goods to our customers and distributors and the transportation of raw materials to us. We rely on third parties for transportation services of these items, which services are occasionally in high demand (especially at the end of calendar quarters) and/or subject to price fluctuations.

If the required supply of transportation services is unavailable when needed, our manufacturing processes may be interrupted or we may be unable to sell our products at full value, or at all. This could harm our reputation, negatively impact our customer relationships and have a material adverse effect on our financial condition and results of operation. In addition, a material increase in transportation rates or fuel surcharges could have a material adverse effect on our profitability.

Technological and Intellectual Property Risks
Our recent efforts to increase our technology offerings and integrate new software and application offerings may prove unsuccessful and may affect our future prospects.

Our industry has experienced increased complexity in some home design and builders are more aggressively trying to reduce their costs. One of our responses has been to design and market sophisticated software to facilitate the design and

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marketing of our product systems. We have continued to commit substantial resources to our software development endeavors in recent years and expect that trend to continue in 2018.

We have a limited operating history in the technology space and may not be able to create commercially successful software and applications. Even if we are able to create initially successful ideas, the technology industry is subject to rapid changes. We may not be able to adapt quickly enough to keep up with changing demands, and our software may become obsolete.

While we see having a software interface with the construction industry as a potential growth area, we also face competition from other companies that are focused solely or primarily on the development of software and applications. These companies may have significantly greater expertise and resources to devote to software development, and we may be unable to compete with them in that space.

If we cannot protect our technology, we will not be able to compete effectively.

Our ability to compete effectively with other companies depends in part on our ability to maintain the proprietary nature of our technology, in part through patents, copyrights, trade secrets and other intellectual property protections. We might not be able to protect or rely on our patents and copyrights. Patents might not issue pursuant to pending patent applications. Our software copyright and other protections might not be adequate to protect our software and application code. Others might independently develop the same or similar technology, develop around the patented aspects of any of our products or proposed products, or otherwise obtain access to or circumvent our proprietary technology. We also rely on unpatented proprietary technology to maintain our competitive position. We might not be able to protect our trade secrets, our know-how or other proprietary information. If we are unable to maintain the proprietary nature of our significant products, our sales and profits are likely to be materially reduced.

In attempting to protect our proprietary information, we sometimes initiate lawsuits against competitors and others that we believe have infringed or are infringing our rights. In such an event, the defendant may assert counterclaims to complicate or delay the litigation or for other reasons. Litigation may be very costly and may result in adverse judgments that affect our sales and profits materially and adversely.

Claims that we infringe intellectual property rights of others may materially increase our expenses and reduce our profits.

Other parties have in the past and may in the future claim that our products or processes infringe their intellectual property rights. We may incur substantial costs and liabilities in investigating, defending and resolving such claims, whether or not they are meritorious, which may materially reduce our profitability and materially and adversely affect our business and financial condition. Litigation can be disruptive to normal business operations and may result in adverse rulings or decisions. If any such infringement claim is asserted against us, we may be required to obtain a license or cross-license, modify our existing technology or design a new non-infringing technology, any of which could be costly and time-consuming. A ruling against us in an infringement lawsuit could include an injunction barring our production or sale of any infringing product. A damages award against us could include an award of royalties or lost profits and, if the court finds willful infringement, treble damages and attorneys’ fees.

If we are unable to protect our information systems against data corruption, cyber-based attacks or network security breaches, our operations could be disrupted and our reputation and profitability could be negatively affected.

We depend on information technology networks and systems, including the internet, to process, transmit and store electronic information. We depend on our information technology infrastructure for electronic communications among our locations around the world and between our personnel and our subsidiaries, customers and suppliers. We collect and retain large volumes of internal and customer, vendor and supplier data, including some personally identifiable information, for business purposes. We also maintain personally identifiable information about our employees. The integrity and protection of our customer, vendor, supplier, employee and other Company data is critical to our business. The regulatory environment governing information, security and privacy laws is increasingly demanding and continues to evolve. Maintaining compliance with applicable security and privacy regulations may increase our operating costs or adversely affect our business operations.

Unauthorized parties may also attempt to gain access to our systems or facilities through fraud, trickery or other forms of deceiving our employees, contractors or other agents or representatives. Security breaches of our infrastructure could

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create system disruptions, shutdowns or unauthorized disclosures of confidential information. Despite the security measures we have in place, our facilities and systems, and those of the retailers, dealers, licensees and other third party distributors with which we do business, may be vulnerable to security breaches, cyber-attacks, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. Any security breach involving the misappropriation, loss or other unauthorized disclosure of confidential customer, employee, supplier or Company information, whether by us or by the retailers, dealers, licensees and other third party distributors with which we do business, could result in losses, severely damage our reputation, expose us to the risks of litigation and liability (including regulatory liability), disrupt our operations and have a material adverse effect on our business, results of operations and financial condition.

We publicly post our privacy policies and practices concerning our processing, use, and disclosure of personally identifiable information on our website. The publication of our privacy policy and other statements we publish that provide assurances about privacy and security can subject us to potential federal, state, or other regulatory action if they are found to be deceptive or misrepresentative of our practices.

We may experience delays or outages in our information technology system and computer networks.

We may be subject to information technology system failures and network disruptions. These may be caused by delays or disruptions due to system updates, natural disasters, malicious attacks, accidents, power disruptions, telecommunications failures, acts of terrorism or war, computer viruses, physical or electronic break-ins or similar events or disruptions.

Despite our security measures, our systems could be vulnerable to disruption, and any such disruption could negatively affect our financial condition and results of operations.

Some of our agreements for software and software-as-services products have limited terms, and we may be unable to renew such agreements and may lose access to such products.

We have various agreements with a number of third parties that provide software and software-as-service products to us. These agreements often require reoccurring payments for online access to the products and have limited terms. In the future, we will be required to renegotiate the terms of these agreements, and may be unable to renew such agreements on favorable terms. If any such agreement cannot be renewed or can only be renewed on terms that are materially worse for us, we may be unable to access the applicable software, and our business and operating results may be adversely affected.

Regulatory Risks
Failure to comply with industry regulations could result in reduced sales and increased costs.

We are subject to environmental laws and regulations governing emissions into the air, discharges into water, and generation, handling, storage, transportation, treatment and disposal of waste materials. We are also subject to other federal and state laws and regulations regarding health and safety matters.

Our manufacturing operations involve the use of solvents, chemicals, oils and other materials that are regarded as hazardous or toxic. We also use complex and heavy machinery and equipment that can pose severe safety hazards, especially if not properly and carefully used. Some of our products also incorporate materials that are hazardous or toxic in some forms, such as zinc and lead used in some steel galvanizing processes, chemicals used in our acrylic and epoxy anchoring products, and chemicals used in our concrete repair, strengthening and protecting products. The gun powder used in our powder-actuated tools is explosive. We have in the past, and may in the future, need to take steps to remedy our failure to properly label, store, transport, use and manufacture such toxic and hazardous materials.

If we do not obtain all material licenses and permits required by environmental, health and safety laws and regulations, we may be subject to regulatory action by governmental authorities. If our policies and procedures are flawed, or our employees fail or neglect to follow our policies and procedures in all respects, we might incur liability. Relevant laws and regulations could change or new ones could be adopted that require us to incur substantial expense to comply.


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Complying or failing to comply with conflict minerals regulations could materially and adversely affect our supply chain, our relationships with customers and suppliers and our financial results.

We are currently subject to conflict mineral disclosure regulations in the U.S. and may be affected by new regulations concerning conflict and similar minerals adopted by other jurisdictions where we operate. While we have been successful to date in adapting to such regulations, we have and will continue to incur added costs to comply with the disclosure requirements, including costs related to determining the source of such minerals used in our products. We may not be able to ascertain the origins of such minerals that we use and may not be able to satisfy requests from customers to certify that our products are free of conflict minerals. These requirements also could constrain the pool of suppliers from which we source such minerals. We may be unable to obtain conflict-free minerals at competitive prices. Such consequences will increase costs and may materially and adversely affect our manufacturing operations and profitability.

When we provide engineering services we are subject to various local, state and federal rules and regulations which can increase our potential liability.

As part of our product offerings, we may provide engineering and design-related services to our clients. Some of these services require us to stamp drawings or otherwise be involved in the engineering process. While we generally attempt to limit our liability through our internal processes and through our legal agreements with third parties to which we provide such services, under various local, state and federal rules and regulations these limitations may not be effective and we may be held liable for engineering failures. Any such liability could materially and adversely affect our profitability.

Capital Expenditures, Expansions, Acquisitions and Divestitures Risks
Our acquisition activities, if any, present unique risks for our business, and any acquisition could materially and adversely affect our business and operating results.

We compete for acquisitions with other potential acquirers, some of which have greater financial or operational resources than we do. As a result, we may not be able to identify suitable acquisition candidates or strategic opportunities. Any acquisitions we undertake involve numerous risks, including, for example:

inadequate access to information and/or due diligence of acquired businesses;
diversion of management’s attention from other business concerns;
overvaluation of acquired businesses;
difficulties assimilating the operations and products of acquired businesses, including expensive and time consuming integration costs such as employee redeployment, relocation or severance, combining teams and processes in various functional areas, reorganization or closures of facilities, and relocation or disposition of excess equipment;
inaccurate accounting or public reporting arising from integration of the financial statements and disclosures of acquired businesses;
undisclosed existing or potential liabilities of acquired businesses;
slow acceptance or rejection of acquired businesses’ products by our customers;
risks of entering markets in which we have little or no prior experience;
litigation involving activities, properties or products of acquired businesses;
increased cost of regulatory compliance and enforcement;
consumer and other claims related to products of acquired businesses; and
the potential loss of key employees of acquired businesses.

In addition, future acquisitions may involve issuance of additional equity securities that dilute the value of our existing equity securities, increase our debt, cause impairment related to goodwill and cause impairment of, and amortization expenses related to, other intangible assets, which could materially and adversely affect our profitability. Any acquisition could materially and adversely affect our business and operating results, and as a result, our business and operating results may differ from any guidance that we may provide.

We may decide to dispose of assets and incur material expenses in doing so.

We have terminated in the past and may terminate in the future product lines or businesses if we determine that the cost of operating them is not warranted by their expected profitability. For example, we closed our sales offices in China, Thailand and Dubai in 2015. There are significant costs with such divestitures, which could materially and adversely affect our sales, assets, profitability and financial condition.

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Our capital expenditures may not be adequate to maintain our competitive position and may not be implemented in a timely or cost-effective manner.

Our capital expenditures are limited by our liquidity and capital resources and the amount we have available for capital spending is limited by the need to pay our other expenses and to maintain adequate cash reserves and borrowing capacity to meet unexpected demands that may arise. Productivity improvements through process re-engineering, design efficiency and manufacturing cost improvements may be required to offset potential increases in labor and raw material costs and competitive price pressures. If we are unable to make sufficient capital expenditures, or to maximize the efficiency of the capital expenditures we do make, our competitive position may be harmed and we may be unable to manufacture the products necessary to compete successfully in our targeted market segments.

Additional financing, if needed, to fund our working capital, growth or other business requirements may not be available on reasonable terms, or at all.

If the cash needed for working capital or to fund our growth or other business requirements increases to a level that exceeds the amount of cash that we generate from operations and have available through our current credit arrangements, we will need to seek additional financing. Additional or new borrowings may not be available on reasonable terms, or at all. Our ability to raise money by issuing and selling shares of our common or preferred stock depends on general market conditions and the demand for our stock. If we sell stock, our existing stockholders could experience substantial dilution. Our inability to secure additional financing could prevent the expansion of our business, internally and through acquisitions.

If we change significantly the location, nature or extent of some of our manufacturing operations, we may reduce our net income.

If we decide to change significantly the location, nature or extent of a portion of our manufacturing operations, we may need to record an impairment of our goodwill. Our goodwill totaled $137.1 million at December 31, 2017. Recording an impairment of our goodwill correspondingly reduces our net income. Other changes or events in the future could further impair our recorded goodwill, which could also materially and adversely affect our profitability.

International Operations Risks

Our international operations may be materially and adversely affected by factors beyond our control.

Economic, social and political conditions, laws, practices and customs vary widely among the countries where we produce or sell our products. Our operations outside of the United States are subject to a number of risks and potential costs, including, for example, lower profit margins, less protection of intellectual property and economic, political and social uncertainty in some countries. Our sales and profits depend, in part, on our ability to develop and implement policies and strategies that effectively anticipate and manage these and other risks in the countries where we do business. These and other risks may materially and adversely affect our operations in any particular country and our business as a whole.

International construction standards, techniques and methods differ from those in the United States. Laws and regulations applicable in new markets may be unfamiliar to us. Compliance may be substantially more costly than we anticipate. As a result, we may need to redesign our products, or invent or design new products, to compete effectively and profitably in international markets. Inflation in emerging markets may also make our products more expensive there and increases the market and credit risks that we are exposed to.

Other significant challenges to conducting business in foreign countries include, among other factors, local acceptance of our products, political instability, changes in import and export regulations, changes in tariff and freight rates, fluctuations in foreign exchange rates, currency controls, cash repatriation restrictions and differing economic outcomes.

International operations expose us to foreign exchange rate risk.

We have foreign exchange rate risk in our international operations and through purchases from foreign vendors. We do not currently hedge this risk. Changes in currency exchange rates could materially and adversely affect our sales and profitability.


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Because of our international operations, we could be adversely affected by violations of applicable U.S. federal and state or foreign laws and regulations, such as the United States Foreign Corrupt Practices Act and similar worldwide anti-bribery, anti-corruption and anti-kickback laws.

As a result of our expanded international operations, we face increasing compliance and regulatory oversight related to operating in foreign countries. The foreign and U.S. laws and regulations that are applicable to our operations are complex and may increase the costs of regulatory compliance, or limit or restrict the products or services we sell or subject our business to the possibility of regulatory actions or proceedings. The United States Foreign Corrupt Practices Act, and other similar laws and regulations, generally prohibit companies and their intermediaries from making improper payments to foreign governmental officials for the purpose of obtaining or retaining business. While our policies mandate compliance with applicable laws and regulations, including anti-bribery laws and other anti-corruption laws, we cannot guarantee that we will be successful in preventing our employees or other agents from taking actions in violation of these laws or regulations. Such violations, or allegations of such violations, could disrupt our business and result in a material adverse effect on our financial condition, results of operations and cash flows.

Our international operations depend on our successful management of our subsidiaries outside of the United States.

We conduct our international business through wholly owned subsidiaries. Managing distant subsidiaries and fully integrating them into our business is challenging. We cannot directly supervise every aspect of the operations of our subsidiaries operating outside the United States. As a result, we rely on local managers and staff. Cultural factors and language differences can result in misunderstandings among internationally dispersed personnel. The risk that unauthorized conduct may go undetected may be greater in subsidiaries outside of the United States. These problems could adversely affect our sales and profits.

Failure to comply with export, import, and sanctions laws and regulations could affect us materially and adversely.

We are subject to a number of export, import and economic sanction regulations, including the International Traffic in Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”) and U.S. sanction regulations administered by the U.S. Department of Treasury, Office of Foreign Assets (“OFAC”). Foreign governments where we have operations also implement export, import and sanction laws and regulations, some of which may be inconsistent or conflict with ITAR and EAR. Where we face such inconsistencies, it may be impossible for us to comply with all applicable regulations.

If we do not obtain all necessary import and export licenses required by applicable export and import regulations, including ITAR and EAR, or do business with sanctioned countries or individuals, we may be subject to fines, penalties and other regulatory action by governmental authorities, including, among other things, having our export or import privileges suspended. Even if our policies and procedures for exports, imports and sanction regulations comply, but our employees fail or neglect to follow them in all respects, we might incur similar liability.

Any changes in applicable export, import or sanction laws or regulations or any legal or regulatory violations could materially and adversely affect our business and financial condition.

Our manufacturing facilities in China complicate our supply and inventory management.

We maintain manufacturing capability in various parts of the world, in part to allow us to serve our customers with prompt delivery of needed products. Such customer service is a significant factor in our efforts to compete with larger companies that have greater resources than we have. In recent years, we have substantially expanded our manufacturing in China. Nearly all of our manufacturing output in China was and is currently intended for export to other parts of the world. Because of the great distances between our manufacturing facilities in China and the markets to which the products made there will be shipped, we may have difficulty providing adequate service to our customers, which may put us at a competitive disadvantage. Our attempts to provide prompt delivery may necessitate that in China we produce and keep on hand substantially more inventory of finished products than would otherwise be needed. Inventory fluctuations can materially and adversely affect our margins, cash flow and profits. Any tariffs, duties, taxes, penalties imposed by the United States on imports from China would negatively affect our inventory management and profits.

We are subject to U.S. and international tax laws that could affect our financial results.
We generally conduct international operations through our wholly-owned subsidiaries. Our income tax liabilities in the different countries where we operate depend in part on internal settlement prices and administrative charges among us

19




and our subsidiaries. These arrangements require us to make judgments with which tax authorities may disagree. Tax authorities may impose additional tariffs, duties, taxes, penalties and interest on us. Transactions that we have arranged in light of current tax rules could have material and adverse consequences if tax rules change, and changes in tax rules or imposition of any new or increased tariffs, duties and taxes could materially and adversely affect our sales, profits and financial condition.

Tax laws are dynamic and subject to change as new laws are passed and new interpretations are issued or applied. The U.S. recently enacted significant tax reform, and certain provisions of the new law may adversely affect us. If the U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.

Recent changes in applicable law regarding the transfer of personally identifiable information by U.S. companies doing business in the European Union could lead us to spend significant resources trying to comply with the newly developed rules. We may not succeed in meeting such requirements, and we may face governmental actions and suffer business losses.

We have in the past relied on adherence to the U.S. Department of Commerce’s Safe Harbor Policy Principles and compliance with the Safe Harbor Frameworks as agreed to and set forth by the European Commission and the United States, which established a means for legitimating the transfer of personally identifiable information by U.S. companies doing business in the European Union (“EU”) to the U.S. under the EU Data Protection Directive (95/46/EC). New EU legislation, the General Data Protection Regulation (Regulation (EU) 2016/679) (“GDPR”) will apply from May 25, 2018, in replacement of the EU Data Protection Directive, and is expected to have a significant impact on how businesses can collect and process the personal data of EU individuals.

In light of the GDPR, we have made and continue to engage in additional compliance efforts when transferring certain data from the EU. We may be unsuccessful in complying with the new EU data transfer requirements, and as a result, we may be at risk of enforcement actions taken by an EU data protection authority until such point in time that we ensure all data transfers to us from the EU are in compliance with applicable law. We may find it necessary to establish systems to maintain EU-origin data in the European Economic Area, which may involve substantial expense and distraction from other aspects of our business.

Capital Structure Risks
A stockholder controls approximately 11% of the outstanding shares of our common stock, which may reduce other stockholders' ability to influence our affairs.
As of December 31, 2017, Sharon Simpson controlled, directly and indirectly, approximately 11% of the then outstanding shares of our common stock. Ms. Simpson, therefore, has significant influence with respect to our corporate matters requiring stockholder approval such as the election of our directors and proposals that come before the stockholders at the annual meeting or other special meetings.
Further, if all or a substantial portion of her shares of our common stock is sold, it could depress the price of our common stock.
Any issuance of preferred stock may dilute your investment and reduce funds available for dividends.
Our Board of Directors is authorized by our Certificate of Incorporation to determine the terms of one or more series of preferred stock and to authorize the issuance of shares of any such series on such terms as our Board of Directors may approve. Any such issuance could be used to impede an acquisition of our business that our Board of Directors does not approve, further dilute the equity investments of holders of our common stock and reduce funds available for the payment of dividends to holders of our common stock.

Future sales of our common stock could adversely affect our stock price.

Our Board of Directors has the authority to issue, from time to time, authorized and unissued shares of our common stock. Our issuance of substantial amounts of new shares of our common stock could adversely affect the prevailing market price for our common stock.


20




All of the outstanding shares of our common stock are freely tradable without restriction under the Securities Act of 1933, as amended (the “Securities Act”), other than shares of our common stock held by our “affiliates,” as that term is defined in Rule 144 under the Securities Act, which, however, may be sold by our affiliates pursuant to Rule 144.
If a substantial number of shares of our common stock are sold in the public market pursuant to Rule 144 by our affiliates or issued upon the exercise of our outstanding options, the trading price of our common stock in the public market could be adversely affected. As of February 26, 2018, there were 5,294,439 million shares held by our affiliates
Delaware law and our corporate governance documents could deter takeover attempts that might otherwise be beneficial to our stockholders.

Provisions of Delaware law could make it more difficult for a third party to acquire us. Section 203 of the Delaware General Corporation Law may make the acquisition of the Company more difficult for potential acquirers by prohibiting stockholders holding 15% or more of our outstanding voting stock from acquiring us without the consent of our Board of Directors for at least three years from the date they first hold 15% or more of the voting stock.

Pursuant to the Company's current corporate governance documents, our stockholders cannot call special meetings and cannot take action by written consent. In addition, a change in the composition of our Board of Directors that is not approved by the existing Board of Directors could trigger a default under our existing credit facilities.

These provisions may discourage, delay or make difficult a merger or acquisition of the Company, including a transaction that may offer a premium price for our common stock.

We will continue to incur increased costs as a result of being a publicly-traded company, including costs arising from the scrutiny of our business, practice and governance as a publicly-traded company.

As a U.S. public company, we are generally subject to the reporting and other requirements of applicable federal and state securities laws, rules and regulations and scrutiny by stockholders and proxy advisors. Compliance with these laws, rules and regulations and attending to stockholder requests, requires us to continue to incur significant legal, accounting and other expenses and costs, makes some activities more difficult, time-consuming or costly and increases demands on our systems and resources, and may continue to do so. For example, we recently expended significant time and resources in terminating our stockholder rights plan, creating a compensation recovery policy and an anti-hedging and anti-pledging policy, redesigning our executive compensation program and responding to other requests from our stockholders. We continue to implement strategic and board initiatives to comply with recent and updated best-practices related to our public company status and respond to stockholder feedback, and expect that will have to continue to allocate significant time and resources to such endeavors.

In addition, as a result of disclosure of information in filings required of a public company, our business and financial condition will become more visible, which may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, brand and reputation and results of operations.

Employee Risks

We depend on key management and technical personnel, the loss of whom could harm our business.

We depend on our key management and technical personnel. The loss of one or more key employees could materially and adversely affect us.

Our success also depends on our ability to attract and retain highly qualified technical, sales and marketing and management personnel necessary for the maintenance and expansion of our activities. We face strong competition for such personnel and may not be able to attract or retain such personnel. In addition, when we experience periods with little or no profits, a decrease in compensation based on our profits may make it difficult to attract and retain highly qualified personnel.

In order to attract and retain executives and other key employees, we must provide a competitive compensation package, including cash and stock-based compensation. Our primary form of stock-based compensation is restricted stock units (“RSUs”). We have issued a substantial number of RSUs in various forms to our management and staff. We cannot

21




guarantee that such stock-based incentive awards are tax deductible. As a result, we may be required to pay additional tax on stock-based compensation to our employees.

If the anticipated value of our stock-based incentive awards does not materialize so that they cease to be viewed as valuable, if our profits decrease, or if our total compensation package is not viewed as competitive, our ability to attract, retain and motivate executives and key employees could be weakened. The failure to successfully hire and retain executives and key employees or the loss of any executives and key employees could have a significant impact on our operations.

Any work stoppage or interruption by employees could materially and adversely affect our business and financial condition.

A significant number of our employees are represented by labor unions and covered by collective bargaining agreements that will expire between 2018 and 2021. Although we believe that our relations with our employees are generally good, no assurance can be given that we will be able to successfully extend or renegotiate our collective bargaining agreements as they expire from time to time. If we fail to extend or renegotiate our collective bargaining agreements, if disputes with our unions arise, or if our unionized workers engage in a strike or other work stoppage or interruption, we could experience a significant disruption of, or inefficiencies in, our operations or incur higher labor costs, which could have a material adverse effect on our business, results of operations, financial position and liquidity.

Other Risks
Natural disasters could decrease our manufacturing capacity.

Some of our current manufacturing facilities are located in geographic regions that have experienced major natural disasters, such as earthquakes, floods and hurricanes. Our disaster recovery plan may not be adequate or effective. We do not carry earthquake insurance. Other insurance that we carry is limited in the risks covered and the amount of coverage. Our insurance would not be adequate to cover all of our resulting costs, business interruption and lost profits when a major natural disaster occurs. A natural disaster rendering one or more of our manufacturing facilities totally or partially unusable, whether or not covered by insurance, would materially and adversely affect our business and financial condition.

Climate change could materially and adversely affect our business.

We cannot predict the effects that climate change may have on our business. They might, for example:

depress or reverse economic development,
reduce the demand for construction,
increase the cost and reduce the availability of fresh water,
destroy forests, increasing the cost and reducing the availability of wood products used in construction,
increase the cost and reduce the availability of raw materials and energy,
increase the cost of capital,
increase the cost and reduce the availability of insurance covering damage from natural disasters,
lead to claims regarding the content or adequacy of our public disclosures, and
lead to new laws and regulations that increase our expenses and reduce our sales.

Any of these consequences, and other consequences of climate change that we do not foresee, could materially and adversely affect our sales, profits and financial condition.

We may have exposure to greater than anticipated tax liabilities.

We provide guidance on our anticipated tax rates. Failure to meet these anticipated rates could cause us to miss analyst forecasts and could result in material declines in our stock price. Our future income taxes could be adversely affected by earnings being lower than anticipated in jurisdictions that have lower statutory tax rates and higher than anticipated in jurisdictions that have higher statutory tax rates, by changes in the valuation of our deferred tax assets and liabilities, as a result of changes in foreign tax exchanges, or changes in tax laws, regulations, or accounting principles, as well as certain discrete items. The determination of our worldwide provision for income taxes and other tax liabilities requires significant judgment, and there are many transactions and calculations where the ultimate tax determination is uncertain. Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.

22





On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act") was signed into law. The impact of the Tax Reform Act and any future Treasury rules, regulations or guidance thereunder on our business and our stockholders is uncertain and could be adverse and cause our future results of operations and financial condition to differ materially from our expectations, estimates and assumptions disclosed in this Annual Report on Form 10-K or previously.

Contracts that we file as exhibits to our public reports contain recitals, representations and warranties that may not be factually correct.

The parties to any agreement or other instrument that we file as an exhibit to this or any other report did not necessarily intend that any recital, representation, warranty or other statement of purported fact in the instrument establish or confirm any fact, even if it is worded as such. Often such statements are used to allocate contractual risk between the parties, and the statements often are subject to standards of materiality that differ from the standards applicable to our reports. In addition, such statements may have been qualified by other materials that we have not filed with (or incorporated by reference into) this or any other report or document. Such exhibits should be read in the context of our other disclosures in our reports and it should not be assumed that any statement, representation or warranty of any party is necessarily factually accurate.

Impairment charges on goodwill or other intangible assets adversely affect our financial position and results of operations.

We are required to perform impairment tests on our goodwill, indefinite-lived intangible assets and definite-lived intangible assets annually or at any time when events occur that could affect the value of such assets. To determine whether a goodwill impairment has occurred, we compare fair value of each of our reporting units with its carrying value. In the past, these tests have led us to incur significant impairment charges. Significant and unanticipated changes in circumstances, such as significant adverse changes in business climate, adverse actions by regulatory authorities, unanticipated competition, loss of key customers or changes in technology or markets, can require a charge for impairment that can materially and adversely affect our reported net income and our stockholders’ equity.

We rely on complex software systems and hosted applications to operate our business, and our business may be disrupted if we are unable to successfully/efficiently update these systems or convert to new systems.

We are increasingly dependent on technology systems to operate our business, reduce costs, and enhance customer service. These systems include complex software systems and hosted applications that are provided by third parties such as financial management and human capital management platforms from SAP America, Inc. and Workday, Inc. Software systems need to be updated on a regular basis with patches, bug fixes and other modifications. Hosted applications are subject to service availability and reliability of hosting environments. We also migrate from legacy systems to new systems from time to time. Maintaining existing software systems, implementing upgrades and converting to new systems are costly and require a significant allocation of personnel and other resources. The implementation of these systems upgrades and conversions is a complex and time-consuming project involving substantial expenditures for implementation activities, consultants, system hardware and software, often requires transforming our current business and financial processes to conform to new systems, and therefore, may take longer, be more disruptive, and cost more than forecast and may not be successful. If the implementation is delayed or otherwise is not successful, it may hinder our business operations and negatively affect our financial condition and results of operations. There are many factors that may materially and adversely affect the schedule, cost, and execution of the implementation process, including, without limitation, problems during the design and testing phases of new systems; system delays and malfunctions; the deviation by suppliers and contractors from the required performance under their contracts with us; the diversion of management attention from our daily operations to the implementation project; reworks due to unanticipated changes in business processes; difficulty in training employees in the operation of new systems and maintaining internal control while converting from legacy systems to new systems; and integration with our existing systems. Some of such factors may not be reasonably anticipated or may be beyond our control.

Failure of our internal control over financial reporting or our accounting systems could harm our business and financial results.

Because of the inherent limitations of internal control, our internal control over financial reporting might not detect or prevent misstatements of our consolidated financial statements on a timely basis. We have used accounting and other financial management software systems in connection with our operations. Defects in such systems or their implementation could result in errors in our consolidated financial statements. Our growth and entry into globally dispersed markets as

23




well as periodic conversions from legacy software systems to new software systems puts significant additional pressure on our internal control. Failure to maintain an effective internal control could limit our ability to report our financial results accurately or to detect and prevent deficiencies timely, cause investors to lose confidence in the accuracy and completeness of our financial reports, and subject us to regulatory investigations and litigation. As a result, our business and the market price of our common stock could be materially and adversely affected.

Changes in accounting standards could materially and adversely affect our financial results.

The accounting rules applicable to public companies are subject to frequent revision. Future changes in accounting standards, guidance and interpretations could require us to change the way we measure revenue, expense or balance sheet amounts, which could result in material and adverse change to our reported results of operations or financial condition.


Item 1B. Unresolved Staff Comments.
 
None.
 

Item 2. Properties.
 
The Company owns its home office in Pleasanton, California, and its principal United States manufacturing facilities in Stockton and San Bernardino County, California, McKinney, Texas, West Chicago, Illinois, Columbus, Ohio, and Gallatin, Tennessee. The principal manufacturing facilities located outside the United States, the majority of which are owned, are in Canada, France, Denmark, Germany, Poland, Switzerland, Sweden, Portugal and China. The Company also owns and leases smaller manufacturing facilities, warehouses, research and development facilities and sales offices in the United States, the United Kingdom, Europe, Asia, Australia, New Zealand, South Africa and Chile. As of February 28, 2018 , the Company’s owned and leased facilities were as follows:
 
 
 
Number
 
 
 
 
 
 
 
 
Of
 
Approximate Square Footage
 
 
Properties
 
Owned
 
Leased
 
Total
 
 
 
 
(in thousands of square feet)
North America
 
29

 
2,323

 
702

 
3,025

Europe
 
20

 
541

 
329

 
870

Asia/Pacific
 
11

 
175

 
78

 
253

Administrative and all other
 
3

 
368

 

 
368

Total
 
63

 
3,407

 
1,109

 
4,516

 
Our headquarters and principal executive offices are located in Pleasanton, California. We believe that our properties are maintained in good operating condition. Our manufacturing facilities are equipped with specialized equipment and use extensive automation. We consider its existing and planned facilities to be adequate for its operations as currently conducted and as planned through 2018. Our leased facilities typically have renewal options and have expiration dates through 2026. We believe it will be able to extend leases on our various facilities as necessary, as they expire. Currently, our manufacturing facilities are being operated with at least one full shift. Based on current information and subject to future events and circumstances, we anticipate that it may require additional facilities to accommodate possible future growth.
We retained our real estate in Vacaville, California, and leased it to M&G Dura-Vent, Inc. for approximately $0.9 million per year for ten years ending 2020. These properties are classified under the “Administrative & All other” segment.
 

Item 3. Legal Proceedings.

From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business.

Corrosion, hydrogen enbrittlement, cracking, material hardness, wood pressure-treating chemicals, misinstallations, misuse, design and assembly flaws, manufacturing defects, labeling defects, product formula defects, inaccurate chemical mixes, adulteration, environmental conditions, or other factors can contribute to failure of fasteners, connectors, anchors, adhesives, specialty chemicals,

24




such as fiber reinforced polymers, and tool products.  In addition, inaccuracies may occur in product information, descriptions and instructions found in catalogs, packaging, data sheets, and the Company’s website.

Certain of the legal proceedings in which we are involved are discussed under “Litigation and Potential Claims” in Note 9, “Commitments and Contingencies,” to the Company’s Consolidated Financial Statements, and are hereby incorporated by reference. The resolution of any claim or litigation is subject to inherent uncertainty and could have a material adverse effect on the Company’s financial condition, cash flows or results of operations.


Item 4. Mine Safety Disclosures.
 
Not applicable.
 

PART II
 

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
Market Information for Common Stock

The information presented below is our historical data and not necessarily indicative of our future financial condition or results of operations.

The Company’s common stock is listed on the New York Stock Exchange (the “NYSE”) under the symbol “SSD.” The following table shows the range of high and low closing sale prices per share of our common stock as reported by the NYSE and dividends declared per share of our common stock for each quarter of the two most recent fiscal years indicated below, respectively:
 
 
Market Price
 
Dividends
Declared
Quarter
High
 
Low
 
2017
 

 
 

 
 

Fourth
$
60.92

 
$
48.63

 
$

Third
49.32

 
42.01

 
0.42

Second
44.13

 
40.18

 
0.21

First
44.94

 
41.55

 
0.18

2016
 

 
 

 
 

Fourth
$
48.17

 
$
40.88

 
$
0.18

Third
45.27

 
39.32

 
0.18

Second
39.97

 
37.25

 
0.18

First
38.17

 
30.49

 
0.16


Record Holders

As of February 23, 2018, there were 9,283 holders of record of the Company’s common stock. Because many of our shares of common stock are held by brokers and other nominees on behalf of stockholders, including in trust, we are unable to estimate the total number of stockholders represented by these record holders.

Dividends
 
The Company declared dividends of $0.16 per share of our common stock in the first quarter of 2016 and $0.18 per share of our common stock in each of the second, third and fourth quarters of 2016. The Company declared dividends of $0.18 per share of our common stock in the first quarter of 2017, $0.21 per share of our common stock in the second quarter and $0.42 in the third quarter of 2017 ($0.21 per share of our common stock declared in each of July and September ). The Company declared no dividends in the fourth quarter of 2017. On January 29, 2018 , the Company declared a dividend of $0.21 per share of our common stock. See "Note 15 — Subsequent Events" to the Company's Consolidated Financial Statements. Future dividends, if any, will

25




be determined by the Company’s Board of Directors, based on the Company’s future earnings, cash flows, financial condition and other factors deemed relevant by the Board of Directors. See “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 
Securities Authorized for Issuance under Equity Compensation Plans

The information required by this item with respect to our equity compensation plans is incorporated by reference to our Proxy Statement for the 2018 Annual Meeting to be filed with the SEC within 120 days of the fiscal year ended December 31, 2017 .


26




Stock Performance Graph

This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. The information presented below is our historical data and not necessarily indicative of our future financial condition or results of operations.

The graph below compares the cumulative total stockholder return on the Company’s common stock from December 31, 2012, through December 31, 2017 , with the cumulative total return on the S&P 500 Index (a broad equity market index), the Dow Jones U.S. Building Materials & Fixtures Index (a published industry or line-of-business index) and a Peer Group Index over the same period (assuming the investment of $100 in the Company’s common stock and in each of the indices on December 31, 2012, and reinvestment of all dividends into additional shares of the same class of equity securities at the frequency with which dividends are paid on such securities during the applicable fiscal year). To provide an additional comparison to our performance, we included an index consisting of companies in the building products or construction materials industries that are most comparable to us in terms of size and nature of operations, which group has also been referenced by us in connection with setting our executive compensation. The Peer Group Index below consisted of AAON, Inc., PGT Innovations, Inc., Continental Building Products, Inc., Trex Company, Inc., Insteel Industries, Inc., Quanex Building Products Corp., American Woodmark Corp, Headwaters Incorporated, Patrick Industries, Inc., Apogee Enterprises, Inc., U.S. Concrete, Inc., Gibraltar Industries, Inc., Eagle Materials Corp., Summit Material, LLC., NCI Building Systems, Inc., Ply Gem Holdings, Inc., and Masonite International Corp. We added a Peer Group Index to the stock performance graph below to ensure that it continues to reflect an appropriate comparison to our business operations. Headwaters Incorporated was acquired in, and not included in such group with respect to 2017.
  SSD2017STOCKGRAPH.JPG


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Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The table below presents the monthly repurchases of shares of our common stock in the fourth quarter of the fiscal year ended December 31, 2017 .

 
(a)
 
(b)
 
(c)
 
(d)
 
Period
Total Number of Shares Purchased
 
Average Price Paid per Share
 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
 
Approximate Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
 
October 1 - October 31, 2017

 
N/A

 

 
$201.5 million
 
November 1 - November 30, 2017

 
N/A

 

 
$201.5 million
 
December 1 - December 31, 2017
677,500

 
$
59.04

 
677,500

 
$151.5 million
 
     Total
677,500

 
 
 
 
 
 
 

(1)  
Pursuant to the $275.0 million repurchase authorization that was publicly announced on August 1, 2017, and is scheduled to expire at the end of 2018. See “Note 1 — Stock Repurchase Program” to the Company’s Consolidated Financial Statements.

In December 2017, the Company entered into a Supplemental Confirmation with Wells Fargo Bank, National Association ("Wells Fargo") for a $50 million accelerated share repurchase program (the "2017 December ASR Program"). Under the 2017 December ASR Program, the Company received 677,500 shares at an average price of $59.04 per share for a total of $40.0 million. The final delivery under the 2017 December ASR Program was made in February 2018. See Note 15 "Subsequent Events" to the Company’s Consolidated Financial Statements.



28




Item 6. Selected Financial Data.
 
You should read the following selected consolidated financial data in conjunction with Part II, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the Company’s Consolidated Financial Statements and the related Notes thereto, including any discussion of accounting changes, business combinations or dispositions of business operations therein, to fully understand factors that may affect the comparability of the information presented below.

The consolidated statements of operations data for each of the years ended December 31, 2017 , 2016 and 2015 and the consolidated balance sheets data as of December 31, 2017 and 2016 are derived from our audited consolidated financial statements included in the Company's Consolidated Financial Statements. The consolidated statements of operations data for the years ended December 31, 2014 and 2013 and the consolidated balance sheets data as of December 31, 2015 , 2014 and 2013 are derived from our audited consolidated financial statements, except as otherwise noted, that are not included in this Annual Report on Form 10-K. The information presented below is our historical data and not necessarily indicative of our future financial condition or results of operations. The financial data below includes the results of operations of acquired companies following their acquisition. For a summary of acquisitions that took place during the fiscal years ended December 31, 2017, 2016 and 2015, see “Note 13 — Acquisitions and Dispositions” to the Company’s Consolidated Financial Statements.
 
Years Ended December 31,
  (in thousands, except per-share data)
2017
 
2016
 
2015
 
2014
 
2013
Statement of Operations Data:
 

 
 

 
 

 
 

 
 

Net sales
$
977,025

 
$
860,661

 
$
794,059

 
$
752,148

 
$
705,322

Cost of sales
530,761

 
448,211

 
435,140

 
410,118

 
391,791

Gross profit
446,264

 
412,450

 
358,919

 
342,030

 
313,531

Research and development and other engineering expense
47,616

 
46,248

 
46,196

 
39,018

 
36,843

Selling expense
114,903

 
98,343

 
90,663

 
92,031

 
85,102

General and administrative expense
144,738

 
129,162

 
113,428

 
111,500

 
108,070

Impairment of goodwill

 

 

 
530

 

Net loss (gain) on disposal of assets
(160
)
 
(780
)
 
(389
)
 
(325
)
 
2,038

Income from operations
139,167

 
139,477

 
109,021

 
99,276

 
81,478

Loss in equity method investment, before tax
(86
)
 

 

 

 

Interest income (expense), net
(788
)
 
(577
)
 
(342
)
 
46

 
86

Gain on bargain purchase of a business
6,336

 

 

 

 

Loss on disposal of a business
(211
)
 

 

 

 

Income from operations
144,418

 
138,900

 
108,679

 
99,322

 
81,564

Provision for income taxes
51,801

 
49,166

 
40,791

 
35,791

 
30,593

Net income
$
92,617

 
$
89,734

 
$
67,888

 
$
63,531

 
$
50,971

Earnings per share of common stock:
 

 
 

 
 

 
 

 
 

Basic
$
1.95

 
$
1.87

 
$
1.39

 
$
1.30

 
$
1.05

Diluted
$
1.94

 
$
1.86

 
$
1.38

 
$
1.29

 
$
1.05

Cash dividends declared per share of common stock
$
0.810

 
$
0.700

 
$
0.620

 
$
0.545

 
$
0.375

 

29




 
December 31,
  (in thousands)
2017
 
2016
 
2015
 
2014
 
2013
Balance Sheet Data:
 

 
 

 
 

 
 

 
 

Working capital
$
447,450

 
$
476,451

 
$
494,308

 
$
509,838

 
$
464,901

Property, plant and equipment, net
273,020

 
232,810

 
213,716

 
207,027

 
209,533

Goodwill
137,140

 
124,479

 
123,950

 
123,881

 
129,218

Total assets
1,037,523

 
979,974

 
961,309

 
973,065

 
953,613

Line of credit and long-term debt, including current portion
3,662

 

 

 
18

 
103

Total liabilities
152,745

 
114,132

 
111,485

 
109,600

 
112,334

Total stockholders’ equity
884,778

 
865,842

 
849,824

 
863,465

 
841,279

 

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following is a discussion and analysis of the financial condition and results of operations, unless stated otherwise, for the Company for the fiscal years ended December 31, 2017 , 2016 and 2015 , and of certain factors that may affect the Company’s prospective financial condition and results of operations. The following discussion and analysis contain forward-looking statements as discussed in the “Note About Forward-Looking Statements” at the beginning of this Annual Report on Form 10-K and should be read in conjunction with the Company's Consolidated Financial Statements and related Notes included therein. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those plans, estimates, and beliefs. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Annual Report on Form 10-K, particularly "Item 1A Risk Factors."

Overview
 
We design, manufacture and sell building construction products that are of high quality and performance, easy to use and cost-effective for customers. We operate in three business segments determined by geographic region: North America, Europe and Asia/Pacific.

Our primary business strategy is to grow through increasing our market share and profitability in Europe; growing our share in the concrete space; and continuing to develop our software to support our core wood products offering while leveraging our strengths in engineering, sales and distribution, and our strong brand name. We believe these initiatives and objectives are crucial to not only offer a more complete solution to our customers and bolster our sales of core wood connector products, but also to mitigate the cyclicality of the U.S. housing market.

On October 30, 2017, we announced the 2020 Plan to provide additional transparency into our strategic plan and financial objectives. We remain on track to substantially achieve our aggressive financial targets under the 2020 Plan, assuming (i) that there are mid-single digit growths in U.S. housing starts and in the repair and remodel market, (ii) that we can realize the $30 million annualized revenue opportunity for our mechanical anchor product line in stores of The Home Depot, Inc., (iii) that we can increase our market share and profitability in Europe, and (iv) that we can gain market shares for both our truss and concrete product offerings. Subject to future events and circumstances, our 2020 Plan is centered on three key aggressive operational objectives as further described below.

First, a continued focus on organic growth with a goal to achieve a net sales compound annual growth rate of approximately 8% (from $860.7 million reported in fiscal 2016) through fiscal 2020.
Second, rationalizing our cost structure to improve company-wide profitability by reducing total operating expenses, as a percent of net sales from 31.8% in fiscal 2016 to a range of 26.0% to 27.0% by fiscal 2020. We expect to achieve this initiative, aside from top-line growth, through cost reduction measures in Europe and our concrete product line, zero-based budgeting for certain expense categories and a commitment to remaining headcount neutral (except in the production and sales departments to meet demands from sales growth). Offsetting these reductions will be the Company’s ongoing investment in its software initiatives as well as the expenses associated with our ongoing SAP implementation.
Third, improving our working capital management and overall balance sheet discipline primarily through the reduction of inventory levels by aggressively eliminating 25 to 30% of the Company’s product SKUs and implementing Lean principles in many factories. We believe we can achieve an additional 30% reduction of our raw materials and finished goods inventory over the next three years without impacting day-to-day production and shipping procedures.

30





In addition to these efforts, we recently hired a leading management consultant to perform an independent in-depth analysis of our operations and identify additional opportunities to enhance our operational efficiencies. We believe our efforts to achieve the 2020 Plan will contribute to improved business performance and operating results, improve returns on invested capital (1) and allow us to be more aggressive in repurchasing shares of our stock in the near-term. Through execution on the 2020 Plan, we also expect by the end of fiscal year 2020 to achieve a return on invested capital target within the range of 17% to 18%.

We believe our ability to achieve industry-leading margins from a gross profit and operating income standpoint is due to the high level of value-added services that we provide to our customers. Aside from our strong brand recognition and trusted reputation, Simpson is unique due to our extensive product testing capabilities and our state-of-the-art test lab; strong customer support and education for engineers, builders and contractors; deep 40-plus year relationships with engineers that get our products specified on the blueprint and pulled through to the job site; product availability with delivery in typically 24 hours or less; and an active involvement with code officials to improve building codes and construction practices. Based on current information, we expect the competitive environment to be relatively stable. We also expect U.S. single-family housing starts to continue to grow as a percentage in the mid to high single digits over the next few years, which should support a sustainable organic revenue growth outlook in North America for many of our products.

We have invested in strategic initiatives, including approximately $8 million annual research and development expenses in software development, to help us perform throughout all industry cycles, such as scaling up our wood construction products operations in Europe and ongoing development of our software solutions, which we estimate supports approximately 40% of our connector and truss plate sales, as our market strategy is to sell engineered product solutions. In support of this effort, we acquired Gbo Fastening Systems AB (“Gbo Fastening Systems”) and CG Visions, Inc. (“CG Visions”) in January 2017, as we believe these two acquisitions fit into our current business model and growth strategy.

While acquisitions were part of a dual-fold approach to growth in the past, our go-forward strategy will focus on organic growth, supported by strategic capital investments in the business. As such, we will de-emphasize acquisitions activities going forward, especially as it relates to the concrete space. An exception may occur if the right opportunity were to arise in our core fastener space, which is the particular area where we believe it would be beneficial to gain additional production capacity to support our wood business.

Factors Affecting Our Results of Operations

Unlike lumber or other products that have a more direct correlation to housing starts, our products are used to a greater extent in areas that are subject to natural forces, such as seismic or wind events. Our products are generally used in a sequential process that follows the construction process. Residential and commercial construction begins with the foundation, followed by the wall and the roof systems, and then the installation of our products, which flow into a project or a house according to these schedules. Foundation product sales could be considered a leading indicator for our product sales. Sales of foundation products in the fourth quarter of 2017 decreased compared to the same period in 2016.

Our sales also tend to be seasonal, with operating results varying from quarter to quarter. With some exceptions, our sales and income have historically been lower in the first and fourth quarters than in the second and third quarters of a fiscal year, as our customers tend to purchase construction materials in the late spring and summer months for the construction season. In addition, weather conditions, such as extended cold or wet weather, which affect and sometimes delay installation of some of our products, could negatively affect our results of operations. Political and economic events can also affect our sales and profitability.

Operating expenses, excluding gain (losses) on disposal of assets, as a percentage of net sales was 31% , 32% and 31% for the years ended 2017, 2016 and 2015, respectively.

Acquisitions

North America

In January 2017, we acquired CG Visions for approximately $20.8 million subject to specified holdback provisions and post-closing adjustments. This acquisition is expected to enable us to build closer partnerships with builders by offering software and services to help them control costs and increase efficiency at all stages of the home building process. We have begun to look for opportunities to incorporate our products into CG Visions' building information modeling ("BIM") packages and apply CG Visions’ expertise to our existing and future software initiatives.


31




Europe

In January 2017, we acquired Gbo Fastening Systems for approximately $10.2 million. Gbo Fastening Systems manufactures and sells a complete line of European approved CE-marked structural fasteners, mostly in northern and eastern Europe, which we have begun to distribute and sell to our subsidiaries in western Europe. We have begun distributing into the Nordic countries wood connector products that were manufactured in the Company's manufacturing facilities in western Europe. Further, we begun to access Gbo Fastening Systems' expertise in product development and testing, and proficiency in fastener manufacturing and surface treatment, to strengthen Gbo Fastening Systems' global presence and contribute engineering expertise in automatic fastening systems and fastener collation to help broaden its fastener and structural connectors lines.

The Company sold Gbo Fastening Systems' Poland and Gbo Fastening Systems' Romania subsidiaries ("Gbo Poland and Gbo Romania") on September 29, 2017 and October 31, 2017, respectively. The Company retains Gbo Fastening Systems' operations in Sweden and Norway.

ERP Integration

In July 2016, our Board of Directors (the "Board") approved a plan to replace our current in-house enterprise resource planning ("ERP") and externally sourced accounting platforms with a fully integrated ERP platform from SAP America, Inc. ("SAP") in multiple phases by location over a period of three to four years at all facilities plus our headquarters, with a focus on configuring, instead of customizing, the standard SAP modules. We anticipate the ERP implementation project will cost approximately $30 million to $34 million through 2019, including capital expenditures. Annual operating expenses will increase from 2017 to 2024 as a result of the ERP project, partly due to the amortization of related capitalized costs.

We believe that the ERP project has progressed well in 2017 and is currently on track and on budget. As of December 31, 2017, we have capitalized $11.6 million and expensed $3.3 million of the costs associated with the ERP project. We went live with our first locations in February of 2018. We anticipate that, as the project progresses further into 2018, we will spend more time and resources in training our staff for the new platform, as opposed to configuring the SAP modules, and we expect to record the cost associated with such training as expense. For 2018, we estimate that approximately $7 to $8 million of the costs associated with the ERP project will be expensed, including the amortization of capitalized SAP costs.

Business Segment Information

Our North America segment has generated revenues primarily from wood construction products compared to concrete construction products. Due to improved economic conditions, including an increase in housing starts, net sales in regions of the segment have trended up, primarily due to increases in unit sales volumes and an approximately 4% price increase for our connector products in the United Stated effective on December 1, 2016, as well as added revenues from CG Visions. Our truss sales decreased slightly in 2017. Our truss specialists will focus on converting medium size truss customers to our design and management software in 2018, while continuing to support our smaller truss customers. In addition, we have presented the BIM platform acquired from CG Visions to various builders to showcase the software and for us to determine which modules and services that builders might be interested in using to support their business.

During 2016, we initiated a multi-year plan to increase our North America factory production efficiency, aiming to achieve a 75% factory utilization rate on two full shifts by moving high-volume connector production from both our Riverside and Western Canada facilities to our other three manufacturing locations in North America. As of September 30, 2017, we had relocated 100% of our planned high-volume connector production. Based on current information and subject to future events and circumstances, we estimate this transition will save approximately $3.0 million per year, mostly in production costs. Also, we are moving all of our truss plate manufacturing to our existing wood connector manufacturing facilities to increase the efficiency and plant utilization. Upon completion, the truss plate manufacturing facility will be permanently closed. Based on current information and subject to future events and circumstances, we will complete the transition by the end of the first quarter of 2018 and we estimate this transition will save approximately $2 million per year in annual production costs.

In late 2016, we collaborated with The Home Depot, Inc. (“The Home Depot”) to begin to roll out our mechanical anchor line of products that are available at The Home Depot. This collaboration increased a portion of our finished goods inventory and we expect to continue to introduce our mechanical anchor line of products through approximately 1,900 of The Home Depot store locations by 2020. Once the rollout is completed, we anticipate this opportunity will meaningfully contribute to our concrete business lines going forward and estimate that on an annualized basis it could potentially increase our net sales by approximately $30 million.


32




Our Europe segment generates more revenues from wood construction products than concrete construction products. Wood construction product sales increased 58% in 2017 compared to 2016, primarily due to the acquisition of Gbo Fastening Systems. Concrete construction product sales are mostly project based and net sales increased 20% in 2017 compared to 2016, primarily due to increased sales volume in 2017. We are uncertain whether concrete construction product net sales will continue to grow at this pace for 2018. In the first quarter of 2018, our Western European locations introduced a complete line of Gbo fastener products to its customers and started taking sales orders. Also, we reduced future operating expenses by an estimated $2.0 million per year through personnel reductions. See “Europe” below.

Our Asia/Pacific segment has generated revenues from both wood and concrete construction products. We have closed our sales offices located in China, Thailand and Dubai; and discontinued our selling activities in Hong Kong, due to continued losses in the regions. We believe that the Asia/Pacific segment is not significant to our overall performance.

 
(1
)
When referred to above, the Company’s return on invested capital (“ROIC”) for a fiscal year is calculated based on (i) the net income of that year as presented in the Company’s consolidated statements of operations prepared pursuant to generally accepted accounting principles in the U.S. (“GAAP”), as divided by (ii) the average of the sum of the total stockholders’ equity and the total long-term liabilities at the beginning of and at the end of such year, as presented in the Company’s consolidated balance sheets prepared pursuant to GAAP for that applicable year. As such, the Company’s ROIC, a ratio or statistical measure, is calculated using exclusively financial measures presented in accordance with GAAP.

Business Outlook

Based on current information and subject to future events and circumstances:

The Company currently anticipates that the market price of steel to rise during the first quarter of 2018.

The Company estimates that its full-year 2018 gross profit margin will be between approximately 45% and 46%.

The Company estimates that its full-year 2018 effective tax rate will be between 26% and 27%. The ultimate impact of the Tax Reform Act may differ materially from the Company’s estimates due to changes in the interpretations and assumptions made by the Company as well as additional regulatory guidance that may be issued and actions the Company may take as a result of the Tax Reform Act, such as cash repatriation to the United States. The Company will continue to assess the expected impacts of the new tax law and provide additional disclosures at appropriate times.


33




Results of Operations
 
The following table sets forth, for the years indicated, the Company's operating results as a percentage of net sales for the years ended December 31, 2017 , 2016 and 2015 , respectively:

 
Years Ended December 31,
 
2017
 
2016
 
2015
Net sales
100.0
 %
 
100.0
 %
 
100.0
 %
Cost of sales
54.3
 %
 
52.1
 %
 
54.8
 %
Gross profit
45.7
 %
 
47.9
 %
 
45.2
 %
Research and development and other engineering
4.9
 %
 
5.4
 %
 
5.8
 %
Selling expense
11.8
 %
 
11.4
 %
 
11.4
 %
General and administrative expense
14.8
 %
 
15.0
 %
 
14.3
 %
Net gain on disposal of assets
(0.1
)%
 
(0.1
)%
 
 %
Income from operations
14.3
 %
 
16.2
 %
 
13.7
 %
Income in equity method investment
 %
 
 %
 
 %
Interest income (expense), net
(0.1
)%
 
(0.1
)%
 
 %
Gain on bargain purchase of a business
0.6
 %
 
 %
 
 %
Loss on disposal of a business
 %
 
 %
 
 %
Income before taxes
14.8
 %
 
16.1
 %
 
13.7
 %
Provision for income taxes
5.3
 %
 
5.7
 %
 
5.1
 %
Net income
9.5
 %
 
10.4
 %
 
8.6
 %

Unless otherwise stated, the Company’s results below, when referencing “recent acquisitions,” refer to the January 2017 acquisitions of Gbo Fastening Systems and CG Visions; when referencing “recently acquired businesses,” refer to Gbo Fastening Systems and/or CG Visions, as applicable; and when referencing “acquired net sales,” refer to net sales of such acquired businesses, as applicable. When referencing the “recent North America acquisition,” the Company’s results below refer to the CG Vision acquisition; and when referencing “recent Europe acquisitions,” refer to the Gbo Fastening Systems acquisition. See "Note 13 — Acquisitions and Dispositions" to the Company's Consolidated Financial Statements).

2015 to 2017 Financial Highlights


Net sales increased 23% to $977.0 million in 2017 from $794.1 million in 2015 .

North America — Net sales increased 19% to $803.7 million in 2017 from $676.6 million in 2015 .
Europe — Net sales increased 53% to $165.2 million in 2017 from $108.1 million in 2015 , primarily due recent acquisitions.
Asia/Pacific — Net sales decreased 13% to $8.2 million in 2017 from $9.4 million in 2015 , due to the closing of sales offices in China, Thailand and Dubai in the first quarter of 2015 .

Gross profit increased 24% to $446.3 million in 2017 from $358.9 million in 2015 and gross profit as a percentage of net sales ("gross profit margin") increased to 46% in 2017 from 45% in 2015 .

North America — Gross profit margin remained at 47% for both 2017 and 2015 .
Europe — Gross profit margin decreased to 36% in 2017 from 38% in 2015 , primarily due recent acquisitions.
Product group — The gross profit margins, including some inter-segment expenses, that are eliminated in consolidation, and excluding other expenses not allocated according to product group, remained at 47% for both 2017 and 2015 for wood construction products and remained at 35% for both 2017 and 2015 for concrete construction products.

Income from operations increased 28% to $139.2 million in 2017 from $109.0 million in 2015 and operating profit as a percentage of net sales ("operating profit margin") remained at 14% for both 2017 and 2015 . Operating expenses (excluding net gain on disposal of assets) increased to $307.3 million in 2017 from $250.3 million in 2015 , but remained at 31% of net sales in both of years ended 2017 and 2015 .


34




North America — Income from operations increased 21% to $132.9 million in 2017 from $109.4 million in 2015. Operating profit margin increased to 17% in 2017 from 16% in 2015 .
Europe — Income from operations increased 16% to $4.4 million in 2017 from $3.8 million in 2015. Operating profit margin decreased to 3% in 2017 from 4% in 2015 .
Asia/Pacific — Income from operations was $1.2 million in 2017 compared to a loss of $3.4 million in 2015.

Our effective income tax rate decreased to 36% in 2017 from 38% in 2015.

The Company had net income of $92.6 million for 2017 compared to net income of $67.9 million for 2015 . Diluted net income per share of common stock was $1.94 for 2017 compared to $1.38 for 2015 .

Comparison of the Years Ended December 31, 2017 and 2016
 
Unless otherwise stated, the results announced below, when providing comparisons (which are generally indicated by words such as “increased,” “decreased,” “unchanged” or “compared to”), compare the results of operations for the year ended December 31, 2017 , against the results of operations for the year ended December 31, 2016 . Unless otherwise stated, the results announced below, when referencing “both years,” refer to the year ended December 31, 2016 and the year ended December 31, 2017. To avoid fractional percentages, all percentages presented below were rounded to the nearest whole number.

The following table shows the change in the Company’s operations from 2016 to 2017 , and the increases or decreases for each category by segment:
  
 
 
 
Increase (Decrease) in Operating Segment
 
 
 
 
 
North America
 
 
 
Asia/
Pacific
 
Admin &
All Other
 
 
  (in thousands)
2016
 
 
Europe
 
 
 
2017
Net sales
$
860,661

 
$
61,676

 
$
53,881

 
$
807

 
$

 
$
977,025

Cost of sales
448,211

 
41,245

 
38,946

 
2,255

 
104

 
530,761

Gross profit
412,450

 
20,431

 
14,935

 
(1,448
)
 
(104
)
 
446,264

Research and development and other engineering expense
46,248

 
201

 
1,224

 
6

 
(63
)
 
47,616

Selling expense
98,343

 
8,042

 
8,268

 
227

 
23

 
114,903

General and administrative expense
129,162

 
15,840

 
1,935

 
(653
)
 
(1,546
)
 
144,738

Gain on sale of assets
(780
)
 
769

 
(18
)
 
(67
)
 
(64
)
 
(160
)
Income from operations
139,477

 
(4,421
)
 
3,526

 
(961
)
 
1,546

 
139,167

Loss in equity method, before tax

 
(86
)
 

 

 

 
(86
)
Interest expense, net
(577
)
 
89

 
(204
)
 
63

 
(159
)
 
(788
)
Gain on bargain purchase of a business

 

 
6,336

 

 

 
6,336

Loss on disposal of a business

 

 
(211
)
 

 

 
(211
)
Income before income taxes
138,900

 
(4,418
)
 
9,447

 
(898
)
 
1,387

 
144,418

Provision for income taxes
49,166

 
4,278

 
697

 
(302
)
 
(2,038
)
 
51,801

Net income
$
89,734

 
$
(8,696
)
 
$
8,750

 
$
(596
)
 
$
3,425

 
$
92,617

 
Net Sales increased 14% to $977.0 million from $860.7 million . Recently acquired businesses accounted for $47.9 million (41%) of the increase in net sales. Net sales to contractor distributors, lumber dealers, dealer distributors and home centers increased primarily due to increased home construction activity and average net sales unit prices. Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 85% of the Company's total net sales in both years. Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15% of the Company's total net sales in both years.

Gross profit increased to $446.3 million from $412.5 million . Gross profit margins decreased to 46% from 48% . Recently acquired businesses had an average gross profit margin of 30% for the year ended 2017. The gross profit margins, including some intersegment expenses, which were eliminated in consolidation, and excluding other expenses that are allocated according to product group, decreased to 47% from 49% for wood construction products and remained at 35% for both years for concrete construction products.


35




Research and development and engineering expense increased 3% to $47.6 million from $46.2 million , primarily due to increases of $2.2 million in personnel costs mainly attributable to the addition of staff and pay rate increases instituted on January 1, 2017, and $1.2 million in severance expenses, partly offset by a decreases of $1.4 million in professional fees and $0.8 million in cash profit sharing on lower operating income.

Selling expense increased 17% to $114.9 million from $98.3 million primarily due to increases of $10.3 million in personnel costs mostly related to recent acquisitions and the addition of staff and pay rate increases instituted on January 1, 2017, $3.1 million in advertising costs, $2.0 million in severance expenses, $0.7 million in depreciation expense, $0.3 million in donation expense, $0.3 million in facility expenses and $0.2 million in computer and phone expenses, which was partly offset by a decrease of $0.9 million in cash profit sharing expense. Recent acquisitions increased selling expense by $7.2 million.

General and administrative expense increased 12% to $144.7 million from $129.2 million , primarily due to increases of $10.3 million in personnel costs mostly related to recent acquisitions and the addition of staff and pay rate increases instituted on January 1, 2017, $6.5 million in legal and professional fees mostly related to strategic initiatives such as software and systems integration and compensation and governance changes, $3.7 million in software licensing, maintenance and hosting fees, $2.2 million in depreciation expense and $2.0 million in severance expenses, which was partly offset by a decrease of $6.0 million in cash profit sharing expense on lower operating income and reduced payouts under our executive officer cash profit sharing plan and $0.4 million in stock-based compensation as well as an increase of $3.0 million from favorable net foreign currency translations and transactions. Recently acquired businesses were responsible for $11.2 million of the total increase in general and administrative expenses.

Gain on bargain purchase of a business - On January 3, 2017, we acquired Gbo Fastening Systems for approximately $10.2 million. This transaction was recorded as a business combination in accordance with the business acquisition method. We recorded a bargain purchase gain of $6.3 million, which represents the fair value of the net assets acquired and liabilities assumed over the consideration exchanged as of the acquisition date. This nonrecurring, non-operating income gain is included in the line item “Gain (adjustment) on bargain purchase of a business” in our results of operations for 2017.

Loss on disposal of a business - In 2017, we sold all of the outstanding shares of Gbo Poland and Gbo Romania for approximately $10.2 million, resulting in a loss of $0.2 million. In February 2018, post-closing adjustments were finalized, which resulted in the Company receiving an additional $69 thousand in sales proceeds.

Our effective income tax rate increased to 36% from 35% , primarily due to the Tax Reform Act toll tax (repatriation), partly offset by a decrease in the deferred tax liability due to the December 31, 2017 re-measurement the liability using the new 21% U.S. corporate tax rate.

Net income was $92.6 million compared to $89.7 million . Diluted net income per share of common stock was $1.94 compared to $1.86 . The increase in net income was primarily due to the $6.3 million nonrecurring bargain purchase gain (see "Gain on bargain purchase of a business" above), which increased diluted net income by $0.13 per share of common stock.

Net Sales

The following table shows net sales by segment for the years ended December 31, 2016 and 2017 , respectively:
  
(in thousands)
North
America
 
Europe
 
Asia/
Pacific
 
Total
December 31, 2016
$
742,021

 
$
111,274

 
$
7,366

 
$
860,661

December 31, 2017
803,697

 
165,155

 
8,173

 
977,025

Increase
$
61,676

 
$
53,881

 
$
807

 
$
116,364

Percentage increase
8
%
 
48
%
 
11
%
 
14
%
 
The following table shows segment net sales as percentages of total net sales for the years ended December 31, 2016 and 2017 , respectively:
 
 
North
America
 
Europe
 
Asia/
Pacific
 
Total
Percentage of total 2016 net sales
86
%
 
13
%
 
1
%
 
100
%
Percentage of total 2017 net sales
82
%
 
17
%
 
1
%
 
100
%

36





Gross Profit
 
The following table shows gross profit by segment for the years ended December 31, 2016 and 2017 , respectively:
 
(in thousands)
North
America
 
Europe
 
Asia/
Pacific
 
Admin &
All Other
 
Total
December 31, 2016
$
365,758

 
$
44,038

 
$
2,419

 
$
235

 
$
412,450

December 31, 2017
386,189

 
58,973

 
971

 
131

 
446,264

Increase (decrease)
$
20,431

 
$
14,935

 
$
(1,448
)
 
$
(104
)
 
$
33,814

Percentage increase (decrease)
6
%
 
34
%
 
*
 
*
 
8
%
* The statistic is not meaningful or material.

The following table shows gross profit percentages by segment for the years ended December 31, 2016 and 2017 , respectively:
 
 
North
America
 
Europe
 
Asia/
Pacific
 
Admin &
All Other
 
Total
2016 gross profit percentage
49
%
 
40
%
 
33
%
 
*
 
48
%
2017 gross profit percentage
48
%
 
36
%
 
12
%
 
*
 
46
%
* The statistic is not meaningful or material.

North America

Net sales increased 8% mostly due to increased average unit price in the United States and increased overall sales volumes. Canada's net sales increased primarily due to increased sales volumes on flat average net sales unit prices. Canada's net sales were not significantly affected by foreign currency translation. The recent North America acquisition increased net sales by $5.8 million.

Gross profit margin decreased to 48% from 49% due to increased material, factory and overhead expenses and labor expenses, which was partly offset by the effect of increased average net sales unit prices.

Research and development and engineering expense increased $0.2 million primarily due to increases of $1.5 million in personnel costs mainly related to the addition of staff and pay rate increases instituted on January 1, 2017, and $0.6 million in severance expenses, partly offset by a decreases of $1.4 million in consulting fees and $0.9 million in cash profit sharing expense.

Selling expense increased $8.0 million, primarily due to increases of $4.5 million in personnel costs mostly related to the addition of staff and pay rate increases instituted on January 1, 2017, $2.4 million in advertising expense mostly in point of purchase advertising, trade show and sale promotion costs, $0.8 million in severance expenses, $0.7 million in depreciation expense and $0.3 million in donation expense, partly offset by a decrease of $1.0 million in cash profit sharing costs on lower operating income.

General and administrative expense increased $15.8 million, primarily due to increases of $6.9 million in personnel costs, mostly related to the North America acquisition and the addition of staff and pay rate increases instituted on January 1, 2017, $6.4 million in legal and professional fees, mostly related to strategic initiatives such as software and systems integration and compensation and governance changes, $2.6 million mostly in software licensing, maintenance and hosting fees, $2.0 million in depreciation expense, $1.8 million in severance expenses, $0.6 million in intangible amortization expense and $0.5 million in stock-based compensation, partly offset by a decrease of $3.8 million in cash profit sharing expense as well as the benefit from $0.5 million in net foreign currency translation in the current period. The recent North America acquisition increased general and administrative expense by $6.5 million.

Income from operations decreased $4.4 million, mostly due to increased operating expenses, which were partially offset by higher gross profit. Severance expenses of $3.6 million were recorded in 2017.


37




Europe

Net sales increased 48% primarily due acquired net sales of $42.1 million, which accounted for 78% of the total increase. Net sales were positively affected by approximately $1.4 million in foreign currency translations primarily related to the strengthening of the Euro, Polish zloty and Danish Kroner against the United States dollar.

Gross profit margin decreased to 36% from 40% primarily due to our recent Europe acquisitions. The acquired businesses in Europe had an average gross profit margin of 20% in 2017.

Research and development and engineering expense increased $1.2 million primarily due to increases of $0.6 million in severance expenses and $0.5 million in personnel costs mainly related to the addition of staff and pay rate increases instituted on January 1, 2017.

Selling expense increased $8.3 million primarily due to an increase of $5.4 million in personnel costs mostly related to acquisitions and the addition of staff, $1.2 million in severance expenses, $0.6 million mostly in advertising costs, $0.3 million in facility expenses and $0.2 million in agent commissions. The recent Europe acquisitions increased selling expense by $6.6 million.

General and administrative expense increased $1.9 million primarily due to increases of $2.4 million in personnel costs, mostly related to the addition of staff and pay rate increases instituted on January 1, 2017, $1.0 million in computer expenses mostly in software licensing and data processing fees, $0.6 million in cash profit sharing expense, $0.2 million in severance expenses, $0.2 million in stock based compensation and $0.2 million in professional fees, partly offset by a decrease in amortization expense of $0.5 million as well as the benefit from $2.9 million in net foreign currency translation in the current period. Recent Europe acquisitions increased general and administrative expense by $4.7 million.

Income from operations increased $3.5 million, mostly due to increased gross profits, which were partially offset by higher operating expenses, which included $2.0 million in severance expenses.

Asia/Pacific

For information about the Company's Asia/Pacific segment, please refer to the table above setting forth changes in our operating results for the years ended December 31, 2017 and 2016 .

Administrative and All Other

General and administrative expenses decreased, primarily due to a decreases of $2.8 million in cash profit sharing expense, partly offset by an increase of $1.3 million in personnel costs.


Comparison of the Years Ended December 31, 2016 and 2015

Unless otherwise stated, the results announced below, in this "Comparison of the Years Ended December 31, 2016 and 2015" section, when providing comparisons (which are generally indicated by words such as “increased,” “decreased,” "remained" or “compared to”), compare the results of operations for the year ended December 31, 2016 , against the results of operations for the year ended December 31, 2015 .

To avoid fractional percentages, all percentages presented below in this section were rounded to the nearest whole number.


38




The following table shows the change in the Company’s operations from 2015 to 2016 , and the increases or decreases for each category by segment.
 
 
 
Increase (Decrease) in Operating Segment
 
 
 
 
 
North America
 
 
 
Asia/
Pacific
 
Admin &
All Other
 
 
  (in thousands)
2015
 
 
Europe
 
 
 
2016
Net sales
$
794,059

 
$
65,403

 
$
3,206

 
$
(2,007
)
 
$

 
$
860,661

Cost of sales
435,140

 
17,273

 
680

 
(4,174
)
 
(708
)
 
448,211

Gross profit
358,919

 
48,130

 
2,526

 
2,167

 
708

 
412,450

Research and development and other engineering expense
46,196

 
(33
)
 
191

 
(90
)
 
(16
)
 
46,248

Selling expense
90,663

 
6,370

 
1,920

 
(563
)
 
(47
)
 
98,343

General and administrative expense
113,428

 
14,622

 
3,337

 
(3,027
)
 
802

 
129,162

Gain on sale of assets
(389
)
 
(695
)
 
(24
)
 
263

 
65

 
(780
)
Income from operations
109,021

 
27,866

 
(2,898
)
 
5,584

 
(96
)
 
139,477

Interest expense, net
(342
)
 
(79
)
 
(256
)
 
(96
)
 
196

 
(577
)
Income before income taxes
108,679

 
27,787

 
(3,154
)
 
5,488

 
100

 
138,900

Provision for income taxes
40,791

 
8,547

 
(264
)
 
140

 
(48
)
 
49,166

Net income
$
67,888

 
$
19,240

 
$
(2,890
)
 
$
5,348

 
$
148

 
$
89,734


Net Sales increased 8% to $860.7 million from $794.1 million . Net sales to dealer distributors, lumber dealers, contractor distributors and home centers increased primarily due to increased home construction activity. Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 85% of the Company's total net sales in both 2016 and 2015. Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15% of the Company's total net sales in both 2016 and 2015.

Gross profit increased to $412.5 million from $358.9 million . Gross profit margins increased to 48% from 45%. The gross profit margins, including some inter-segment expenses, that are eliminated in consolidation, and excluding other expenses not allocated according to product group, increased to 49% from 47% for wood construction products and increased to 35% from 31% for concrete construction products.

Research and development and engineering expense was $46.2 million in both 2016 and 2015, primarily due to increases of $2.3 million in cash profit sharing expense on increased profits, $0.7 million in personnel costs, $0.5 million in supply costs, $0.4 million in computer costs and $0.1 in stock-based compensation, offset by decreases of $4.2 million write-offs of software development projects, most of which occurred in the North America segment.

Selling expense increased 8% to $98.3 million from $90.7 million, primarily due to increases of $5.0 million in personnel costs, $2.6 million in cash profit sharing expense on increased profits, and $0.5 million in advertising expense, partly offset by a decrease of $0.8 million in professional fees.

General and administrative expense increased 14% to $129.2 million from $113.4 million, primarily due to increases of $5.4 million in cash profit sharing expense on increased profits, $4.0 million in legal and professional fees, primarily related to acquisition activities, stockholder engagement and board initiatives, such as changes to executive compensation and corporate governance, $2.2 million in stock-based compensation, $1.8 million in computer and information technology expense, $1.1 million in personnel costs, and $0.4 million in contingent compensation related to prior acquisitions made in Europe, as well as a $0.9 million increase in net foreign currency losses, partly offset by decreases of $0.6 million in bad debt reserve and $0.1 million in facility rent and maintenance expense.

Income taxes

Our effective income tax rate decreased to 35% from 38%, primarily due to reduced operating losses in the Asia/Pacific segment, for which no tax benefit was recorded.

Net income was $89.7 million compared to $67.9 million . Diluted net income per share was $1.86 compared to $1.38 . The increase in net income was primarily due to increased gross profit margin, partly offset by increased general and administrative and selling expenses.


39




Net Sales
 
The following table shows net sales by segment for the years ended December 31, 2015 and 2016 , respectively:
 
(in thousands)
North
America
 
Europe
 
Asia/
Pacific
 
Total
December 31, 2015
$
676,618

 
$
108,068

 
$
9,373

 
$
794,059

December 31, 2016
742,021

 
111,274

 
7,366

 
860,661

Increase (decrease)
$
65,403

 
$
3,206

 
$
(2,007
)
 
$
66,602

Percentage increase (decrease)
10
%
 
3
%
 
(21
)%
 
8
%

The following table shows segment net sales as percentages of total net sales for the years ended December 31, 2015 and 2016 , respectively:

 
North
America
 
Europe
 
Asia/
Pacific
 
Total
Percentage of total 2015 net sales
85
%
 
14
%
 
1
%
 
100
%
Percentage of total 2016 net sales
86
%
 
13
%
 
1
%
 
100
%

  Gross Profit

The following table shows gross profit by segment for the years ended December 31, 2015 and 2016 , respectively:

(in thousands)
North
America
 
Europe
 
Asia/
Pacific
 
Admin &
All Other
 
Total
December 31, 2015
$
317,628

 
$
41,512

 
$
251

 
$
(472
)
 
$
358,919

December 31, 2016
365,758

 
44,038

 
2,419

 
235

 
412,450

Increase
$
48,130

 
$
2,526

 
$
2,168

 
$
707

 
$
53,531

Percentage increase
15
%
 
6
%
 
*
 
*
 
15
%
 * The statistic is not meaningful or material.

The following table shows gross profit percentages by segment for the years ended December 31, 2015 and 2016 , respectively:
 
 
North
America
 
Europe
 
Asia/
Pacific
 
Admin &
All Other
 
Total
2015 gross profit percentage
47
%
 
38
%
 
3
%
 
*
 
45
%
2016 gross profit percentage
49
%
 
40
%
 
33
%
 
*
 
48
%
* The statistic is not meaningful or material.

North America

Net sales increased 10%, mostly due to increased unit sales volumes on improved economic activity as well as a slight increase in average net sales unit prices in both the United States and Canada. Canada's net sales were negatively affected by approximately $1.2 million in foreign currency translation, due to the weakening of the Canadian dollar against the United States dollar.

Gross profit margin increased to 49% from 47%, primarily as a result of a decrease in material costs, as a percentage of sales and an increase in average net sales unit price.

Research and development and engineering expense was flat in 2016 compared to 2015.

Selling expense increased $6.4 million, primarily due to increases of $4.4 million in personnel costs, mostly related to the addition of staff and pay rate increases instituted on January 1, 2016, $2.3 million in cash profit sharing expense and $0.5 million in advertising expense, partly offset by a decrease of $1.0 million in professional fees.


40




General and administrative expense increased $14.6 million, primarily due to increases of $4.9 million in cash profit sharing expense, $2.5 million in legal and professional fees, $2.3 million in personnel costs, $1.8 million in computer and information technology expense, $1.1 million in stock-based compensation, and $0.5 million in facility rent and maintenance expense, as well as a $0.9 million increase in net foreign currency losses, partly offset by a decrease of $0.4 million in bad debt reserve.

Income from operations increased $27.9 million, mostly due to increased gross profits, which were partially offset by higher general and administrative and selling expenses.

Europe

Net sales increased 3%, mostly due to increased unit sales volumes, partly offset by a decrease in average net sales unit prices. Europe's net sales were negatively affected by approximately $3.1 million primarily due to the weakening of the British pound against the United States dollar.

Gross profit margin increased to 40% from 38%, primarily as a result of decreases in material costs and factory overhead costs, each as a percentage of sales.

Research and development and engineering expense increased $0.2 million in 2016 compared to 2015.

Selling expense increased $1.9 million, primarily due to increases of $1.2 million in personnel costs, mostly related to the addition of staff, and $0.2 million in cash profit sharing expense.

General and administrative expense increased $3.3 million, primarily due to increases of $1.6 million in legal and professional fees related to acquisition activities, $0.6 million in personnel costs, and $0.4 million in contingent compensation related to prior acquisitions, partly offset by a decrease of $0.2 million in stock-based compensation and $0.2 million in bad debt reserves.

Income from operations decreased $2.9 million, mostly due to increased operating expenses, which were partially offset by increased gross profits.

Asia/Pacific

Net sales decreased 21%, primarily due to the effects of the closing of sales offices in China, Thailand and Dubai late in the first quarter of 2015, which accounted for an approximately $4.1 million decrease in net sales.

Asia/Pacific — Selling expense decreased $0.6 million, primarily due to a decrease of $0.6 million in personnel costs related to closing three sales offices and downsizing one sales office in 2015.

Asia/Pacific — General and administrative expense decreased $3.0 million, primarily due to decreases of $1.7 million in personnel costs, $0.6 million in facility rent and maintenance expense and $0.2 million in legal and professional fees, each related to the sales office closures in 2015.

Income from operations increased $5.6 million, mostly due to costs related to closing three sales offices and downsizing one sales office in 2015.

Administrative and All Other

Administrative and All Other — General and administrative expense increased, primarily due to increases of $1.3 million in stock-based compensation and $0.4 million in cash profit sharing expense.

 
Critical Accounting Policies and Estimates
 
The critical accounting policies described below affect the Company’s more significant judgments and estimates used in the preparation of the Company's Consolidated Financial Statements. If the Company’s business conditions change or if it uses different assumptions or estimates in the application of these and other accounting policies, the Company’s future results of operations could be adversely affected.
 

41




Inventory Valuation
 
Inventories are stated at the lower of cost or net realizable value (market). Cost includes all costs incurred in bringing each product to its present location and condition, as follows:
 
Raw materials and purchased finished goods — principally valued at cost determined on a weighted average basis; and
In-process products and finished goods — cost of direct materials and labor plus attributable overhead based on a normal level of activity.
 
The Company applies net realizable value and obsolescence to the gross value of inventory. The Company estimates net realizable value based on estimated selling price less further costs to completion and disposal. The Company impairs slow-moving products by comparing inventories on hand to projected demand. If on-hand supply of a product exceeds projected demand or if the Company believes the product is no longer marketable, the product is considered obsolete inventory. The Company revalues obsolete inventory to its net realizable value. The Company has consistently applied this methodology. The Company believes that this approach is prudent and makes suitable impairments for slow-moving and obsolete inventory. When impairments are established, a new cost basis of the inventory is created. Unexpected change in market demand, building codes or buyer preferences could reduce the rate of inventory turnover and require the Company to recognize more obsolete inventory.
 
Revenue Recognition
 
The Company recognizes revenue when the earnings process is complete, net of applicable provision for discounts, returns and incentives, whether actual or estimated, based on the Company’s experience. This generally occurs when products are shipped to the customer in accordance with the sales agreement or purchase order, ownership and risk of loss pass to the customer, collectability is reasonably assured and pricing is fixed or determinable. The Company’s general shipping terms are F.O.B. shipping point, where title is transferred and revenue is recognized when the products are shipped to customers. When the Company sells F.O.B. destination point, title is transferred and the Company recognizes revenue on delivery or customer acceptance, depending on terms of the sales agreement. Service sales, representing after-market repair and maintenance, engineering activities, software license sales and service and lease income, though significantly less than 1% of net sales and not material to the Consolidated Financial Statements, are recognized as the services are completed or the software products and services are delivered. If actual costs of sales returns, incentives and discounts were to significantly exceed the recorded estimated allowance, the Company’s sales would be adversely affected.
 
Business Combinations
 
The Company recognizes separately from goodwill or any gain from a bargain purchase the assets acquired and the liabilities assumed at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the assets acquired and the liabilities assumed. A gain on a bargain purchase as of the acquisition date is measured as the excess of the net of the fair value of the assets acquired less liabilities assumed and consideration transferred. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to value assets acquired and liabilities assumed at the acquisition date, the Company’s estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. On the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, the Company records subsequent adjustments, if any, to its consolidated statements of operations. None of the subsequent adjustments for the fiscal years ended 2015 , 2016 and 2017 were material.
 
Accounting for business combinations requires the Company’s management to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets. Although the Company believes that the assumptions and estimates it has made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.
 
Examples of critical estimates in valuing certain of the intangible assets that the Company has acquired include:
 
Future expected cash flows from customer relationships and acquired unpatented technologies and patents;
The acquired company’s brand and competitive position and assumptions about the period of time the acquired brand will continue to be used in the combined company’s product portfolio; and
Discount rates.
 

42




Unanticipated events and circumstances may affect the accuracy or validity of such assumptions, estimates or actual results.
 
For a given acquisition, the Company may identify pre-acquisition contingencies as of the acquisition date and may extend its review and evaluation of these pre-acquisition contingencies throughout the measurement period (up to one year from the acquisition date) to obtain sufficient information to assess whether the Company includes these contingencies as a part of the purchase price allocation and, if so, to determine their estimated amounts.
 
If the Company determines that a pre-acquisition contingency (that is not income-tax related) is probable and estimable as of the acquisition date, the Company records its best estimate for such a contingency as a part of the preliminary purchase price allocation. The Company often continues to gather information and evaluate its pre-acquisition contingencies throughout the measurement period. If the Company changes the amounts recorded or identifies additional pre-acquisition contingencies during the measurement period, such amounts are included in the purchase price allocation during the measurement period and, subsequently, in the Company’s results of operations.

In addition, the Company estimates uncertain tax positions and income tax related valuation allowances assumed in connection with a business combination initially as of the acquisition date. The Company reevaluates these items quarterly with any adjustments to its preliminary estimates being recorded to goodwill if the Company is within the measurement period. The Company continues to collect information to determine estimated values. Subsequent to the measurement period or the Company’s final determination of the uncertain tax positions estimated value or tax-related valuation allowances, whichever comes first, changes to these uncertain tax positions and tax-related valuation allowances will affect the Company’s provision for income taxes in its consolidated statement of operations and could have a material effect on the Company’s results of operations and financial position.
 
Goodwill Impairment Testing
 
The Company tests goodwill for impairment at the reporting unit level on an annual basis (in the fourth quarter for the Company). The Company also reviews goodwill for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or disposition or relocation of a significant portion of a reporting unit.
 
The reporting unit level is generally one level below the operating segment, which is at the country level, except for the United States, Australia and S&P Clever reporting units.
 
The Company determined that the United States reporting unit includes four components: Northwest United States, Southwest United States, Northeast United States and Southeast United States (collectively, the “U.S. Components”). The Company aggregates the U.S. Components into a single reporting unit because management concluded that they are economically similar and that the goodwill is recoverable from the U.S. Components working in concert. The U.S. Components are economically similar because of a number of factors, including selling similar products to shared customers and sharing assets and services such as intellectual property, manufacturing assets for certain products, research and development projects, manufacturing processes, management of inventory excesses and shortages and administrative services. These activities are managed centrally at the U.S. Components level and costs are allocated among the four U.S. Components.
 
The Company determined that the Australia reporting unit includes four components: Australia, New Zealand, South Africa and United Arab Emirates (collectively, the “AU Components”). The Company aggregates the AU Components into a single reporting unit because management concluded that they are economically similar and that the goodwill is recoverable from the AU Components working in concert. The AU Components are economically similar because of a number of factors, including that New Zealand, South Africa and United Arab Emirates operate as extensions of their Australian parent company selling similar products and sharing assets and services such as intellectual property, manufacturing assets for certain products, management of inventory excesses and shortages and administrative services. These activities are managed centrally at the AU Components level and costs are allocated among the AU Components.
 
The Company determined that the S&P Clever reporting unit includes nine components: S&P Switzerland, S&P Poland, S&P Austria, S&P The Netherlands, S&P Portugal, S&P Germany, S&P France, S&P Nordic and S&P Spain (collectively, the "S&P Components”). The Company aggregates the S&P Components into a single reporting unit because management concluded that they are economically similar and that the goodwill is recoverable from the S&P Components working in concert. The S&P Components are economically similar because of a number of factors, including sharing assets and services such as intellectual property, manufacturing assets for certain products, research and development projects, manufacturing processes, management of inventory excesses and shortages and administrative services. These activities are managed centrally at the S&P Components level and costs are allocated among the S&P Components.
 

43




For certain reporting units, the Company may first assess qualitative factors related to the goodwill of the reporting unit to determine whether it is necessary to perform a two-step impairment test. If the Company judges that it is more likely than not that the fair value of the reporting unit is greater than the carrying amount of the reporting unit, including goodwill, no further testing is required. If the Company judges that it is more likely than not that the fair value of the reporting unit is less than the carrying amount of the reporting unit, including goodwill, management will perform a two-step impairment test on goodwill. In the first step of the Company's annual goodwill impairment test ("Step 1"), the Company compares the fair value of the reporting unit to its carrying value. The fair value calculation uses both the income approach (discounted cash flow method) and the market approach, equally weighted. If the Company judges that the carrying value of the net assets assigned to the reporting unit, including goodwill, exceeds the fair value of the reporting unit, a second step of the impairment test must be performed to determine the implied fair value of the reporting unit’s goodwill. If the Company judges that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company would record an impairment charge equal to the difference between the implied fair value of the goodwill and the carrying value.
 
Determining the fair value of a reporting unit or an indefinite-lived purchased intangible asset is a judgment involving significant estimates and assumptions. These estimates and assumptions include revenue growth rates, operating margins and working capital requirements used to calculate projected future cash flows, risk-adjusted discount rates, selected multiples, control premiums and future economic and market conditions (Level 3 fair value inputs). The Company bases its fair value estimates on assumptions that it believes to be reasonable, but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.
 
Assumptions about a reporting unit’s operating performance in the first year of the discounted cash flow model used to determine whether or not the goodwill related to that reporting unit is impaired are derived from the Company’s budget. The fair value model considers such factors as macro-economic conditions, revenue and expense forecasts, product line changes, material, labor and overhead costs, tax rates, working capital levels and competitive environment. Future estimates, however derived, are inherently uncertain but the Company believes that this is the most appropriate source on which to base its fair value calculations.
 
The Company uses these parameters only to provide a basis for the determination of whether or not the goodwill related to a reporting unit is impaired. No inference whatsoever should be drawn from these parameters about the Company’s future financial performance and they should not be taken as projections or guidance of any kind.
 
The 2017 , 2016 and 2015 annual testing of goodwill for impairment did not result in impairment charges.

The Denmark reporting unit passed Step 1 of the annual 2017 impairment test by a 8.3% margin indicating an estimated fair value greater than its net book value and was the only reporting unit with a fair value greater than net book value margin of less than 10%. The Denmark reporting unit is sensitive to management’s plans for increasing sales and operating margins. The Denmark reporting unit’s failure to meet management’s objectives could result in future impairment of some or all of the Denmark reporting unit’s goodwill, which was $7.1 million at December 31, 2017 .

Key assumptions used in Step 1 of the Company's annual goodwill impairment test included compound annual growth rates (“CAGR”) and average annual pre-tax operating margins during the forecast period, multiple and discount rates. A sensitivity assessment for the key assumptions included in the 2017 goodwill impairment test on the Denmark reporting unit is as follows:

A 500 basis point hypothetical increase in the discount rate, holding all other assumptions constant, would not have decreased the fair value of the reporting unit below its carrying value, and thus it would not result in the reporting unit failing Step 1 of the goodwill impairment test;
A 210 basis point hypothetical decrease in the multiple rate, holding all other assumptions constant, would not have decreased the fair value of the reporting unit below its carrying value, and thus it would not result in the reporting unit failing Step 1 of the goodwill impairment test;
A 139 basis point hypothetical percentage decrease in the CAGR, holding all other assumptions constant, would not have decreased the fair value of the reporting unit below its carrying value and
A 37% hypothetical decrease in average annual pre-tax operating profit, holding all other assumptions constant, would not have decreased the fair value of the reporting unit below its carrying value.

Effect of New Accounting Standards

See "Note 1 — Recently Adopted Accounting Standards" and "Note 1 — Recently Issued Accounting Standards Not Yet Adopted" to the Company's Consolidated Financial Statements.



44




Liquidity and Sources of Capital
 
The Company’s primary sources of liquidity are cash and cash equivalents and income from the Company’s operations. The Company also receives proceeds from the issuance of its common stock through the exercise of stock options by its employees. As of February 28, 2018 , all outstanding stock options of the Company were either exercised or expired. As of December 31, 2017 , the Company's cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions.

The Company's principal uses of liquidity are paying the costs and expenses associated with the Company's operations, continuing its capital allocation strategy, which includes growing its business by internal improvements or acquisitions, repurchasing the Company’s common stock, paying cash dividends and meeting other liquidity requirements. Depending, however, on the Company’s future growth and possible acquisitions, it may become necessary to secure additional sources of financing, which may not be available on reasonable terms, or at all.

The Company currently maintains a $300.0 million revolving line of credit as its primary credit facility, which expires on July 23, 2021. See "Note 8 — Debt" to the Company's Consolidated Financial Statements.

As of December 31, 2017 , the Company held cash and cash equivalents of $86.5 million in the local currencies of its foreign operations and could be subject to additional taxation if repatriated to the United States. The Company has no imminent plans to repatriate cash and cash equivalents held outside the United States.

The following table presents selected financial information as of December 31, 2017 , 2016 and 2015 , respectively:

 
 
At December 31,
(in thousands)
 
2017
 
2016
 
2015
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
168,514

 
$
226,537

 
$
258,825

Property, plant and equipment, net
 
273,020

 
232,810

 
213,716

Equity investment, goodwill and intangible assets
 
169,015

 
149,843

 
151,625

Working capital (1)
 
447,450

 
476,451

 
494,308

(1 ) Due to the adoption of ASU 2015-17, (see "Note 1 — Recently Adopted Accounting Standards" to the Company's Consolidated Financial Statements), $16.2 million of current deferred income taxes included in current assets and working capital, as of January 1, 2016, were reclassified to non-current assets and long-term liabilities, resulting in decreases in current assets from $589.3 million to $573.1 million and in working capital from $494.3 million to $478.1 million.
    
The following table provides cash flow indicators for the twelve months ended December 31, 2017 , 2016 and 2015 , respectively:

 
 
Years Ended December 31,
(in thousands)
 
2017
 
2016
 
2015
Net cash provided by (used in):
 
 
 
 
 
 
  Operating activities
 
$
119,065

 
$
98,965

 
$
117,923

  Investing activities
 
(75,815
)
 
(48,543
)
 
(37,828
)
  Financing activities
 
(106,671
)
 
(83,134
)
 
(71,608
)

Cash flows from operating activities result primarily from the Company's earnings or losses, and are also affected by changes in operating assets and liabilities which consist primarily of working capital balances. As a building materials manufacturer, the Company's operating cash flows are subject to seasonality and are cyclically associated with the volume and timing of construction project starts. For example, trade accounts receivable, net, is generally at its lowest at the end of the fourth quarter and increases during the first, second and third quarters.

In 2017 , operating activities provided $119.1 million in cash and cash equivalents, as a result of $92.6 million from net income and $48.5 million from non-cash adjustments to net income which includes depreciation and amortization expenses and stock-based compensation expenses, partly offset by a decrease of $22.0 million in the net change in operating assets and liabilities, including net change decreases in cash and cash equivalents due to increases of $17.8 million in trade accounts receivable, net,

45




$6.6 million in inventory and $5.6 million in income tax receivable, partly offset by an increase of $10.1 million in accrued liabilities. Cash used in investing activities of $75.8 million during the year ended December 31, 2017 , consisted primarily of $58.0 million for property, plant and equipment expenditures, primarily related to real estate improvements, ERP software, machinery and equipment purchases, and software in development, and $27.9 million , net of acquired cash of $4.0 million, for the acquisitions of CG Visions and Gbo Fastening Systems, which was partly offset by $9.5 million , net of delivered cash of $0.8 million, for the sale of Gbo Poland and Gbo Romania (see "Note 13 — Acquisitions and Dispositions" to the Company's Consolidated Financial Statements). Cash used in financing activities of $106.7 million during the year ended December 31, 2017 , consisted primarily of $70.0 million for the repurchase of the Company's common stock (see "Note 1 — Stock Repurchase Program" to the Company's Consolidated Financial Statements) and $37.0 million used to pay cash dividends.
 
In 2016, operating activities provided $94.9 million in cash and cash equivalents, as a result of $89.7 million from net income and $42.1 million from non-cash adjustments to net income which includes depreciation and amortization expenses, stock-based compensation expenses and software development project write-off, partly offset by a decrease of $36.9 million in the net change in operating assets and liabilities, including net change decreases in cash and cash equivalents due to increases of $36.6 million in inventory and $7.5 million in trade accounts receivable, net, partly offset by a decrease of $5.8 million in trade accounts payable. Cash used in investing activities of $48.5 million during the year ended December 31, 2016, consisted primarily of $42.0 million for property, plant and equipment expenditures, related to real estate improvements, primarily related to improvements of the West Chicago facility, machinery and equipment purchases, and software in development, $5.4 million, net of acquired cash of $1.5 million, for the acquisition of MS Decoupe, and $2.5 million for the equity investment in Ruby Sketch. See "Note 13 — Acquisitions and Dispositions" and "Note 6 — Equity Investments" to the Company's Consolidated Financial Statements. Cash used in financing activities of $79.1 million during the year ended December 31, 2016, consisted primarily of $53.5 million for the repurchase of the Company's common stock, including a $50.0 million accelerated share repurchase program (see "Note 1 — Stock Repurchase Program" to the Company's Consolidated Financial Statements) and $32.7 million used to pay cash dividends, partly offset by $8.0 million received from the exercise of stock options.

In 2015, operating activities provided $114.2 million in cash and cash equivalents, as a result of $67.9 million from net income and $44.2 million from non-cash adjustments to net income which includes depreciation and amortization expenses, stock-based compensation expenses, software development project write-offs, and changes in deferred income taxes, as well as an increase of $2.1 million in the net change in operating assets and liabilities, including net change increases in cash and cash equivalents due to decreases of $17.2 million in inventory and $6.3 million in current assets, partly offset by an increase of $16.8 million in trade accounts receivable, net and $5.1 million in accrued liabilities. Cash used in investing activities of $37.8 million during the year ended December 31, 2015, consisted primarily of $34.2 million for property, plant and equipment expenditures, related to the purchase a manufacturing site in West Chicago, software development and machinery and equipment, and $4.2 million for acquisitions. Cash used in financing activities of $67.9 million during the year ended December 31, 2015, consisted primarily of $47.1 million for the repurchase of the Company's common stock, including a $25.0 million accelerated share repurchase program and $29.4 million used to pay cash dividends, partly offset by $9.7 million received from the exercise of stock options.

Capital Allocation Strategy

The Company has a strong cash position and remains committed to seeking growth opportunities in the building products range where it can leverage its expertise in engineering, testing, manufacturing and distribution to invest in and grow its business. Those opportunities include internal improvements or acquisitions that fit within the Company’s strategic growth plan. Additionally, we have financial flexibility and are committed to providing returns to our stockholders. Below are highlights of the Company’s capital allocation strategy since the beginning of 2016.

In August 2016, we acquired all the stock of MS Decoupe (a former customer of one of our subsidiaries) for a net cost of approximately $5.4 million. Our preliminary measurement of MS Decoupe assets acquired included goodwill and intangible assets of $3.1 million. In January 2017, we acquired Gbo Fastening Systems for approximately $10.2 million and CG Visions for approximately $20.8 million subject to specified holdback provisions and post-closing adjustments. Our final measurement of Gbo Fastening Systems' assets acquired resulted in a $6.3 million gain on a bargain purchase of a business. Our final measurement of CG Visions assets acquired included goodwill and intangible assets of $20.4 million. See "Note 13 — Acquisitions and Dispositions" to the Company's Consolidated Financial Statements.

In December 2016, we acquired a 25.0% equity interest in Ruby Sketch Pty Ltd. (“Ruby Sketch”) for $2.5 million, for which we account for our ownership interest using the equity accounting method. See "Note 6 — Equity Investments" to the Company's Consolidated Financial Statements.

Our capital spending in 2016 was $42.0 million and was primarily used for the purchase and build-out of our West Chicago, Illinois, chemical facility, manufacturing equipment and software development. Our capital spending in 2017 was $58.0

46




million primarily related to our real estate improvements, ERP software, machinery and equipment purchases, and software in development. Based on current information and subject to future events and circumstances, we estimate that our full-year 2018 capital spending will be approximately $30 million to $32 million, mostly for equipment replacement or upgrades, information technology upgrades and development of software, assuming all such projects will be completed by the end of 2018. Based on current information and subject to future events and circumstances, we estimate that our full year 2018 depreciation and amortization expense to be approximately $39 million to $40 million, of which approximately $34 million to $35 million is related to depreciation.

In April 2017, the Company’s Board of Directors raised the quarterly cash dividend by 16.7% to $0.21 per share. On January 29, 2018 , the Board declared a cash dividend of $0.21 per share, estimated to be $9.8 million in total. Such dividend is scheduled to be paid on April 26, 2018 , to stockholders of record on April 5, 2018 .

In February 2016, the Board authorized the Company to repurchase up to $50.0 million of the Company’s common stock in 2016. In August 2016, the Board increased and extended the $50.0 million repurchase authorization from February 2016 by authorizing the Company to repurchase up to $125.0 million of the Company's common stock through December 2017. In August 2017, the Board increased its previous $125.0 million share repurchase authorization by $150.0 million to $275.0 million and extended the authorization from December 2017 to December 2018.

In August 2016, the Company entered into a Supplemental Confirmation with Wells Fargo for a $50.0 million accelerated share repurchase program (the “2016 August ASR Program”), which has been completed. In June 2017, the Company entered into another Supplemental Confirmation for a $20.0 million accelerated share repurchase program with Wells Fargo (the “2017 June ASR Program”), which was completed in 2017. In December 2017, the Company entered into the $50 million 2017 December ASR Program with Wells Fargo. During February 2018, the Company received 182,171 shares of the Company's common stock pursuant to the 2017 December ASR Program, which constituted the final delivery thereunder. In total, the Company received 859,671 shares of the Company's common stock under the 2017 December ASR Program at an average price of $58.17 per share.

The following table presents the Company’s dividends paid and share repurchases for the year ended December 31, 2017 , December 31, 2016 and December 31, 2015, respectively, in aggregated amounts:

(in thousands)
Dividends Paid
 
Open Market Share Repurchases
 
Accelerated Share Repurchases
 
Total
January 1 - December 31, 2017
$
36,981

 
$

 
70,000

 
$
106,981

January 1 - December 31, 2016
32,711

 
3,502

 
50,000

 
86,213

January 1 - December 31, 2015
29,352

 
22,144

 
25,000

 
76,496

Total
$
99,044

 
$
25,646

 
145,000

 
$
269,690


As of December 31, 2017, approximately $151.5 million remained available under the $275.0 million repurchase authorization from August 2017, after taking into account final settlement of the 2017 December ASR Program that occurred in early February 2018.

Contractual Obligations

The following table summarizes our known material contractual obligations and commitments as of December 31, 2017 :
 
 
Payments Due by Period
 
Total
all
periods
 
Less
than 1
year
 
1 — 3
years
 
3 — 5
years
 
More
than 5
years
 
 
 
 
 
Contractual Obligation (in thousands)
 
 
 
 
Long-term debt interest obligations (1)
$
1,600

 
$
450

 
$
900

 
$
250

 
$

Operating lease obligations (2)
25,167

 
6,923

 
10,259

 
5,646

 
2,339

Capital lease obligations (3)
3,749

 
1,055

 
2,214

 
480

 

Purchase obligations (4)
45,452

 
42,833

 
1,358

 
1,261

 

 
 
 
 
 
 
 
 
 
 
Total
$
75,968

 
$
51,261

 
$
14,731

 
$
7,637

 
$
2,339


47




 
(1) Includes interest payments on fixed-term debt, line-of-credit borrowings and annual facility fees on the Company’s primary line-of-credit facility. Interest on line-of-credit facilities was estimated based on historical borrowings and repayment patterns. The Company’s primary line-of-credit facility requires the Company pay an annual facility fee from 0.15% to 0.30%, depending on the Company’s leverage ratio, on the unused portion of the facilities.
(2) Includes real estate and auto leases and other equipment.
(3) Includes obligations under two lease agreements for certain office equipment. The interest rates for these two capital leases are 2.89% and 3.50%, respectively, and the two leases will mature in May 2021 and July 2021.
(4) Consists of other purchase commitments related to facility equipment, consulting services, minimum quantities of certain raw materials. The Company currently is not a party to any long-term supply contracts with respect to the purchase of raw materials or finished goods.

Off-Balance Sheet Arrangements

The Company did not have any off-balance sheet arrangements as of December 31, 2017 .

Contingencies

From time to time, we are subject to various claims, lawsuits, legal proceedings (including litigation, arbitration or regulatory actions) and other matters arising in the ordinary course of business. Periodically, we evaluate the status of each matter and assess our potential financial exposure.

The Company records a provision for a liability when we believe that (a) it is probable that a loss has been incurred, and (b) the amount is reasonably estimable. Significant judgment is required to determine both probability and the estimated amount. The outcomes of claims, lawsuits, legal proceedings and other matters brought against the Company are subject to significant uncertainty, some of which are inherently unpredictable and/or beyond our control. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these matters were resolved against the Company for amounts in excess of management’s expectations, they could have a material adverse impact on our business, results of operations, financial position and liquidity and the Company’s Consolidated Financial Statements could be materially adversely affected.

See “Item 3 — Legal Proceedings” above and “Note 9 — Commitments and Contingencies” to the Company’s Consolidated Financial Statements.

Inflation
 
The Company believes that the effect of inflation on the Company has not been material in the three most recent fiscal years ended December 31, 2017 , 2016 and 2015 , respectively, as general inflation rates have remained relatively low. The Company’s main raw material is steel. Increases in steel prices may adversely affect the Company’s gross profit margin if it cannot recover the higher costs through price increases of its products. See “Item 1 — Raw Materials” and “Item 1A — Risk Factors.”
 
Indemnification
 
In the normal course of business, to facilitate transactions of services and products, we have agreed to indemnify certain parties with respect to certain matters. These agreements may limit the time within which an indemnification claim can be made and the amount of the claim. In addition, we have entered into indemnification agreements with our officers and directors, and the Company’s bylaws as permitted by the Company’s certificate of incorporation require the Company to indemnify corporate servants, including our officers and directors, to the fullest extent permitted by law. The Company maintains directors and officers liability insurance coverage to reduce its exposure to such obligations. The Company has not incurred significant obligations under indemnification provisions historically, and does not expect to incur significant obligations in the future. It is not possible to determine the maximum potential amount under these indemnities due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. Accordingly, the Company has not recorded any liability for costs related these indemnities through December 31, 2017 .
 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 
We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business, including changes to foreign currency exchange rates and interest rates.


48




Foreign Currency Exchange Risk

The Company has foreign currency exchange rate risk in its international operations, and through purchases from foreign vendors. Changes in the values of currencies of foreign countries affect our financial position, income statement and cash flows when translated into United States dollars. The Company does not currently hedge this risk. The Company estimates that if the exchange rate were to change by 10% in any one country where the Company has operations, the change in net income would not be material to the Company’s operations taken as a whole.

The translation adjustment on the Company's underlying assets and liabilities resulted in a decrease in accumulated other comprehensive income of $21.4 million for the year ended December 31, 2017 , primarily due to the effect of the weakening of the United States dollar in relation to most foreign currencies during 2017 .

Interest Rate Risk

The Company has no variable interest-rate debt outstanding. The Company estimates that a hypothetical 100 basis point change in U.S. interest rates would not be material to the Company’s operations taken as a whole.



49




Item 8. Consolidated Financial Statements and Supplementary Data.
 
SIMPSON MANUFACTURING CO., INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
 
Financial Statement Schedule
 


50




Report of Independent Registered Public Accounting Firm
 
Board of Directors and Stockholders
Simpson Manufacturing Co., Inc.

Opinion on the financial statements
We have audited the accompanying consolidated balance sheets of Simpson Manufacturing Company, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes and schedules (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 28, 2018 expressed an unqualified opinion thereon.

Basis for opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.







We have served as the Company’s auditor since 2015.
/s/ Grant Thornton LLP
San Francisco, California
February 28, 2018


51




Report of Independent Registered Public Accounting Firm
 
Board of Directors and Stockholders
Simpson Manufacturing Co., Inc.

Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Simpson Manufacturing Company, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2017, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2017, and our report dated February 28, 2018 expressed an unqualified opinion on those financial statements.

Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Gbo Fastening Systems and CG Visions, wholly-owned subsidiaries, whose financial statements reflect total assets constituting 2.5 and 1.9 percent, respectively, and revenues constituting 4.3 and 0.6 percent, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017. As indicated in Management’s Report, Gbo Fastening Systems and CG Visions were acquired during 2017. Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Gbo Fastening Systems and CG Visions.

Definition and limitations of internal control over financial reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


/s/ Grant Thornton LLP
San Francisco, California
February 28, 2018

52




Simpson Manufacturing Co., Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except per share data)
 
 
December 31,
 
2017
 
2016
ASSETS
 

 
 

Current assets
 

 
 

Cash and cash equivalents
$
168,514

 
$
226,537

Trade accounts receivable, net
135,958

 
112,423

Inventories
252,996

 
232,274

Other current assets
26,473

 
14,013

Total current assets
583,941

 
585,247

Property, plant and equipment, net
273,020

 
232,810

Goodwill
137,140

 
124,479

Equity investment (see Note 6)
2,549

 
2,500

Intangible assets, net
29,326

 
22,864

Other noncurrent assets
11,547

 
12,074

Total assets
$
1,037,523

 
$
979,974

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities
 
 
 
Capital lease obligations - current portion
$
1,055

 
$

Trade accounts payable
31,536

 
27,674

Accrued liabilities
84,204

 
60,477

Accrued profit sharing trust contributions
7,054

 
6,549

Accrued cash profit sharing and commissions
9,416

 
10,527

Accrued workers’ compensation
3,226

 
3,569

Total current liabilities
136,491

 
108,796

Capital lease obligations - net of current portion
2,607

 

 Deferred income tax and other long-term liabilities
13,647

 
5,336

Total liabilities
152,745

 
114,132

Commitments and contingencies (see Note 9)


 


Stockholders’ equity
 
 
 
Preferred stock, par value $0.01; authorized shares, 5,000; issued and outstanding shares, none

 

Common stock, par value $0.01; authorized shares, 160,000; issued and outstanding shares, 46,745 and 47,437 at December 31, 2017 and 2016, respectively
473

 
473

Additional paid-in capital
260,157

 
255,917

Retained earnings
676,644

 
642,422

Treasury stock
(40,000
)
 

Accumulated other comprehensive loss
(12,496
)
 
(32,970
)
Total stockholders’ equity
884,778

 
865,842

Total liabilities and stockholders’ equity
$
1,037,523

 
$
979,974

 


The accompanying notes are an integral part of these consolidated financial statements
53





Simpson Manufacturing Co., Inc. and Subsidiaries
Consolidated Statements of Operations
(In thousands, except per share data)
 
 
Years Ended December 31,
 
2017
 
2016
 
2015
Net sales
$
977,025

 
$
860,661

 
$
794,059

Cost of sales
530,761

 
448,211

 
435,140

Gross profit
446,264

 
412,450

 
358,919

Operating expenses:
 

 
 

 
 

Research and development and other engineering
47,616

 
46,248

 
46,196

Selling
114,903

 
98,343

 
90,663

General and administrative
144,738

 
129,162

 
113,428

Net gain on disposal of assets
(160
)
 
(780
)
 
(389
)
 
307,097

 
272,973

 
249,898

Income from operations
139,167

 
139,477

 
109,021

Loss in equity method investment, before tax
(86
)
 

 

Interest income
389

 
570

 
655

Interest expense
(1,177
)
 
(1,147
)
 
(997
)
Gain on bargain purchase of a business
6,336

 

 

Loss on disposal of a business
(211
)
 

 

Income before taxes
144,418

 
138,900

 
108,679

Provision for income taxes
51,801

 
49,166

 
40,791

Net income
$
92,617

 
$
89,734

 
$
67,888

Earnings per share of common stock:
 

 
 

 
 

Basic
$
1.95

 
$
1.87

 
$
1.39

Diluted
$
1.94

 
$
1.86

 
$
1.38

Weighted average number of shares of common stock outstanding
 

 
 

 
 

Basic
47,486

 
48,084

 
48,952

Diluted
47,774

 
48,295

 
49,181

 


The accompanying notes are an integral part of these consolidated financial statements
54





Simpson Manufacturing Co., Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
(In thousands)
 
 
Year End December 31,
 
2017
 
2016
 
2015
Net income
$
92,617

 
$
89,734

 
$
67,888

Other comprehensive income:
 

 
 

 
 

Translation adjustment, net of tax expense of $0, ($222) and ($57) for 2017, 2016 and 2015, respectively
21,418

 
(3,920
)
 
(20,939
)
Unamortized pension adjustments, net of tax benefit of $37, $88, and $82 for 2017, 2016 and 2015, respectively
(944
)
 
(474
)
 
(457
)
Comprehensive income
$
113,091

 
$
85,340

 
$
46,492

 



The accompanying notes are an integral part of these consolidated financial statements
55





Simpson Manufacturing Co., Inc. and Subsidiaries
Consolidated Statements of Stockholders’ Equity
For the years ended December 31, 2015 , 2016 and 2017
(In thousands, except per share data)
 
 
 
 
 
Additional
Paid-in
Capital
 
 
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 
 
 
 
Common Stock
 
 
Retained
Earnings
 
 
Treasury
Stock
 
 
 
Shares
 
Par Value
 
 
 
 
 
Total
Balance at January 1, 2015
48,966

 
$
489

 
$
220,982

 
$
649,174

 
$
(7,180
)
 
$

 
$
863,465

Net income

 

 

 
67,888

 

 

 
67,888

Translation adjustment, net of tax

 

 

 

 
(20,939
)
 

 
(20,939
)
Pension adjustment, net of tax

 

 

 

 
(457
)
 

 
(457
)
Options exercised
331

 
3

 
9,717

 

 

 

 
9,720

Stock-based compensation expense

 

 
10,997

 

 

 

 
10,997

Tax benefit of options exercised

 

 
(318
)
 

 

 

 
(318
)
Repurchase of common stock
(1,339
)
 

 

 

 

 
(47,144
)
 
(47,144
)
Retirement of common stock

 
(13
)
 

 
(47,131
)
 

 
47,144

 

Cash dividends declared on common stock, $0.62 per share

 

 

 
(30,224
)
 

 

 
(30,224
)
Shares issued from release of restricted stock units
210

 
2

 
(3,718
)
 

 

 

 
(3,716
)
Common stock issued at $34.32 per share
16

 

 
552

 

 

 

 
552

Balance at December 31, 2015
48,184

 
481

 
238,212

 
639,707

 
(28,576
)
 

 
849,824

Net income

 

 

 
89,734

 

 

 
89,734

Translation adjustment, net of tax

 

 

 

 
(3,920
)
 

 
(3,920
)
Pension adjustment, net of tax

 

 

 

 
(474
)
 

 
(474
)
Options exercised
270

 
3

 
7,973

 

 

 

 
7,976

Stock-based compensation expense

 

 
13,186

 

 

 

 
13,186

Tax benefit of options exercised

 

 
251

 

 

 

 
251

Repurchase of common stock
(1,244
)
 

 

 

 

 
(53,502
)
 
(53,502
)
Retirement of common stock
 
 
(13
)
 

 
(53,489
)
 
 
 
53,502

 

Cash dividends declared on common stock, $0.70 per share

 

 

 
(33,530
)
 

 

 
(33,530
)
Shares issued from release of restricted stock units
217

 
2

 
(4,020
)
 

 

 

 
(4,018
)
Common stock issued at $32.45 per share
10

 

 
315

 

 

 

 
315

Balance at December 31, 2016
47,437

 
473

 
255,917

 
642,422

 
(32,970
)
 

 
865,842

Net income

 

 

 
92,617

 

 


 
92,617

Translation adjustment, net of tax

 

 

 

 
21,418

 

 
21,418

Pension adjustment, net of tax

 

 

 

 
(944
)
 

 
(944
)
Options exercised
223

 
3

 
6,607

 

 

 

 
6,610

Stock-based compensation expense

 

 
12,565

 

 

 

 
12,565

Repurchase of common stock
(1,138
)
 

 
(10,000
)
 

 

 
(60,000
)
 
(70,000
)
Retirement of common stock

 
(5
)
 

 
(19,995
)
 

 
20,000

 

Cash dividends declared on common stock, $0.81 per share

 

 

 
(38,400
)
 

 

 
(38,400
)
Shares issued from release of restricted stock units
214

 
2

 
(5,343
)
 

 

 

 
(5,341
)
Common stock issued at $44.26 per share
9

 

 
411

 

 

 

 
411

Balance at December 31, 2017
46,745

 
$
473

 
$
260,157

 
$
676,644

 
$
(12,496
)
 
$
(40,000
)
 
$
884,778

 

The accompanying notes are an integral part of these consolidated financial statements
56





Simpson Manufacturing Co., Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
 
Years Ended December 31,
 
2017
 
2016
 
2015
Cash flows from operating activities
 

 
 

 
 

Net income
$
92,617

 
$
89,734

 
$
67,888

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

 
 

Gain on sale of assets
(160
)
 
(780
)
 
(389
)
Depreciation and amortization
33,724

 
27,927

 
26,821

Write-off of software development project
676

 
2,212

 
3,140

Loss in equity method investment, before tax
86

 

 

Gain (adjustment) on bargain purchase of a business
(6,336
)
 

 

Loss on disposal of a business
211

 

 

Gain on contingent consideration adjustment

 

 
(245
)
Deferred income taxes
6,299

 
(869
)
 
2,537

Noncash compensation related to stock plans
13,908

 
13,946

 
11,958

Excess tax benefit of options exercised and restricted stock units vested

 
(273
)
 
(78
)
Recovery (provision) of doubtful accounts
66

 
(83
)
 
440

Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
 

 
 

 
 

Trade accounts receivable
(17,822
)
 
(7,548
)
 
(16,818
)
Inventories
(6,580
)
 
(36,617
)
 
17,208

Other current assets
(2,016
)
 
(2,180
)
 
6,274

Other noncurrent assets
513

 
336

 
(1,301
)
Trade accounts payable
1,157

 
5,785

 
(1,035
)
Accrued liabilities
10,130

 
4,290

 
(1,432
)
Accrued profit sharing trust contributions
498

 
757

 
417

Accrued cash profit sharing and commissions
(1,246
)
 
2,064

 
2,530

Long-term liabilities
(718
)
 
242

 
(2,930
)
Accrued workers’ compensation
(343
)
 
(1,024
)
 
492

Income taxes payable
(5,599
)
 
1,046

 
2,446

Net cash provided by operating activities
119,065

 
98,965

 
117,923

Cash flows from investing activities
 

 
 

 
 

Capital expenditures
(58,041
)
 
(42,002
)
 
(34,186
)
Assets acquisitions, net of cash acquired
(27,921
)
 
(5,361
)
 
(4,179
)
Equity investments

 
(2,500
)
 

Loan repayment by customer

 

 
244

Proceeds from sale of property and equipment
681

 
1,320

 
293

Proceeds from sale of a business
9,466

 

 

Net cash used in investing activities
(75,815
)
 
(48,543
)
 
(37,828
)
Cash flows from financing activities
 

 
 

 
 

Repayment of long-term borrowings and capital leases
(354
)
 

 
(17
)
Repayment of debt and line of credit borrowings
(400
)
 

 

Deferred and contingent consideration paid for asset acquisitions
(205
)
 
(27
)
 
(1,177
)
Debt issuance costs

 
(1,125
)
 

Repurchase of common stock
(70,000
)
 
(53,502
)
 
(47,144
)
Issuance of Company’s common stock
6,610

 
7,976

 
9,720

Excess tax benefit of options exercised and restricted stock units vested

 
273

 
78

Dividends paid
(36,981
)
 
(32,711
)
 
(29,352
)
Cash paid on behalf of employees for shares withheld
(5,341
)
 
(4,018
)
 
(3,716
)
Net cash used in financing activities
(106,671
)
 
(83,134
)
 
(71,608
)
Effect of exchange rate changes on cash
5,398

 
424

 
(9,969
)
Net decrease in cash and cash equivalents
(58,023
)
 
(32,288
)
 
(1,482
)
Cash and cash equivalents at beginning of year
226,537

 
258,825

 
260,307

Cash and cash equivalents at end of year
$
168,514

 
$
226,537

 
$
258,825

Supplemental Disclosure of Cash Flow Information
Cash paid during the year for
 

 
 

 
 

Interest
$
121

 
$
284

 
$
249

Income taxes
50,832

 
49,425

 
34,008

Noncash activity during the year for
 

 
 

 
 

Noncash capital expenditures
$
1,533

 
$
2,318

 
$
1,214

Capital lease obligations
3,750

 

 

Contingent consideration for acquisition
1,314

 

 

Issuance of Company's common stock for compensation
411

 
315

 
552

Dividends declared but not paid
9,954

 
8,535

 
7,716

 


The accompanying notes are an integral part of these consolidated financial statements
57





Simpson Manufacturing Co., Inc. and Subsidiaries
Notes to Consolidated Financial Statements
 
1.
Operations and Summary of Significant Accounting Policies
 
Nature of Operations
 
Simpson Manufacturing Co., Inc., through Simpson Strong-Tie Company Inc. and its other subsidiaries (collectively, the “Company”), focuses on designing, manufacturing, and marketing systems and products to make buildings and structures safe and secure. The Company designs, engineers and is a leading manufacturer of wood construction products, including connectors, truss plates, fastening systems, fasteners and shearwalls, and concrete construction products, including adhesives, specialty chemicals, mechanical anchors, powder actuated tools and fiber reinforcing materials. The Company markets its products to the residential construction, industrial, commercial and infrastructure construction, remodeling and do-it-yourself markets.
 
The Company operates exclusively in the building products industry. The Company’s products are sold primarily in the United States, Canada, Europe and Pacific Rim. The Company closed its sales office in Asia in 2015 and its revenues have some geographic market concentration in the United States. A portion of the Company’s business is therefore dependent on economic activity within the North America segment. The Company is dependent on the availability of steel, its primary raw material.
 
Principles of Consolidation
 
The accompanying consolidated financial statements include the accounts of Simpson Manufacturing Co., Inc. and its subsidiaries. Investments in 50% or less owned entities are accounted for using either cost or the equity method. The Company consolidates all variable interest entities ("VIEs") where it is the primary beneficiary. There were no VIEs as of December 31, 2017 or 2016 . All significant intercompany transactions have been eliminated.
 
Use of Estimates
 
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, as amended from time to time ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company's actual results could differ from those estimates.
 
Revenue Recognition
 
The Company recognizes revenue when the earnings process is complete, net of applicable provision for discounts, returns and incentives, whether actual or estimated based on the Company’s experience. This generally occurs when products are shipped to the customer in accordance with the sales agreement or purchase order, ownership and risk of loss pass to the customer, collectability is reasonably assured and pricing is fixed or determinable. The Company’s general shipping terms are F.O.B. shipping point, where title is transferred and revenue is recognized when the products are shipped to customers. When the Company sells F.O.B. destination point, title is transferred and the Company recognizes revenue on delivery or customer acceptance, depending on terms of the sales agreement. Service sales, representing after-market repair and maintenance, engineering activities, software license sales and service and lease income, though significantly less than 1% of net sales and not material to the Consolidated Financial Statements, are recognized as the services are completed or the software products and services are delivered. If actual costs of sales returns, incentives and discounts were to significantly exceed the recorded estimated allowances, the Company’s sales would be adversely affected.

Sales Incentive and Advertising Allowances
 
The Company records estimated reductions to revenues for sales incentives, primarily rebates for volume discounts, and allowances for co-operative advertising.
 
Allowances for Sales Discounts
 
The Company records estimated reductions to revenues for discounts taken on early payment of invoices by its customers.
 

58




Cash Equivalents
 
The Company considers all highly liquid investments with an original or remaining maturity of three months or less at the time of purchase to be cash equivalents.

Allowance for Doubtful Accounts
 
The Company assesses the collectability of specific customer accounts that would be considered doubtful based on the customer’s financial condition, payment history, credit rating and other factors that the Company considers relevant, or accounts that the Company assigns for collection. The Company reserves for the portion of those outstanding balances that the Company believes it is not likely to collect based on historical collection experience. The Company also reserves 100% of the amounts that it deems uncollectable due to a customer’s deteriorating financial condition or bankruptcy. If the financial condition of the Company’s customers were to deteriorate, resulting in probable inability to make payments, additional allowances may be required.
 
Inventory Valuation
 
Inventories are stated at the lower of cost or net realizable value. Cost includes all costs incurred in bringing each product to its present location and condition, as follows:
 
Raw materials and purchased finished goods for resale — principally valued at cost determined on a weighted average basis; and
In-process products and finished goods — cost of direct materials and labor plus attributable overhead based on a normal level of activity.
 
The Company applies net realizable value and obsolescence to the gross value of the inventory. The Company estimates net realizable value based on estimated selling price less further costs to completion and disposal. The Company impairs slow-moving products by comparing inventories on hand to projected demand. If on-hand supply of a product exceeds projected demand or if the Company believes the product is no longer marketable, the product is considered obsolete inventory. The Company revalues obsolete inventory to its net realizable value. The Company has consistently applied this methodology. The Company believes that this approach is prudent and makes suitable impairments for slow-moving and obsolete inventory. When impairments are established, a new cost basis of the inventory is created. Unexpected change in market demand, building codes or buyer preferences could reduce the rate of inventory turnover and require the Company to recognize more obsolete inventory.
 
Warranties and recalls
 
The Company provides product warranties for specific product lines and records estimated recall expenses in the period in which the recall occurs, none of which has been material to the Consolidated Financial Statements. In a limited number of circumstances, the Company may also agree to indemnify customers against legal claims made against those customers by the end users of the Company’s products. Historically, payments made by the Company, if any, under such agreements have not had a material effect on the Company’s consolidated results of operations, cash flows or financial position

Fair Value of Financial Instruments  

The “Fair Value Measurements and Disclosures” topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification  (“ASC”) establishes a valuation hierarchy for disclosure of the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
 

59




As of December 31, 2017 and 2016 , the Company’s investments consisted of only money market funds, which are the Company’s primary financial instruments, maintained in cash equivalents and carried at cost, approximating fair value, based on Level 1 inputs. The balance of the Company’s primary financial instruments was as follows:
 
(in thousands)
At December 31,
 
2017
2016
Money market funds
$
5,293

$
2,832

 
The carrying amounts of trade accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. The fair value of the Company’s contingent consideration related to acquisitions is classified as Level 3 within the fair value hierarchy as it is based on unobserved inputs such as management estimates and entity-specific assumptions and is evaluated on an ongoing basis. As of December 31, 2017, the estimated fair value of the Company's contingent consideration was approximately a total of $1.3 million , which was mostly based on the use of the Monte Carlo method of valuation.

Property, Plant and Equipment
 
Property, plant and equipment are carried at cost. Major renewals and betterments are capitalized. Maintenance and repairs are expensed on a current basis. When assets are sold or retired, their costs and accumulated depreciation are removed from the accounts, and the resulting gains or losses are reflected in the accompanying Consolidated Statements of Operations.
 
The “Intangibles—Goodwill and Other” topic of the FASB ASC provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. The Company capitalizes qualified external costs and internal costs related to the purchase and implementation of software projects used for business operations and engineering design activities. Capitalized software costs primarily include purchased software, internal costs and external consulting fees. Capitalized software projects are amortized over the estimated useful lives of the software.
 
Depreciation and Amortization
 
Depreciation of software, machinery and equipment is provided using accelerated methods over the following estimated useful lives: 
Software
3 to 5 years
Machinery and equipment
3 to 10 years
 
Buildings and site improvements are depreciated using the straight-line method over their estimated useful lives, which range from 15 to 45 years. Leasehold improvements are amortized using the straight-line method over the shorter of the expected life or the remaining term of the lease. Amortization of purchased intangible assets with finite useful lives is computed using the straight-line method over the estimated useful lives of the assets.
 
Cost of Sales
 
The types of costs included in cost of sales include material, labor, factory and tooling overhead, shipping, and freight costs. Major components of these expenses are material costs, such as steel, packaging and cartons, personnel costs, and facility costs, such as rent, depreciation and utilities, related to the production and distribution of the Company’s products. Inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs, and other costs of the Company’s distribution network are also included in cost of sales.
 
Tool and Die Costs
 
Tool and die costs are included in product costs in the year incurred.
 
Shipping and Handling Fees and Costs
 
The Company’s general shipping terms are F.O.B. shipping point. Shipping and handling fees and costs are included in revenues and product costs, as appropriate, in the year incurred.
 

60




Product and Software Research and Development Costs
 
Product research and development costs, which are included in operating expenses and are charged against income as incurred, were $10.6 million , $10.8 million and $12.0 million in 2017 , 2016 and 2015 , respectively. The types of costs included as product research and development expenses was revised in 2017 and prior years to include all related personnel costs including salary, benefits, retirement, stock-based compensation costs, as well as computer and software costs, professional fees, supplies, tools and maintenance costs. In 2017 , 2016 and 2015 , the Company incurred software development expenses related to its expansion into the plated truss market and some of the software development costs were capitalized. See "Note 5 — Property, Plant and Equipment." The Company amortizes acquired patents over their remaining lives and performs periodic reviews for impairment. The cost of internally developed patents is expensed as incurred.
 
Selling Costs
 
Selling costs include expenses associated with selling, merchandising and marketing the Company’s products. Major components of these expenses are personnel, sales commissions, facility costs such as rent, depreciation and utilities, professional services, information technology costs, sales promotion, advertising, literature and trade shows.
 
Advertising Costs
 
Advertising costs are included in selling expenses, are expensed when the advertising occurs, and were $9.6 million , $7.1 million and $6.4 million in 2017 , 2016 , and 2015 , respectively.
 
General and Administrative Costs
 
General and administrative costs include personnel, information technology related costs, facility costs such as rent, depreciation and utilities, professional services, amortization of intangibles and bad debt charges.
 
Income Taxes
 
Income taxes are calculated using an asset and liability approach. The provision for income taxes includes federal, state and foreign taxes currently payable and deferred taxes, due to temporary differences between the financial statement and tax bases of assets and liabilities. In addition, future tax benefits are recognized to the extent that realization of such benefits is more likely than not.
This method gives consideration to the future tax consequences of the deferred income tax items and immediately recognizes changes in income tax laws in the year of enactment. On December 22, 2017, the President of the United States signed into law the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”). Further information on the tax impacts of the Tax Reform Act is included in Note 10 — Income Taxes of the Company’s consolidated financial statements.
 
Sales Taxes
 
The Company presents taxes collected and remitted to governmental authorities on a net basis in the accompanying Consolidated Statements of Operations.
 
Foreign Currency Translation
 
The local currency is the functional currency of most of the Company’s operations in Europe, Canada, Asia, Australia, New Zealand and South Africa. Assets and liabilities denominated in foreign currencies are translated using the exchange rate on the balance sheet date. Revenues and expenses are translated using average exchange rates prevailing during the year. The translation adjustment resulting from this process is shown separately as a component of stockholders’ equity. Foreign currency transaction gains or losses are included in general and administrative expenses.
 
Common Stock
 
Subject to the rights of holders of any preferred stock that may be issued in the future, holders of common stock are entitled to receive such dividends, if any, as may be declared from time to time by the Company’s Board of Directors (the "Board") out of legally available funds, and in the event of liquidation, dissolution or winding-up of the Company, to share ratably in all assets available for distribution. The holders of common stock have no preemptive or conversion rights. Subject to the rights of any preferred stock that may be issued in the future, the holders of common stock are entitled to one vote per share on any matter submitted to a vote of the stockholders. A director in an uncontested election is elected if the votes cast “for” such director’s election exceed the votes cast “against” such director’s election, except that, if a stockholder properly nominates a candidate for

61




election to the Board, the candidates with the highest number of affirmative votes (up to the number of directors to be elected) are elected. There are no redemption or sinking fund provisions applicable to the common stock.
 
Preferred Stock
 
The Board has the authority to issue the authorized and unissued preferred stock in one or more series with such designations, rights and preferences as may be determined from time to time by the Board. Accordingly, the Board is empowered, without stockholder approval, to issue preferred stock with dividend, redemption, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the holders of the Company’s common stock.
 
Stock Repurchase Program

At its meeting in August 2016, the Board authorized the Company to repurchase up to $125 million of its common stock. This authorization increased and extended the $50.0 million repurchase authorization from February 2016. For the fiscal year ended December 31, 2016 , the Company purchased a total of 1,244,003 shares of its common stock at an average price of $43.01 , which included 1,137,656 shares purchased pursuant to the $50.0 million accelerated share repurchase program ("2016 ASR Program") that the Company entered into with Wells Fargo Bank, National Association ("Wells Fargo") in August 2016. As of December 31, 2016, the 2016 ASR Program was completed at an average share price of $43.95 per share. All shares repurchased during 2016 were retired.

At its meeting in August 2017, the Board authorized the Company to repurchase up to $275.0 million of the its common stock. This authorization increased and extended the $125.0 million repurchase authorization from August 2016 and will remain in effect through December 31, 2018. For the fiscal year ended December 31, 2017 , the Company purchased a total of 1,138,387 shares of its common stock for a total of $60.0 million through accelerated share repurchase programs that the Company entered into with Wells Fargo, which included 460,887 shares purchased at an average share price of $43.39 per share pursuant to a $20.0 million accelerated share repurchase program initiated in June 2017 (the "2017 June ASR Program"), and 677,500 shares received at an average share price of $59.04 per share, or $40.0 million , pursuant to a $50.0 million accelerated share repurchase program initiated in December 2017 (the "2017 December ASR Program"). The final delivery under the 2017 December ASR Program was made in February 2018. See Note 15 - "Subsequent Events." As of December 31, 2017, 460,887 shares were retired, 677,500 shares were held as treasury shares and approximately $151.5 million remained available for share repurchases through December 31, 2018 under the Board current authorization.

See the "Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2017, 2016 and 2015."

Net Income per Share
 
Basic net income per common share is computed based on the weighted average number of common shares outstanding. Potentially dilutive shares, using the treasury stock method, are included in the diluted per-share calculations for all periods when the effect of their inclusion is dilutive.

The following shows a reconciliation of basic earnings per share (“EPS”) to diluted EPS:
 
 
Fiscal Year Ended December 31,
  (in thousands, except per-share amounts)
2017
 
2016
 
2015
Net income available to common stockholders
$
92,617

 
$
89,734

 
$
67,888

 
 
 
 
 
 
Basic weighted average shares outstanding
47,486

 
48,084

 
48,952

Dilutive effect of potential common stock equivalents
288

 
211

 
229

Diluted weighted average shares outstanding
47,774

 
48,295

 
49,181

Net earnings per share:
 

 
 

 
 

Basic
$
1.95

 
$
1.87

 
$
1.39

Diluted
$
1.94

 
$
1.86

 
$
1.38

 
For the year ended December 31, 2017 , 2016 , and 2015 , no potential common shares with anti-dilutive effect were included in the calculation of diluted net income per share.


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Comprehensive Income or Loss
 
Comprehensive income is defined as net income plus other comprehensive income or loss. Other comprehensive income or loss consists of changes in cumulative translation adjustments and changes in unamortized pension adjustments recorded directly in accumulated other comprehensive income within stockholders’ equity. The following shows the components of accumulated other comprehensive income or loss as of December 31, 2017 and 2016 , respectively:

 
Foreign Currency Translation
 
Pension Benefit
 
Total
(in thousands)
 
 
Balance at January 1, 2015
$
(6,613
)
 
$
(567
)
 
$
(7,180
)
Other comprehensive income before reclassification net of tax benefit (expense) of ($57) and $82, respectively
(20,708
)
 
(457
)
 
(21,165
)
Amounts reclassified from accumulative other comprehensive income, net of $0 tax
(231
)
 

 
(231
)
Balance at December 31, 2015
(27,552
)
 
(1,024
)
 
(28,576
)
Other comprehensive loss net of tax benefit (expense) of ($222) and $87, respectively
(3,920
)
 
(474
)
 
(4,394
)
Balance at December 31, 2016
(31,472
)
 
(1,498
)
 
(32,970
)
Other comprehensive loss net of tax benefit (expense) of $0 and $36, respectively
21,273

 
(944
)
 
20,329

Amounts reclassified from accumulative other comprehensive income, net of $0 tax
145

 

 
145

Balance at December 31, 2017
$
(10,054
)
 
$
(2,442
)
 
$
(12,496
)

Concentration of Credit Risk
 
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash in banks, short-term investments in money market funds and trade accounts receivable. The Company maintains its cash in demand deposit and money market accounts held primarily at 17 banks.
 
Accounting for Stock-Based Compensation

The Company recognizes stock-based expenses related to stock options and restricted stock awards on a straight-line basis, net of forfeitures, over the requisite service period of the awards, which is generally the vesting term of four years. Stock-based expenses related to performance share grants are measured based on grant date fair value and expensed on a straight-line basis over the service period of the awards, which is generally the vesting term of three years. The assumptions used to calculate the fair value of options or restricted stock units are evaluated and revised, as necessary, to reflect market conditions and the Company’s experience.

Goodwill Impairment Testing
 
The Company tests goodwill for impairment at the reporting unit level on an annual basis (in the fourth quarter for the Company). The Company also reviews goodwill for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or disposition or relocation of a significant portion of a reporting unit.
 
The reporting unit level is generally one level below the operating segment and is at the country level except for the United States, Denmark, Australia, and S&P Clever reporting units.
 
The Company has determined that the United States reporting unit includes four components: Northwest United States, Southwest United States, Northeast United States and Southeast United States (collectively, the “U.S. Components”). The Company aggregates the U.S. Components into a single reporting unit because management concluded that they are economically similar and that the goodwill is recoverable from the U.S. Components working in concert. The U.S. Components are economically similar because of a number of factors, including, selling similar products to shared customers and sharing assets and services such as intellectual property, manufacturing assets for certain products, research and development projects, manufacturing processes, management of inventory excesses and shortages and administrative services. These activities are managed centrally at the U.S. Components level and costs are allocated among the four U.S. Components.
 

63




The Company determined that the Australia reporting unit includes four components: Australia, New Zealand, South Africa and United Arab Emirates (collectively, the “AU Components”). The Company aggregates the AU Components into a single reporting unit because management concluded that they are economically similar and that the goodwill is recoverable from the AU Components working in concert. The AU Components are economically similar because of a number of factors, including that New Zealand, South Africa and United Arab Emirates operate as extensions of their Australian parent company selling similar products and sharing assets and services such as intellectual property, manufacturing assets for certain products, management of inventory excesses and shortages and administrative services. These activities are managed centrally at the AU Components level and costs are allocated among the AU Components.
 
The Company has determined that the S&P Clever reporting unit includes nine components: S&P Switzerland, S&P Poland, S&P Austria, S&P The Netherlands, S&P Portugal, S&P Germany, S&P France, S&P Nordic, and S&P Spain (collectively, the "S&P Components”). The Company aggregates the S&P Components into a single reporting unit because management concluded that they are economically similar and that the goodwill is recoverable from the S&P Components working in concert. The S&P Components are economically similar because of a number of factors, including sharing assets and services such as intellectual property, manufacturing assets for certain products, research and development projects, manufacturing processes, management of inventory excesses and shortages and administrative services. These activities are managed centrally at the S&P Components level and costs are allocated among the S&P Components.
 
For certain reporting units, the Company may first assess qualitative factors related to the goodwill of the reporting unit to determine whether it is necessary to perform a two-step impairment test. If the Company judges that it is more likely than not that the fair value of the reporting unit is greater than the carrying amount of the reporting unit, including goodwill, no further testing is required. If the Company judges that it is more likely than not that the fair value of the reporting unit is less than the carrying amount of the reporting unit, including goodwill, management will perform a two-step impairment test on goodwill. In the first step ("Step 1"), the Company compares the fair value of the reporting unit to its carrying value. The fair value calculation uses the income approach (discounted cash flow method) and the market approach, equally weighted. If the Company judges that the carrying value of the net assets assigned to the reporting unit, including goodwill, exceeds the fair value of the reporting unit, a second step of the impairment test must be performed to determine the implied fair value of the reporting unit’s goodwill. If the Company judges that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, the Company would record an impairment charge equal to the difference between the implied fair value of the goodwill and the carrying value.
 
Determining the fair value of a reporting unit or an indefinite-lived purchased intangible asset is a judgment involving significant estimates and assumptions. These estimates and assumptions include revenue growth rates, operating margins and working capital requirements used to calculate projected future cash flows, risk-adjusted discount rates, selected multiples, control premiums and future economic and market conditions (Level 3 fair value inputs). The Company bases its fair value estimates on assumptions that it believes to be reasonable, but that are unpredictable and inherently uncertain. Actual future results may differ from those estimates.
 
Assumptions about a reporting unit’s operating performance in the first year of the discounted cash flow model used to determine whether or not the goodwill related to that reporting unit is impaired are derived from the Company’s budget. The fair value model considers such factors as macro-economic conditions, revenue and expense forecasts, product line changes, material, labor and overhead costs, tax rates, working capital levels and competitive environment. Future estimates, however derived, are inherently uncertain but the Company believes that this is the most appropriate source on which to base its fair value calculation.
 
The Company uses these parameters only to provide a basis for the determination of whether or not the goodwill related to a reporting unit is impaired. No inference whatsoever should be drawn from these parameters about the Company’s future financial performance and they should not be taken as projections or guidance of any kind.
 
The 2017 , 2016 and 2015 annual testing of goodwill for impairment did not result in impairment charges.

The Denmark reporting unit passed Step 1 of the annual 2017 impairment test by a 8.3% margin indicating an estimated fair value greater than its net book value and was the only reporting unit with a fair value greater than net book value margin of less than 10%. The Denmark reporting unit is sensitive to management’s plans for increasing sales and operating margins. The Denmark reporting unit’s failure to meet management’s objectives could result in future impairment of some or all of the Denmark reporting unit’s goodwill, which was $7.1 million at December 31, 2017 .

Key assumptions used in Step 1 of the Company's annual goodwill impairment test included compound annual growth rates (“CAGR”) and average annual pre-tax operating margins during the forecast period, multiple and discount rates. A sensitivity assessment for the key assumptions included in the 2017 goodwill impairment test on the Denmark reporting unit is as follows:


64




A 500 basis point hypothetical increase in the discount rate, holding all other assumptions constant, would not have decreased the fair value of the reporting unit below its carrying value, and thus it would not result in the reporting unit failing Step 1 of the goodwill impairment test;
A 210 basis point hypothetical decrease in the multiple rate, holding all other assumptions constant, would not have decreased the fair value of the reporting unit below its carrying value, and thus it would not result in the reporting unit failing Step 1 of the goodwill impairment test;
A 139 basis point hypothetical percentage decrease in the CAGR, holding all other assumptions constant, would not have decreased the fair value of the reporting unit below its carrying value and
A 37% hypothetical decrease in average annual pre-tax operating profit, holding all other assumptions constant, would not have decreased the fair value of the reporting unit below its carrying value.

The assets and liabilities of acquired businesses are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying identifiable net assets of acquired businesses. The annual changes in the carrying amount of goodwill, by segment, as of December 31, 2016 and 2017 , were as follows, respectively:

(in thousands)
North
America
 
Europe
 
Asia
Pacific
 
Total
Balance as of January 1, 2016:
 
 
 
 
 
 
 
Goodwill
$
96,500

 
$
50,135

 
$
1,396

 
$
148,031

Accumulated impairment losses
(10,666
)
 
(13,415
)
 

 
(24,081
)
 
85,834

 
36,720

 
1,396

 
123,950

Goodwill acquired

 
1,848

 

 
1,848

Foreign exchange
93

 
(952
)
 
(21
)
 
(880
)
Reclassifications (1)
(439
)
 

 

 
(439
)
Balance as of December 31, 2016:
 
 
 
 
 
 
0

Goodwill
96,154

 
51,031

 
1,375

 
148,560

Accumulated impairment losses
(10,666
)
 
(13,415
)
 

 
(24,081
)
 
85,488

 
37,616

 
1,375

 
124,479

Goodwill acquired
10,066

 

 

 
10,066

Foreign exchange
198

 
2,472

 
114

 
2,784

Reclassifications (2)
3

 
(192
)
 

 
(189
)
Balance as of December 31, 2017:
 
 
 
 
 
 
0

Goodwill
106,421

 
53,311

 
1,489

 
161,221

Accumulated impairment losses
(10,666
)
 
(13,415
)
 

 
(24,081
)
 
$
95,755

 
$
39,896

 
$
1,489

 
$
137,140

  (1) Reclassifications in 2016 of $0.2 million in patents, $0.1 million in non-compete agreements, $46 thousand in customer relationships and other assets, with
a corresponding $0.4 million decrease in goodwill related to the EBTY acquisition.
(2) Reclassifications in 2017 were $3 thousand and $192 thousand in other assets, with a corresponding $189 thousand decrease in goodwill related to CG
Visions and MS Decoupe acquisitions.
 
Amortizable Intangible Assets
Intangible assets from acquired businesses are recognized at their estimated fair values at the date of acquisition and consist of patents, unpatented technology, non-compete agreements, trademarks, customer relationships and other intangible assets. Finite-lived intangibles are amortized to expense over the applicable useful lives, ranging from three to 21 years, based on the nature of the asset and the underlying pattern of economic benefit as reflected by future net cash inflows. The Company performs an impairment test of finite-lived intangibles whenever events or changes in circumstances indicate their carrying value may be impaired.
The total gross carrying amount and accumulated amortization of intangible assets subject to amortization at December 31, 2017 , were $54.5 and $25.2 million , respectively. The aggregate amount of amortization expense of intangible assets for the years ended December 31, 2017 , 2016 and 2015 was $6.2 million , $6.0 million and $6.1 million , respectively.


65




The annual changes in the carrying amounts of patents, unpatented technologies, customer relationships and non-compete agreements and other intangible assets subject to amortization as of December 31, 2016 , and 2017 were as follows, respectively:
(in thousands)
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Patents
 
 
Balance at January 1, 2016
$
1,513

 
$
(379
)
 
$
1,134

Amortization

 
(149
)
 
(149
)
Reclassification (1)
212

 

 
212

Foreign exchange
(7
)
 

 
(7
)
Balance at December 31, 2016
1,718

 
(528
)
 
1,190

Acquisition
800

 

 
800

Amortization

 
(187
)
 
(187
)
Foreign exchange
2

 

 
2

Removal of fully amortized assets
(170
)
 
170

 

Balance at December 31, 2017
$
2,350

 
$
(545
)
 
$
1,805

  (1) Reclassifications in 2016 of $0.2 million in patents, $0.1 million in non-compete agreements, $46 thousand in customer relationships and other assets, with
a corresponding $0.4 million decrease in goodwill related to the EBTY acquisition
(in thousands)
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Unpatented Technology
 
 
Balance at January 1, 2016
$
21,604

 
$
(8,656
)
 
$
12,948

Amortization

 
(2,058
)
 
(2,058
)
Reclassifications   (1)
1,512

 

 
1,512

Foreign exchange
(243
)
 

 
(243
)
Removal of fully amortized assets
(1,711
)
 
1,711

 

Balance at December 31, 2016
21,162

 
(9,003
)
 
12,159

Amortization

 
(1,976
)
 
(1,976
)
Foreign exchange
505

 
$

 
505

Balance at December 31, 2017
$
21,667

 
$
(10,979
)
 
$
10,688

 (1) Reclassifications in 2016 of $1.5 million in unpatented technology for completed indefinite-lived in-process research and development ("IPR&D"), with a corresponding reduction in IPR&D intangibles.
(in thousands)
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Non-Compete Agreements,
Trademarks and Other
 
 
 
 
Balance at January 1, 2016
$
10,578

 
(7,203
)
 
3,375

Acquisition
1,212

 

 
1,212

Amortization

 
(2,040
)
 
(2,040
)
Foreign exchange
(39
)
 

 
(39
)
Reclassifications (1)
119

 

 
119

Removal of fully amortized assets
(5,143
)
 
5,143

 

Balance at December 31, 2016
6,727

 
(4,100
)
 
2,627

Acquisition
9,260

 

 
9,260

Amortization

 
(2,495
)
 
(2,495
)
Foreign exchange
16

 

 
16

Removal of fully amortized asset
(3,778
)
 
3,778

 

Balance at December 31, 2017
$
12,225

 
$
(2,817
)
 
$
9,408

(1) Reclassifications in 2016 of $0.2 million in patents, $0.1 million in non-compete agreements, $46 thousand in customer relationships and other assets, with a corresponding $0.4 million decrease in goodwill related to the EBTY acquisition .


66




(in thousands)
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
Customer Relationships
 
 
Balance at January 1, 2016
$
21,242

 
(13,152
)
 
8,090

Acquisition

 

 

Amortization

 
(1,793
)
 
(1,793
)
Reclassifications (1)
46

 

 
46

Foreign exchange
(71
)
 

 
(71
)
Balance at December 31, 2016
21,217

 
(14,945
)
 
6,272

Acquisition
1,091

 

 
1,091

Amortization

 
(1,574
)
 
(1,574
)
Reclassifications  (2)
626

 

 
626

Foreign exchange
394

 

 
394

Removal of fully amortized assets
(5,650
)
 
5,650

 

Balance at December 31, 2017
$
17,678

 
$
(10,869
)
 
$
6,809

       (1) Reclassifications in 2016 of $0.2 million to patents, $0.1 million in non-compete agreements, $46 thousand in customer relationships and other assets, with a corresponding $0.4 million decrease in goodwill related to the EBTY acquisition.
   (2) Reclassifications in 2017 of $0.6 million in customer relationships with a corresponding $0.6 million decrease in other assets related to the MS Decoupe acquisition.

At December 31, 2017 , estimated future amortization of intangible assets was as follows:
 
(in thousands)  
2018
$
5,352

2019
5,260

2020
5,230

2021
4,751

2022
2,859

Thereafter
5,258

 
$
28,710

 
Indefinite-Lived Intangible Assets

As of December 31, 2017 , the only indefinite-lived intangible asset, consisting of a trade name, totaled $0.6 million .

Amortizable and indefinite-lived assets, net, by segment, as of December 31, 2016 and 2017 , respectively, were as follows: 
 
December 31, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
(in thousands)
 
 
Total Intangible Assets
 
 
North America
$
23,562

 
$
(13,811
)
 
$
9,751

Europe
27,880

 
(14,767
)
 
13,113

Total
$
51,442

 
$
(28,578
)
 
$
22,864


 
At December 31, 2017
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 
Net
Carrying
Amount
(in thousands)
 
 
Total Intangible Assets
 
 
North America
$
30,775

 
$
(13,732
)
 
$
17,043

Europe
23,762

 
(11,479
)
 
12,283

Total
$
54,537

 
$
(25,211
)
 
$
29,326

 

67




Recently Adopted Accounting Standards

In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation - Stock Compensation (Topic 718),
Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09") , which amends existing guidance related to accounting for employee share-based payments affecting the income tax consequences of awards, classification of awards as equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. On January 1, 2017, the Company adopted ASU 2016-09.

This new guidance requires all excess tax benefits and tax deficiencies be recognized as income tax expense or benefit in the income statement and classified as an operating activity in the statement of cash flows. The Company prospectively adopted this guidance with the tax impact of a $1.1 million tax benefit recognized in the consolidated income statements and classified it as an operating activity in the consolidated statement of cash flows. The guidance also requires a policy election either to estimate the number of awards that are expected to vest or to account for forfeitures whenever they occur. The Company did not change its policy for calculating accrual compensation costs by estimating the number of awards that are expected to vest. Therefore, when the Company adopted this guidance, there was no recognized cumulative effect adjustment to retained earnings. In addition, this guidance requires cash paid by an employer, when directly withholding shares for tax withholding purposes, to be classified in the statement of cash flows as a financing activity, which differs from the Company's previous method of classification of such cash payments as an operating activity. Accordingly, the Company applied this provision retrospectively for the twelve months ended December 31, 2017 and 2016, and reclassified $1.3 million and $4.3 million , respectively, from operating activities to financing activities in the condensed consolidated statements of cash flows.

In March 2016, the FASB issued Accounting Standards Update No. 2016-07, Simplifying the Transition to the Equity Method of Accountin g ("ASU 2016-07"), which eliminates the requirement to apply the equity method of accounting retrospectively when a reporting entity obtains significant influence over a previously held investment. The amendments in ASU 2016-07 are effective for public companies for fiscal years beginning after December 15, 2016, including interim periods therein, with early adoption permitted. The new standard should be applied prospectively for investments that qualify for the equity method of accounting after the effective date. On January 1, 2017, the Company prospectively adopted ASU 2016-07. Adoption of ASU 2016-07 has had no material effect on the Company's consolidated financial statements and footnote disclosures.

In January 2017, the FASB issued Accounting Standards Updated No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASU 2017-01"), which changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The new guidance clarifies that a business must also include at least one substantive process and narrows the definition of outputs by more closely aligning it with how outputs are described in ASC 606, Revenue from Contracts with Customers. ASU 2017-01 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, 2017, with early adoption permitted. On January 1, 2017, the Company prospectively adopted ASU 2017-01. Adoption of ASU 2017-01 has had no material effect on the Company's consolidated financial statements and footnote disclosures.

In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes ("ASU 2015-17"). The objective is to simplify the presentation of deferred income taxes; the amendments require that deferred tax assets and liabilities be classified as noncurrent in a classified consolidated balance sheets.
ASU 2015-17 will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal
years. The Company adopted prospectively ASU 2015-17 in the first quarter of 2016, resulted in the Company offsetting all of its deferred income tax assets and liabilities, as of January 1, 2016, by taxing jurisdictions and classifying those balances as noncurrent. The result was a $4.1 million increase in "Other noncurrent assets," from $6.7 million to $10.8 million , and a $12.1 million decrease in "Deferred income tax and other long-term liabilities," from $16.5 million to $4.4 million .

All other issued and effective accounting standards during 2017 were determined to be not relevant or material to the Company.

Recently Issued Accounting Standards Not Yet Adopted
 
In May 2014, the FASB issued Accounting Standards Update No. 2014-09 (later codified as ASC 606), Revenue from Contracts with Customers (“ASC 606”), which supersedes nearly all existing revenue recognition guidance under GAAP. ASC 606 provides a five-step model for revenue recognition to be applied to all revenue contracts with customers. The five-step model includes: (1) determination of whether a contract, an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of the performance obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and (5) recognition of revenue when (or as) the

68




performance obligations are satisfied. The core principle of ASC 606 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASC 606 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The standard is effective for annual and interim periods beginning after December 15, 2017 and permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective method). The Company will adopt the new standard effective January 1, 2018 using the modified retrospective approach.

We completed our review of customer contracts and do not expect the adoption of this standard will materially impact the amount or timing of revenue recognized.  The guidance requires the Company to estimate and record variable consideration resulting from rebates and other pricing allowances at contract inception.  Net sales will not be materially impacted as a result of adoption as the Company currently records estimated rebates and allowances as reductions to revenue.  Under current revenue recognition guidance, revenue from the sale of our finished goods is recognized at the point in time when all revenue recognition criteria are met, which typically occurs when products are shipped from our facilities with the Company’s general shipping terms. Based on the nature of our contracts, we expect to continue to recognize revenue from the sale of our finished goods upon shipment, which is the point in time when control is transferred to the customer.  Accordingly, the adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. The Company is identifying and preparing to implement changes to our accounting policies and practices, business processes, systems and controls to support the enhanced disclosure requirements of ASC 606.

In October 2016, the FASB issued Accounting Standards Update No. 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory ("ASU 2016-16"), which requires companies to account for the income tax effects of intercompany sales and transfers of assets other than inventory when the transfer occurs. Current guidance requires companies to defer the income tax effects of intercompany transfers of assets until the asset has been sold to an outside party or otherwise recognized. The amendment is to be applied using a modified retrospective approach. ASU 2016-16 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. Based on current information and subject to future events and circumstances, the Company does not know whether ASU 2016-16 will have a material impact on its financial statements upon adoption.

In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ("ASU 2017-04"), which eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge or Step 2 of the goodwill impairment analysis. Instead, an impairment charge will be recorded based on the excess of a reporting unit's carrying amount over its fair value using Step 1 of the goodwill impairment analysis. The standard is required to be adopted for annual and interim impairment tests performed after December 15, 2019. The amendment is to be applied prospectively. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. Based on current information and subject to future events and circumstances, the Company does not know whether ASU 2017-04 will have a material impact on its financial statements upon adoption.

In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-02,  Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income  (ASU 2018-02) .  ASU 2018-02 allows a reclassification from Accumulated other Comprehensive Income to Retained Earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and for interim periods therein. Early adoption of ASU 2018-02 is permitted. The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements.


2.
Stock-Based Compensation

The Company currently maintains an equity incentive plan, the Simpson Manufacturing Co., Inc. Amended and Restated 2011 Incentive Plan (the “2011 Plan”). The 2011 Plan amended and restated in their entirety, and incorporated and superseded, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan (the “1994 Plan”), which was principally for the Company’s employees, and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan (the “1995 Plan”), which was for the Company's independent directors. Awards previously granted under the 1994 Plan or the 1995 Plan will not be affected by the adoption of the 2011 Plan and will continue to be governed by the 1994 Plan or the 1995 Plan, respectively.
 
The Company generally granted options under each of the 1994 Plan and the 1995 Plan once each year. Options vest and expire according to terms established at the grant date. Shares of common stock issued on exercise of stock options under the 1994 Plan and the 1995 Plan are registered under the Securities Act of 1933, as amended (the "Securities Act").

69




 
Under the 2011 Plan, the Company may grant incentive stock options, non-qualified stock options, restricted stock and restricted stock units, although the Company currently intends to award primarily performance-based and/or time-based restricted stock units ("RSUs"), and to a lesser extent, if at all, non-qualified stock options. The performance-based RSUs may vest, only if the applicable Company-wide or profit-center operating goals, or both, or strategic goals, established by the Compensation and Leadership Development Committee (the “Committee”) of the Board, are met.

The Company does not currently intend to award incentive stock options or restricted stock. Under the 2011 Plan, no more than 16.3 million shares of the Company’s common stock in aggregate may be issued including shares already issued pursuant to prior awards granted under the 2011 Plan and shares issued on exercise of options previously granted under the 1994 Plan and the 1995 Plan. Shares of common stock underlying awards to be issued pursuant to the 2011 Plan are registered under the Securities Act.
 
The Company granted RSUs under the 2011 Plan in 2015, 2016 and 2017 to its employees, including officers, and directors. The fair value of each RSU award is estimated on the measurement date as determined in accordance with GAAP and is based on the closing price of shares of the Company’s common stock on the day preceding the measurement date. The fair value excludes the present value of the dividends that the RSUs do not participate in. The RSUs granted to the Company’s employees may be time-based, performance-based or time- and performance-based. The restrictions on a portion of the time-based RSUs generally lapse pursuant to a vesting schedule. The restrictions on the performance-based RSUs generally lapse following a performance period, and the underlying shares of the Company’s common stock are subject to performance-based adjustment before becoming vested. The time- and performance-based RSUs require the underlying shares of the Company’s common stock to be subject to performance-based adjustment before starting to vest according to a vesting schedule.

The following table shows the Company’s stock-based compensation activity:
 
Fiscal Years Ended December 31,
(in thousands)  
2017
 
2016
 
2015
Stock-based compensation expense recognized in operating expenses
$
12,744

 
$
13,113

 
$
11,212

Tax benefit of stock-based compensation expense in provision for income taxes
4,575

 
4,757

 
3,987

Stock-based compensation expense, net of tax
$
8,169

 
$
8,356

 
$
7,225

Fair value of shares vested
$
11,043

 
$
13,186

 
$
10,997

Proceeds to the Company from the exercise of stock-based compensation
$
6,610

 
$
7,976

 
$
9,720

Tax benefit from exercise of stock-based compensation, including shortfall tax benefits
$

 
$
(251
)
 
$
(318
)

The stock-based compensation expense included in cost of sales, research and development and engineering expense, selling expense, or general and administrative expense depends on the job functions performed by the employees to whom the stock options were granted, or the restricted stock units were awarded. Stock-based compensation cost capitalized in inventory was $0.2 million in 2017 , and was $0.4 million in both 2016 and 2015 , respectively.

The following table summarizes the Company’s unvested restricted stock unit activity for the year ended December 31, 2017 :

Shares
(in thousands)
 
Weighted-
Average
Price
 
Aggregate
Intrinsic
Value *
(in thousands)
Unvested Restricted Stock Units (RSUs)
 
 
Outstanding at January 1, 2017
615

 
$
31.81

 
$
26,915

Awarded
589

 
38.79

 


Vested
(336
)
 
32.85

 


Forfeited
(172
)
 
35.96

 


Outstanding at December 31, 2017
696

 
$
35.34

 
$
39,976

Outstanding and expected to vest at December 31, 2017
690

 
$
35.33

 
$
39,609


*  The intrinsic value for outstanding and expected to vest is calculated using the closing price per share of $57.41 , as reported by the New York Stock Exchange on December 31, 2017 .
 

70




On February 4, 2017, 579,139 RSUs were awarded to the Company's employees, including officers, at an estimated fair value of $38.74 per share, based on the closing price on February 3, 2017 of $43.42 per share and adjusted for certain market factors, and to a lesser extent, the present value of dividends. On May 16, 2017, 10,066 RSUs were awarded to each of the Company’s seven non-employee directors at an estimated fair value of $41.52 per share based on the closing price on May 15, 2017, which RSUs vested fully on the date of the grant.

The total intrinsic value of RSUs vested during the years ended December 31, 2017 , 2016 and 2015 was $14.7 million , $10.8 million and $10.3 million , respectively, based on the market value on the award date.
 
No stock options were granted under the 2011 Plan in 2015 , 2016 or 2017 .

The following table summarizes the Company’s stock option activity for the year ended December 31, 2017 :

Shares
(in thousands)
 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value*
(in thousands)
Non-Qualified Stock Options
 
 
 
Outstanding at January 1, 2017
251

 
$
29.66

 
1.1
 
$
3,538

Exercised
(223
)
 
$
29.66

 
 
 
 

Forfeited

 
$

 
 
 
 
Outstanding and exercisable at December 31, 2017
28

 
$
29.66

 
0.1
 
$
780


 * The intrinsic value as of December 31, 2017 represents the amount by which the fair market value of the underlying common stock exceeds the exercise price of the option, and is calculated using the closing price per share of $57.41 , as reported by the New York Stock Exchange on December 31, 2017 .
 
The total intrinsic value of stock options exercised during each of the three years ended December 31, 2017 , 2016 and 2015 , was $4.6 million , $3.1 million and $2.4 million , respectively.

As of December 31, 2017 , there was $10.2 million total unrecognized compensation cost related to unvested stock-based compensation arrangements under the 2011 Plan for awards made through December 31, 2017, which is expected to be recognized over a weighted-average period of 1.8 years.

On February 15, 2018, approximately 186 thousand RSUs were awarded to the Company's employees, including officers. The Company's closing price of its stock was $57.16 on February 14, 2018. The fair value of the awards has not yet been determined, but the Company expects it will be less after adjustment for expected dividends the RSUs do not participate in.
 
Stock Bonus Plan

The Company also maintains a stock bonus plan, the Simpson Manufacturing Co., Inc. 1994 Employee Stock Bonus Plan (the “Stock Bonus Plan”), whereby it awards shares of the Company’s common stock to employees, who do not otherwise participate in any of the Company’s equity-based incentive plans and meet minimum service requirements as determined by the Committee. The number of shares awarded, as well as the required period of service, is determined by the Committee. Shares have generally been issued under the Stock Bonus Plan following the year in which the respective employee reached his or her tenth, twentieth, thirtieth, fortieth or fiftieth anniversary of employment with the Company or any direct or indirect subsidiary thereof. The Company committed to issuing 12 thousand shares for 2017, ( 8,100 shares to be issued and 3,900 shares of which are expected to be settled in cash for the Company's foreign employees). In 2016 and 2015 , the Company issued 12 thousand and 10 thousand shares, respectively. As a result, we recorded pre-tax compensation charges of $1.2 million , $0.8 million and $0.7 million for each of the years ended December 31, 2017 , 2016 and 2015 , respectively. Employees are also awarded cash bonuses as included in these charges, to compensate for income taxes payable as a result of the stock bonuses.
 

71





3.
Trade Accounts Receivable, net

Trade accounts receivable consisted of the following:
 
 
December 31,
  (in thousands)
2017
 
2016
Trade accounts receivable
$
139,910

 
$
116,368

Allowance for doubtful accounts
(996
)
 
(895
)
Allowance for sales discounts
(2,956
)
 
(3,050
)
 
$
135,958

 
$
112,423

 
The Company sells products on credit and generally does not require collateral.  


4.
Inventories
 
The components of inventories consisted of the following:

 
December 31,
  (in thousands)  
2017
 
2016
Raw materials
$
91,022

 
$
86,524

In-process products
26,849

 
20,902

Finished products
135,125

 
124,848

 
$
252,996

 
$
232,274



5.
Property, Plant and Equipment, net
 
Property, plant and equipment consisted of the following:
 
 
December 31,
  (in thousands)
2017
 
2016
Land
$
33,087

 
$
32,127

Buildings and site improvements
212,817

 
183,882

Leasehold improvements
4,684

 
5,550

Machinery and equipment
300,334

 
248,861

 
550,922

 
470,420

Less accumulated depreciation and amortization
(299,907
)
 
(273,302
)
 
251,015

 
197,118

Capital projects in progress
22,005

 
35,692

 
$
273,020

 
$
232,810

 
Included in property, plant and equipment at December 31, 2017 and 2016 , are fully depreciated assets with an original cost of $189.9 million and $166.7 million , respectively. These fully depreciated assets are still in use in the Company’s operations.

The Company capitalizes certain development costs associated with internal use software, including external direct costs of materials and services and payroll costs for employees devoting time to a software project. As of December 31, 2017 and 2016 , depreciable capitalized software development costs were $20.5 million and $4.6 million , respectively, and included in capital projects in progress at December 31, 2017 and 2016 , were software in development costs of $12.2 million and $13.5 million , respectively. The approximate $29.0 million increase in buildings and site improvements was primarily related to $21.2 million improvement costs associated with the manufacturing facility in West Chicago and the expansion of the McKinney facility.


72




Depreciation expense, including depreciation of equipment and software acquired through capital lease arrangements, was $27.3 million , $21.6 million and $20.4 million for the years ended December 31, 2017 , 2016 and 2015 , respectively.


6. Equity Investments

In December 2016, the Company acquired a 25.0% equity interest in Ruby Sketch Pty Ltd. (“Ruby Sketch”), an Australian proprietary limited company, for $2.5 million . The Company has accounted for its ownership interest using the equity accounting method and recognized Ruby Sketch investment as an asset at cost. The investment will fluctuate in future periods based on the Company’s allocable share of earnings or losses from the investment which is recognized through earnings.

Ruby Sketch develops software that assists in designing residential structures, primarily used in Australia and potentially for the North America market. The Company’s future relationship with Ruby Sketch also could potentially include the specification of the Company’s products in Ruby Sketch's software. The Company has no obligation to make any additional capital contributions to Ruby Sketch.


7. Accrued Liabilities
 
Accrued liabilities consisted of the following:
 
 
December 31,
(in thousands)
2017
 
2016
Sales incentive and advertising accruals
$
31,143

 
$
25,761

Vacation liability
8,993

 
7,432

Dividend payable
9,954

 
8,535

Labor related liabilities
16,970

 
8,431

Sales taxes payable and other
17,144

 
10,318


$
84,204

 
$
60,477

 

8.
Debt
 
The Company has revolving lines of credit with various banks in the United States and Europe. Total available credit at December 31, 2017 was $304.2 million including revolving credit lines and an irrevocable standby letter of credit in support of various insurance deductibles.
 
The Company’s primary credit facility is a revolving line of credit with $300.0 million in available credit, which expires on July 23, 2021. Amounts borrowed under this credit facility will bear interest at an annual rate equal to either, at the Company’s option, (a) the rate for Eurocurrency deposits for the corresponding deposits of United States dollars appearing on Reuters LIBOR1screen page (the “LIBOR Rate”), adjusted for any reserve requirement in effect, plus a spread of 0.60% to 1.45% , determined quarterly based on the Company’s leverage ratio (at December 31, 2017 , the LIBOR Rate was 1.49% , or (b) a base rate , plus a spread of 0.00% to 0.45% , determined quarterly based on the Company’s leverage ratio. The base rate is defined in a manner such that it will not be less than the LIBOR Rate. The Company will pay fees for standby letters of credit at an annual rate equal to the applicable spread described above, and will pay market-based fees for commercial letters of credit. The Company is required to pay an annual facility fee of 0.15% to 0.30% of the available commitments under the credit agreement, regardless of usage, with the applicable fee determined on a quarterly basis based on the Company’s leverage ratio.
 
In addition to the $300.0 million credit facility, the Company’s borrowing capacity under other revolving credit lines totaled $4.0 million at December 31, 2017 . The other revolving credit lines charge interest ranging from 0.47% to 8.50% and have maturity dates from March 2017 to December 2018. The Company had no outstanding balance on any of its revolving credit lines at December 31, 2017 and 2016 , respectively.
 
The Company and its subsidiaries are required to comply with various affirmative and negative covenants. The covenants include provisions that would limit the availability of funds as a result of a material adverse change to the Company’s financial position or results of operations. The Company was in compliance with its financial covenants under the loan agreement as of December 31, 2017 .

73




 
The Company incurs interest costs, which include interest, maintenance fees and bank charges. The amount of costs incurred, capitalized, and expensed for the years ended December 31, 2017 , 2016 and 2015 , consisted of the following:
 
 
Years Ended December 31,
 
2017
 
2016
 
2015
Interest costs incurred
$
1,249

 
$
1,167

 
$
1,133

Less: Interest capitalized
(72
)
 
(20
)
 
(136
)
Interest expense
$
1,177

 
$
1,147

 
$
997


Capital Lease Obligations

The Company entered into two four -year lease agreements for certain office equipment with Cisco Systems Capital Corporation for a total of approximately $4.4 million , which was recorded in fixed assets as capital lease obligations. These capital lease obligations are included in current liabilities and other long-term liabilities in the accompanying condensed consolidated balance sheets. The interest rates for these two capital leases are 2.89% and 3.50% , respectively, and the two leases will mature in May 2021 and July 2021, respectively.

As of December 31, 2017 , the current portion of the outstanding liability for the leased equipment was approximately $1.1 million and the long-term portion was approximately $2.6 million .
 

9.
Commitments and Contingencies
 
Leases
 
Certain properties occupied by the Company are leased. The leases expire at various dates through 2026 and generally require the Company to assume the obligations for insurance, property taxes and maintenance of the facilities.
 
Rental expense for 2017 , 2016 and 2015 with respect to all leased property was approximately $6.4 million , $5.9 million and $6.6 million , respectively.
 
At December 31, 2017 , minimum rental commitments under all non-cancelable leases were as follows:
 
(in thousands)  
2018
$
6,923

2019
5,787

2020
4,472

2021
3,376

2022
2,270

Thereafter
2,339

Total
$
25,167

 
Some of these minimum rental commitments contain renewal options and provide for periodic rental adjustments based on changes in the consumer price index or current market rental rates. Other rental commitments provide options to cancel early without penalty. Future minimum rental payments, under the earliest cancellation options, are included in minimum rental commitments in the table above.

Other Contractual Obligations
 
Purchase obligations consist of commitments primarily related to the acquisition, construction or expansion of facilities and equipment, consulting agreements, and minimum purchase quantities of certain raw materials. The Company is not a party to any long-term supply contracts with respect to the purchase of raw materials or finished goods. Debt interest obligations include annual facility fees on the Company’s primary line-of-credit facility. Interest on line-of-credit facilities was estimated based on historical borrowings and repayment patterns.

74




 
At December 31, 2017 , other contractual obligations were as follows:

(in thousands)  
As of December 31, 2017
Debt Interest Obligations
 
Capital Lease Obligations
Purchase Obligations
 
Total
2018
$
450

 
$
1,055

$
42,833

 
$
44,338

2019
450

 
1,089

679

 
2,218

2020
450

 
1,125

679

 
2,254

2021
250

 
480

679

 
1,409

2022

 

582

 
582

Thereafter

 


 

Total
$
1,600

 
$
3,749

$
45,452

 
$
50,801

 
Employee Relations
 
As of December 31, 2017, approximately 13% of the Company’s employees are represented by labor unions and are covered by collective bargaining agreements. We have two locations with collective bargaining agreements covering tool and die craftsmen, maintenance workers, and sheet-metal workers. The two union contracts in Stockton, California will expire in July and September 2019, respectively. Moreover, the two contracts in San Bernardino County will expire in June 2018 and February 2021, respectively. We have not begun negotiations to extend the sheetmetal workers union labor contract that will expire in June 2018. Based on current information and subject to future events and circumstances, we believe that, even if new agreements are not reached before the existing labor union contracts expire, it is not expected to have a material adverse effect on the Company's ability to provide products to customers or on the Company's profitability.

Environmental

The Company’s policy with regard to environmental liabilities is to accrue for future environmental assessments and remediation costs when information becomes available that indicates that it is probable that the Company is liable for any related claims and assessments and the amount of the liability is reasonably estimable. The Company does not believe that any such matters will have a material adverse effect on the Company’s financial condition, cash flows or results of operations.

Litigation and Potential Claims

From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. Corrosion, hydrogen enbrittlement, cracking, material hardness, wood pressure-treating chemicals, misinstallations, misuse, design and assembly flaws, manufacturing defects, labeling defects, product formula defects, inaccurate chemical mixes, adulteration, environmental conditions, or other factors can contribute to failure of fasteners, connectors, anchors, adhesives, specialty chemicals, such as fiber reinforced polymers, and tool products. In addition, inaccuracies may occur in product information, descriptions and instructions found in catalogs, packaging, data sheets, and the Company’s website.

The resolution of any claim or litigation is subject to inherent uncertainty and could have a material adverse effect on the Company’s financial condition, cash flows or results of operations.

Gentry Homes, Ltd. v. Simpson Strong-Tie Company Inc., et al. , Case No. 17-cv-00566, was filed in a federal district court in Hawaii against Simpson Strong-Tie Company Inc. and the Company on November 20, 2017. The Gentry case is a product of a previous state court class action, Nishimura v. Gentry Homes, Ltd., et al. , Civil No. 11-1-1522-07, which is now closed. The Nishimura case concerned alleged corrosion of the Company’s galvanized “hurricane straps” and mudsill anchor products used in a residential project in Ewa by Gentry, Honolulu, Hawaii. In the Nishimura case, the plaintiff homeowners and the developer, Gentry Homes, Ltd. (“Gentry”), arbitrated their dispute and agreed on a settlement in the amount of approximately $90 million . In the subsequent Gentry case, Gentry alleges breach of warranty and negligent misrepresentation by the Company related to its “hurricane strap” and mudsill anchor products, and demands general, special, and consequential damages from the Company in an amount to be proven at trial. Gentry also seeks pre-judgment and post-judgment interest, attorneys’ fees and costs, and other relief. The Company admits no liability and will vigorously defend the claims brought against it. At this time, the Company cannot reasonably ascertain the likelihood that it will be found responsible for substantial damages to Gentry. Based on the facts currently

75




known, and subject to future events and circumstances, the Company believes that all or part of the claims brought against it in the Gentry case may be covered by its insurance policies.

Charles Vitale, et al. v. D.R. Horton, Inc. and D.R. Horton-Schuler Homes, LLC , Civil No. 15-1-1347-07, a putative class action lawsuit, was filed in the Hawaii First Circuit on July 13, 2015, in which the plaintiff homeowners allege that all homes built by D.R Horton/D.R. Horton-Schuler Homes (collectively, “Horton Homes”) in the State of Hawaii have strap-tie holdowns that are suffering premature corrosion. The complaint alleges that various manufacturers make strap-tie holdowns that suffer from such corrosion, but does not identify the Company’s products specifically. The Company is not currently a party to the Vitale lawsuit, but the lawsuit in the future could potentially involve the Company’s strap-tie holdowns. If claims are asserted against the Company in the Vitale case, it will vigorously defend any such claims, whether brought by the plaintiff homeowners or by Horton Homes. Based on the facts currently known, and subject to future events and circumstances, the Company believes that all or part of any claims that any party might bring against it related to the Vitale case may be covered by its insurance policies.

Given the nature and the complexities involved in the Gentry and Vitale proceedings, the Company is unable to estimate reasonably the likelihood of possible loss or a range of possible loss until the Company knows, among other factors, (i) the specific claims brought against the Company and the legal theories on which they are based; (ii) what claims, if any, might be dismissed without trial; (iii) how the discovery process will affect the litigation; (iv) the settlement posture of the other parties to the litigation; (v) the damages to be proven at trial, particularly if the damages are not specified or are indeterminate; (vi) the extent to which the Company’s insurance policies will cover the claims or any part thereof, if at all; and (vii) any other factors that may have a material effect on the proceeding.


10.
Income Taxes
 
On December 22, 2017, the Tax Reform Act was signed, which includes a broad range of tax reform proposals affecting businesses, including corporate tax rates, business deductions, and international tax provisions. Many of these provisions significantly differ from current U.S. tax law, resulting in financial reporting implications. Some of the changes include, but are not limited to, a U.S. corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the option to claim accelerated depreciation deductions, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings as of December 31, 2017.

While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it includes two new U.S. tax base erosion provisions: the global intangible low-taxed income (“GILTI”) provisions and the base-erosion and anti-abuse tax (“BEAT”) provisions. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period cost are both acceptable methods subject to an accounting policy election. Effective the first quarter of 2018, the Company will elect to treat any potential GILTI inclusions as a period cost as we are not projecting any material impact from GILTI inclusions and any deferred taxes related to any inclusion would be immaterial.

The BEAT provisions in the Tax Reform Act eliminate the deduction of certain base-erosion payments made to related foreign corporations, and impose a minimum tax if greater than regular tax. The Company does not expect it will be subject to this tax and therefore has not included any tax impacts of BEAT in its consolidated financial statements for the year ended December 31, 2017. 

On December 22, 2017, Staff Accounting Bulletin No. 118 ("SAB 118") was issued by the SEC to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. In accordance with SAB 118, the Company has recorded provisional amounts for $2.8 million of deferred tax benefit recorded in connection with the re-measurement of deferred tax assets and liabilities and $3.8 million of current tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings. The Company considers these amounts to be reasonable estimates at December 31, 2017. Additional work is necessary to do a more detailed analysis of historical data as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in 2018 when the analysis is complete.

The provision for income taxes from operations consisted of the following: 


76




 
Years Ended December 31,
(in thousands)
2017
 
2016
 
2015
Current


 


 


Federal
$
36,077

 
$
39,649

 
$
29,684

State
6,357

 
7,053

 
5,001

Foreign
3,068

 
3,333

 
3,568

Deferred


 


 


Federal
6,093

 
260

 
2,390

State
544

 
13

 
753

Foreign
(338
)
 
(1,142
)
 
(605
)

$
51,801

 
$
49,166

 
$
40,791

 
Income and loss from operations before income taxes for the years ended December 31, 2017 , 2016 , and 2015 , respectively, consisted of the following:

 
Years Ended December 31,
  (in thousands)  
2017
 
2016
 
2015
Domestic
$
132,105

 
$
131,827

 
$
106,381

Foreign
12,313

 
7,073

 
2,298


$
144,418

 
$
138,900

 
$
108,679


As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Reform Act, the Company re-measured its ending net deferred tax liabilities at December 31, 2017 and recognized a provisional $2.8 million tax benefit for the year ended December 31, 2017.

At December 31, 2017, the Company had $32.1 million of pre-tax loss carryforwards in various foreign taxing jurisdictions, of which $1.1 million will begin to expire between 2019 and 2024. The remaining tax losses can be carried forward indefinitely.

At December 31, 2017, and 2016, the Company had deferred tax valuation allowances of $11.1 million and $6.9 million , respectively. The valuation allowance increased $4.2 million and decreased $0.7 million for the years ended December 31, 2017 and 2016, respectively. The increase in the valuation allowance in 2017 was primarily due to the Company’s remaining foreign tax credits carryforward in the U.S. The Company concluded it is more likely than not that these foreign tax credits will expire unrealized under the Tax Reform Act.

The Company has not historically recorded federal income taxes on the undistributed earnings of its foreign subsidiaries because such earnings are reinvested and, in the Company’s opinion, will continue to be reinvested indefinitely. The Tax Reform Act provided for a one-time transition tax on the mandatory deemed repatriation of foreign earnings through the year ended December 31, 2017. The Company has recorded a net $3.8 million tax liability based on undistributed foreign earnings of approximately $73.3 million , payable over eight years. The Company intends to limit any possible future distributions to earnings previously taxed in the U.S. As a result, the Company has not recognized a deferred tax liability on its investment in foreign subsidiaries. Determination of the related amount of unrecognized deferred U.S. income taxes is not practicable because of the complexities associated with this hypothetical calculation.

77





Reconciliations between the statutory federal income tax rates and the Company’s effective income tax rates as a percentage of income before income taxes for its operations were as follows:

 
Years Ended December 31,
  (in thousands)  
2017
 
2016
 
2015
Federal tax rate
35.0
 %
 
35.0
 %
 
35.0
 %
State taxes, net of federal benefit
3.2
 %
 
3.4
 %
 
3.3
 %
Tax benefit of domestic manufacturing deduction
(2.0
)%
 
(2.5
)%
 
(2.3
)%
Mandatory deemed repatriation of foreign earnings
2.7
 %
 
 %
 
 %
Change in U.S. tax rate applied to deferred taxes
(1.9
)%
 
 %
 
 %
Change in valuation allowance
1.3
 %
 
(0.1
)%
 
1.3
 %
Difference between United States statutory and foreign local tax rates
(0.8
)%
 
(0.3
)%
 
0.2
 %
Change in uncertain tax position
 %
 
(0.2
)%
 
0.3
 %
Other
(1.6
)%
 
0.1
 %
 
(0.3
)%
Effective income tax rate
35.9
 %
 
35.4
 %
 
37.5
 %

The tax effects of the significant temporary differences that constitute the deferred tax assets and liabilities at December 31, 2017 and 2016 , respectively, were as follows:
 

 
December 31,
  (in thousands)
2017
 
2016
Deferred asset taxes


 


State tax
$
1,390

 
$
2,518

Workers’ compensation
822

 
1,381

Health claims
487

 
755

Vacation liability
1,008

 
1,485

Allowance for doubtful accounts
104

 
123

Inventories
5,385

 
6,833

Sales incentive and advertising allowances
709

 
1,126

Acquisition costs

 
528

Unrealized foreign exchange gain or loss
291

 
678

Stock-based compensation
2,967

 
5,550

Foreign tax credit carryforwards
4,453

 
1,288

Uncertain tax positions’ unrecognized tax benefits
31

 
104

Foreign tax loss carry forward
6,892

 
6,841

Other
1,291

 
1,259

 
$
25,830

 
$
30,469

  Less valuation allowances
(11,114
)
 
(6,868
)
 
14,716

 
23,601

 
 
 
 
Deferred tax liabilities


 


Depreciation
$
(7,050
)
 
$
(6,138
)
Goodwill and other intangibles amortization
(11,331
)
 
(14,126
)
Tax effect on cumulative translation adjustment
(487
)
 
(667
)
Other

 
(744
)
 
(18,868
)
 
(21,675
)
 
 
 
 
Total Deferred tax
$
(4,152
)
 
$
1,926


78





A reconciliation of the beginning and ending amounts of unrecognized tax benefits in 2017 , 2016 and 2015 , respectively, was as follows, including foreign translation amounts:

Reconciliation of Unrecognized Tax Benefits
2017
 
2016
 
2015
Balance at January 1
$
1,119

 
$
1,107

 
$
1,307

Additions based on tax positions related to prior years
660

 
204

 
310

Reductions based on tax positions related to prior years
(1
)
 

 
(514
)
Additions for tax positions of the current year
319

 
155

 
191

Lapse of statute of limitations
(202
)
 
(347
)
 
(187
)
Balance at December 31
$
1,895

 
$
1,119

 
$
1,107

 
Tax positions of $0 , $0 , and $0.2 million are included in the balance of unrecognized tax benefits at December 31, 2017 , 2016 , and 2015 , respectively, which if recognized, would reduce the effective tax rate.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in income tax expense, which is a continuation of the Company’s historical accounting policy. During the year ended December 31, 2017 , accrued interest increased by $0.2 million and during the years ended 2016 and 2015 , accrued interest decreased by $61 thousand and $30 thousand , respectively. The Company had accrued $0.4 million for each of the fiscal year ended 2017 , and $0.2 million for the years ended 2016 and 2015 , for the potential payment of interest, before income tax benefits.
 
At December 31, 2017 , the Company remained subject to United States federal income tax examinations for the tax years 2014 through 2017 . In addition, the Company remained subject to state, local and foreign income tax examinations primarily for the tax years 2012 through 2017 .


11.
Retirement Plans
 
The Company has six defined contribution retirement plans covering substantially all salaried employees and nonunion hourly employees. On January 1, 2015, the Simpson Manufacturing Co., Inc. 401(k) Profit Sharing Plan for Salaried Employees was amended, restated and superseded by the Simpson Manufacturing Co., Inc. 401(k) Profit Sharing Plan (the “Restated Plan”), and the Simpson Manufacturing Co., Inc. 401(k) Profit Sharing Plan for Hourly Employees was merged with and incorporated into the Restated Plan. The Restated Plan, covering United States employees, provides for quarterly safe harbor contributions, limited to 3% of the employees quarterly eligible compensation and for annual discretionary contributions, subject to certain limitations, but in no event are total contributions more than the amounts permitted under the Internal Revenue Code as deductible expense. The discretionary amounts for 2016 and 2017 were equal to 7% of qualifying salaries or wages of the covered employees. The other four plans, covering the Company’s European and Canadian employees, require the Company to make contributions ranging from 3% to 15% of the employees’ compensation. The total cost for these retirement plans for the years ended December 31, 2017 , 2016 and 2015 , was $14.2 million , $10.1 million and $9.5 million , respectively.
 
We participate in various multiemployer benefit plans that cover some of our employees who are represented by labor unions . We make periodic contributions to these plans in accordance with the terms of applicable collective bargaining agreements and laws but do not sponsor or administer these plans . We do not participate in any multiemployer benefit plans for which we consider our contributions to be individually significant. If we were to otherwise withdraw from participation in any of these plans, applicable law would require us to fund our allocable share of the unfunded vested benefits, which is known as a withdrawal liability. As of December 31, 2017, we believe that there was no probable withdrawal liability under the multiemployer benefit pension plans under the terms of collective-bargaining agreements that cover its union-represented employees.

Our total contribution to various industry-wide, union-sponsored pension funds and a statutorily required pension fund for employees in the U.S. and Europe were $4.0 million , $3.1 million and $2.5 million for the years ended December 31, 2017 , 2016 and 2015 , respectively.


12.
Related Party Transactions
 
During 2017, the Company identified certain purchases of goods and services from companies where the Chief Executive Officer or a member of the Company’s own board of directors serve as directors on the respective company providing the goods or services. 

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The Company also identified purchases of services from a company affiliated with an immediate family member of another of the Company’s own board of directors.  The amount of goods and services purchased by the Company pursuant to these arrangements was not material to the Company’s consolidated statement of income and cash flows for the year ended December 31, 2017.


13.
Acquisitions and Dispositions

Under the business combinations topic of the FASB ASC 805, the Company accounts for acquisitions as business combinations and ascribes acquisition-date fair values to the acquired assets and assumed liabilities. Provisional fair value measurements are made at the time of the acquisitions. Adjustments to those measurements may be made in subsequent periods, up to one year from the acquisition date, as information necessary to complete the analysis is obtained. Fair value of intangible assets are generally based on Level 3 inputs.

CG Visions, Inc.

In January 2017, the Company acquired CG Visions, Inc. ("CG Visions"), an Indiana corporation for $20.8 million . CG Visions provides scalable technologies and services in building information modeling ("BIM") technologies, estimation tools and software solutions to a number of the top 100 mid-sized to large builders in the United States, which are expected to complement and support the Company's sales in North America. During the third quarter of 2017, the Company finalized its fair value measurement of assets acquired and liabilities assumed in this acquisition. CG Visions assets and liabilities included other current assets of $0.5 million , noncurrent assets of $20.4 million , current liabilities and contingent consideration of $1.1 million . Included in noncurrent assets was goodwill of $10.1 million , which was assigned to the North America segment, and intangible assets of $10.3 million , both of which are not subject to tax-deductible amortization. The estimated weighted-average amortization period for the intangible assets is 7 years.

Gbo Fastening Systems AB

In January 2017, the Company acquired Gbo Fastening Systems AB ("Gbo Fastening Systems"), a Sweden limited company, for $10.2 million . Gbo Fastening Systems manufactures and sells a complete line of CE-marked structural fasteners as well as fastener dimensioning software for wood construction applications, currently sold mostly in northern and eastern Europe, which are expected to complement the Company's line of wood construction products in Europe. The Gbo Fastening Systems acquisition result in a $6.3 million gain on bargain purchase of a business, which was included in the condensed consolidated statements of operation. Without speculating regarding the sellers' motivation, the Company does not know why Gbo Fastening Systems was sold below fair value, resulting in a nonrecurring bargain purchase gain for the Company.


80




The following table represents the final allocation of the purchase price to the estimated fair value of the assets acquired and liabilities assumed in the Gbo Fastening Systems acquisition:

(In thousands)
 
 
Assets *
Cash and cash equivalents
$
3,956

 
Accounts receivable
4,914

 
Inventory
13,591

 
Other current assets
760

 
Noncurrent assets
3,929

 
 
27,150

 
 
 
Liabilities
Accounts payable
4,500

 
Other current liabilities and long-term liabilities
6,146

 
 
10,646

 
 
 
Total net assets
 
16,504

 
Gain on bargain purchase of a business, net of tax
(6,336
)
 
Total purchase price
10,168

*
Intangible assets acquired were determined to have little to no value, thus were not recognized
 

Multi Services Dêcoupe S.A .

In August 2016, the Company purchased all of the outstanding shares of Multi Services Dêcoupe S.A. ("MS Decoupe"), a Belgium public limited company, for $6.9 million . MS Decoupe primarily manufactures and distributes wood construction, plastic, and metal labeling products in Belgium and the Netherlands, including distributing the Company's products manufactured at the Company's production facility in France. With this acquisition, the Company could potentially offer the Belgium market a wider-range of its products, shorten delivery lead times, and expand the Company's sales presence into the Netherlands market. During the third quarter of 2017, the Company finalized its fair value measurement of assets acquired and liabilities assumed in this acquisition. MS Decoupe assets and liabilities included cash and cash equivalents of $1.4 million , other current assets of $1.6 million , noncurrent assets of $5.0 million , current liabilities of $0.6 million and noncurrent deferred income tax liabilities of $1.0 million . Included in noncurrent assets was goodwill of $1.4 million , which was assigned to the Europe segment, and intangible assets of $1.7 million , both of which are not subject to tax-deductible amortization. The estimated weighted-average amortization period for the intangible assets is 10 years.

Blue Heron Enterprises, LLC and Fox Chase Enterprises, LLC.

In December 2015, the Company purchased all of the business assets including intellectual property from Blue Heron Enterprises, LLC, and Fox Chase Enterprises, LLC (collectively, "EBTY"), both New Jersey limited liability companies, for $3.4 million in cash. EBTY manufactured and sold hidden deck clips using a patented design. EBTY's patented design complements the Company's line of hidden clips and fastener systems. The Company's measurement of assets acquired included goodwill of $2.0 million , which was assigned to the North America segment, and intangible assets of $1.1 million , both of which are subject to tax-deductible amortization. Net assets consisting of inventory and equipment accounted for the balance of the purchase price. The weighted-average amortization period for the intangible assets is 7 years.

The results of operations of the businesses acquired in 2015 through 2017 have been in the Company’s consolidated results of operations since the date of the acquisition. They were not material to the Company on an individual or aggregate basis, and accordingly, pro forma results of such operations have not been presented.

Sales of Gbo Poland and Gbo Romania

As a result of incompatibility with Simpson's market strategy, the Company completed the sale of all of its equity in Gbo Fastening Systems' Poland and Gbo Romania subsidiaries on September 29, 2017 and October 31, 2017, respectively, for approximately $10.2 million , resulting in a loss of $0.2 million which was presented in the accompanying condensed statements of operations.

81






14.
Segment Information
 
The Company is organized into three reporting segments. The segments are defined by the regions where the Company’s products are manufactured, marketed and distributed to the Company’s customers. The three regional segments are the North America segment (comprising primarily the Company's operations in the United States and Canada), the Europe segment and the Asia/Pacific segment (comprising the Company’s operations in Asia, the South Pacific, South Africa and the Middle East). These segments are similar in several ways, including the types of materials used, the production processes, the distribution channels and the product applications.
 
The Administrative & All Other column primarily includes expenses such as self-insured workers compensation claims for employees of the Company’s venting business, which was sold in 2010, stock-based compensation for certain members of management, interest expense, foreign exchange gains or losses and income tax expense, as well as revenues and expenses related to real estate activities, such as rental income and depreciation expense on the Company’s property in Vacaville, California, which the Company has leased to a third party for a 10 -year term expiring in August 2020.
 
The following table shows certain measurements used by management to assess the performance of the segments described above as of December 31, 2017 , 2016 and 2015 , respectively:
 
(in thousands)  
North
America
 
 Europe
 
Asia/
Pacific
 
Administrative
& All Other
 
 Total
2017
 
 
 
 
Net sales
$
803,697

 
$
165,155

 
$
8,173

 
$

 
$
977,025

Sales to other segments *
3,237

 
959

 
20,715

 

 
24,911

Income from operations
132,890

 
4,421

 
1,179

 
677

 
139,167

Depreciation and amortization
25,745

 
5,832

 
1,246

 
901

 
33,724

Gain on bargain purchase of a business

 
6,336

 

 

 
6,336

Significant non-cash charges
9,861

 
1,509

 
65

 
2,473

 
13,908

Provision for income taxes
47,434

 
2,124

 
419

 
1,824

 
51,801

Capital expenditures and business acquisitions, net of
    cash acquired
70,040

 
11,411

 
4,511

 

 
85,962

Total assets
953,033

 
208,640

 
26,820

 
(150,970
)
 
1,037,523


(in thousands) 
North
America
 
 Europe
 
Asia/
Pacific
 
Administrative
& All Other
 
 Total
2016
 
 
 
 
Net sales
$
742,021

 
$
111,274

 
$
7,366

 
$

 
$
860,661

Sales to other segments *
2,512

 
570

 
28,690

 

 
31,772

Income (loss) from operations
137,311

 
895

 
2,140

 
(869
)
 
139,477

Depreciation and amortization
19,433

 
5,809

 
1,208

 
1,477

 
27,927

Significant non-cash charges
9,124

 
1,052

 
113

 
3,657

 
13,946

Provision for income taxes
45,547

 
1,428

 
721

 
1,470

 
49,166

Capital expenditures and business acquisitions, net of
cash acquired
37,652

 
8,461

 
1,250

 

 
47,363

Total assets
853,826

 
165,121

 
25,118

 
(64,091
)
 
979,974

 

82




(in thousands) 
North
America
 
 Europe
 
Asia/
Pacific
 
Administrative
& All Other
 
 Total
2015
 
 
 
 
Net sales
$
676,618

 
$
108,068

 
$
9,373

 
$

 
$
794,059

Sales to other segments *
2,857

 
931

 
20,496

 

 
24,284

Income (loss) from operations
109,446

 
3,795

 
(3,445
)
 
(775
)
 
109,021

Depreciation and amortization
17,812

 
5,773

 
1,785

 
1,451

 
26,821

Significant non-cash charges
8,221

 
1,251

 
131

 
2,355

 
11,958

Provision for (benefit from) income taxes
36,999

 
1,692

 
581

 
1,519

 
40,791

Capital expenditures and business acquisitions, net of
cash acquired
33,336

 
4,177

 
825

 
27

 
38,365

Total assets
748,241

 
168,305

 
24,366

 
20,397

 
961,309

 
 * Sales to other segments are eliminated on consolidation.

Cash collected by the Company’s United States subsidiaries is routinely transferred into the Company’s cash management accounts, and therefore has been included in the total assets of “Administrative & All Other.” Cash and short-term investment balances in “Administrative & All Other” were $80.2 million , $137.4 million and $164.1 million as of December 31, 2017 , 2016 and 2015 , respectively. As of December 31, 2017 , the Company had $86.5 million , or 51.3% , of its cash and cash equivalents held outside the United States in accounts belonging to the Company’s various foreign operating entities. The majority of this balance is held in foreign currencies and could be subject to additional taxation if it were repatriated to the United States.
 
The significant non-cash charges comprise compensation related to the awards under the Company's stock-based incentive plans and the Company's employee stock bonus plan. The Company’s measure of profit or loss for its reportable segments is income (loss) from operations. The reconciling amounts between consolidated income before tax and consolidated income from operations are net interest income (expense), loss in equity method investment, gain on bargain purchase of a business, and loss on disposal of a business. Interest income (expense) is primarily attributed to “Administrative & All Other.”

The following table shows the geographic distribution of the Company’s net sales and long-lived assets as of December 31, 2017 , 2016 and 2015 , respectively:
 
 
2017
 
2016
 
2015
  (in thousands)  
Net
Sales
 
Long-Lived
Assets
 
Net
Sales
 
Long-Lived
Assets
 
Net
Sales
 
Long-Lived
Assets
United States
$
758,181

 
$
223,184

 
$
702,071

 
$
192,787

 
$
639,443

 
$
171,367

Canada
43,176

 
4,650

 
38,269

 
4,473

 
36,122

 
4,275

United Kingdom
23,157

 
1,459

 
20,905

 
1,183

 
22,924

 
1,357

Germany
21,821

 
14,153

 
20,751

 
12,582

 
19,974

 
13,358

France
36,677

 
9,152

 
33,062

 
8,349

 
31,147

 
8,621

Poland
20,409

 
2,471

 
6,633

 
1,830

 
6,417

 
893

Sweden
16,421

 
1,068

 

 

 

 

Denmark
14,723

 
1,601

 
15,728

 
1,249

 
14,987

 
1,381

Norway
12,902

 
229

 

 

 

 

Switzerland
5,593

 
8,748

 
6,549

 
8,469

 
5,538

 
9,071

Australia
5,501

 
268

 
4,741

 
239

 
3,121

 
274

Belgium
5,050

 
2,065

 
1,286

 
1,798

 

 

The Netherlands
4,834

 
110

 
4,909

 
21

 
4,773

 
15

New Zealand
2,604

 
130

 
2,474

 
163

 
2,154

 
142

Chile
2,314

 
61

 
1,572

 
56

 
902

 
91

Other countries
3,662

 
12,710

 
1,711

 
7,471

 
6,557

 
8,241

 
$
977,025

 
$
282,059

 
$
860,661

 
$
240,670

 
$
794,059

 
$
219,086

 

83




Net sales and long-lived assets, net of intangible assets, are attributable to the country where the sales or manufacturing operations are located.
 
The Company's wood construction products include connectors, truss plates, fastening systems, fasteners and pre-fabricated shearwalls and are used for connecting and strengthening wood-based construction primarily in the residential construction market. Its concrete construction products include adhesives, specialty chemicals, mechanical anchors, carbide drill bits, powder actuated tools and reinforcing fiber materials and are used for restoration, protection or strengthening concrete, masonry and steel construction in residential, industrial, commercial and infrastructure construction. The following table show the distribution of the Company’s net sales by product for the years ended December 31, 2017 , 2016 and 2015 , respectively:

(in thousands)  
2017
 
2016
 
2015
Wood Construction
$
833,200

 
$
732,414

 
$
674,274

Concrete Construction
143,102

 
128,247

 
119,481

Other
723

 

 
304

Total
$
977,025

 
$
860,661

 
$
794,059


No customer accounted for as much as 10% of net sales for the years ended December 31, 2017 , 2016 and 2015 .
 

15.
Subsequent Events
 
Dividend Declaration

On January 29, 2018 , the Board declared a cash dividend of $0.21 per share of our common stock, estimated to be $9.8 million in total. The record date for the dividend will be April 5, 2018 , and it will be paid on April 26, 2018 .

Share Repurchase

In February 2018, the Company received 182,171 shares of its common stock pursuant to the $50.0 million accelerated share repurchase program that it entered into with Wells Fargo in December 2017, which constituted the final delivery thereunder.




84


16.
Selected Quarterly Financial Data (Unaudited)
 
The following table sets forth selected quarterly financial data for each of the quarters in 2017 and 2016 , respectively:
 
(in thousands, except per share amounts)  
 
2017
 
2016
 
Fourth
Quarter
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
Fourth
Quarter
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
 
 
 
 
 
 
 
Net sales
$
231,681

 
$
262,476

 
$
263,002

 
$
219,866

 
$
200,192

 
$
230,974

 
$
229,973

 
$
199,523

Cost of sales
128,983

 
142,591

 
139,477

 
119,710

 
105,226

 
117,499

 
118,486

 
107,000

Gross profit
102,698

 
119,885

 
123,525

 
100,156

 
94,966

 
113,475

 
111,487

 
92,523

Research and development and other engineering
12,565

 
8,679

 
13,264

 
13,108

 
12,441

 
10,932

 
11,452

 
11,423

Selling
28,753

 
28,156

 
28,511

 
29,483

 
24,030

 
24,304

 
24,822

 
25,187

General and administrative
36,688

 
36,501

 
36,563

 
34,986

 
32,376

 
32,543

 
34,945

 
29,298

Gain (loss) on sale of assets
(13
)
 
(147
)
 
50

 
(50
)
 
(17
)
 
(81
)
 
(656
)
 
(26
)
Income from operations
24,705

 
46,696

 
45,137

 
22,629

 
26,136

 
45,777

 
40,924

 
26,641

Loss in equity method investment, before tax
(33
)
 
(13
)
 
(12
)
 
(28
)
 

 

 

 

Interest (expense) income, net
(104
)
 
(296
)
 
(199
)
 
(189
)
 
(177
)
 
(82
)
 
(83
)
 
(235
)
Gain (adjustment) on bargain purchase of a business

 
(2,052
)
 

 
8,388

 

 

 

 

Gain (loss) on disposal of a business
(654
)
 
443

 

 

 

 

 

 

Provision for
  income taxes
10,829

 
16,581

 
16,712

 
7,679

 
8,565

 
15,898

 
14,640

 
10,063

Net income
$
13,085

 
$
28,197

 
$
28,214

 
$
23,121

 
$
17,394

 
$
29,797

 
$
26,201

 
$
16,343

Earnings per share of common stock:


 


 


 
0

 
 

 
 

 
 

 
 

Basic
$
0.28

 
$
0.60

 
$
0.59

 
$
0.49

 
$
0.37

 
$
0.62

 
$
0.54

 
$
0.34

Diluted
0.27

 
0.59

 
0.59

 
0.48

 
0.36

 
0.62

 
0.54

 
0.34

Cash dividends declared per
share of common stock
$

 
$
0.42

 
$
0.21

 
$
0.18

 
$
0.18

 
$
0.18

 
$
0.18

 
$
0.16

 
Basic earnings per share of common stock (“EPS”) for each of the quarters presented above is computed based on the weighted average number of shares of common stock outstanding during the quarter. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential shares of common stock outstanding during the quarter using the treasury stock method. Dilutive potential shares of common stock include outstanding stock options and stock awards. The sum of the quarterly basic and diluted EPS amounts may not necessarily be equal to the full-year basic and diluted EPS amounts.





SCHEDULE II
 
Simpson Manufacturing Co., Inc. and Subsidiaries
 
VALUATION AND QUALIFYING ACCOUNTS
for the years ended December 31, 2017 , 2016 and 2015
 
Column A
Column B
 
Column C
 
Column D
 
Column E
 
 
 
Additions
 
 
 
 
 
 
 
Charged
 
Charged
 
 
 
 
 
Balance at
 
to Costs
 
to Other
 
 
 
Balance
(in thousands)
Beginning
 
and
 
Accounts —
 
 
 
at End
Classification
of Year
 
Expenses
 
Write-offs
 
Deductions
 
of Year
Year to date December 31, 2017
 

 
 

 
 

 
 

 
 

Allowance for doubtful accounts
$
895

 
$
66

 


 
$
(35
)
 
$
996

Allowance for sales discounts
3,050

 
(94
)
 

 

 
2,956

Allowance for deferred tax assets
6,868

 
5,765

 


 
1,519

 
11,114

Year to date December 31, 2016
 

 
 

 
 

 
 

 
 

Allowance for doubtful accounts
1,142

 
(83
)
 

 
164

 
895

Allowance for sales discounts
2,706

 
344

 

 

 
3,050

Allowance for deferred tax assets
7,575

 
358

 

 
1,065

 
6,868

Year to date December 31, 2015
 

 
 

 
 

 
 

 
 

Allowance for doubtful accounts
929

 
440

 

 
227

 
1,142

Allowance for sales discounts
2,089

 
617

 

 

 
2,706

Allowance for deferred tax assets
6,754

 
1,577

 

 
756

 
7,575


86




Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.

None.

Item 9A.  Controls and Procedures.
 
Disclosure Controls and Procedures. As of December 31, 2017 , the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the chief executive officer (“CEO”) and the chief financial officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act. Disclosure controls and procedures are controls and other procedures designed reasonably to assure that information required to be disclosed in the Company’s reports filed or submitted under the Exchange Act, such as this Annual Report on Form 10-K, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures are also designed reasonably to assure that this information is accumulated and communicated to the Company’s management, including the CEO and the CFO, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, as of December 31, 2017 , the Company's CEO and CFO have concluded that the Company's disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 , using the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and concluded that the Company's internal control over financial reporting was effective as of December 31, 2017 .

The Company’s management does not include Gbo Fastening Systems and CG Visions, wholly owned subsidiaries, in its assessment of internal control over financial reporting as of December 31, 2017, because they were acquired by the Company in purchase business combinations during 2017. The total assets of these acquisitions are 2.5% and 1.9%, respectively, and total revenues are 4.3% and 0.6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017

Grant Thornton LLP, an independent registered public accounting firm that audited the Company’s Consolidated Financial Statements, has also audited the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017 , as stated in their report included in the Company's Consolidated Financial Statements.

Changes in Internal Control over Financial Reporting . There were no changes in our internal control over financial reporting identified in management's evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the three months ended December 31, 2017 , that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Disclosure Controls and Procedures and Internal Control over Financial Reporting. The Company’s management, including the CEO and the CFO, does not, however, expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will necessarily prevent all fraud and material errors. Internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the facts that there are resource constraints and that the benefits of controls must be considered relative to their costs. The inherent limitations in internal control over financial reporting include the realities that judgments can be faulty and that breakdowns can occur because of simple error or mistake. Controls also can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of controls. The design of any system of internal control is also based in part on assumptions about the likelihood of future events, and there can be only reasonable, not absolute, assurance that any design will succeed in achieving its stated goals under all potential events and conditions. Over time, controls may become inadequate because of changes in circumstances, or the degree of compliance with the policies and procedures may deteriorate.

Item 9B. Other Information.
 
None.



87




PART III
 
Item 10. Directors, Executive Officers and Corporate Governance.
 
The information required by this Item will be contained in the Company’s proxy statement for the 2018 Annual Meeting to be held on Monday, April 24, 2018, to be filed with the SEC not later than 120 days following the end of the Company’s fiscal year ended December 31, 2017 , which information is incorporated herein by reference.
 
Item 11. Executive Compensation.
 
The information required by this Item will be contained in the Company’s proxy statement for the 2018 Annual Meeting to be held on Monday, April 24, 2018, to be filed with the SEC not later than 120 days following the end of the Company’s fiscal year ended December 31, 2017 , which information is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
 
The information required by this Item will be contained in the Company’s proxy statement for the 2018 Annual Meeting to be held on Monday, April 24, 2018, to be filed with the SEC not later than 120 days following the end of the Company’s fiscal year ended December 31, 2017 , which information is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence.
 
The information required by this Item will be contained in the Company’s proxy statement for the 2018 Annual Meeting to be held on Monday, April 24, 2018, to be filed with the SEC not later than 120 days following the end of the Company’s fiscal year ended December 31, 2017 , which information is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services.
 
The information required by this Item will be contained in the Company’s proxy statement for the 2018 Annual Meeting to be held on Monday, April 24, 2018, to be filed with the SEC not later than 120 days following the end of the Company’s fiscal year ended December 31, 2017 , which information is incorporated herein by reference.


PART IV
 
Item 15. Exhibits and Financial Statement Schedules.

(a)   The following documents are filed as part of this Annual Report on Form 10-K:

1.     Consolidated financial statements

The following consolidated financial statements are filed as a part of this report:

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets as of December 31, 2017 and 2016

Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015

Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2017, 2016 and 2015

Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015

Notes to Consolidated Financial Statements

2.     Financial Statement Schedules

88





The following consolidated financial statement schedule for each of the years in the three-year period ended December 31, 2017, is filed as part of this Annual Report on Form 10-K:

Schedule II - Valuation and Qualifying Accounts-Years ended December 31, 2017, 2016 and 2015

All other schedules have been omitted as the required information is not present or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and related notes thereto.

(b)   Exhibits

The following exhibits are either incorporated by reference into, or filed or furnished with, this Annual Report on Form 10-K, as indicated below.

3.1 Certificate of Incorporation of Simpson Manufacturing Co., Inc. is incorporated by reference to Exhibit 3.1 of its Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.

3.2

3.3

4.1

10.1
    
10.2

10.3

10.4

10.5

10.6


89




10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15 Form of Simpson Manufacturing Co., Inc. 2018 Director Time Based Restricted Stock Unit Agreement is filed herewith.

21.

23

31.1

31.2

32.

99.1

99.2

99.3

99.4

101
Financial statements from the annual report on Form 10-K of Simpson Manufacturing Co., Inc. for the year ended December 31, 2017, formatted in XBRL, are filed herewith and include: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Statement of Comprehensive Income, (iv) the Consolidated Statements of Stockholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to Consolidated Financial Statements.

90






91




Item 16. Form 10-K Summary.

None.

92




SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated:
February 28, 2018
 
Simpson Manufacturing Co., Inc.
 
 
 
(Registrant)
 
 
By
/s/Brian J. Magstadt
 
 
 
Brian J. Magstadt
 
 
 
Chief Financial Officer
 
 
 
and Duly Authorized Officer
 
 
 
of the Registrant
 
 
 
(principal accounting and financial officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated below.
Signature
 
Title
 
Date
 
 
 
 
 
Chief Executive Officer:
 
 
 
 
 
 
 
 
 
/s/Karen Colonias
 
President, Chief Executive
 
February 28, 2018
(Karen Colonias)
 
Officer and Director
 
 
 
 
(principal executive officer)
 
 
 
 
 
 
 
Chief Financial Officer:
 
 
 
 
 
 
 
 
 
/s/Brian J. Magstadt
 
Chief Financial Officer,
 
February 28, 2018
(Brian J. Magstadt)
 
Treasurer and Secretary
 
 
 
 
(principal accounting and financial officer)
 
 
 
 
 
 
 
Directors:
 
 
 
 
 
 
 
 
 
/s/Peter N. Louras, Jr.
 
Chairman of the Board and Director
 
February 28, 2018
(Peter N. Louras, Jr.)
 
 
 
 
 
 
 
 
 
/s/James S. Andrasick
 
Director
 
February 28, 2018
(James S. Andrasick)
 
 
 
 
 
 
 
 
 
/s/Michael A. Bless
 
Director
 
February 28, 2018
(Michael A. Bless)
 
 
 
 
 
 
 
 
 
/s/Jennifer A. Chatman
 
Director
 
February 28, 2018
(Jennifer A. Chatman)
 
 
 
 
 
 
 
 
 
/s/Gary M. Cusumano
 
Director
 
February 28, 2018
(Gary M. Cusumano)
 
 
 
 
 
 
 
 
 
/s/Celeste Volz Ford
 
Director
 
February 28, 2018
(Celeste Volz Ford)
 
 
 
 
 
 
 
 
 
/s/Robin G. MacGillivray
 
Director
 
February 28, 2018
(Robin G. MacGillivray)
 
 
 
 
 
 
 
 
 

93


Exhibit 21

Simpson Manufacturing Co., Inc. and Subsidiaries
List of Subsidiaries of Simpson Manufacturing Co., Inc.
At February 28, 2018

1.
Simpson Strong-Tie Company Inc., a California corporation
2.
Simpson Strong-Tie International, Inc., a California corporation
3.
Simpson Strong-Tie Canada, Limited, a Canadian corporation
4.
Simpson Strong-Tie Europe EURL, a French corporation
5.
Simpson Strong-Tie, S.A.S., a French corporation
6.
Simpson Strong-Tie Australia, Inc., a California corporation
7.
Simpson Strong-Tie A/S, a Danish corporation
8.
Simpson Strong-Tie GmbH, a German corporation
9.
Simpson Strong-Tie Sp. z.o.o., a Polish corporation
10.
Simpson France SCI, a French corporation
11.
Simpson Strong-Tie Australia Pty Limited, an Australian corporation
12.
Simpson Strong-Tie Asia Limited, a Hong Kong company
13.
Simpson Strong-Tie Asia Holding Limited, a Hong Kong company
14.
Simpson Strong-Tie (Zhangjiagang) Co., Ltd., a Chinese company
15.
Simpson Strong-Tie s.r.o., a Czech company
16.
Socom S.A.S., a French corporation
17.
Simpson Strong-Tie (New Zealand) Limited, a New Zealand company
18.
Simpson Strong-Tie Switzerland GmbH, a Switzerland company
19.
S&P Clever Reinforcement Company AG, a Switzerland company
20.
S&P Handels GmbH, an Austrian company
21.
S&P Clever Reinforcement GmbH, a Germany company
22.
S&P Clever Reinforcement Company Benelux B.V., a Dutch company
23.
S&P Polska Sp. z.o.o., a Polish corporation
24.
Clever Reinforcement Iberica - Materiais de Construção, Lda., a Portugal company
25.
S&P Reinforcement France, a French company
26.
Simpson Strong-Tie (Thailand) Co., Ltd, a Thai company
27.
Simpson Strong-Tie Vietnam Company Limited, a Vietnam company
28.
Simpson Strong-Tie South Africa (PTY) Ltd, a South Africa company
29.
Simpson Strong-Tie Chile Limitada, a Chile company
30.
S&P Reinforcement Nordic ApS, a Danish company
31.
Simpson Strong-Tie Structural Connectors Ireland Ltd, an Ireland company
32.
Multi Services Dêcoupe S.A., a Belgium company
33.
CG Visions, Inc., an Indiana corporation
34.
Gbo Fastening Systems AB, a Swedish corporation
35.
Christiania Spigerverk AS, a Norwegian company
36.
S&P Reinforcement Spain, S.L., a Spanish company

93


Exhibit 23

Consent of Independent Registered Public Accounting Firm



We have issued our reports dated February 28, 2018 , with respect to the consolidated financial statements, financial statement schedule, and internal control over financial reporting included in the Annual Report of Simpson Manufacturing Co., Inc. on Form 10-K for the year ended December 31, 2017 .  We consent to the incorporation by reference of said reports in the Registration Statements of Simpson Manufacturing Co., Inc. on Forms S-8 (File Nos. 033-90964, 333-37325, 333-40858, 333-97313, 333-97315, 333-173811, and 033-85662).
 

/s/ Grant Thornton LLP
San Francisco, California
February 28, 2018


94


Exhibit 31.1

Simpson Manufacturing Co., Inc. and Subsidiaries
Rule 13a-14(a)/15d-14(a) Certifications


I, Karen Colonias, certify that:

1.
I have reviewed this annual report on Form 10-K of Simpson Manufacturing Co., Inc.;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


DATE:
February 28, 2018
 
 
By /s/Karen Colonias
 
 
Karen Colonias
 
 
Chief Executive Officer

95


Exhibit 31.2

Simpson Manufacturing Co., Inc. and Subsidiaries
Rule 13a-14(a)/15d-14(a) Certifications


I, Brian J. Magstadt, certify that:

1.
I have reviewed this annual report on Form 10-K of Simpson Manufacturing Co., Inc.;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


DATE:
February 28, 2018
 
 
By /s/Brian J. Magstadt
 
 
Brian J. Magstadt
 
 
Chief Financial Officer

96


Exhibit 32

Simpson Manufacturing Co., Inc. and Subsidiaries
Section 1350 Certifications


The undersigned, Karen Colonias and Brian J. Magstadt, being the duly elected and acting Chief Executive Officer and Chief Financial Officer, respectively, of Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), hereby certify that the annual report of the Company on Form 10-K for the year ended December 31, 2017 , fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended, and that information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company.



DATE:
February 28, 2018
 
 
By /s/Karen Colonias
 
 
Karen Colonias
 
 
Chief Executive Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
By /s/Brian J. Magstadt
 
 
 
 
Brian J. Magstadt
 
 
 
 
Chief Financial Officer
 
 
 
 
 


A signed original of this written statement required by Section 1350 of Chapter 63 of Title 18 of the United States Code has been provided to Simpson Manufacturing Co., Inc. and will be retained by Simpson Manufacturing Co., Inc. and furnished to the Securities and Exchange Commission or its staff on request.

The foregoing certification is being furnished to the Securities and Exchange Commission pursuant to § 18 U.S.C. Section 1350. It is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.




97
Exhibit 10.4 EXHIBIT A SIMPSON MANUFACTURING CO, INC. 1994 EMPLOYEE STOCK BONUS PLAN As Amended through December 7, 2015 1.The purpose of this Plan is to express appreciation to employees of Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), and its direct and indirect subsidiaries, who have continued in this employment for more than ten years, for their contributions to the growth and success of the Company and its business. 2.Each employee of the Company or any direct or indirect subsidiary of the Company, who is not a participant in the Simpson Manufacturing Co., Inc. 2011 Incentive Plan, adopted April 26, 2011, and amended and restated April 21, 2015, and its predecessor plans, who is not a director or an officer of the Company or any direct or indirect subsidiary of the Company and who shall have been employed on a full-time basis for a period of not less than ten years by the Company or any direct or indirect subsidiary of the Company, shall be eligible to participate in this Plan (an “Eligible Employee”). 3.Under this Plan, each Eligible Employee designated by the Board of Directors of the Company (the “Board”), in its exclusive discretion, shall be awarded a bonus in the form of shares of common stock of the Company (“Common Stock”) and an amount of cash approximately equal to the amount of federal and state social security and income tax and other amounts required to be withheld by such Eligible Employee’s employer with respect to such bonus. 4.As Eligible Employees designated by this Board, in its exclusive discretion, reach their tenth, twentieth, thirtieth, fortieth and fiftieth anniversaries of service as employees of the Company or any such subsidiary, the Board, in its exclusive discretion, shall determine the nature and amount of the bonuses, if any, that will be awarded to such Eligible Employees and the time or times of such awards under this Plan. 5.The aggregate number of shares of Common Stock reserved for issuance as bonuses under this Plan shall be 400,000 shares, including shares already awarded. 6.All bonuses awarded under this Plan shall be subject to withholding of Social Security and income and other taxes and levies in accordance with applicable law. 7.Each Eligible Employee who receives a bonus under this Plan shall, as a condition precedent to receiving such bonus, execute and deliver such agreement regarding sales of shares included in such bonus as the President, the Chief Financial Officer or the Secretary of the Company may require. 8.The Company shall not in any event have any obligation to award any bonus, to issue any shares of Common Stock or to pay any amount to any person under this Plan unless and until the Board shall have determined to do so in the specific case, and then only in accordance with such determination. The Board shall have the absolute right, in its exclusive discretion, to amend or modify this Plan at any time or times and to terminate this Plan at any time.


 
Exhibit 10.10 2017 PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT Company: Simpson Manufacturing Co., Inc. Recipient: The recipient’s name (the “Recipient”) is set forth on the Recipient’s online award acceptance page on Morgan Stanley Smith Barney’s StockPlan Connect website (the “Acceptance Page”) at https://www.stockplanconnect.com, which is incorporated by reference to this Agreement. The Number of Shares of Common Stock Subject to PSUs Granted Hereunder (the “PSU Shares”):1 The aggregate number of shares of Common Stock as stated on the Acceptance Page. The Effective Date of the Award (the “Award Date”): A date in 2017 as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Measurement Period (the “Measurement Period”): A three-year period beginning on January 1, 2017, and ending on December 31, 2019. The Date the PSU Shares Vest (the “Vesting Date”): A date subsequent to the Measurement Period as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Vesting Period (the “Vesting Period”): A period beginning on the Award Date, and ending on the Vesting Date; provided, however, that if the Vesting Date falls on a weekend or federal holiday, such period shall end on the immediately following business day.2 Specific Performance Goals (the “Specific Performance Goals”): The Performance Goals are set forth on Exhibit A. This PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made as of the Award Date stated on the Acceptance Page by and between Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), and the Recipient named on the Acceptance Page, with reference to the following facts: Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in the amended and restated Simpson Manufacturing Co., Inc. 2011 Incentive Plan effective on April 21, 2015 (as amended from time to time, the “Plan”). The Board has delegated to the Committee all authority to administer the Plan. 1 121.8% of the total targeted 2017 PSUs. 2 For example, if the Award Date is determined by the Committee to be March 1, 2017 and the Vesting Date is determined by the Committee to be February 15, 2020, then the PSU Shares, if any (based on the Specific Performance Goals), will vest on February 18, 2020 and the Vesting Period should be from March 1, 2017 to February 18, 2020 (because February 15, 2020 falls on a Saturday and February 17, 2020 is a federal holiday, President’s day, the immediately following business day is February 18, 2020).


 
The Committee has determined to grant to the Recipient, under the Plan, performance-based Restricted Stock Units (the “PSUs”) with respect to the PSU Shares stated on the Acceptance Page. To evidence the PSUs and to set forth the terms and conditions thereof, the Company and the Recipient agree as follows: 1. Confirmation of Grant. (a) The Company grants the PSUs to the Recipient and the Recipient agrees to accept the PSUs and participate in the Plan, effective as of the Award Date. As a condition of the grant, this Agreement and the PSUs shall be governed by the terms and conditions of the Plan and shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery policy. (b) The PSUs shall be reflected in a bookkeeping account maintained by the Company through the date on which the PSUs become vested pursuant to section 2 or are forfeited pursuant to section 3. The Recipient acknowledges and agrees that (i) the PSU Shares merely represent the maximum number of shares of Common Stock that are granted under the PSUs and are not necessarily the number of shares of Common Stock that will eventually vest in favor of the Recipient, and (ii) pursuant to section 2 and otherwise in accordance with this Agreement and the Plan, the number of shares of Common Stock, which will eventually vest in favor of the Recipient under the PSUs (the “Vested Shares”), will be subject to the Specific Performance Goals and will be between 0% and 120% of the Initially Adjusted Targeted Shares as defined on Exhibit A. (c) The Company’s obligations under this Agreement shall be unfunded and unsecured. No special or separate fund shall be established therefor and no other segregation of assets shall be required or made with respect thereto. The rights of the Recipient under this Agreement shall be no greater than those of a general unsecured creditor of the Company. (d) Except as otherwise provided in this Agreement and the Plan, the PSUs shall be settled by the issuance and delivery of the Vested Shares, or as provided in this Section 1(d), by cash or a combination thereof (as determined by the Committee in its sole discretion), within sixty days after the last day of the Vesting Period (a time or fixed schedule specified for the purpose of Code section 409A) subject to satisfaction of any other terms and conditions applicable to the PSUs; provided, however, that the number of the Vested Shares issued or delivered (or for which a cash payment is made) to the Recipient in any calendar year, together with the number of shares of Common Stock issued or delivered (or for which a cash payment is made) to the Recipient in the same calendar year under any other RSU Awards, shall not exceed the annual maximum aggregate number of shares of Common Stock issuable or deliverable under RSU Awards as set forth in the Plan that is effective at the time of the issuance or delivery of (or making a cash payment for) the PSUs. In settling the PSUs pursuant to the foregoing, the Company (or its acquirer or successor) shall have the option (as determined by the Committee in its sole discretion) to make or provide for a cash payment to the Recipient, in exchange for the cancellation of the vested PSUs (or any portion thereof), in an amount equal to the product of (A) the number of the Vested Shares under the cancelled PSUs and (B) the average closing price of a share of Common Stock over the period ending on the date the PSUs become vested and starting 100 days prior to that date. 2. Vesting. Subject to the terms and conditions of this Agreement and the Plan and unless otherwise forfeited pursuant to section 3, the PSUs shall vest, and the Restricted Period with respect to the PSUs shall terminate, immediately following the last day of the Vesting Period; provided, however, that the PSUs shall vest during the Vesting Period on the date, (a) immediately preceding the effective date of the Recipient’s Retirement as determined by the Committee in relation to the PSUs: either (A) after reaching age 70 or (B) after reaching age 55 and having been employed or engaged by the Company or any Subsidiary for 15 years (provided that, if the Recipient retires after reaching age 56, for each year after age 55, the Recipient may work one year less for the Company or any Subsidiary, as applicable, and still be qualified for Retirement under this sub-section (B)3), (b) 3 For example, if the Recipient retires at age 60 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 10 years to be qualified for Retirement; and for example, if the Recipient retires at age 65 during


 
immediately preceding the Recipient’s death or the effective date of the Recipient’s Disability, and (c) the effective date of the termination of the Recipient’s employment or engagement with the Company or any Subsidiary by the Company or Subsidiary (which, whenever used in this Agreement, includes any such entity’s successor) without Cause,4 or by the Recipient for a Good Reason,5 in either case only in connection with or within 24 months following a Sale Event.6 On the day that the PSUs become vested pursuant to the foregoing, the PSU Shares stated on the Acceptance Page shall be adjusted pursuant to the Specific Performance Goals as set forth on Exhibit A attached hereto, and after the adjustment, become the total number of the Vested Shares that will be used to settle the PSUs under section 1(d); provided, however, that, if the PSUs have vested during the Vesting Period, the PSUs shall continue to be subject to the terms and conditions of this Agreement, including adjustment pursuant to the Specific Performance Goals during the Vesting Period, and in addition, the number of Vested Shares that will be used to settle the PSUs under section 1(d) will be prorated so that the Recipient will only receive a portion of the Vested Shares that is equal to the product of (x) the number of the Vested Shares and (y) a percentage that is equal to the number of days between and including the first day of the Vesting Period and the day when the PSUs become vested as divided by the number of days of the whole Vesting Period. The Recipient explicitly acknowledges and agrees that (i) the Committee has the absolute discretion to determine the number of the Vested Shares, (ii) the Committee may engage professional advisors and consultants and rely on their opinions and advice to make such determination, (iii) such determination shall be binding on the Recipient, and (iv) the granting or vesting of the PSUs as well as the Recipient’s holding of the Vested Shares shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery, stock ownership, and hedging, pledging and trading policies. the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 5 years to be qualified for Retirement. 4 “Cause” means, in addition to any cause for termination as provided in any other applicable written agreement between the Company, the applicable Subsidiary, or the acquirer or successor of the Company or Subsidiary, and the Recipient, (i) conviction of any felony, (ii) any material breach or violation by the Recipient of any agreement to which the Recipient and the Company or the Subsidiary that employs or engages the Recipient are parties or of any published policy or guideline of the Company, (iii) any act (other than retirement or other termination of employment or engagement) or omission to act by the Recipient which may have a material and adverse effect on the business of the Company or Subsidiary or on the Recipient’s ability to perform services for the Company or Subsidiary, including habitual insobriety or substance abuse or the commission of any crime, gross negligence, fraud or dishonesty with regard to the Company or Subsidiary, or (iv) any material misconduct or neglect of duties and responsibilities by the Recipient in connection with the business or affairs of the Company or Subsidiary; provided, however, that the Recipient first shall have received written notice, which shall specifically identify what the Company or Subsidiary believes constitutes Cause, and if the breach, act, omission, misconduct or neglect is capable of being cured, the Recipient shall have failed to cure after 15 days following such notice. 5 A “Good Reason” means the occurrence of any of the following events: (i) a material adverse change in the functions, duties or responsibilities of the Recipient’s position (other than a termination by the Company or Subsidiary) which would meaningfully reduce the level, importance or scope of such position (provided that, a change in the person, position and/or department to whom the Recipient is required to report shall not by itself constitute a material adverse change in the Recipient’s position), (ii) the relocation of the Company or Subsidiary office at which the Recipient is principally located immediately prior to a Sale Event (the “Original Office”) to a new location outside of the metropolitan area of the Original Office or the failure to place the Recipient’s own office in the Original Office (or at the office to which such office is relocated which is within the metropolitan area of the Original Office), or (iii) a material reduction in the Recipient’s base salary and incentive compensation opportunity as in effect immediately prior to a Sale Event; provided, however, that, within 90 days of the incident that provides the basis for a Good Reason termination, the Recipient shall have provided the Company or Subsidiary a written notice specifically identifying what the Recipient believes constitutes a Good Reason, and the Company or Subsidiary shall have failed to cure the adverse change, relocation or compensation reduction after 30 days following such notice. 6 A “Sale Event” shall mean (i) the sale or other disposition of all or substantially all of the assets of the Company or the Subsidiary that employs or engages the Recipient, including a majority or more of all outstanding stock of the Subsidiary, on a consolidated basis to one or more unrelated persons or entities, (ii) a Change in Control, or (iii) the sale or other transfer of outstanding Common Stock to one or more unrelated persons or entities (including by way of a merger, reorganization or consolidation in which the outstanding Common Stock are converted into or exchanged for securities of the successor entity) where the stockholders of the Company, immediately prior to such sale or other transfer, would not, immediately after such sale or transfer, beneficially own shares representing in the aggregate more than 50 percent of the voting shares of the acquirer or surviving entity (or its ultimate parent corporation, if any). For the purpose of sub-section (iii) of this definition, only voting shares of the acquirer or surviving entity (or its ultimate parent, if any) received by stockholders of the Company in exchange for Common Stock shall be counted, and any voting shares of the acquirer or surviving entity (or its ultimate parent, if any) already owned by stockholders of the Company prior to the transaction shall be disregarded.


 
3. Forfeiture. Anything herein to the contrary notwithstanding, (a) all PSUs that are not vested in accordance with section 2 shall terminate immediately and be forfeited in their entirety if and at such time as (i) the Recipient ceases to be an Employee, Outside Director or Consultant, as the case may be, or (ii) 24 months have passed immediately following a Sale Event (provided that, in the event the surviving or acquiring entity or the new entity resulting from a Sale Event substitutes a similar equity award for the PSUs, such award will continue in accordance with its own terms and conditions), and (b) all PSUs, to the extent not theretofore settled in accordance with section 1(d), shall terminate immediately and be forfeited in their entirety when and as provided in section 13(I) of the Plan. 4. Tax Withholding. Pursuant to section 10 of the Plan, the Company may require the Recipient to enter into an arrangement providing for the payment in cash, Common Stock or otherwise by the Recipient to the Company of any tax withholding obligation of the Company arising by reason of (a) the granting or vesting of the PSUs, (b) the lapse of any substantial risk of forfeiture to which the PSUs or the Vested Shares are subject, or (c) the disposition of the PSUs or the Vested Shares, to the extent such arrangement does not cause a loss of the Section 16(b) exemption pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. 5. Representations and Warranties of the Company. The Company represents and warrants to the Recipient that the Vested Shares, when issued and delivered on the vesting of the PSUs in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. 6. Recipient Representations. The Recipient represents and warrants to the Company that the Recipient has received and read this Agreement and the Plan, that the Recipient has consulted with the Recipient’s own legal, financial and other advisers regarding this Agreement and the Plan to the extent that the Recipient considered necessary or appropriate, that the Recipient fully understands and accepts all of the terms and conditions of this Agreement and the Plan, and that the Recipient is relying solely on the Recipient’s own advisers with respect to the tax consequences of this Agreement and the PSUs. 7. Change in Control. Notwithstanding section 9 of the Plan, a Change in Control shall be treated as a Sale Event with respect to the PSUs granted hereunder. 8. Adjustments to Reflect Capital Changes. Subject to and except as otherwise provided in section 9 of the Plan, the number and kind of shares subject to the PSUs shall be appropriately adjusted, as the Committee may determine pursuant to section 11 of the Plan, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends. 9. No Rights as Stockholder. Neither the granting or vesting of the PSUs nor the issuance or delivery of the Vested Shares shall entitle the Recipient, as such, or any of the Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until the Vested Shares are registered on the Company’s records in the name or names of the Recipient or the Recipient’s Beneficiaries or Personal Representative, as the case may be, and then only with respect to such Vested Shares so registered. 10. No Right to Continued Employment. Nothing in this Agreement shall confer on the Recipient any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate the Recipient’s employment or service at any time. If the Award of the PSUs is in connection with the Recipient’s performance of services as a Consultant or Outside Director, references to employment, employee and similar terms shall be deemed to include the performance of services as a Consultant or an Outside Director, as the case may be; provided that no rights as an Employee shall arise by reason of the use of such terms. 11. Regulatory Compliance. Notwithstanding anything herein to the contrary, the issuance and delivery of the Vested Shares shall in all events be subject to and governed by section 13(C) of the Plan. 12. Notices. Any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally,


 
when transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office in California, and, if to the Recipient, at the Recipient’s address on the Company’s records. Either party may change such party’s address or facsimile number from time to time by notice hereunder to the other. 13. Entire Agreement. This Agreement and the Plan together contain the entire agreement of the parties and supersede all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between the parties, regarding the PSUs. The Recipient specifically acknowledges and agrees that all descriptions of the PSUs in any prior letters, memoranda or other documents provided to him or her by the Company or any Subsidiary are hereby replaced and superseded in their entirety by this Agreement and shall be of no further force or effect. To the extent there is any inconsistency between the descriptions of any such documents and the terms of this Agreement, the terms of this Agreement shall prevail. 14. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by the Recipient and the Company. 15. Assignment. The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of this Agreement, any of the PSUs or any other rights hereunder, and shall not delegate any duties hereunder, except only as may be permitted pursuant to section 13(B) of the Plan; and any such action or transaction that may otherwise be attempted or purported by the Recipient shall be void and of no effect. 16. Successors. Subject to section 15, this Agreement shall bind and inure to the benefit of the Company and the Recipient and their respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any other Person any right or benefit in or under this Agreement or the Plan. 17. Separate Payments. All amounts payable in connection with the PSUs hereunder or any other Awards granted under the Plan shall be treated as separate payments for the purposes of Code section 409A. 18. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 20. Order of Precedence and Construction. This Agreement and the PSUs are subject to all provisions of the Plan (a copy of which is attached hereto as Exhibit B), including the Restricted Stock Unit provisions of section 6 thereof, and are further subject to all interpretations and amendments thereto that may from time to time be adopted pursuant to the Plan. In the event of any inconsistency between any provision of this Agreement and any provision of the Plan, the provision of the Plan shall govern. The headings of sections herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction or interpretation of any provision hereof. Whenever the context requires, the use in this Agreement of the singular number shall be deemed to include the plural and vice versa, and each gender shall be deemed to include each other gender. References herein to sections refer to sections of this Agreement, except as otherwise stated. The meaning of general words is not limited by specific examples introduced by “includes”, “including”, “for example”, “such as” or similar expressions, which shall be deemed to be followed by the phrase “without limitation”. 21. Further Assurances. The Recipient agrees to do and perform all acts and execute and deliver all additional documents, instruments and agreements as the Company or the Committee may reasonably request in connection with this Agreement. 22. Data Privacy. Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Recipient’s personal data as described in this Agreement by and among, as applicable, Recipient’s employer, the Company, and any Subsidiary for the exclusive purposes of implementing,


 
administering, and managing Recipient’s participation in the Plan. Recipient understands that the Company and the employing Subsidiary may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, and any shares of stock or directorships held in the Company or any Subsidiary, details of all PSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor (“Personal Data”). Recipient understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these entities may be located in Recipient’s country, or elsewhere, and that the third parties’ country may have different data privacy laws and protections than Recipient’s country. Recipient understands that he or she may request a list with the names and addresses of any potential third parties in receipt of the Personal Data by contacting the Company’s Equity Plans Administrator. Recipient authorizes the third parties to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Personal Data as may be required to a broker or other third party with whom Recipient may elect to deposit any Vested Shares received upon vest of the PSUs. Recipient understands that Personal Data will be held as long as is necessary to administer and manage Recipient’s participation in the Plan. Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s Equity Plans Administrator. Recipient understands that refusal or withdrawal of consent may affect Recipient’s ability to realize benefits from the PSUs. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the Company’s Equity Plans Administrator. 23. Electronic Delivery. The Company may, in its sole discretion, decide (a) to deliver or effect by electronic means any documents or communications related to the PSUs granted under the Plan, Recipient’s participation in the Plan, or future Awards that may be granted under the Plan or (b) to request by electronic means Recipient’s consent to participate in the Plan and other communications related to the PSUs or the Plan. Recipient hereby consents to receive such documents and communications by electronic delivery and, if requested, to agree to participate in the Plan and deliver or effect such other communications through an on-line or electronic system established and maintained by the Company or any third party designated by the Company. [Signature Page Follows]


 
IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed by or on behalf of the Company and the Recipient as of the Award Date. COMPANY: SIMPSON MANUFACTURING CO., INC. By /s/Brian J. Magstadt, Chief Financial Officer Authorized Signatory for the Compensation and Leadership Development Committee of the Board of Directors ACCEPTANCE OF AGREEMENT: Through the electronic submission of his or her consent to this Restricted Stock Unit Agreement in accordance with the instructions on Morgan Stanley Smith Barney’s StockPlan Connect website, the Recipient hereby confirms, ratifies, approves and accepts all of the terms and conditions of this Restricted Stock Unit Agreement.


 
Exhibit A Specific Performance Goals (A). Basic Terms for the Specific Performance Goals. The parties agree on the following terms for the Specific Performance Goals: “Specific Performance Goals” means the number of the Vested Shares shall be equal to the sum of (1) the number of the Further Adjusted Shares I and (2) the number of the Further Adjusted Shares II; calculated as follows: ( ( (A) the number of the Targeted Shares x (B) the Fair Value Multiplier / 2) x the Revenue CAGR Multiplier ) + ( ( (A) the number of the Targeted Shares x (B) the Fair Value Multiplier / 2) x the Revenue ROIC Multiplier ); provided, however, that in case of a Sale Event during the Vesting Period, as determined by the Committee in its absolute discretion and to the extent as permitted under Code section 162(m) (without causing the PSUs to fail to meet the requirements of “qualified performance-based compensation” thereunder) and under Code section 409A (without causing the PSUs to fail to be exempt from or comply with 409A), the Specific Performance Goals hereunder, including the Revenue CAGR Multiplier and/or the ROIC Multiplier, may be replaced by any of the Performance Goals defined under the Plan, after being adjusted for the accounting fair value of the Specific Performance Goals hereunder as of the Sale Event.7 “Targeted Shares” means the PSU Shares as divided by 121.8%. (B). How to Determine the Specific Performance Goals. The Committee has the absolute discretion to determine, and its determination shall be binding on the Recipient with respect to, any of the following: “Initially Adjusted Targeted Shares” means the number of the PSU Shares that is equal to the product of (A) the number of the Targeted Shares and (B) the Fair Value Multiplier. “Further Adjusted Shares I” means the number of the PSU Shares that is equal to the product of (A) 50% of the number of the Initially Adjusted Targeted Shares and (B) the Revenue CAGR Multiplier. 7 In case of a Sale Event during the Vesting Period, in which (a) the Company ceases to exist, (b) the Subsidiary with which the Recipient is employed or engaged is acquired, or (c) all or substantially all of the assets of the Company or Subsidiary are sold or otherwise disposed of, unless (i) the acquiring or surviving entity does not maintain an equity incentive program or (ii) a new entity is created through the Sale Event and all stockholders of the Company immediately prior to the Sale Event become stockholders of the new entity, with respect to the remaining fiscal years of the Vesting Period (including any unfinished fiscal year as of the Sale Event), as determined by the Committee in its absolute discretion and to the extent as permitted under Code section 162(m) (without causing the PSUs to fail to meet the requirements of “qualified performance-based compensation” thereunder) and under Code section 409A (without causing the PSUs to fail to be exempt from or comply with 409A), the Specific Performance Goals hereunder may be replaced by the Specific Performance Goals that the acquiring or surviving entity uses in relation to the performance-based equity awards granted to its similarly-situated employees, consultants or outside directors, after being adjusted for the accounting fair value of the Specific Performance Goals hereunder as of the Sale Event. In the event a new entity results from the Sale Event and all stockholders of the Company immediately prior to the Sale Event become stockholders of the new entity, the Specific Performance Goals hereunder shall continue to apply to the PSUs, assumed, continued or substituted upon the Sale Event as if the new entity is the Company. For example, if a Sale Event takes place in June 2017, resulting in no new entity, and the Company ceases to exist, and if the Committee approves the goal replacement, the fiscal year 2017 will still be subject to the Specific Performance Goals hereunder while the fiscal years 2018 and 2019 will be subject to the aforementioned Performance Goals of the acquiring or surviving entity. In the event the acquiring or surviving entity does not maintain an equity incentive program or the acquiring or surviving entity does not use any of the Performance Goals defined under the Plan with respect to the performance-based equity awards granted to its similarly-situated employees, consultants or outside directors, the Specific Performance Goals hereunder shall continue to apply to the PSUs, assumed, continued or substituted upon the Sale Event as if the acquiring or surviving entity is the Company.


 
“Further Adjusted Shares II” means the number of the PSU Shares that is equal to the product of (A) 50% of the number of the Initially Adjusted Targeted Shares and (B) the ROIC Multiplier. “Prorated Allocation” means assigning a multiplier that is equal to the sum of (A) the applicable lower percentage limit and (B) the product of (1) the difference between the applicable lower and upper percentage limits and (2) a percentage that is equal to the Company’s TSR, Revenue CAGR or ROIC (each as defined below), as applicable, as divided by the difference between the applicable lower and upper goal limits. (B). Part I. Fair Value Multiplier. “Fair Value Multiplier” shall be determined by the Committee on or prior to the Award Date, based on (i) the fair value, calculated pursuant to the then-current U.S. generally accepted accounting principles (“GAAP”), of the Targeted Shares as of the Award Date as if the TSR Multiplier as described below is applying to the Targeted Shares during the Measurement Period, as divided by (ii) the fair value, calculated pursuant to GAAP, of the Targeted Shares as of the Award Date as adjusted by the Revenue CAGR Multiplier and the ROIC Multiplier as described below (where each of the Revenue CAGR Multiplier and the ROIC Multiplier is applying to 50% of the Targeted Shares during the Measurement Period); provided, however, that the Fair Value Multiplier shall not be less than 80% nor greater than 120%. Without limiting the generality of the foregoing, when calculating the fair value of the Targeted Shares under (i) and (ii) of this Section (B). Part I, the Committee may use a Monte Carlo model with the Company’s TSR, Revenue CAGR or ROIC (each as defined below) performance as of the Award Date, as applicable, as a data input. Pursuant to the foregoing, as of the Award Date, the Fair Value Multiplier has been determined by the Committee to be 101.5%. (B). Part II. TSR Multiplier. “TSR Multiplier” shall be determined by the Committee as follows: RTSR Ranking TSR Multiplier the Company’s TSR is <=40th percentile 80% the Company’s TSR is within >40th and < 50th percentile Prorated Allocation within >80% and < 100%8 the Company’s TSR is at 50th percentile 100% the Company’s TSR is within >50th and < 85th percentile Prorated Allocation within >100% and < 120%9 the Company’s TSR is >=85th percentile 120% “Comparator Group” means all companies on the Standard & Poors Small Cap 600 Index (the “S&P Small Cap 600”) on the date the Measurement Period begins, and that have not been delisted or suspended for more than 180 days during the Measurement Period; provided, however, that companies that have been acquired, merged, or delisted due to reasons other than bankruptcy are removed from the Comparator Group. “RTSR Ranking” means the ranking of the Company within the Comparator Group based on the Company’s TSR relative to TSRs of other companies within the within the Comparator Group. “TSR” with respect to any company within the Comparator Group, means total return to shareholders of common stock from the beginning to the end of the Measurement Period as calculated by the Committee, taking into 8 For example, if the Company’s TSR is at 45th percentile, the applicable TSR Multiplier is 90%. 9 For example, if the Company’s TSR is at 70th percentile, the applicable TSR Multiplier is 111.43%.


 
account stock price appreciation and dividends and distributions made or declared during the Measurement Period, expressed as a percentage return. (B). Part III. Revenue CAGR Multiplier. “Revenue CAGR Multiplier” shall be determined by the Committee as follows: Revenue Growth Goal Revenue CAGR Multiplier the Company’s Revenue CAGR is < Revenue CAGR Threshold 0% the Company’s Revenue CAGR is = Revenue CAGR Threshold 50% the Company’s Revenue CAGR is > Revenue CAGR Threshold and < Revenue CAGR Target Prorated Allocation within >50% and < 100%10 the Company’s Revenue CAGR is = Revenue CAGR Target 100% the Company’s Revenue CAGR is > Revenue CAGR Target and < Revenue CAGR Max Prorated Allocation within >100% and < 120%11 the Company’s Revenue CAGR is >= Revenue CAGR Max 120% “Revenue CAGR” means, as certified by the Committee, the Company’s compound annual growth rate for the Measurement Period, calculated pursuant to GAAP based on the Company’s performance during the Measurement Period. “Revenue CAGR Threshold” means the threshold Revenue CAGR goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the Revenue CAGR Threshold has been determined by the Committee to be 5%. “Revenue CAGR Target” means the targeted Revenue CAGR goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the Revenue CAGR Target has been determined by the Committee to be 10%. “Revenue CAGR Max” means the aspirational Revenue CAGR goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the Revenue CAGR Max has been determined by the Committee to be 15%. (B). Part IV. ROIC Multiplier. “ROIC Multiplier” shall be determined by the Committee as follows: ROIC Goal ROIC Multiplier the Company’s ROIC is < ROIC Threshold 0% 10 For example, if the Company’s CAGR is the average of CAGR Threshold and CAGR Target, the applicable CAGR Multiplier is 75%. 11 For example, if the Company’s CAGR is the average of CAGR Target and CAGR Max, the applicable CAGR Multiplier is 110%.


 
the Company’s ROIC is = ROIC Threshold 50% the Company’s ROIC is > ROIC Threshold and < ROIC Target Prorated Allocation within >50% and < 100%12 the Company’s ROIC is = ROIC Target 100% the Company’s ROIC is > ROIC Target and < ROIC Max Prorated Allocation within >100% and < 120%13 the Company’s ROIC is => ROIC Max 120% “ROIC” means, as certified by the Committee, the arithmetic mean of the Company’s annual returns on invested capital ratio for the three fiscal years of the Measurement Period, calculated based on (i) the net income of each fiscal year during the Measurement Period (with the net income as presented in the consolidated statements of operations of the Company prepared pursuant to GAAP for that year) as divided by (ii) the arithmetic mean of (x) the sum of the total stockholders’ equity and the total long-term liabilities of the same year and (y) the sum of the total stockholders’ equity and the total long-term liabilities of the prior year (with each of the total stockholders’ equity and the total long-term liabilities as presented in the consolidated balance sheets of the Company prepared pursuant to GAAP for that applicable year). “ROIC Threshold” means the threshold ROIC goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the ROIC Threshold has been determined by the Committee to be 7%. “ROIC Target” means the targeted ROIC goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the ROIC Target has been determined by the Committee to be 10%. “ROIC Max” means the aspirational ROIC goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the ROIC Max has been determined by the Committee to be 12%. (C). Timing of the Committee’s Determinations and Calculations. The Committee shall make any and all such determinations and calculations required under Section (B) above no later than the latest time permitted by the Internal Revenue Code of 1986, as amended, including the section 162(m) thereof, and the regulations and interpretations thereunder. (D). Representative Examples. Without prejudicing any of the foregoing, including the Committee’s absolute discretion under Section (B) above, the parties agree on the following representative (and non-exhaustive examples for the Specific Performance Goals:14 (D). Part I. Example 1. If the number of the PSU Shares, as stated on the Recipient’s Acceptance Page, is 24,360 shares of Common Stock, then the number of the Targeted Shares is 20,000 shares. 12 For example, if the Company’s ROIC is the average of ROIC Threshold and ROIC Target, the applicable ROIC Multiplier is 75%. 13 For example, if the Company’s ROIC is the average of ROIC Target and ROIC Max, the applicable ROIC Multiplier is 110%. 14 No fractional shares will be issued or delivered pursuant to any Award, and therefore, any fractional shares may be forfeited or otherwise eliminated as determined by the Committee. As a result, the decimal fractions of the number of the Vested Shares presented in the examples below are rounded down to the nearest whole number.


 
Furthermore under this example, because as of the Award Date, the Fair Value Multiplier has been determined by the Committee to be 101.5%, then the number of the Initially Adjusted Targeted Shares is 20,300 shares. Then, as a result, 50% of the number of the Initially Adjusted Targeted Shares is 10,150 shares. Still further under this example, because as of the Award Date, the Revenue CAGR Threshold has been determined by the Committee to be 5%, if following the end of the Measurement Period, the Company’s Revenue CAGR is determined by the Committee to be 4.9%, then the Revenue CAGR Multiplier is 0%. Still further under this example, because as of the Award Date, the ROIC Target has been determined by the Committee to be 10% and the ROIC Max has been determined by the Committee to be 12%, if following the end of the Measurement Period, the Company’s ROIC is determined by the Committee to be 11%, then the ROIC Multiplier is 110%. Then, as a result, the number of the Further Adjusted Shares I is 0 shares and the number of the Further Adjusted Shares II is 11,165 shares, respectively. Therefore, the number of the Vested Shares is 11,165 shares. (D). Part II. Example 2. If the number of the PSU Shares, as stated on the Recipient’s Acceptance Page, is 24,360 shares of Common Stock, then the number of the Targeted Shares is 20,000 shares. Furthermore under this example, because as of the Award Date, the Fair Value Multiplier has been determined by the Committee to be 101.5%, then the number of the Initially Adjusted Targeted Shares is 20,300 shares. Then, as a result, 50% of the number of the Initially Adjusted Targeted Shares is 10,150 shares. Still further under this example, because as of the Award Date, the Revenue CAGR Threshold has been determined by the Committee to be 5% and the Revenue CAGR Target has been determined by the Committee to be 10%, if following the end of the Measurement Period, the Company’s Revenue CAGR is determined by the Committee to be 8.75%, then the Revenue CAGR Multiplier is 75%. Still further under this example, because as of the Award Date, the ROIC Target has been determined by the Committee to be 10% and the ROIC Max has been determined by the Committee to be 12%, if following the end of the Measurement Period, the Company’s ROIC is determined by the Committee to be 10.5%, then the ROIC Multiplier is 105%. Then, as a result, the number of the Further Adjusted Shares I is 7,612.5 shares and the number of the Further Adjusted Shares II is 10,657.5 shares, respectively. Therefore, the number of the Vested Shares is 18,270 shares. (D). Part III. Example 3. If the number of the PSU Shares, as stated on the Recipient’s Acceptance Page, is 24,360 shares of Common Stock, then the number of the Targeted Shares is 20,000 shares. Furthermore under this example, because as of the Award Date, the Fair Value Multiplier has been determined by the Committee to be 101.5%, then the number of the Initially Adjusted Targeted Shares is 20,300 shares. Then, as a result, 50% of the number of the Initially Adjusted Targeted Shares is 10,150 shares. Still further under this example, because as of the Award Date, the Revenue CAGR Target has been determined by the Committee to be 10% and the Revenue CAGR Max has been determined by the Committee to be 15%, if following the end of the Measurement Period, the Company’s Revenue CAGR is determined by the Committee to be 13%, then the Revenue CAGR Multiplier is 112%.


 
Still further under this example, because as of the Award Date, the ROIC Target has been determined by the Committee to be 10% and the ROIC Max has been determined by the Committee to be 12%, if following the end of the Measurement Period, the Company’s ROIC is determined by the Committee to be 15%, then the ROIC Multiplier is 120%. Then, as a result, the number of the Further Adjusted Shares I is 11,368 shares and the number of the Further Adjusted Shares II is 12,180 shares, respectively. Therefore, the number of the Vested Shares is 23,548 shares.


 
1 Exhibit B SIMPSON MANUFACTURING CO. INC. 2011 INCENTIVE PLAN Adopted April 26, 2011, and Amended and Restated April 21, 2015 SECTION 1. PURPOSE The purpose of the Simpson Manufacturing Co., Inc. 2011 Incentive Plan is to promote the interests of the Company and its stockholders by providing incentives to directors, officers and employees of, and consultants to, the Company and the Subsidiaries. Accordingly, the Company may grant to selected officers, Employees, Consultants and Outside Directors Option Awards, Restricted Stock Awards and RSU Awards in an effort to attract and retain qualified individuals as employees, directors and consultants and to provide such individuals with incentives to continue service with the Company, devote their best efforts to the Company and improve the Company’s economic performance, thus enhancing the value of the Company for the benefit of stockholders. This Plan amends and restates in their entirety, and incorporates and supersedes, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended (the “1994 Plan”), and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended (the “1995 Plan” and, together with the 1994 Plan, the “Prior Plans”); provided that any stock option granted under the 1994 Plan or the 1995 Plan that has not been exercised in full and that has not expired or terminated shall continue in effect in accordance with its terms and conditions and shall continue to be subject to and governed by the 1994 Plan or the 1995 Plan, respectively, as in effect immediately before the adoption of this Plan. SECTION 2. DEFINITIONS As used in this Plan, the following terms have the meanings indicated: “Agreement” means an agreement, in written or electronic form, entered into by the Company and a Recipient setting forth the terms and conditions applicable to an Award granted under this Plan. “Award” means an Option Award, a Restricted Stock Award or an RSU Award, in each case granted under this Plan. “Beneficial Ownership” and “Beneficially Own” have the meanings set forth in Rule 13d-3 under the Exchange Act. “Beneficiary” means each Person designated as such by a Recipient or, if no designation has been made, each Person entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Recipient’s death. “Board” means the Board of Directors of the Company.


 
2 “Change in Control” means the occurrence of any one (or more) of the following events: (i) the consummation of a consolidation or merger of the Company in which the Company is not the surviving corporation; (ii) the consummation of a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding such reverse merger are converted by virtue of such reverse merger into other property, whether securities, cash or otherwise; or (iii) the approval by the stockholders of the Company of a plan or proposal for the dissolution and liquidation of the Company; provided that a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the Common Stock immediately before such transaction or transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately thereafter. “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means the Compensation and Leadership Development Committee of the Board, as from time to time constituted, or any successor committee of the Board with similar functions, which shall consist of three or more members, each of whom shall be an outside director as defined in the regulations issued under Code section 162(m) and a non-employee director within the meaning of applicable regulatory requirements, including those promulgated under Exchange Act section 16. “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustment pursuant to section 11 hereof. “Company” means Simpson Manufacturing Co., Inc., a Delaware corporation, or any successor thereto. “Consultant” means a Person that (i) renders services to the Company as an independent contractor (and not as an Employee or Outside Director) pursuant to a contract between such Person and the Company and (ii) is selected by the Committee to receive an Award under this Plan. “Disability” means (i) in the case of a Participant, determination by the Committee that he or she has become unable to perform the functions required by his or her regular job due to physical or mental illness or incapacity and, in connection with the grant of an ISO, he or she is within the meaning of that term as provided in Code section 22(e)(3), and (ii) in the case of an Outside Director, determination by the Committee that he or she is unable to attend to his or her duties and responsibilities as a member of the Board due to physical or mental illness or incapacity. “Employee” means a regular, full-time or part-time employee of the Company or any Subsidiary; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of ISOs, the term “Employee” shall have the meaning ascribed to such term in Code section 3401(c). “Exercise Price” means, with respect to each share of Common Stock subject to an Option, the price fixed by the Committee at which such share may be purchased from the Company on the exercise of such Option. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Fair Market Value” means (i) as of any date, the closing sale price per share of Common Stock as reported on the Composite Tape of the New York Stock Exchange, or if there are no sales on such day, on the next prior


 
3 trading day during which a sale occurred; and (ii) in the absence of such market for the shares of Common Stock, the fair market value per share of Common Stock determined by the Committee in good faith (which determination shall, to the extent applicable, be made in a manner that complies with Code sections 422(b) and 409A). “Incentive Stock Option” or “ISO” means an Option that is intended by the Committee to meet the requirements of Code section 422 or any successor provision. “ISO Award” means an Award of an Incentive Stock Option pursuant to section 9 hereof. “NQSO” means an Option granted pursuant to this Plan that does not qualify as an Incentive Stock Option. “NQSO Award” means an Award of an NQSO pursuant to section 7 hereof. “Option” means the right to purchase Common Stock at an Exercise Price to be specified and on terms to be designated by the Committee or otherwise determined pursuant to this Plan. The Committee shall designate each Option as either an NQSO or an Incentive Stock Option. “Option Award” means an Award of an Option pursuant to section 7 hereof. “Outside Director” means a director of the Company, who is not also an Employee and who is selected by the Committee to receive an Award under this Plan. “Participant” means an Employee who is selected by the Committee to receive an Award under this Plan. “Performance Goals” means performance goals established by the Committee from time to time. Such goals may be absolute in their terms or measured against or in relation to other companies comparably or otherwise situated. Such performance goals may be particular to a Participant or the Subsidiary, division or other unit in which the Participant works or may be based on the performance of the Company as a whole. The Performance Goals applicable to any Award that is intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m) shall be based on one or more of (i) earnings, (ii) unit sales, sales volume or revenue, (iii) sales growth, (iv) stock price (including comparison with various stock market indices), (v) return on equity, (vi) return on investment, (vii) total return to stockholders, (viii) economic profit, (ix) debt rating, (x) operating income, (xi) cash flows, (xii) cost targets, (xiii) return on assets or margins or (xiv) implementation, completion or attainment of measurable objectives with respect to (1) software development, (2) new distribution channels, (3) customer growth targets, (4) acquisition identification and integration, (5) manufacturing, production or inventory targets, (6) new product introductions, (7) product quality control, (8) accounting and reporting, (9) recruiting and maintaining personnel, or (10) compliance or regulatory program targets. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time or against other companies or financial metrics), (c) on a per share basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company or (e) on a pre-tax or after tax basis. “Person” has the meaning ascribed to that term in Exchange Act section 3(a)(9), as modified and used in Exchange Act sections 13(d) and 14(d), except that such term shall not include (a) the Company, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (c) an underwriter temporarily holding securities pursuant to an offering on behalf of the Company.


 
4 “Personal Representative” means the Person or Persons who, on the Disability or incompetence of a Recipient, shall have acquired on behalf of the Recipient by legal proceeding or otherwise the right to receive benefits pursuant to this Plan. “Plan” means this Simpson Manufacturing Co., Inc. 2011 Incentive Plan. “Recipient” means a Participant, an Outside Director or a Consultant, as appropriate. “Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals or the occurrence of other events, as determined by the Committee). “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award, which are subject to the restrictions, terms, and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Restricted Stock Award” means an Award of Restricted Stock pursuant to section 6 hereof. “Restricted Stock Units” or “RSUs” means units issued pursuant to an RSU Award, which are valued in terms of shares of Common Stock equivalents and are subject to the restrictions, terms and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Retirement” means (i) in the case of a Participant, retirement from employment with the Company or any Subsidiary at any time as described in the Simpson Manufacturing Co., Inc. Profit Sharing Plan for Salaried Employees or in any successor plan, as from time to time in effect, or as otherwise determined by the Committee, (ii) in the case of an Outside Director, retirement from the Board after the date, if any, established by the Committee as the date for mandatory retirement, as from time to time in effect, or as otherwise determined by the Committee, and (iii) in the case of a Consultant, such date as is determined by the Committee. “RSU Award” means an Award of Restricted Stock Units pursuant to section 6 hereof. “Subsidiary” means a corporation, limited liability company, partnership or other entity (i) more than fifty percent of the outstanding voting equity securities (representing the right to vote for the election of directors or other managing authority) are now or hereafter owned or controlled, directly or indirectly, by the Company, or (ii) which does not have outstanding voting equity securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than fifty percent of the ownership interests of which, representing the right generally to make decisions for such entity, is now or hereafter owned or controlled, directly or indirectly, by the Company; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall have the meaning ascribed to such term in Code section 424(f), as interpreted by the regulations thereunder and applicable law. “Tax Date” means the date the withholding tax obligation arises with respect to an Award. SECTION 3. STOCK SUBJECT TO PLAN (A) Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, 16,320,000 shares of Common Stock are reserved for issuance under this Plan, any or all of which may be delivered with respect to


 
5 Option Awards, Restricted Stock Awards and RSU Awards and any or all of which may be authorized and unissued shares or treasury shares; provided that such 16,320,000 shares include all shares heretofore reserved for issuance pursuant to the Prior Plans. Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, the following limits shall apply with respect to Awards that are intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m): (i) the maximum aggregate number of shares of Common Stock that may be subject to Options granted in any calendar year to any one Participant shall be 150,000 shares; and (ii) the maximum aggregate number of Restricted Stock Awards and shares of Common Stock issuable or deliverable under RSU Awards granted in any calendar year to any one Participant shall be 100,000 shares. (B) Shares of Common Stock subject to Awards under this Plan or stock options granted under the Prior Plans that are forfeited, terminated, canceled or settled without the delivery of Common Stock under this Plan or the Prior Plans, respectively, will again be available for Awards under this Plan as if such Awards or grants had not been made; provided that, notwithstanding any other provision herein to the contrary, the aggregate number of shares of Common Stock that may be issued under this Plan shall not be increased by (i) shares of Common Stock tendered in full or partial payment of the Exercise Price of any Option or any stock option granted under either of the Prior Plans, (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy any tax withholding obligation, or (iii) shares of Common Stock that are repurchased by the Company. (C) Notwithstanding anything in this section 3 to the contrary and solely for purposes of determining whether shares are available for the grant of ISOs, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this section 3 that, if taken into account, would cause this Plan to fail the requirement under Code section 422 that this Plan designate a maximum aggregate number of shares that may be issued. SECTION 4. ADMINISTRATION The Committee shall have exclusive authority to administer this Plan. In addition to any implied powers and duties that may be needed to carry out the provisions hereof, the Committee shall have all the powers vested in it by the terms hereof, including exclusive authority to select the Recipients, to determine the type, size and terms of any and all Awards to be made to each Recipient, to determine the time when Awards will be granted, and to prescribe the form, terms and conditions of any Agreement relating to any Award under this Plan. The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, to make any other determinations that the Committee believes necessary or advisable for the administration hereof, and to correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent that the Committee deems desirable and consistent with the intent of this Plan. The Committee may exercise any and all of the Committee’s rights, powers, authority and discretion under this Plan in the Committee’s absolute and exclusive discretion, and the Committee is authorized and empowered to grant or give any consent, approval or authorization, make any determination or do or perform any other act or thing conditionally or unconditionally, arbitrarily, or inconsistently in varying or similar circumstances, without any accountability to any Recipient, except only as otherwise expressly provided by this Plan or any Agreement with such Recipient. Any decision, determination, direction or other action of the Committee in the administration of this Plan shall be final, binding and conclusive for all purposes, subject only to the further exercise of authority of the Committee hereunder. SECTION 5. ELIGIBILITY


 
6 Awards may be granted only to Recipients; provided that no Outside Director or Consultant may be granted an ISO Award. SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNIT (RSU) AWARDS (A) Grant. Any Recipient may receive one or more Restricted Stock Awards or RSU Awards. (B) Restricted Periods. The Restricted Period for each Restricted Stock Award or RSU Award shall be set forth in the applicable Agreement. Except as otherwise provided in the applicable Agreement on a termination of employment or engagement, or pursuant to section 9 hereof in the event of a Change in Control, each Restricted Stock Award or RSU Award shall have such Restricted Period and be subject to such Performance Goals as the Committee may determine. Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Restricted Stock Award or RSU Award is made to a Recipient whose employment or service as a director or Consultant subsequently terminates for any reason before the lapse of all restrictions thereon, such Restricted Stock or RSU with respect to which such restrictions shall not have lapsed shall be forfeited to that extent by such Recipient. (C) Certain Restricted Stock Award Provisions. (1) Stockholder Rights. On the granting of a Restricted Stock Award, a Recipient shall be entitled to all rights incident to ownership of Common Stock of the Company with respect to his or her Restricted Stock, including the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid in cash or shares of Restricted Stock, as set forth in the applicable Agreement or as determined by the Committee. Each grant of Restricted Stock may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) Certificates; Dividends on Restricted Stock; Restrictions on Transferability. During the Restricted Period, each certificate representing Restricted Stock shall be registered in the respective Recipient’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in this Plan and the applicable Agreement. Each such certificate shall be deposited by the Recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, that will permit transfer to the Company of all or any portion of the Restricted Stock that may be forfeited in accordance with this Plan and the applicable Agreement. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes, except that: (i) no Recipient will be entitled to delivery of a certificate representing Restricted Stock until expiration of the restrictions applicable thereto; (ii) the Company will retain custody of all Restricted Stock issued as a dividend or otherwise with respect to an Award of Restricted Stock, which shall be subject to the same restrictions, terms and conditions as are applicable to the awarded Restricted Stock, until such time, if ever, as such Restricted Stock becomes vested, and no Restricted Stock shall bear interest or be segregated in separate accounts; (iii) subject to section 13(B) hereof, no Recipient shall have any right or power to sell, assign, transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of any Restricted Stock during the applicable Restricted Period; and (iv) unless otherwise determined and directed by the Committee, a breach of any restriction, term or condition in this Plan or the applicable Agreement or established by the Committee with respect to any Restricted Stock will cause a forfeiture of such Restricted Stock, including any Restricted Stock issued as a dividend or otherwise with respect thereto. (D) Certain Restricted Stock Unit (RSU) Award Provisions.


 
7 (1) General. Each grant of Restricted Stock Units shall constitute an agreement by the Company to issue or deliver shares of Common Stock or cash to the Recipient thereof following the end of the applicable Restricted Period in consideration of the performance of services. Each such grant of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) No Stockholder Rights. A Recipient who receives an RSU Award shall not have any rights as a stockholder with respect to the shares of Common Stock subject to such RSUs until such time, if any, as shares of Common Stock are delivered to such Recipient pursuant to the applicable Agreement. (3) Payment. Unless otherwise determined by the Committee, each Agreement relating to an RSU Award shall set forth the payment date for such RSU Award, which date shall not be earlier than the end of the applicable Restricted Period. Payment of earned Restricted Stock Units may be made in one or more installments and may be made wholly in cash, wholly in shares of Common Stock or a combination thereof, as determined by the Committee. SECTION 7. OPTION AWARDS (A) Grant. Any Recipient may receive one or more Option Awards. (B) Designation and Price. (1) Any Option granted under this Plan may be granted as an ISO or as an NQSO as shall be determined by the Committee at the time of the grant of such Option. Only Participants may be granted ISOs. Each Option shall, as directed by the Committee, be evidenced by an Agreement, which shall specify whether the Option is an ISO or an NQSO and shall contain such terms and conditions as the Committee may determine in accordance with this Plan. (2) Every ISO or NQSO shall provide for a fixed expiration date of not later than ten years from the date that such ISO or NQSO is granted. (3) The Exercise Price pursuant to each Option shall be fixed by the Committee at the time of the granting of the Option, but shall not in any event be less than the Fair Market Value on the date that such Option is granted, subject to adjustment as provided in section 11 hereof. (C) Exercise. The Committee may provide for Options granted under this Plan to be exercisable as a whole at any time or in part from time to time. Shares of Common Stock to be issued on any exercise of an Option will be issued after the Company receives (i) notice (in such form as the Committee may require) from the holder thereof of the exercise of such Option, and (ii) payment as provided in section 7(D) hereof of the aggregate Exercise Price for all shares with respect to which such Option is exercised. Each such notice and payment shall be delivered at such place and in such manner as the Committee may specify from time to time. (D) Payment. The Exercise Price for the shares of Common Stock issuable on the exercise of an Option shall be paid in full at the time of such exercise either in cash or by such other means as the Committee may approve, which may include tendering unencumbered shares of Common Stock then owned by the Recipient


 
8 exercising such Option having an aggregate Fair Market Value at the time of such exercise equal to the aggregate Exercise Price of the shares being purchased on such exercise or cashless exercise through a securities broker. (E) Expiration or Termination of Awards. (1) Participants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Participant who holds an outstanding Option dies while employed, during the period when such Participant, if Disabled, would be entitled to exercise such Option, or after such Participant’s Retirement, then such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by the Beneficiaries of the decedent for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s death. (b) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of a Participant who holds an outstanding Option ceases by reason of Disability at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by such Participant or his or her Personal Representative for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Disability. (c) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of any Participant who holds an outstanding Option ceases by reason of Retirement, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Retirement. (d) Notwithstanding any provision of this Plan to the contrary, any Option may, in the discretion of the Committee or as provided in the applicable Agreement, become exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, from and after the time the Participant ceases to be an Employee as a result of the sale or other disposition by the Company or any Subsidiary of assets or property (including shares of any Subsidiary) in respect of which such Participant shall theretofore have been employed or as a result of which such Participant’s continued employment is no longer required. (e) Except as otherwise provided in subsections (a), (b), (c) and (d) of this section 7(E)(1) and sections 9(D) and 13(I) hereof, if the employment of any Participant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Participant’s employment, for the number of shares that such Participant could have acquired on exercise of such Option immediately before the cessation of such Participant’s employment; provided that such Option shall terminate on and as of such earlier date. (2) Outside Directors and Consultants.


 
9 (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the service of any Outside Director or Consultant who holds an outstanding Option ceases by reason of Retirement, death or Disability, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, by such Outside Director or Consultant, his or her Personal Representative or his or her Beneficiaries for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before such Outside Director’s or Consultant’s Retirement, death or Disability. (b) Except as otherwise provided in subsection (a) of this section 7(E)(2) and sections 9(D) and 13(I) hereof, if the service of any Outside Director or Consultant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Outside Director’s or Consultant’s service, for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before the cessation of such Outside Director’s or Consultant’s service; provided that such Option shall terminate on and as of such earlier date. SECTION 8. CONTINUED EMPLOYMENT Nothing in this Plan, or in any Award granted pursuant to this Plan, shall confer on any Person any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate any Recipient’s employment or service at any time. SECTION 9. CHANGE IN CONTROL (A) Restricted Stock and RSU Awards. On a Change in Control, except as otherwise provided in the applicable Agreement and subject to compliance with Code section 409A, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall substitute similar benefits for the Restricted Stock Awards and RSU Awards outstanding under this Plan; or (ii) such Restricted Stock Awards or RSU Awards shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to substitute similar benefits for such Restricted Stock Awards and RSU Awards and refuses to continue such Restricted Stock Awards and RSU Awards in full force and effect, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then the Restricted Period relating to each such Restricted Stock Award or RSU Award shall terminate, and from and after such Change in Control, each such Restricted Stock Award or RSU Award shall be free of all other restrictions for all shares of Restricted Stock or RSUs that shall not theretofore have been acquired under the applicable Agreement. (B) Option Awards. On a Change in Control, except as otherwise provided in the applicable Agreements, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall assume all Options outstanding under this Plan or shall substitute similar options for those outstanding under this Plan, or (ii) such Options shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to assume or continue such Options or to substitute similar options for those outstanding under this Plan, and if the nature and terms of employment or engagement, including compensation and benefits, of the


 
10 respective Recipients will change significantly as a result of the Change in Control, then each such Option shall become immediately exercisable for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, and shall be terminated if not exercised before or at the time of such Change of Control. (C) Cash-Out of Awards. In connection with a Change in Control, notwithstanding any of the foregoing provisions of this section 9 to the contrary, the Committee may, either pursuant to the applicable Agreement or by resolution adopted before the Change in Control, provide that any outstanding Award (or a portion thereof) shall, on such Change in Control, be cancelled in exchange for payment in cash of the amount, if any, by which the aggregate Fair Market Value of the shares of Common Stock subject to such Award exceeds the aggregate Exercise Price therefor. SECTION 10. WITHHOLDING TAXES Federal, state or local law may require the withholding of taxes resulting from the grant or vesting of an Award or the exercise of an Option. The Company may permit or require (subject to such conditions or procedures as may be established by the Committee) any such tax withholding obligation of a Participant to be satisfied by any of the following means, or by any combination of such means: (i) cash payment by such Participant to the Company; (ii) withholding from the shares of Common Stock otherwise issuable to such Participant pursuant to the vesting or exercise of an Award of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation; or (iii) delivery by the Participant to the Company of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation arising from the vesting or exercise of an Award. If the payment or delivery specified in clause (i) or (iii) of the preceding sentence is required but is not paid by a Participant, the Company may refuse to issue Common Stock to such Participant under this Plan. SECTION 11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends, the number or kind of shares that may be issued under this Plan pursuant to section 3 hereof and the number or kind of shares subject to, or the price per share under any outstanding Award, shall be adjusted, automatically and without notice, so that the proportionate interests of the Recipients shall be maintained as before the occurrence of such event; provided that no adjustment shall be made pursuant to this section 11 that would (i) cause any Option intended to qualify as an ISO to fail to qualify as an ISO, (ii) cause an Award that is otherwise exempt from Code section 409A to become subject to Code section 409A, or (iii) cause an Award that is subject to Code section 409A to fail to satisfy the requirements of Code section 409A. SECTION 12. AMENDMENT AND TERMINATION The Committee may amend this Plan at any time or from time to time; provided that: (i) the Committee may not, without approval by the Board, materially increase the benefits provided to Recipients under this Plan; (ii) any amendment with respect to Restricted Stock Awards or RSU Awards granted to Outside Directors must be approved by the Board; and (iii) no amendment that requires stockholder approval in order for this Plan to continue to comply with any provision of the Exchange Act, any rule promulgated by the Securities and Exchange Commission under the Exchange Act, any rule of the New York Stock Exchange or any other securities exchange on


 
11 which shares of Common Stock are listed, or any other applicable law, rule or regulation, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company within the time period required under such provision. Without the approval of the stockholders of the Company, (i) neither the Board nor the Committee will authorize the amendment of any outstanding Option to reduce the Exercise Price thereof, except for adjustments made pursuant to section 11 hereof, (ii) no outstanding Option will be cancelled and replaced with another Option Award having a lower Exercise Price, or for another Award, or for cash, except as provided in section 9 or 11 hereof, and (iii) no Option will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award; provided that this sentence is intended to prohibit, without stockholder approval, the re-pricing of Options that have Exercise Prices above Fair Market Value and will not be construed to limit or prohibit any adjustment pursuant to section 9 or 11 hereof. The Committee may terminate this Plan at any time; provided that such termination shall not affect any Awards theretofore made or any stock options theretofore granted under either of the Prior Plans and such Awards and stock options shall continue to be subject to all terms and conditions of this Plan (including the second paragraph of section 1 hereof) notwithstanding such termination. SECTION 13. MISCELLANEOUS PROVISIONS (A) No Rights to Awards. No Person has or shall have any claim or right to be granted an Award under this Plan. (B) Assignment and Transfer. No right or interest of any Recipient under this Plan or in any Award may be assigned or transferred as a whole or in part, directly or indirectly, by operation of law or otherwise (except by will or the laws of descent and distribution), including by way of execution, levy, garnishment, attachment, pledge or bankruptcy or in any other manner, and no such rights or interests of any Recipient in this Plan shall be subject to any obligation or liability of such Recipient; provided that the Committee may determine that a Recipient’s rights and interests under this Plan or in any Award may be made transferable by such Recipient during his or her lifetime, subject to such conditions as the Committee may specify. Except as provided in section 6 hereof, no Award shall entitle the Recipient thereof, as such, or any of such Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until shares subject to such Award are issued to and registered on the Company’s records in the name or names of such Recipient, Beneficiaries or Personal Representative, as the case may be, and then only with respect to such shares. (C) Compliance with Legal and Exchange Requirements. This Plan, the grant and exercise of Awards hereunder, the issuance of Common Stock and other interests hereunder, and the other obligations of the Company under this Plan and any Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as the Committee may determine are necessary or advisable. The Company or the Committee may postpone the grant or exercise of any Award, the issuance or delivery of Common Stock under any Award or any other action permitted under this Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation and may require any Recipient to make such representations and furnish such information as the Committee may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with any and all applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of this Plan or any Agreement to recognize the exercise of any Award or otherwise to sell or issue Common Stock in violation of any such law, rule


 
12 or regulation. Any postponement of the exercise or settlement of any Award under this section 13(C) shall not extend the term of any Award. Neither the Company nor any Subsidiary nor any director or officer of the Company shall have any obligation or liability to any Recipient with respect to any Award (or Common Stock issuable thereunder) that shall lapse because of any such postponement. (D) Section 409A. Awards granted under this Plan shall be designed and administered in a manner that they are either exempt from the application of, or comply with, the requirements of Code section 409A. To the extent that the Committee determines that any Award is subject to Code section 409A, the Agreement relating to such Award shall incorporate terms and conditions necessary to avoid the imposition on the Recipient of additional tax under Code section 409A. Notwithstanding anything to the contrary in this Plan or any Agreement (unless such Agreement provides otherwise with specific reference to this section 13(D)): (i) no Award shall be granted, deferred, accelerated, extended, paid, settled, substituted or modified under this Plan in a manner that would result in the imposition on a Recipient of additional tax under Code section 409A; and (ii) if an Award is subject to Code section 409A, and if the Recipient to whom such Award is granted is a “specified employee” (as defined in Code section 409A, with such classification to be determined in accordance with methodology established by the Company), no distribution or payment of any amount under such Award shall be made before a date that is six months following the date of such Recipient’s “separation from service” (as defined in Code section 409A) or, if earlier, the date of such Recipient’s death. The Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Code section 409A; provided that the Company does not and shall not make any representation or warranty that any Award under this Plan will qualify for favorable tax treatment under Code section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Recipient for any tax, interest or penalties a Recipient might owe as a result of the grant, holding, vesting, exercise or payment of any Award. (E) Ratification and Consent. By accepting any Award under this Plan, each Recipient and each Personal Representative or Beneficiary claiming under or through such Recipient shall be conclusively deemed to have accepted, ratified and consented to all of the terms and conditions of this Plan and any and all action taken under this Plan by the Company, any Subsidiary, the Board or the Committee. (F) Other Compensation. Nothing in this Plan shall prevent, limit or otherwise affect the right, power and authority of the Board with respect to any other or additional compensation arrangements. (G) Grant Date. Each Recipient shall be deemed to have been granted an Award on the date that the Committee grants such Award under this Plan or such later date as the Committee shall determine at the time such grant is authorized. (H) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. (I) Forfeiture Provision. Except as otherwise expressly provided by the applicable Agreement, the Committee may require a Recipient to forfeit all unexercised, unearned, unvested or unpaid Awards, if: (1) the Recipient, while employed by the Company or any Subsidiary, prepares to engage or engages, directly or indirectly, without the written consent of the Company, in any manner or capacity, as principal, agent, partner, officer, director, employee or otherwise, in any business or activity competitive with any business conducted by the Company or any Subsidiary, as determined by the Committee;


 
13 (2) the Recipient performs any act or engages in any activity that the Committee determines is materially detrimental to the best interests of the Company or any Subsidiary; or (3) the Recipient materially breaches any agreement with or duty to the Company or any Subsidiary, including any non-competition agreement, non-solicitation agreement, confidentiality or non-disclosure agreement, or assignment of inventions or ownership of works agreement, as determined by the Committee. (J) Participants Outside the United States. Notwithstanding any provision of this Plan to the contrary, to comply with the laws of other countries in which the Company and the Subsidiaries operate or have Employees or Consultants, the Committee shall have the power and authority to: (i) determine which Subsidiaries shall be covered by this Plan; (ii) determine which Employees or Consultants outside the United States are eligible to participate in this Plan; (iii) modify the terms and conditions of any Award granted to Employees or Consultants outside the United States to comply with applicable foreign laws; (iv) modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (v) take any action, before or after an Award is made, that it deems necessary or advisable to obtain approval or comply with any government regulatory exemption or requirement; provided that the Committee is not authorized to take any action hereunder, and no Awards shall be granted, that would violate any applicable law. (K) Successors. All obligations of the Company under this Plan and with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other event, or a sale or disposition of all or substantially all of the business or assets of the Company, and references to the “Company” herein and in any Agreements shall be deemed to refer to such successors. (L) Severability. If any provision of this Plan, or the application of such provision to any Person or circumstance, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Plan, or the application of such provision to Persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. (M) Construction. The headings of the sections hereof are for convenience of reference only and are not part of this Plan. As used herein, each gender includes each other gender, and the singular includes the plural and vice versa, as the context may require. Reference herein to any section includes reference to each and all subsections of such section. For purposes of this Plan, each of the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” (N) Governing Law. This Plan shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware. SECTION 14. EFFECTIVENESS OF THIS PLAN This amended and restated Plan shall be submitted to the stockholders of the Company for their approval at their annual meeting scheduled to be held on April 21, 2015, or at such other annual or special meeting as the Board may specify, or any adjournment or postponement thereof. This Plan will be effective as of the date of its approval by the stockholders of the Company.


 
1 Exhibit 10.11 2017 TIME-BASED RESTRICTED STOCK UNIT AGREEMENT Company: Simpson Manufacturing Co., Inc. Recipient: The recipient’s name (the “Recipient”) is set forth on the Recipient’s online award acceptance page on Morgan Stanley Smith Barney’s StockPlan Connect website (the “Acceptance Page”) at https://www.stockplanconnect.com, which is incorporated by reference to this Agreement. The Number of Shares of Common Stock Subject to RSUs Granted Hereunder (the “RSU Shares”): The aggregate number of shares of Common Stock as stated on the Acceptance Page. The Effective Date of the Award (the “Award Date”): A date in 2017 as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. The Date the RSU Shares Start To Vest (the “Vesting Start Date”): A date subsequent to the Award Date as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Vesting Schedule (the “Vesting Schedule”): One fourth of the RSU Shares will vest on each of the Vesting Start Date and the first, second and third anniversaries of the Vesting Start Date; provided, however, that if any of such dates falls on a weekend or federal holiday, the applicable one fourth of the RSU Shares shall vest on the immediately following business day.1 Vesting Period (the “Vesting Period”): A period beginning on the Vesting Start Date, and ending on the third anniversary of the Vesting Start Date; provided, however, that if such anniversary date falls on a weekend or federal holiday, such period shall end on the immediately following business day.2 This TIME-BASED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made as of the Award Date stated on the Acceptance Page by and between Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), and the Recipient named on the Acceptance Page, with reference to the following facts: Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in the amended and restated Simpson Manufacturing Co., Inc. 2011 Incentive Plan effective on April 21, 2015 (as amended from time to time, the “Plan”). The Board has delegated to the Committee all authority to administer 1 For example, if the Vesting Start Date is determined by the Committee to be February 15, 2017, then 1/4 of the RSU Shares will vest on each of February 15, 2017, February 15, 2018, February 15, 2019 and February 18, 2020 (because February 15, 2020 falls on a Saturday and February 17, 2020 is a federal holiday, President’s day, the immediately following business day is February 18, 2020) and the Vesting Period should be from February 15, 2017 to February 18, 2020. 2 See footnote 2, supra.


 
2 the Plan. The Committee has determined to grant to the Recipient, under the Plan, time-based Restricted Stock Units (the “RSUs”) with respect to the RSU Shares stated on the Acceptance Page. To evidence the RSUs and to set forth the terms and conditions thereof, the Company and the Recipient agree as follows: 1. Confirmation of Grant. (a) The Company grants the RSUs to the Recipient and the Recipient agrees to accept the RSUs and participate in the Plan, effective as of the Award Date. As a condition of the grant, this Agreement and the RSUs shall be governed by the terms and conditions of the Plan and shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery policy. (b) The RSUs shall be reflected in a bookkeeping account maintained by the Company through the date on which the RSUs become fully vested pursuant to section 2 or are forfeited pursuant to section 3. If and when the RSUs become fully vested pursuant to section 2, and on the satisfaction of all other conditions applicable to the RSUs, the RSUs not forfeited pursuant to section 3 shall be settled in the number of shares of Common Stock as provided in section 1(d) and otherwise in accordance with the Plan. (c) The Company’s obligations under this Agreement shall be unfunded and unsecured. No special or separate fund shall be established therefor and no other segregation of assets shall be required or made with respect thereto. The rights of the Recipient under this Agreement shall be no greater than those of a general unsecured creditor of the Company. (d) Except as otherwise provided in this Agreement and the Plan, the RSUs shall be settled by the issuance and delivery of the RSU Shares, or as provided in this Section 1(d), by cash or a combination thereof (as determined by the Committee in its sole discretion), within sixty days after the RSUs have vested pursuant to section 2 subject to satisfaction of any other terms and conditions applicable to the RSUs; provided, however, that to the extent the Committee determines that any of the RSUs are subject to Code section 409A, to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such RSUs shall be made until the earliest of the date (i) set for such RSUs to vest according to the Vesting Schedule (a time or fixed schedule specified for the purpose of Code section 409A), (ii) of the Recipient’s “separation from service” (as defined in Code section 409A), (iii) of the Recipient’s death, or (iv) when the Recipient becomes “disabled” (as defined in Code section 409A); and further provided that, the number of the RSU Shares issued or delivered (or for which a cash payment is made) to the Recipient in any calendar year, together with the number of shares of Common Stock issued or delivered (or for which a cash payment is made) to the Recipient in the same calendar year under any other RSU Awards, shall not exceed the annual maximum aggregate number of shares of Common Stock issuable or deliverable under RSU Awards as set forth in the Plan that is effective at the time of the issuance or delivery of (or making a cash payment for) the RSUs. Notwithstanding the foregoing, to the extent the Committee determines that any of the RSUs are subject to Code section 409A and the Recipient is a Specified Employee3 on the date of his or 3 The determination of whether the Recipient is a Specified Employee will be made annually by the Committee or its delegate pursuant to Code section 409A for the 12-month period ending every December 31st (the “Specified Employee Identification Date”). The Committee’s determination shall be final and binding on the Recipient. If the Recipient was determined by the Committee as a Specified Employee at any time during such 12-month period ending on the Specified Employee Identification Date, he or she shall be considered a Specified Employee for the 12-month period commencing on the February 1st immediately following the Specified Employee Identification Date (i.e., from February 1st to the following January 31st), even if he or she is no longer employed or engaged by the Company on or after the Specified Employee Identification Date. For the purposes of this section 1(d), a “Specified Employee” shall mean: • the Recipient owns 5% or more of all outstanding Common Stock; • the Recipient owns 1% or more of all outstanding Common Stock and has an annual compensation of more than $150,000; and/or • the Recipient is among the top 50 most highly-compensated officers of the Company and the Subsidiaries forming a controlled group of corporations within the meaning of Code section 1563(a) (based on total W-2 compensation plus elective 401(k) plan deferrals) and has an annual compensation exceeding the indexed dollar limit then in effect pursuant to Treas. Reg. § 1.409A-1(i) promulgated under Code (which is $175,000 for 2017).


 
3 her “separation from service” (as defined in Code section 409A), to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such RSUs that is otherwise payable pursuant to this Section 1(d) upon a separation from service shall be made before the date that is six months after the date of the Recipient’s separation from service. In settling the RSUs pursuant to the foregoing, the Company (or its acquirer or successor) shall have the option (as determined by the Committee in its sole discretion) to make or provide for a cash payment to the Recipient, in exchange for the cancellation of the vested RSUs (or any portion thereof), in an amount equal to the product of (A) the number of the RSU Shares under the cancelled RSUs and (B) the average closing price of a share of Common Stock over the period ending on the date the RSUs (or the portion thereof) become vested and starting 100 days prior to that date. 2. Vesting. Subject to the terms and conditions of this Agreement and the Plan and unless otherwise forfeited pursuant to section 3,4 the RSUs shall vest (that is, the Restricted Period with respect thereto shall terminate) pursuant to the Vesting Schedule; provided, however, that the unvested RSUs shall vest in full during the Vesting Period on the date, (a) immediately preceding the effective date of the Recipient’s Retirement as determined by the Committee in relation to the RSUs: either (A) after reaching age 70 or (B) after reaching age 55 and having been employed or engaged by the Company or any Subsidiary for 15 years (provided that, if the Recipient retires after reaching age 56, for each year after age 55, the Recipient may work one year less for the Company or any Subsidiary, as applicable, and still be qualified for Retirement under this sub-section (B)5), (b) immediately preceding the Recipient’s death or the effective date of the Recipient’s Disability, or (c) immediately preceding the effective date of the termination of the Recipient’s employment or engagement with the Company or any Subsidiary by the Company or Subsidiary (which, whenever used in this Agreement, includes any such entity’s successor) without Cause,6 or by the Recipient for a Good Reason,7 in either case only in connection with or within 24 months following a Sale Event.8 The Recipient explicitly acknowledges and agrees that the granting or vesting of the RSUs 4 For example, pursuant to section 3, before the Vesting Start Date, (I) if the Recipient’s employment or engagement with the Company or any Subsidiary is terminated by the Recipient for any reason, or (II) if the Recipient retires, dies or becomes Disabled, the RSUs shall be forfeited in their entirety and no distribution or payment of any amount under such RSUs shall ever be made to the Recipient. 5 For example, if the Recipient retires at age 60 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 10 years to be qualified for retirement and receive the RSU Shares; and for example, if the Recipient retires at age 65 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 5 years to be qualified for retirement and receive the RSU Shares. 6 “Cause” means, in addition to any cause for termination as provided in any other applicable written agreement between the Company, the applicable Subsidiary, or the acquirer or successor of the Company or Subsidiary, and the Recipient, (i) conviction of any felony, (ii) any material breach or violation by the Recipient of any agreement to which the Recipient and the Company or the Subsidiary that employs or engages the Recipient are parties or of any published policy or guideline of the Company, (iii) any act (other than retirement or other termination of employment or engagement) or omission to act by the Recipient which may have a material and adverse effect on the business of the Company or Subsidiary or on the Recipient’s ability to perform services for the Company or Subsidiary, including habitual insobriety or substance abuse or the commission of any crime, gross negligence, fraud or dishonesty with regard to the Company or Subsidiary, or (iv) any material misconduct or neglect of duties and responsibilities by the Recipient in connection with the business or affairs of the Company or Subsidiary; provided, however, that the Recipient first shall have received written notice, which shall specifically identify what the Company or Subsidiary believes constitutes Cause, and if the breach, act, omission, misconduct or neglect is capable of being cured, the Recipient shall have failed to cure after 15 days following such notice. 7 A “Good Reason” means the occurrence of any of the following events: (i) a material adverse change in the functions, duties or responsibilities of the Recipient’s position (other than a termination by the Company or Subsidiary) which would meaningfully reduce the level, importance or scope of such position (provided that, a change in the person, position and/or department to whom the Recipient is required to report shall not by itself constitute a material adverse change in the Recipient’s position), (ii) the relocation of the Company or Subsidiary office at which the Recipient is principally located immediately prior to a Sale Event (the “Original Office”) to a new location outside of the metropolitan area of the Original Office or the failure to place the Recipient’s own office in the Original Office (or at the office to which such office is relocated which is within the metropolitan area of the Original Office), or (iii) a material reduction in the Recipient’s base salary and incentive compensation opportunity as in effect immediately prior to a Sale Event; provided, however, that, within 90 days of the incident that provides the basis for a Good Reason termination, the Recipient shall have provided the Company or Subsidiary a written notice specifically identifying what the Recipient believes constitutes a Good Reason, and the Company or Subsidiary shall have failed to cure the adverse change, relocation or compensation reduction after 30 days following such notice. 8 A “Sale Event” shall mean (i) the sale or other disposition of all or substantially all of the assets of the Company or the Subsidiary that employs or engages the Recipient, including a majority or more of all outstanding stock of the Subsidiary, on a


 
4 as well as the Recipient’s holding of the RSU Shares shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery, stock ownership, and hedging, pledging and trading policies. 3. Forfeiture. Anything herein to the contrary notwithstanding, (a) all RSUs that are not vested in accordance with section 2 shall terminate immediately and be forfeited in their entirety if and at such time as (i) the Recipient ceases to be an Employee, Outside Director or Consultant, as the case may be, or (ii) 24 months have passed immediately following a Sale Event (provided that, in the event the surviving or acquiring entity or the new entity resulting from a Sale Event substitutes a similar equity award for the RSUs, such award will continue in accordance with its own terms and conditions), and (b) all RSUs, to the extent not theretofore settled in accordance with section 1(d), shall terminate immediately and be forfeited in their entirety when and as provided in section 13(I) of the Plan. 4. Tax Withholding. Pursuant to section 10 of the Plan, the Company may require the Recipient to enter into an arrangement providing for the payment in cash, Common Stock or otherwise by the Recipient to the Company of any tax withholding obligation of the Company arising by reason of (a) the granting or vesting of the RSUs, (b) the lapse of any substantial risk of forfeiture to which the RSUs or the RSU Shares are subject, or (c) the disposition of the RSUs or the RSU Shares, to the extent such arrangement does not cause a loss of the Section 16(b) exemption pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. 5. Representations and Warranties of the Company. The Company represents and warrants to the Recipient that the RSU Shares, when issued and delivered on the vesting of the RSUs in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. 6. Recipient Representations. The Recipient represents and warrants to the Company that the Recipient has received and read this Agreement and the Plan, that the Recipient has consulted with the Recipient’s own legal, financial and other advisers regarding this Agreement and the Plan to the extent that the Recipient considered necessary or appropriate, that the Recipient fully understands and accepts all of the terms and conditions of this Agreement and the Plan, and that the Recipient is relying solely on the Recipient’s own advisers with respect to the tax consequences of this Agreement and the RSUs. 7. Change in Control. Notwithstanding section 9 of the Plan, a Change in Control shall be treated as a Sale Event with respect to the RSUs granted hereunder. 8. Adjustments to Reflect Capital Changes. Subject to and except as otherwise provided in section 9 of the Plan, the number and kind of shares subject to the RSUs shall be appropriately adjusted, as the Committee may determine pursuant to section 11 of the Plan, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends. 9. No Rights as Stockholder. Neither the granting or vesting of the RSUs nor the issuance or delivery of the RSU Shares shall entitle the Recipient, as such, or any of the Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until the RSU Shares are registered on the Company’s records in the name or names of the Recipient or the Recipient’s Beneficiaries or Personal Representative, as the case may be, and then only with respect to such RSU Shares so registered. consolidated basis to one or more unrelated persons or entities, (ii) a Change in Control, or (iii) the sale or other transfer of outstanding Common Stock to one or more unrelated persons or entities (including by way of a merger, reorganization or consolidation in which the outstanding Common Stock are converted into or exchanged for securities of the successor entity) where the stockholders of the Company, immediately prior to such sale or other transfer, would not, immediately after such sale or transfer, beneficially own shares representing in the aggregate more than 50 percent of the voting shares of the acquirer or surviving entity (or its ultimate parent corporation, if any). For the purpose of sub-section (iii) of this definition, only voting shares of the acquirer or surviving entity (or its ultimate parent, if any) received by stockholders of the Company in exchange for Common Stock shall be counted, and any voting shares of the acquirer or surviving entity (or its ultimate parent, if any) already owned by stockholders of the Company prior to the transaction shall be disregarded.


 
5 10. No Right to Continued Employment. Nothing in this Agreement shall confer on the Recipient any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate the Recipient’s employment or service at any time. If the Award of the RSUs is in connection with the Recipient’s performance of services as a Consultant or Outside Director, references to employment, employee and similar terms shall be deemed to include the performance of services as a Consultant or an Outside Director, as the case may be; provided that no rights as an Employee shall arise by reason of the use of such terms. 11. Regulatory Compliance. Notwithstanding anything herein to the contrary, the issuance and delivery of the RSU Shares shall in all events be subject to and governed by section 13(C) of the Plan. 12. Notices. Any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally, when transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office in California, and, if to the Recipient, at the Recipient’s address on the Company’s records. Either party may change such party’s address or facsimile number from time to time by notice hereunder to the other. 13. Entire Agreement. This Agreement and the Plan together contain the entire agreement of the parties and supersede all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between the parties, regarding the RSUs. The Recipient specifically acknowledges and agrees that all descriptions of the RSUs in any prior letters, memoranda or other documents provided to him or her by the Company or any Subsidiary are hereby replaced and superseded in their entirety by this Agreement and shall be of no further force or effect. To the extent there is any inconsistency between the descriptions of any such documents and the terms of this Agreement, the terms of this Agreement shall prevail. 14. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by the Recipient and the Company. 15. Assignment. The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of this Agreement, any of the RSUs or any other rights hereunder, and shall not delegate any duties hereunder, except only as may be permitted pursuant to section 13(B) of the Plan, and any such action or transaction that may otherwise be attempted or purported by the Recipient shall be void and of no effect. 16. Successors. Subject to section 15, this Agreement shall bind and inure to the benefit of the Company and the Recipient and their respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any other Person any right or benefit in or under this Agreement or the Plan. 17. Separate Payments. All amounts payable in connection with the RSUs hereunder or any other Awards granted under the Plan shall be treated as separate payments for the purposes of Code section 409A. 18. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 20. Order of Precedence and Construction. This Agreement, the RSUs and the RSU Shares are subject to all provisions of the Plan (a copy of which is attached hereto as Exhibit A), including the Restricted Stock Unit provisions of section 6 thereof, and are further subject to all interpretations and amendments thereto that may from time to time be adopted pursuant to the Plan. In the event of any inconsistency between any provision of this Agreement and any provision of the Plan, the provision of the Plan shall govern. The headings of sections herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction or


 
6 interpretation of any provision hereof. Whenever the context requires, the use in this Agreement of the singular number shall be deemed to include the plural and vice versa, and each gender shall be deemed to include each other gender. References herein to sections refer to sections of this Agreement, except as otherwise stated. The meaning of general words is not limited by specific examples introduced by “includes”, “including”, “for example”, “such as” or similar expressions, which shall be deemed to be followed by the phrase “without limitation”. 21. Further Assurances. The Recipient agrees to do and perform all acts and execute and deliver all additional documents, instruments and agreements as the Company or the Committee may reasonably request in connection with this Agreement. 22. Data Privacy. Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Recipient’s personal data as described in this Agreement by and among, as applicable, Recipient’s employer, the Company, and any Subsidiary for the exclusive purposes of implementing, administering, and managing Recipient’s participation in the Plan. Recipient understands that the Company and the employing Subsidiary may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, and any shares of stock or directorships held in the Company or any Subsidiary, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor (“Personal Data”). Recipient understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these entities may be located in Recipient’s country, or elsewhere, and that the third parties’ country may have different data privacy laws and protections than Recipient’s country. Recipient understands that he or she may request a list with the names and addresses of any potential third parties in receipt of the Personal Data by contacting the Company’s Equity Plans Administrator. Recipient authorizes the third parties to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Personal Data as may be required to a broker or other third party with whom Recipient may elect to deposit any RSU Shares received upon vest of the RSUs. Recipient understands that Personal Data will be held as long as is necessary to administer and manage Recipient’s participation in the Plan. Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s Equity Plans Administrator. Recipient understands that refusal or withdrawal of consent may affect Recipient’s ability to realize benefits from the RSUs. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the Company’s Equity Plans Administrator. 23. Electronic Delivery. The Company may, in its sole discretion, decide (a) to deliver or effect by electronic means any documents or communications related to the RSUs granted under the Plan, Recipient’s participation in the Plan, or future Awards that may be granted under the Plan or (b) to request by electronic means Recipient’s consent to participate in the Plan and other communications related to the RSUs or the Plan. Recipient hereby consents to receive such documents and communications by electronic delivery and, if requested, to agree to participate in the Plan and deliver or effect such other communications through an on-line or electronic system established and maintained by the Company or any third party designated by the Company. [Signature Page Follows]


 
7 IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed by or on behalf of the Company and the Recipient as of the Award Date. COMPANY: SIMPSON MANUFACTURING CO., INC. By /s/Brian J. Magstadt, Chief Financial Officer Authorized Signatory for the Compensation and Leadership Development Committee of the Board of Directors ACCEPTANCE OF AGREEMENT: Through the electronic submission of his or her consent to this Restricted Stock Unit Agreement in accordance with the instructions on Morgan Stanley Smith Barney’s StockPlan Connect website, the Recipient hereby confirms, ratifies, approves and accepts all of the terms and conditions of this Restricted Stock Unit Agreement.


 
8 Exhibit A SIMPSON MANUFACTURING CO. INC. 2011 INCENTIVE PLAN Adopted April 26, 2011, and Amended and Restated April 21, 2015 SECTION 1. PURPOSE The purpose of the Simpson Manufacturing Co., Inc. 2011 Incentive Plan is to promote the interests of the Company and its stockholders by providing incentives to directors, officers and employees of, and consultants to, the Company and the Subsidiaries. Accordingly, the Company may grant to selected officers, Employees, Consultants and Outside Directors Option Awards, Restricted Stock Awards and RSU Awards in an effort to attract and retain qualified individuals as employees, directors and consultants and to provide such individuals with incentives to continue service with the Company, devote their best efforts to the Company and improve the Company’s economic performance, thus enhancing the value of the Company for the benefit of stockholders. This Plan amends and restates in their entirety, and incorporates and supersedes, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended (the “1994 Plan”), and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended (the “1995 Plan” and, together with the 1994 Plan, the “Prior Plans”); provided that any stock option granted under the 1994 Plan or the 1995 Plan that has not been exercised in full and that has not expired or terminated shall continue in effect in accordance with its terms and conditions and shall continue to be subject to and governed by the 1994 Plan or the 1995 Plan, respectively, as in effect immediately before the adoption of this Plan. SECTION 2. DEFINITIONS As used in this Plan, the following terms have the meanings indicated: “Agreement” means an agreement, in written or electronic form, entered into by the Company and a Recipient setting forth the terms and conditions applicable to an Award granted under this Plan. “Award” means an Option Award, a Restricted Stock Award or an RSU Award, in each case granted under this Plan. “Beneficial Ownership” and “Beneficially Own” have the meanings set forth in Rule 13d-3 under the Exchange Act. “Beneficiary” means each Person designated as such by a Recipient or, if no designation has been made, each Person entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Recipient’s death. “Board” means the Board of Directors of the Company. “Change in Control” means the occurrence of any one (or more) of the following events: (i) the consummation of a consolidation or merger of the Company in which the Company is not the surviving corporation; (ii) the consummation of a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding such reverse merger are converted by virtue of such reverse merger into other property, whether securities, cash or otherwise; or (iii) the approval by the stockholders of the Company of a plan or proposal for the dissolution and liquidation of the Company; provided that a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the Common Stock immediately before such transaction or transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately thereafter.


 
9 “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means the Compensation and Leadership Development Committee of the Board, as from time to time constituted, or any successor committee of the Board with similar functions, which shall consist of three or more members, each of whom shall be an outside director as defined in the regulations issued under Code section 162(m) and a non-employee director within the meaning of applicable regulatory requirements, including those promulgated under Exchange Act section 16. “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustment pursuant to section 11 hereof. “Company” means Simpson Manufacturing Co., Inc., a Delaware corporation, or any successor thereto. “Consultant” means a Person that (i) renders services to the Company as an independent contractor (and not as an Employee or Outside Director) pursuant to a contract between such Person and the Company and (ii) is selected by the Committee to receive an Award under this Plan. “Disability” means (i) in the case of a Participant, determination by the Committee that he or she has become unable to perform the functions required by his or her regular job due to physical or mental illness or incapacity and, in connection with the grant of an ISO, he or she is within the meaning of that term as provided in Code section 22(e)(3), and (ii) in the case of an Outside Director, determination by the Committee that he or she is unable to attend to his or her duties and responsibilities as a member of the Board due to physical or mental illness or incapacity. “Employee” means a regular, full-time or part-time employee of the Company or any Subsidiary; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of ISOs, the term “Employee” shall have the meaning ascribed to such term in Code section 3401(c). “Exercise Price” means, with respect to each share of Common Stock subject to an Option, the price fixed by the Committee at which such share may be purchased from the Company on the exercise of such Option. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Fair Market Value” means (i) as of any date, the closing sale price per share of Common Stock as reported on the Composite Tape of the New York Stock Exchange, or if there are no sales on such day, on the next prior trading day during which a sale occurred; and (ii) in the absence of such market for the shares of Common Stock, the fair market value per share of Common Stock determined by the Committee in good faith (which determination shall, to the extent applicable, be made in a manner that complies with Code sections 422(b) and 409A). “Incentive Stock Option” or “ISO” means an Option that is intended by the Committee to meet the requirements of Code section 422 or any successor provision. “ISO Award” means an Award of an Incentive Stock Option pursuant to section 9 hereof. “NQSO” means an Option granted pursuant to this Plan that does not qualify as an Incentive Stock Option. “NQSO Award” means an Award of an NQSO pursuant to section 7 hereof. “Option” means the right to purchase Common Stock at an Exercise Price to be specified and on terms to be designated by the Committee or otherwise determined pursuant to this Plan. The Committee shall designate each Option as either an NQSO or an Incentive Stock Option. “Option Award” means an Award of an Option pursuant to section 7 hereof.


 
10 “Outside Director” means a director of the Company, who is not also an Employee and who is selected by the Committee to receive an Award under this Plan. “Participant” means an Employee who is selected by the Committee to receive an Award under this Plan. “Performance Goals” means performance goals established by the Committee from time to time. Such goals may be absolute in their terms or measured against or in relation to other companies comparably or otherwise situated. Such performance goals may be particular to a Participant or the Subsidiary, division or other unit in which the Participant works or may be based on the performance of the Company as a whole. The Performance Goals applicable to any Award that is intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m) shall be based on one or more of (i) earnings, (ii) unit sales, sales volume or revenue, (iii) sales growth, (iv) stock price (including comparison with various stock A-3 market indicies), (v) return on equity, (vi) return on investment, (vii) total return to stockholders, (viii) economic profit, (ix) debt rating, (x) operating income, (xi) cash flows, (xii) cost targets, (xiii) return on assets or margins or (xiv) implementation, completion or attainment of measurable objectives with respect to (1) software development, (2) new distribution channels, (3) customer growth targets, (4) acquisition identification and integration, (5) manufacturing, production or inventory targets, (6) new product introductions, (7) product quality control, (8) accounting and reporting, (9) recruiting and maintaining personnel, or (10) compliance or regulatory program targets. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time or against other companies or financial metrics), (c) on a per share basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company or (e) on a pre-tax or after tax basis. “Person” has the meaning ascribed to that term in Exchange Act section 3(a)(9), as modified and used in Exchange Act sections 13(d) and 14(d), except that such term shall not include (a) the Company, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (c) an underwriter temporarily holding securities pursuant to an offering on behalf of the Company. “Personal Representative” means the Person or Persons who, on the Disability or incompetence of a Recipient, shall have acquired on behalf of the Recipient by legal proceeding or otherwise the right to receive benefits pursuant to this Plan. “Plan” means this Simpson Manufacturing Co., Inc. 2011 Incentive Plan. “Recipient” means a Participant, an Outside Director or a Consultant, as appropriate. “Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals or the occurrence of other events, as determined by the Committee). “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award, which are subject to the restrictions, terms, and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Restricted Stock Award” means an Award of Restricted Stock pursuant to section 6 hereof. “Restricted Stock Units” or “RSUs” means units issued pursuant to an RSU Award, which are valued in terms of shares of Common Stock equivalents and are subject to the restrictions, terms and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Retirement” means (i) in the case of a Participant, retirement from employment with the Company or any Subsidiary at any time as described in the Simpson Manufacturing Co., Inc. Profit Sharing Plan for Salaried Employees or in any successor plan, as from time to time in effect, or as otherwise determined by the Committee, (ii) in the case of an Outside Director, retirement from the Board after the date, if any, established by the Committee


 
11 as the date for mandatory retirement, as from time to time in effect, or as otherwise determined by the Committee, and (iii) in the case of a Consultant, such date as is determined by the Committee. “RSU Award” means an Award of Restricted Stock Units pursuant to section 6 hereof. “Subsidiary” means a corporation, limited liability company, partnership or other entity (i) more than fifty percent of the outstanding voting equity securities (representing the right to vote for the election of directors or other managing authority) are now or hereafter owned or controlled, directly or indirectly, by the Company, or (ii) which does not have outstanding voting equity securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than fifty percent of the ownership interests of which, representing the right generally to make decisions for such entity, is now or hereafter owned or controlled, directly or indirectly, by the Company; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall have the meaning ascribed to such term in Code section 424(f), as interpreted by the regulations thereunder and applicable law. “Tax Date” means the date the withholding tax obligation arises with respect to an Award. SECTION 3. STOCK SUBJECT TO PLAN (A) Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, 16,320,000 shares of Common Stock are reserved for issuance under this Plan, any or all of which may be delivered with respect to Option Awards, Restricted Stock Awards and RSU Awards and any or all of which may be authorized and unissued shares or treasury shares; provided that such 16,320,000 shares include all shares heretofore reserved for issuance pursuant to the Prior Plans. Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, the following limits shall apply with respect to Awards that are intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m): (i) the maximum aggregate number of shares of Common Stock that may be subject to Options granted in any calendar year to any one Participant shall be 150,000 shares; and (ii) the maximum aggregate number of Restricted Stock Awards and shares of Common Stock issuable or deliverable under RSU Awards granted in any calendar year to any one Participant shall be 100,000 shares. (B) Shares of Common Stock subject to Awards under this Plan or stock options granted under the Prior Plans that are forfeited, terminated, canceled or settled without the delivery of Common Stock under this Plan or the Prior Plans, respectively, will again be available for Awards under this Plan as if such Awards or grants had not been made; provided that, notwithstanding any other provision herein to the contrary, the aggregate number of shares of Common Stock that may be issued under this Plan shall not be increased by (i) shares of Common Stock tendered in full or partial payment of the Exercise Price of any Option or any stock option granted under either of the Prior Plans, (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy any tax withholding obligation, or (iii) shares of Common Stock that are repurchased by the Company. (C) Notwithstanding anything in this section 3 to the contrary and solely for purposes of determining whether shares are available for the grant of ISOs, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this section 3 that, if taken into account, would cause this Plan to fail the requirement under Code section 422 that this Plan designate a maximum aggregate number of shares that may be issued. SECTION 4. ADMINISTRATION The Committee shall have exclusive authority to administer this Plan. In addition to any implied powers and duties that may be needed to carry out the provisions hereof, the Committee shall have all the powers vested in it by the terms hereof, including exclusive authority to select the Recipients, to determine the type, size and terms of any and all Awards to be made to each Recipient, to determine the time when Awards will be granted, and to prescribe the form, terms and conditions of any Agreement relating to any Award under this Plan. The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, to make any other determinations that the Committee believes necessary or advisable for the administration hereof, and to correct any defect or supply any omission or reconcile any


 
12 inconsistency in this Plan or in any Award in the manner and to the extent that the Committee deems desirable and consistent with the intent of this Plan. The Committee may exercise any and all of the Committee’s rights, powers, authority and discretion under this Plan in the Committee’s absolute and exclusive discretion, and the Committee is authorized and empowered to grant or give any consent, approval or authorization, make any determination or do or perform any other act or thing conditionally or unconditionally, arbitrarily, or inconsistently in varying or similar circumstances, without any accountability to any Recipient, except only as otherwise expressly provided by this Plan or any Agreement with such Recipient. Any decision, determination, direction or other action of the Committee in the administration of this Plan shall be final, binding and conclusive for all purposes, subject only to the further exercise of authority of the Committee hereunder. SECTION 5. ELIGIBILITY Awards may be granted only to Recipients; provided that no Outside Director or Consultant may be granted an ISO Award. SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNIT (RSU) AWARDS (A) Grant. Any Recipient may receive one or more Restricted Stock Awards or RSU Awards. (B) Restricted Periods. The Restricted Period for each Restricted Stock Award or RSU Award shall be set forth in the applicable Agreement. Except as otherwise provided in the applicable Agreement on a termination of employment or engagement, or pursuant to section 9 hereof in the event of a Change in Control, each Restricted Stock Award or RSU Award shall have such Restricted Period and be subject to such Performance Goals as the Committee may determine. Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Restricted Stock Award or RSU Award is made to a Recipient whose employment or service as a director or Consultant subsequently terminates for any reason before the lapse of all restrictions thereon, such Restricted Stock or RSU with respect to which such restrictions shall not have lapsed shall be forfeited to that extent by such Recipient. (C) Certain Restricted Stock Award Provisions. (1) Stockholder Rights. On the granting of a Restricted Stock Award, a Recipient shall be entitled to all rights incident to ownership of Common Stock of the Company with respect to his or her Restricted Stock, including the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid in cash or shares of Restricted Stock, as set forth in the applicable Agreement or as determined by the Committee. Each grant of Restricted Stock may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) Certificates; Dividends on Restricted Stock; Restrictions on Transferability. During the Restricted Period, each certificate representing Restricted Stock shall be registered in the respective Recipient’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in this Plan and the applicable Agreement. Each such certificate shall be deposited by the Recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, that will permit transfer to the Company of all or any portion of the Restricted Stock that may be forfeited in accordance with this Plan and the applicable Agreement. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes, except that: (i) no Recipient will be entitled to delivery of a certificate representing Restricted Stock until expiration of the restrictions applicable thereto; (ii) the Company will retain custody of all Restricted Stock issued as a dividend or otherwise with respect to an Award of Restricted Stock, which shall be subject to the same restrictions, terms and conditions as are applicable to the awarded Restricted Stock, until such time, if ever, as such Restricted Stock becomes vested, and no Restricted Stock shall bear interest or be segregated in separate accounts; (iii) subject to section 13(B) hereof, no Recipient shall have any right or power to sell, assign, transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of any Restricted Stock during the applicable Restricted Period; and (iv) unless otherwise determined and directed by the Committee, a breach of any restriction, term or condition in this Plan or the applicable Agreement or established by the Committee with respect to any Restricted Stock will cause a


 
13 forfeiture of such Restricted Stock, including any Restricted Stock issued as a dividend or otherwise with respect thereto. (D) Certain Restricted Stock Unit (RSU) Award Provisions. (1) General. Each grant of Restricted Stock Units shall constitute an agreement by the Company to issue or deliver shares of Common Stock or cash to the Recipient thereof following the end of the applicable Restricted Period in consideration of the performance of services. Each such grant of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) No Stockholder Rights. A Recipient who receives an RSU Award shall not have any rights as a stockholder with respect to the shares of Common Stock subject to such RSUs until such time, if any, as shares of Common Stock are delivered to such Recipient pursuant to the applicable Agreement. (3) Payment. Unless otherwise determined by the Committee, each Agreement relating to an RSU Award shall set forth the payment date for such RSU Award, which date shall not be earlier than the end of the applicable Restricted Period. Payment of earned Restricted Stock Units may be made in one or more installments and may be made wholly in cash, wholly in shares of Common Stock or a combination thereof, as determined by the Committee. SECTION 7. OPTION AWARDS (A) Grant. Any Recipient may receive one or more Option Awards. (B) Designation and Price. (1) Any Option granted under this Plan may be granted as an ISO or as an NQSO as shall be determined by the Committee at the time of the grant of such Option. Only Participants may be granted ISOs. Each Option shall, as directed by the Committee, be evidenced by an Agreement, which shall specify whether the Option is an ISO or an NQSO and shall contain such terms and conditions as the Committee may determine in accordance with this Plan. (2) Every ISO or NQSO shall provide for a fixed expiration date of not later than ten years from the date that such ISO or NQSO is granted. (3) The Exercise Price pursuant to each Option shall be fixed by the Committee at the time of the granting of the Option, but shall not in any event be less than the Fair Market Value on the date that such Option is granted, subject to adjustment as provided in section 11 hereof. (C) Exercise. The Committee may provide for Options granted under this Plan to be exercisable as a whole at any time or in part from time to time. Shares of Common Stock to be issued on any exercise of an Option will be issued after the Company receives (i) notice (in such form as the Committee may require) from the holder thereof of the exercise of such Option, and (ii) payment as provided in section 7(D) hereof of the aggregate Exercise Price for all shares with respect to which such Option is exercised. Each such notice and payment shall be delivered at such place and in such manner as the Committee may specify from time to time. (D) Payment. The Exercise Price for the shares of Common Stock issuable on the exercise of an Option shall be paid in full at the time of such exercise either in cash or by such other means as the Committee may approve, which may include tendering unencumbered shares of Common Stock then owned by the Recipient exercising such Option having an aggregate Fair Market Value at the time of such exercise equal to the aggregate Exercise Price of the shares being purchased on such exercise or cashless exercise through a securities broker.


 
14 (E) Expiration or Termination of Awards. (1) Participants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Participant who holds an outstanding Option dies while employed, during the period when such Participant, if Disabled, would be entitled to exercise such Option, or after such Participant’s Retirement, then such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by the Beneficiaries of the decedent for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s death. (b) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of a Participant who holds an outstanding Option ceases by reason of Disability at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by such Participant or his or her Personal Representative for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Disability. (c) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of any Participant who holds an outstanding Option ceases by reason of Retirement, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Retirement. (d) Notwithstanding any provision of this Plan to the contrary, any Option may, in the discretion of the Committee or as provided in the applicable Agreement, become exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, from and after the time the Participant ceases to be an Employee as a result of the sale or other disposition by the Company or any Subsidiary of assets or property (including shares of any Subsidiary) in respect of which such Participant shall theretofore have been employed or as a result of which such Participant’s continued employment is no longer required. (e) Except as otherwise provided in subsections (a), (b), (c) and (d) of this section 7(E)(1) and sections 9(D) and 13(I) hereof, if the employment of any Participant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Participant’s employment, for the number of shares that such Participant could have acquired on exercise of such Option immediately before the cessation of such Participant’s employment; provided that such Option shall terminate on and as of such earlier date. (2) Outside Directors and Consultants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the service of any Outside Director or Consultant who holds an outstanding Option ceases by reason of Retirement, death or Disability, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, by such Outside Director or Consultant, his or her Personal Representative or his or her Beneficiaries for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before such Outside Director’s or Consultant’s Retirement, death or Disability. (b) Except as otherwise provided in subsection (a) of this section 7(E)(2) and sections 9(D) and 13(I) hereof, if the service of any Outside Director or Consultant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Outside


 
15 Director’s or Consultant’s service, for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before the cessation of such Outside Director’s or Consultant’s service; provided that such Option shall terminate on and as of such earlier date. SECTION 8. CONTINUED EMPLOYMENT Nothing in this Plan, or in any Award granted pursuant to this Plan, shall confer on any Person any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate any Recipient’s employment or service at any time. SECTION 9. CHANGE IN CONTROL (A) Restricted Stock and RSU Awards. On a Change in Control, except as otherwise provided in the applicable Agreement and subject to compliance with Code section 409A, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall substitute similar benefits for the Restricted Stock Awards and RSU Awards outstanding under this Plan; or (ii) such Restricted Stock Awards or RSU Awards shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to substitute similar benefits for such Restricted Stock Awards and RSU Awards and refuses to continue such Restricted Stock Awards and RSU Awards in full force and effect, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then the Restricted Period relating to each such Restricted Stock Award or RSU Award shall terminate, and from and after such Change in Control, each such Restricted Stock Award or RSU Award shall be free of all other restrictions for all shares of Restricted Stock or RSUs that shall not theretofore have been acquired under the applicable Agreement. (B) Option Awards. On a Change in Control, except as otherwise provided in the applicable Agreements, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall assume all Options outstanding under this Plan or shall substitute similar options for those outstanding under this Plan, or (ii) such Options shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to assume or continue such Options or to substitute similar options for those outstanding under this Plan, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then each such Option shall become immediately exercisable for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, and shall be terminated if not exercised before or at the time of such Change of Control. (C) Cash-Out of Awards. In connection with a Change in Control, notwithstanding any of the foregoing provisions of this section 9 to the contrary, the Committee may, either pursuant to the applicable Agreement or by resolution adopted before the Change in Control, provide that any outstanding Award (or a portion thereof) shall, on such Change in Control, be cancelled in exchange for payment in cash of the amount, if any, by which the aggregate Fair Market Value of the shares of Common Stock subject to such Award exceeds the aggregate Exercise Price therefor. SECTION 10. WITHHOLDING TAXES Federal, state or local law may require the withholding of taxes resulting from the grant or vesting of an Award or the exercise of an Option. The Company may permit or require (subject to such conditions or procedures as may be established by the Committee) any such tax withholding obligation of a Participant to be satisfied by any of the following means, or by any combination of such means: (i) cash payment by such Participant to the Company; (ii) withholding from the shares of Common Stock otherwise issuable to such Participant pursuant to the vesting or exercise of an Award of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation; or (iii) delivery by the Participant to the Company of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation arising from the vesting or exercise of an Award. If the payment


 
16 or delivery specified in clause (i) or (iii) of the preceding sentence is required but is not paid by a Participant, the Company may refuse to issue Common Stock to such Participant under this Plan. SECTION 11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends, the number or kind of shares that may be issued under this Plan pursuant to section 3 hereof and the number or kind of shares subject to, or the price per share under any outstanding Award, shall be adjusted, automatically and without notice, so that the proportionate interests of the Recipients shall be maintained as before the occurrence of such event; provided that no adjustment shall be made pursuant to this section 11 that would (i) cause any Option intended to qualify as an ISO to fail to qualify as an ISO, (ii) cause an Award that is otherwise exempt from Code section 409A to become subject to Code section 409A, or (iii) cause an Award that is subject to Code section 409A to fail to satisfy the requirements of Code section 409A. SECTION 12. AMENDMENT AND TERMINATION The Committee may amend this Plan at any time or from time to time; provided that: (i) the Committee may not, without approval by the Board, materially increase the benefits provided to Recipients under this Plan; (ii) any amendment with respect to Restricted Stock Awards or RSU Awards granted to Outside Directors must be approved by the Board; and (iii) no amendment that requires stockholder approval in order for this Plan to continue to comply with any provision of the Exchange Act, any rule promulgated by the Securities and Exchange Commission under the Exchange Act, any rule of the New York Stock Exchange or any other securities exchange on which shares of Common Stock are listed, or any other applicable law, rule or regulation, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company within the time period required under such provision. Without the approval of the stockholders of the Company, (i) neither the Board nor the Committee will authorize the amendment of any outstanding Option to reduce the Exercise Price thereof, except for adjustments made pursuant to section 11 hereof, (ii) no outstanding Option will be cancelled and replaced with another Option Award having a lower Exercise Price, or for another Award, or for cash, except as provided in section 9 or 11 hereof, and (iii) no Option will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award; provided that this sentence is intended to prohibit, without stockholder approval, the re-pricing of Options that have Exercise Prices above Fair Market Value and will not be construed to limit or prohibit any adjustment pursuant to section 9 or 11 hereof. The Committee may terminate this Plan at any time; provided that such termination shall not affect any Awards theretofore made or any stock options theretofore granted under either of the Prior Plans and such Awards and stock options shall continue to be subject to all terms and conditions of this Plan (including the second paragraph of section 1 hereof) notwithstanding such termination. SECTION 13. MISCELLANEOUS PROVISIONS (A) No Rights to Awards. No Person has or shall have any claim or right to be granted an Award under this Plan. (B) Assignment and Transfer. No right or interest of any Recipient under this Plan or in any Award may be assigned or transferred as a whole or in part, directly or indirectly, by operation of law or otherwise (except by will or the laws of descent and distribution), including by way of execution, levy, garnishment, attachment, pledge or bankruptcy or in any other manner, and no such rights or interests of any Recipient in this Plan shall be subject to any obligation or liability of such Recipient; provided that the Committee may determine that a Recipient’s rights and interests under this Plan or in any Award may be made transferable by such Recipient during his or her lifetime, subject to such conditions as the Committee may specify. Except as provided in section 6 hereof, no Award shall entitle the Recipient thereof, as such, or any of such Recipient’s Beneficiaries or Personal


 
17 Representative, to any rights of a stockholder of the Company, unless and until shares subject to such Award are issued to and registered on the Company’s records in the name or names of such Recipient, Beneficiaries or Personal Representative, as the case may be, and then only with respect to such shares. (C) Compliance with Legal and Exchange Requirements. This Plan, the grant and exercise of Awards hereunder, the issuance of Common Stock and other interests hereunder, and the other obligations of the Company under this Plan and any Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as the Committee may determine are necessary or advisable. The Company or the Committee may postpone the grant or exercise of any Award, the issuance or delivery of Common Stock under any Award or any other action permitted under this Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation and may require any Recipient to make such representations and furnish such information as the Committee may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with any and all applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of this Plan or any Agreement to recognize the exercise of any Award or otherwise to sell or issue Common Stock in violation of any such law, rule or regulation. Any postponement of the exercise or settlement of any Award under this section 13(C) shall not extend the term of any Award. Neither the Company nor any Subsidiary nor any director or officer of the Company shall have any obligation or liability to any Recipient with respect to any Award (or Common Stock issuable thereunder) that shall lapse because of any such postponement. (D) Section 409A. Awards granted under this Plan shall be designed and administered in a manner that they are either exempt from the application of, or comply with, the requirements of Code section 409A. To the extent that the Committee determines that any Award is subject to Code section 409A, the Agreement relating to such Award shall incorporate terms and conditions necessary to avoid the imposition on the Recipient of additional tax under Code section 409A. Notwithstanding anything to the contrary in this Plan or any Agreement (unless such Agreement provides otherwise with specific reference to this section 13(D)): (i) no Award shall be granted, deferred, accelerated, extended, paid, settled, substituted or modified under this Plan in a manner that would result in the imposition on a Recipient of additional tax under Code section 409A; and (ii) if an Award is subject to Code section 409A, and if the Recipient to whom such Award is granted is a “specified employee” (as defined in Code section 409A, with such classification to be determined in accordance with methodology established by the Company), no distribution or payment of any amount under such Award shall be made before a date that is six months following the date of such Recipient’s “separation from service” (as defined in Code section 409A) or, if earlier, the date of such Recipient’s death. The Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Code section 409A; provided that the Company does not and shall not make any representation or warranty that any Award under this Plan will qualify for favorable tax treatment under Code section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Recipient for any tax, interest or penalties a Recipient might owe as a result of the grant, holding, vesting, exercise or payment of any Award. (E) Ratification and Consent. By accepting any Award under this Plan, each Recipient and each Personal Representative or Beneficiary claiming under or through such Recipient shall be conclusively deemed to have accepted, ratified and consented to all of the terms and conditions of this Plan and any and all action taken under this Plan by the Company, any Subsidiary, the Board or the Committee. (F) Other Compensation. Nothing in this Plan shall prevent, limit or otherwise affect the right, power and authority of the Board with respect to any other or additional compensation arrangements. (G) Grant Date. Each Recipient shall be deemed to have been granted an Award on the date that the Committee grants such Award under this Plan or such later date as the Committee shall determine at the time such grant is authorized. (H) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.


 
18 (I) Forfeiture Provision. Except as otherwise expressly provided by the applicable Agreement, the Committee may require a Recipient to forfeit all unexercised, unearned, unvested or unpaid Awards, if: (1) the Recipient, while employed by the Company or any Subsidiary, prepares to engage or engages, directly or indirectly, without the written consent of the Company, in any manner or capacity, as principal, agent, partner, officer, director, employee or otherwise, in any business or activity competitive with any business conducted by the Company or any Subsidiary, as determined by the Committee; (2) the Recipient performs any act or engages in any activity that the Committee determines is materially detrimental to the best interests of the Company or any Subsidiary; or (3) the Recipient materially breaches any agreement with or duty to the Company or any Subsidiary, including any non-competition agreement, non-solicitation agreement, confidentiality or non-disclosure agreement, or assignment of inventions or ownership of works agreement, as determined by the Committee. (J) Participants Outside the United States. Notwithstanding any provision of this Plan to the contrary, to comply with the laws of other countries in which the Company and the Subsidiaries operate or have Employees or Consultants, the Committee shall have the power and authority to: (i) determine which Subsidiaries shall be covered by this Plan; (ii) determine which Employees or Consultants outside the United States are eligible to participate in this Plan; (iii) modify the terms and conditions of any Award granted to Employees or Consultants outside the United States to comply with applicable foreign laws; (iv) modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (v) take any action, before or after an Award is made, that it deems necessary or advisable to obtain approval or comply with any government regulatory exemption or requirement; provided that the Committee is not authorized to take any action hereunder, and no Awards shall be granted, that would violate any applicable law. (K) Successors. All obligations of the Company under this Plan and with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other event, or a sale or disposition of all or substantially all of the business or assets of the Company, and references to the “Company” herein and in any Agreements shall be deemed to refer to such successors. (L) Severability. If any provision of this Plan, or the application of such provision to any Person or circumstance, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Plan, or the application of such provision to Persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. (M) Construction. The headings of the sections hereof are for convenience of reference only and are not part of this Plan. As used herein, each gender includes each other gender, and the singular includes the plural and vice versa, as the context may require. Reference herein to any section includes reference to each and all subsections of such section. For purposes of this Plan, each of the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” (N) Governing Law. This Plan shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware. SECTION 14. EFFECTIVENESS OF THIS PLAN This Plan shall be submitted to the stockholders of the Company for their approval at their annual meeting scheduled to be held on April 26, 2011, or at such other annual or special meeting as the Board may specify, or any adjournment or postponement thereof. This Plan will be effective as of the date of its approval by the stockholders of the Company.


 
1 Exhibit 10.12 2017 TIME-BASED RESTRICTED STOCK UNIT AGREEMENT Company: Simpson Manufacturing Co., Inc. Recipient: The recipient’s name (the “Recipient”) is set forth on the Recipient’s online award acceptance page on Morgan Stanley Smith Barney’s StockPlan Connect website (the “Acceptance Page”) at https://www.stockplanconnect.com, which is incorporated by reference to this Agreement. The Number of Shares of Common Stock Subject to RSUs Granted Hereunder (the “RSU Shares”): The aggregate number of shares of Common Stock as stated on the Acceptance Page. The Effective Date of the Award (the “Award Date”): A date in 2017 as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. The Date the RSU Shares Start To Vest (the “Vesting Start Date”): A date subsequent to the Award Date as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Vesting Schedule (the “Vesting Schedule”): One fourth of the RSU Shares will vest on each of the Vesting Start Date and the first, second and third anniversaries of the Vesting Start Date; provided, however, that if any of such dates falls on a weekend or federal holiday, the applicable one fourth of the RSU Shares shall vest on the immediately following business day.1 Vesting Period (the “Vesting Period”): A period beginning on the Vesting Start Date, and ending on the third anniversary of the Vesting Start Date; provided, however, that if such anniversary date falls on a weekend or federal holiday, such period shall end on the immediately following business day.2 This TIME-BASED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made as of the Award Date stated on the Acceptance Page by and between Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), and the Recipient named on the Acceptance Page, with reference to the following facts: Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in the amended and restated Simpson Manufacturing Co., Inc. 2011 Incentive Plan effective on April 21, 2015 (as amended from time to time, the “Plan”). The Board has delegated to the Committee all authority to administer 1 For example, if the Vesting Start Date is determined by the Committee to be February 15, 2017, then 1/4 of the RSU Shares will vest on each of February 15, 2017, February 15, 2018, February 15, 2019 and February 18, 2020 (because February 15, 2020 falls on a Saturday and February 17, 2020 is a federal holiday, President’s day, the immediately following business day is February 18, 2020) and the Vesting Period should be from February 15, 2017 to February 18, 2020. 2 See footnote 2, supra.


 
2 the Plan. The Committee has determined to grant to the Recipient, under the Plan, time-based Restricted Stock Units (the “RSUs”) with respect to the RSU Shares stated on the Acceptance Page. To evidence the RSUs and to set forth the terms and conditions thereof, the Company and the Recipient agree as follows: 1. Confirmation of Grant. (a) The Company grants the RSUs to the Recipient and the Recipient agrees to accept the RSUs and participate in the Plan, effective as of the Award Date. As a condition of the grant, this Agreement and the RSUs shall be governed by the terms and conditions of the Plan and shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery policy. (b) The RSUs shall be reflected in a bookkeeping account maintained by the Company through the date on which the RSUs become fully vested pursuant to section 2 or are forfeited pursuant to section 3. If and when the RSUs become fully vested pursuant to section 2, and on the satisfaction of all other conditions applicable to the RSUs, the RSUs not forfeited pursuant to section 3 shall be settled in the number of shares of Common Stock as provided in section 1(d) and otherwise in accordance with the Plan. (c) The Company’s obligations under this Agreement shall be unfunded and unsecured. No special or separate fund shall be established therefor and no other segregation of assets shall be required or made with respect thereto. The rights of the Recipient under this Agreement shall be no greater than those of a general unsecured creditor of the Company. (d) Except as otherwise provided in this Agreement and the Plan, the RSUs shall be settled by the issuance and delivery of the RSU Shares, or as provided in this Section 1(d), by cash or a combination thereof (as determined by the Committee in its sole discretion), within sixty days after the RSUs have vested pursuant to section 2 subject to satisfaction of any other terms and conditions applicable to the RSUs; provided, however, that to the extent the Committee determines that any of the RSUs are subject to Code section 409A, to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such RSUs shall be made until the earliest of the date (i) set for such RSUs to vest according to the Vesting Schedule (a time or fixed schedule specified for the purpose of Code section 409A), (ii) of the Recipient’s “separation from service” (as defined in Code section 409A), (iii) of the Recipient’s death, or (iv) when the Recipient becomes “disabled” (as defined in Code section 409A); and further provided that, the number of the RSU Shares issued or delivered (or for which a cash payment is made) to the Recipient in any calendar year, together with the number of shares of Common Stock issued or delivered (or for which a cash payment is made) to the Recipient in the same calendar year under any other RSU Awards, shall not exceed the annual maximum aggregate number of shares of Common Stock issuable or deliverable under RSU Awards as set forth in the Plan that is effective at the time of the issuance or delivery of (or making a cash payment for) the RSUs. Notwithstanding the foregoing, to the extent the Committee determines that any of the RSUs are subject to Code section 409A and the Recipient is a Specified Employee3 on the date of his or 3 The determination of whether the Recipient is a Specified Employee will be made annually by the Committee or its delegate pursuant to Code section 409A for the 12-month period ending every December 31st (the “Specified Employee Identification Date”). The Committee’s determination shall be final and binding on the Recipient. If the Recipient was determined by the Committee as a Specified Employee at any time during such 12-month period ending on the Specified Employee Identification Date, he or she shall be considered a Specified Employee for the 12-month period commencing on the February 1st immediately following the Specified Employee Identification Date (i.e., from February 1st to the following January 31st), even if he or she is no longer employed or engaged by the Company on or after the Specified Employee Identification Date. For the purposes of this section 1(d), a “Specified Employee” shall mean: • the Recipient owns 5% or more of all outstanding Common Stock; • the Recipient owns 1% or more of all outstanding Common Stock and has an annual compensation of more than $150,000; and/or • the Recipient is among the top 50 most highly-compensated officers of the Company and the Subsidiaries forming a controlled group of corporations within the meaning of Code section 1563(a) (based on total W-2 compensation plus elective 401(k) plan deferrals) and has an annual compensation exceeding the indexed dollar limit then in effect pursuant to Treas. Reg. § 1.409A-1(i) promulgated under Code (which is $175,000 for 2017).


 
3 her “separation from service” (as defined in Code section 409A), to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such RSUs that is otherwise payable pursuant to this Section 1(d) upon a separation from service shall be made before the date that is six months after the date of the Recipient’s separation from service. In settling the RSUs pursuant to the foregoing, the Company (or its acquirer or successor) shall have the option (as determined by the Committee in its sole discretion) to make or provide for a cash payment to the Recipient, in exchange for the cancellation of the vested RSUs (or any portion thereof), in an amount equal to the product of (A) the number of the RSU Shares under the cancelled RSUs and (B) the average closing price of a share of Common Stock over the period ending on the date the RSUs (or the portion thereof) become vested and starting 100 days prior to that date. 2. Vesting. Subject to the terms and conditions of this Agreement and the Plan and unless otherwise forfeited pursuant to section 3,4 the RSUs shall vest (that is, the Restricted Period with respect thereto shall terminate) pursuant to the Vesting Schedule; provided, however, that the unvested RSUs shall vest in full during the Vesting Period on the date, (a) immediately preceding the effective date of the Recipient’s Retirement as determined by the Committee in relation to the RSUs: either (A) after reaching age 70 or (B) after reaching age 55 and having been employed or engaged by the Company or any Subsidiary for 15 years (provided that, if the Recipient retires after reaching age 56, for each year after age 55, the Recipient may work one year less for the Company or any Subsidiary, as applicable, and still be qualified for Retirement under this sub-section (B)5), (b) immediately preceding the Recipient’s death or the effective date of the Recipient’s Disability, or (c) immediately preceding the effective date of the termination of the Recipient’s employment or engagement with the Company or any Subsidiary by the Company or Subsidiary (which, whenever used in this Agreement, includes any such entity’s successor) without Cause,6 or by the Recipient for a Good Reason,7 in either case only in connection with or within 24 months following a Sale Event.8 The Recipient explicitly acknowledges and agrees that the granting or vesting of the RSUs 4 For example, pursuant to section 3, before the Vesting Start Date, (I) if the Recipient’s employment or engagement with the Company or any Subsidiary is terminated by the Recipient for any reason, or (II) if the Recipient retires, dies or becomes Disabled, the RSUs shall be forfeited in their entirety and no distribution or payment of any amount under such RSUs shall ever be made to the Recipient. 5 For example, if the Recipient retires at age 60 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 10 years to be qualified for retirement and receive the RSU Shares; and for example, if the Recipient retires at age 65 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 5 years to be qualified for retirement and receive the RSU Shares. 6 “Cause” means, in addition to any cause for termination as provided in any other applicable written agreement between the Company, the applicable Subsidiary, or the acquirer or successor of the Company or Subsidiary, and the Recipient, (i) conviction of any felony, (ii) any material breach or violation by the Recipient of any agreement to which the Recipient and the Company or the Subsidiary that employs or engages the Recipient are parties or of any published policy or guideline of the Company, (iii) any act (other than retirement or other termination of employment or engagement) or omission to act by the Recipient which may have a material and adverse effect on the business of the Company or Subsidiary or on the Recipient’s ability to perform services for the Company or Subsidiary, including habitual insobriety or substance abuse or the commission of any crime, gross negligence, fraud or dishonesty with regard to the Company or Subsidiary, or (iv) any material misconduct or neglect of duties and responsibilities by the Recipient in connection with the business or affairs of the Company or Subsidiary; provided, however, that the Recipient first shall have received written notice, which shall specifically identify what the Company or Subsidiary believes constitutes Cause, and if the breach, act, omission, misconduct or neglect is capable of being cured, the Recipient shall have failed to cure after 15 days following such notice. 7 A “Good Reason” means the occurrence of any of the following events: (i) a material adverse change in the functions, duties or responsibilities of the Recipient’s position (other than a termination by the Company or Subsidiary) which would meaningfully reduce the level, importance or scope of such position (provided that, a change in the person, position and/or department to whom the Recipient is required to report shall not by itself constitute a material adverse change in the Recipient’s position), (ii) the relocation of the Company or Subsidiary office at which the Recipient is principally located immediately prior to a Sale Event (the “Original Office”) to a new location outside of the metropolitan area of the Original Office or the failure to place the Recipient’s own office in the Original Office (or at the office to which such office is relocated which is within the metropolitan area of the Original Office), or (iii) a material reduction in the Recipient’s base salary and incentive compensation opportunity as in effect immediately prior to a Sale Event; provided, however, that, within 90 days of the incident that provides the basis for a Good Reason termination, the Recipient shall have provided the Company or Subsidiary a written notice specifically identifying what the Recipient believes constitutes a Good Reason, and the Company or Subsidiary shall have failed to cure the adverse change, relocation or compensation reduction after 30 days following such notice. 8 A “Sale Event” shall mean (i) the sale or other disposition of all or substantially all of the assets of the Company or the Subsidiary that employs or engages the Recipient, including a majority or more of all outstanding stock of the Subsidiary, on a


 
4 as well as the Recipient’s holding of the RSU Shares shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery, stock ownership, and hedging, pledging and trading policies. 3. Forfeiture. Anything herein to the contrary notwithstanding, (a) all RSUs that are not vested in accordance with section 2 shall terminate immediately and be forfeited in their entirety if and at such time as (i) the Recipient ceases to be an Employee, Outside Director or Consultant, as the case may be, or (ii) 24 months have passed immediately following a Sale Event (provided that, in the event the surviving or acquiring entity or the new entity resulting from a Sale Event substitutes a similar equity award for the RSUs, such award will continue in accordance with its own terms and conditions), and (b) all RSUs, to the extent not theretofore settled in accordance with section 1(d), shall terminate immediately and be forfeited in their entirety when and as provided in section 13(I) of the Plan. 4. Tax Withholding. Pursuant to section 10 of the Plan, the Company may require the Recipient to enter into an arrangement providing for the payment in cash, Common Stock or otherwise by the Recipient to the Company of any tax withholding obligation of the Company arising by reason of (a) the granting or vesting of the RSUs, (b) the lapse of any substantial risk of forfeiture to which the RSUs or the RSU Shares are subject, or (c) the disposition of the RSUs or the RSU Shares, to the extent such arrangement does not cause a loss of the Section 16(b) exemption pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. 5. Representations and Warranties of the Company. The Company represents and warrants to the Recipient that the RSU Shares, when issued and delivered on the vesting of the RSUs in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. 6. Recipient Representations. The Recipient represents and warrants to the Company that the Recipient has received and read this Agreement and the Plan, that the Recipient has consulted with the Recipient’s own legal, financial and other advisers regarding this Agreement and the Plan to the extent that the Recipient considered necessary or appropriate, that the Recipient fully understands and accepts all of the terms and conditions of this Agreement and the Plan, and that the Recipient is relying solely on the Recipient’s own advisers with respect to the tax consequences of this Agreement and the RSUs. 7. Change in Control. Notwithstanding section 9 of the Plan, a Change in Control shall be treated as a Sale Event with respect to the RSUs granted hereunder. 8. Adjustments to Reflect Capital Changes. Subject to and except as otherwise provided in section 9 of the Plan, the number and kind of shares subject to the RSUs shall be appropriately adjusted, as the Committee may determine pursuant to section 11 of the Plan, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends. 9. No Rights as Stockholder. Neither the granting or vesting of the RSUs nor the issuance or delivery of the RSU Shares shall entitle the Recipient, as such, or any of the Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until the RSU Shares are registered on the Company’s records in the name or names of the Recipient or the Recipient’s Beneficiaries or Personal Representative, as the case may be, and then only with respect to such RSU Shares so registered. consolidated basis to one or more unrelated persons or entities, (ii) a Change in Control, or (iii) the sale or other transfer of outstanding Common Stock to one or more unrelated persons or entities (including by way of a merger, reorganization or consolidation in which the outstanding Common Stock are converted into or exchanged for securities of the successor entity) where the stockholders of the Company, immediately prior to such sale or other transfer, would not, immediately after such sale or transfer, beneficially own shares representing in the aggregate more than 50 percent of the voting shares of the acquirer or surviving entity (or its ultimate parent corporation, if any). For the purpose of sub-section (iii) of this definition, only voting shares of the acquirer or surviving entity (or its ultimate parent, if any) received by stockholders of the Company in exchange for Common Stock shall be counted, and any voting shares of the acquirer or surviving entity (or its ultimate parent, if any) already owned by stockholders of the Company prior to the transaction shall be disregarded.


 
5 10. No Right to Continued Employment. Nothing in this Agreement shall confer on the Recipient any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate the Recipient’s employment or service at any time. If the Award of the RSUs is in connection with the Recipient’s performance of services as a Consultant or Outside Director, references to employment, employee and similar terms shall be deemed to include the performance of services as a Consultant or an Outside Director, as the case may be; provided that no rights as an Employee shall arise by reason of the use of such terms. 11. Regulatory Compliance. Notwithstanding anything herein to the contrary, the issuance and delivery of the RSU Shares shall in all events be subject to and governed by section 13(C) of the Plan. 12. Notices. Any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally, when transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office in California, and, if to the Recipient, at the Recipient’s address on the Company’s records. Either party may change such party’s address or facsimile number from time to time by notice hereunder to the other. 13. Entire Agreement. This Agreement and the Plan together contain the entire agreement of the parties and supersede all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between the parties, regarding the RSUs. The Recipient specifically acknowledges and agrees that all descriptions of the RSUs in any prior letters, memoranda or other documents provided to him or her by the Company or any Subsidiary are hereby replaced and superseded in their entirety by this Agreement and shall be of no further force or effect. To the extent there is any inconsistency between the descriptions of any such documents and the terms of this Agreement, the terms of this Agreement shall prevail. 14. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by the Recipient and the Company. 15. Assignment. The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of this Agreement, any of the RSUs or any other rights hereunder, and shall not delegate any duties hereunder, except only as may be permitted pursuant to section 13(B) of the Plan, and any such action or transaction that may otherwise be attempted or purported by the Recipient shall be void and of no effect. 16. Successors. Subject to section 15, this Agreement shall bind and inure to the benefit of the Company and the Recipient and their respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any other Person any right or benefit in or under this Agreement or the Plan. 17. Separate Payments. All amounts payable in connection with the RSUs hereunder or any other Awards granted under the Plan shall be treated as separate payments for the purposes of Code section 409A. 18. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 20. Order of Precedence and Construction. This Agreement, the RSUs and the RSU Shares are subject to all provisions of the Plan (a copy of which is attached hereto as Exhibit A), including the Restricted Stock Unit provisions of section 6 thereof, and are further subject to all interpretations and amendments thereto that may from time to time be adopted pursuant to the Plan. In the event of any inconsistency between any provision of this Agreement and any provision of the Plan, the provision of the Plan shall govern. The headings of sections herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction or


 
6 interpretation of any provision hereof. Whenever the context requires, the use in this Agreement of the singular number shall be deemed to include the plural and vice versa, and each gender shall be deemed to include each other gender. References herein to sections refer to sections of this Agreement, except as otherwise stated. The meaning of general words is not limited by specific examples introduced by “includes”, “including”, “for example”, “such as” or similar expressions, which shall be deemed to be followed by the phrase “without limitation”. 21. Further Assurances. The Recipient agrees to do and perform all acts and execute and deliver all additional documents, instruments and agreements as the Company or the Committee may reasonably request in connection with this Agreement. 22. Data Privacy. Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Recipient’s personal data as described in this Agreement by and among, as applicable, Recipient’s employer, the Company, and any Subsidiary for the exclusive purposes of implementing, administering, and managing Recipient’s participation in the Plan. Recipient understands that the Company and the employing Subsidiary may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, and any shares of stock or directorships held in the Company or any Subsidiary, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor (“Personal Data”). Recipient understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these entities may be located in Recipient’s country, or elsewhere, and that the third parties’ country may have different data privacy laws and protections than Recipient’s country. Recipient understands that he or she may request a list with the names and addresses of any potential third parties in receipt of the Personal Data by contacting the Company’s Equity Plans Administrator. Recipient authorizes the third parties to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Personal Data as may be required to a broker or other third party with whom Recipient may elect to deposit any RSU Shares received upon vest of the RSUs. Recipient understands that Personal Data will be held as long as is necessary to administer and manage Recipient’s participation in the Plan. Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s Equity Plans Administrator. Recipient understands that refusal or withdrawal of consent may affect Recipient’s ability to realize benefits from the RSUs. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the Company’s Equity Plans Administrator. 23. Electronic Delivery. The Company may, in its sole discretion, decide (a) to deliver or effect by electronic means any documents or communications related to the RSUs granted under the Plan, Recipient’s participation in the Plan, or future Awards that may be granted under the Plan or (b) to request by electronic means Recipient’s consent to participate in the Plan and other communications related to the RSUs or the Plan. Recipient hereby consents to receive such documents and communications by electronic delivery and, if requested, to agree to participate in the Plan and deliver or effect such other communications through an on-line or electronic system established and maintained by the Company or any third party designated by the Company. [Signature Page Follows]


 
7 IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed by or on behalf of the Company and the Recipient as of the Award Date. COMPANY: SIMPSON MANUFACTURING CO., INC. By /s/Brian J. Magstadt, Chief Financial Officer Authorized Signatory for the Compensation and Leadership Development Committee of the Board of Directors ACCEPTANCE OF AGREEMENT: Through the electronic submission of his or her consent to this Restricted Stock Unit Agreement in accordance with the instructions on Morgan Stanley Smith Barney’s StockPlan Connect website, the Recipient hereby confirms, ratifies, approves and accepts all of the terms and conditions of this Restricted Stock Unit Agreement.


 
8 Exhibit A SIMPSON MANUFACTURING CO. INC. 2011 INCENTIVE PLAN Adopted April 26, 2011, and Amended and Restated April 21, 2015 SECTION 1. PURPOSE The purpose of the Simpson Manufacturing Co., Inc. 2011 Incentive Plan is to promote the interests of the Company and its stockholders by providing incentives to directors, officers and employees of, and consultants to, the Company and the Subsidiaries. Accordingly, the Company may grant to selected officers, Employees, Consultants and Outside Directors Option Awards, Restricted Stock Awards and RSU Awards in an effort to attract and retain qualified individuals as employees, directors and consultants and to provide such individuals with incentives to continue service with the Company, devote their best efforts to the Company and improve the Company’s economic performance, thus enhancing the value of the Company for the benefit of stockholders. This Plan amends and restates in their entirety, and incorporates and supersedes, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended (the “1994 Plan”), and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended (the “1995 Plan” and, together with the 1994 Plan, the “Prior Plans”); provided that any stock option granted under the 1994 Plan or the 1995 Plan that has not been exercised in full and that has not expired or terminated shall continue in effect in accordance with its terms and conditions and shall continue to be subject to and governed by the 1994 Plan or the 1995 Plan, respectively, as in effect immediately before the adoption of this Plan. SECTION 2. DEFINITIONS As used in this Plan, the following terms have the meanings indicated: “Agreement” means an agreement, in written or electronic form, entered into by the Company and a Recipient setting forth the terms and conditions applicable to an Award granted under this Plan. “Award” means an Option Award, a Restricted Stock Award or an RSU Award, in each case granted under this Plan. “Beneficial Ownership” and “Beneficially Own” have the meanings set forth in Rule 13d-3 under the Exchange Act. “Beneficiary” means each Person designated as such by a Recipient or, if no designation has been made, each Person entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Recipient’s death. “Board” means the Board of Directors of the Company. “Change in Control” means the occurrence of any one (or more) of the following events: (i) the consummation of a consolidation or merger of the Company in which the Company is not the surviving corporation; (ii) the consummation of a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding such reverse merger are converted by virtue of such reverse merger into other property, whether securities, cash or otherwise; or (iii) the approval by the stockholders of the Company of a plan or proposal for the dissolution and liquidation of the Company; provided that a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the Common Stock immediately before such transaction or transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately thereafter.


 
9 “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means the Compensation and Leadership Development Committee of the Board, as from time to time constituted, or any successor committee of the Board with similar functions, which shall consist of three or more members, each of whom shall be an outside director as defined in the regulations issued under Code section 162(m) and a non-employee director within the meaning of applicable regulatory requirements, including those promulgated under Exchange Act section 16. “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustment pursuant to section 11 hereof. “Company” means Simpson Manufacturing Co., Inc., a Delaware corporation, or any successor thereto. “Consultant” means a Person that (i) renders services to the Company as an independent contractor (and not as an Employee or Outside Director) pursuant to a contract between such Person and the Company and (ii) is selected by the Committee to receive an Award under this Plan. “Disability” means (i) in the case of a Participant, determination by the Committee that he or she has become unable to perform the functions required by his or her regular job due to physical or mental illness or incapacity and, in connection with the grant of an ISO, he or she is within the meaning of that term as provided in Code section 22(e)(3), and (ii) in the case of an Outside Director, determination by the Committee that he or she is unable to attend to his or her duties and responsibilities as a member of the Board due to physical or mental illness or incapacity. “Employee” means a regular, full-time or part-time employee of the Company or any Subsidiary; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of ISOs, the term “Employee” shall have the meaning ascribed to such term in Code section 3401(c). “Exercise Price” means, with respect to each share of Common Stock subject to an Option, the price fixed by the Committee at which such share may be purchased from the Company on the exercise of such Option. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Fair Market Value” means (i) as of any date, the closing sale price per share of Common Stock as reported on the Composite Tape of the New York Stock Exchange, or if there are no sales on such day, on the next prior trading day during which a sale occurred; and (ii) in the absence of such market for the shares of Common Stock, the fair market value per share of Common Stock determined by the Committee in good faith (which determination shall, to the extent applicable, be made in a manner that complies with Code sections 422(b) and 409A). “Incentive Stock Option” or “ISO” means an Option that is intended by the Committee to meet the requirements of Code section 422 or any successor provision. “ISO Award” means an Award of an Incentive Stock Option pursuant to section 9 hereof. “NQSO” means an Option granted pursuant to this Plan that does not qualify as an Incentive Stock Option. “NQSO Award” means an Award of an NQSO pursuant to section 7 hereof. “Option” means the right to purchase Common Stock at an Exercise Price to be specified and on terms to be designated by the Committee or otherwise determined pursuant to this Plan. The Committee shall designate each Option as either an NQSO or an Incentive Stock Option. “Option Award” means an Award of an Option pursuant to section 7 hereof.


 
10 “Outside Director” means a director of the Company, who is not also an Employee and who is selected by the Committee to receive an Award under this Plan. “Participant” means an Employee who is selected by the Committee to receive an Award under this Plan. “Performance Goals” means performance goals established by the Committee from time to time. Such goals may be absolute in their terms or measured against or in relation to other companies comparably or otherwise situated. Such performance goals may be particular to a Participant or the Subsidiary, division or other unit in which the Participant works or may be based on the performance of the Company as a whole. The Performance Goals applicable to any Award that is intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m) shall be based on one or more of (i) earnings, (ii) unit sales, sales volume or revenue, (iii) sales growth, (iv) stock price (including comparison with various stock A-3 market indicies), (v) return on equity, (vi) return on investment, (vii) total return to stockholders, (viii) economic profit, (ix) debt rating, (x) operating income, (xi) cash flows, (xii) cost targets, (xiii) return on assets or margins or (xiv) implementation, completion or attainment of measurable objectives with respect to (1) software development, (2) new distribution channels, (3) customer growth targets, (4) acquisition identification and integration, (5) manufacturing, production or inventory targets, (6) new product introductions, (7) product quality control, (8) accounting and reporting, (9) recruiting and maintaining personnel, or (10) compliance or regulatory program targets. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time or against other companies or financial metrics), (c) on a per share basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company or (e) on a pre-tax or after tax basis. “Person” has the meaning ascribed to that term in Exchange Act section 3(a)(9), as modified and used in Exchange Act sections 13(d) and 14(d), except that such term shall not include (a) the Company, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (c) an underwriter temporarily holding securities pursuant to an offering on behalf of the Company. “Personal Representative” means the Person or Persons who, on the Disability or incompetence of a Recipient, shall have acquired on behalf of the Recipient by legal proceeding or otherwise the right to receive benefits pursuant to this Plan. “Plan” means this Simpson Manufacturing Co., Inc. 2011 Incentive Plan. “Recipient” means a Participant, an Outside Director or a Consultant, as appropriate. “Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals or the occurrence of other events, as determined by the Committee). “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award, which are subject to the restrictions, terms, and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Restricted Stock Award” means an Award of Restricted Stock pursuant to section 6 hereof. “Restricted Stock Units” or “RSUs” means units issued pursuant to an RSU Award, which are valued in terms of shares of Common Stock equivalents and are subject to the restrictions, terms and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Retirement” means (i) in the case of a Participant, retirement from employment with the Company or any Subsidiary at any time as described in the Simpson Manufacturing Co., Inc. Profit Sharing Plan for Salaried Employees or in any successor plan, as from time to time in effect, or as otherwise determined by the Committee, (ii) in the case of an Outside Director, retirement from the Board after the date, if any, established by the Committee


 
11 as the date for mandatory retirement, as from time to time in effect, or as otherwise determined by the Committee, and (iii) in the case of a Consultant, such date as is determined by the Committee. “RSU Award” means an Award of Restricted Stock Units pursuant to section 6 hereof. “Subsidiary” means a corporation, limited liability company, partnership or other entity (i) more than fifty percent of the outstanding voting equity securities (representing the right to vote for the election of directors or other managing authority) are now or hereafter owned or controlled, directly or indirectly, by the Company, or (ii) which does not have outstanding voting equity securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than fifty percent of the ownership interests of which, representing the right generally to make decisions for such entity, is now or hereafter owned or controlled, directly or indirectly, by the Company; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall have the meaning ascribed to such term in Code section 424(f), as interpreted by the regulations thereunder and applicable law. “Tax Date” means the date the withholding tax obligation arises with respect to an Award. SECTION 3. STOCK SUBJECT TO PLAN (A) Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, 16,320,000 shares of Common Stock are reserved for issuance under this Plan, any or all of which may be delivered with respect to Option Awards, Restricted Stock Awards and RSU Awards and any or all of which may be authorized and unissued shares or treasury shares; provided that such 16,320,000 shares include all shares heretofore reserved for issuance pursuant to the Prior Plans. Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, the following limits shall apply with respect to Awards that are intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m): (i) the maximum aggregate number of shares of Common Stock that may be subject to Options granted in any calendar year to any one Participant shall be 150,000 shares; and (ii) the maximum aggregate number of Restricted Stock Awards and shares of Common Stock issuable or deliverable under RSU Awards granted in any calendar year to any one Participant shall be 100,000 shares. (B) Shares of Common Stock subject to Awards under this Plan or stock options granted under the Prior Plans that are forfeited, terminated, canceled or settled without the delivery of Common Stock under this Plan or the Prior Plans, respectively, will again be available for Awards under this Plan as if such Awards or grants had not been made; provided that, notwithstanding any other provision herein to the contrary, the aggregate number of shares of Common Stock that may be issued under this Plan shall not be increased by (i) shares of Common Stock tendered in full or partial payment of the Exercise Price of any Option or any stock option granted under either of the Prior Plans, (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy any tax withholding obligation, or (iii) shares of Common Stock that are repurchased by the Company. (C) Notwithstanding anything in this section 3 to the contrary and solely for purposes of determining whether shares are available for the grant of ISOs, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this section 3 that, if taken into account, would cause this Plan to fail the requirement under Code section 422 that this Plan designate a maximum aggregate number of shares that may be issued. SECTION 4. ADMINISTRATION The Committee shall have exclusive authority to administer this Plan. In addition to any implied powers and duties that may be needed to carry out the provisions hereof, the Committee shall have all the powers vested in it by the terms hereof, including exclusive authority to select the Recipients, to determine the type, size and terms of any and all Awards to be made to each Recipient, to determine the time when Awards will be granted, and to prescribe the form, terms and conditions of any Agreement relating to any Award under this Plan. The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, to make any other determinations that the Committee believes necessary or advisable for the administration hereof, and to correct any defect or supply any omission or reconcile any


 
12 inconsistency in this Plan or in any Award in the manner and to the extent that the Committee deems desirable and consistent with the intent of this Plan. The Committee may exercise any and all of the Committee’s rights, powers, authority and discretion under this Plan in the Committee’s absolute and exclusive discretion, and the Committee is authorized and empowered to grant or give any consent, approval or authorization, make any determination or do or perform any other act or thing conditionally or unconditionally, arbitrarily, or inconsistently in varying or similar circumstances, without any accountability to any Recipient, except only as otherwise expressly provided by this Plan or any Agreement with such Recipient. Any decision, determination, direction or other action of the Committee in the administration of this Plan shall be final, binding and conclusive for all purposes, subject only to the further exercise of authority of the Committee hereunder. SECTION 5. ELIGIBILITY Awards may be granted only to Recipients; provided that no Outside Director or Consultant may be granted an ISO Award. SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNIT (RSU) AWARDS (A) Grant. Any Recipient may receive one or more Restricted Stock Awards or RSU Awards. (B) Restricted Periods. The Restricted Period for each Restricted Stock Award or RSU Award shall be set forth in the applicable Agreement. Except as otherwise provided in the applicable Agreement on a termination of employment or engagement, or pursuant to section 9 hereof in the event of a Change in Control, each Restricted Stock Award or RSU Award shall have such Restricted Period and be subject to such Performance Goals as the Committee may determine. Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Restricted Stock Award or RSU Award is made to a Recipient whose employment or service as a director or Consultant subsequently terminates for any reason before the lapse of all restrictions thereon, such Restricted Stock or RSU with respect to which such restrictions shall not have lapsed shall be forfeited to that extent by such Recipient. (C) Certain Restricted Stock Award Provisions. (1) Stockholder Rights. On the granting of a Restricted Stock Award, a Recipient shall be entitled to all rights incident to ownership of Common Stock of the Company with respect to his or her Restricted Stock, including the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid in cash or shares of Restricted Stock, as set forth in the applicable Agreement or as determined by the Committee. Each grant of Restricted Stock may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) Certificates; Dividends on Restricted Stock; Restrictions on Transferability. During the Restricted Period, each certificate representing Restricted Stock shall be registered in the respective Recipient’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in this Plan and the applicable Agreement. Each such certificate shall be deposited by the Recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, that will permit transfer to the Company of all or any portion of the Restricted Stock that may be forfeited in accordance with this Plan and the applicable Agreement. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes, except that: (i) no Recipient will be entitled to delivery of a certificate representing Restricted Stock until expiration of the restrictions applicable thereto; (ii) the Company will retain custody of all Restricted Stock issued as a dividend or otherwise with respect to an Award of Restricted Stock, which shall be subject to the same restrictions, terms and conditions as are applicable to the awarded Restricted Stock, until such time, if ever, as such Restricted Stock becomes vested, and no Restricted Stock shall bear interest or be segregated in separate accounts; (iii) subject to section 13(B) hereof, no Recipient shall have any right or power to sell, assign, transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of any Restricted Stock during the applicable Restricted Period; and (iv) unless otherwise determined and directed by the Committee, a breach of any restriction, term or condition in this Plan or the applicable Agreement or established by the Committee with respect to any Restricted Stock will cause a


 
13 forfeiture of such Restricted Stock, including any Restricted Stock issued as a dividend or otherwise with respect thereto. (D) Certain Restricted Stock Unit (RSU) Award Provisions. (1) General. Each grant of Restricted Stock Units shall constitute an agreement by the Company to issue or deliver shares of Common Stock or cash to the Recipient thereof following the end of the applicable Restricted Period in consideration of the performance of services. Each such grant of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) No Stockholder Rights. A Recipient who receives an RSU Award shall not have any rights as a stockholder with respect to the shares of Common Stock subject to such RSUs until such time, if any, as shares of Common Stock are delivered to such Recipient pursuant to the applicable Agreement. (3) Payment. Unless otherwise determined by the Committee, each Agreement relating to an RSU Award shall set forth the payment date for such RSU Award, which date shall not be earlier than the end of the applicable Restricted Period. Payment of earned Restricted Stock Units may be made in one or more installments and may be made wholly in cash, wholly in shares of Common Stock or a combination thereof, as determined by the Committee. SECTION 7. OPTION AWARDS (A) Grant. Any Recipient may receive one or more Option Awards. (B) Designation and Price. (1) Any Option granted under this Plan may be granted as an ISO or as an NQSO as shall be determined by the Committee at the time of the grant of such Option. Only Participants may be granted ISOs. Each Option shall, as directed by the Committee, be evidenced by an Agreement, which shall specify whether the Option is an ISO or an NQSO and shall contain such terms and conditions as the Committee may determine in accordance with this Plan. (2) Every ISO or NQSO shall provide for a fixed expiration date of not later than ten years from the date that such ISO or NQSO is granted. (3) The Exercise Price pursuant to each Option shall be fixed by the Committee at the time of the granting of the Option, but shall not in any event be less than the Fair Market Value on the date that such Option is granted, subject to adjustment as provided in section 11 hereof. (C) Exercise. The Committee may provide for Options granted under this Plan to be exercisable as a whole at any time or in part from time to time. Shares of Common Stock to be issued on any exercise of an Option will be issued after the Company receives (i) notice (in such form as the Committee may require) from the holder thereof of the exercise of such Option, and (ii) payment as provided in section 7(D) hereof of the aggregate Exercise Price for all shares with respect to which such Option is exercised. Each such notice and payment shall be delivered at such place and in such manner as the Committee may specify from time to time. (D) Payment. The Exercise Price for the shares of Common Stock issuable on the exercise of an Option shall be paid in full at the time of such exercise either in cash or by such other means as the Committee may approve, which may include tendering unencumbered shares of Common Stock then owned by the Recipient exercising such Option having an aggregate Fair Market Value at the time of such exercise equal to the aggregate Exercise Price of the shares being purchased on such exercise or cashless exercise through a securities broker.


 
14 (E) Expiration or Termination of Awards. (1) Participants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Participant who holds an outstanding Option dies while employed, during the period when such Participant, if Disabled, would be entitled to exercise such Option, or after such Participant’s Retirement, then such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by the Beneficiaries of the decedent for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s death. (b) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of a Participant who holds an outstanding Option ceases by reason of Disability at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by such Participant or his or her Personal Representative for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Disability. (c) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of any Participant who holds an outstanding Option ceases by reason of Retirement, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Retirement. (d) Notwithstanding any provision of this Plan to the contrary, any Option may, in the discretion of the Committee or as provided in the applicable Agreement, become exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, from and after the time the Participant ceases to be an Employee as a result of the sale or other disposition by the Company or any Subsidiary of assets or property (including shares of any Subsidiary) in respect of which such Participant shall theretofore have been employed or as a result of which such Participant’s continued employment is no longer required. (e) Except as otherwise provided in subsections (a), (b), (c) and (d) of this section 7(E)(1) and sections 9(D) and 13(I) hereof, if the employment of any Participant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Participant’s employment, for the number of shares that such Participant could have acquired on exercise of such Option immediately before the cessation of such Participant’s employment; provided that such Option shall terminate on and as of such earlier date. (2) Outside Directors and Consultants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the service of any Outside Director or Consultant who holds an outstanding Option ceases by reason of Retirement, death or Disability, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, by such Outside Director or Consultant, his or her Personal Representative or his or her Beneficiaries for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before such Outside Director’s or Consultant’s Retirement, death or Disability. (b) Except as otherwise provided in subsection (a) of this section 7(E)(2) and sections 9(D) and 13(I) hereof, if the service of any Outside Director or Consultant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Outside


 
15 Director’s or Consultant’s service, for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before the cessation of such Outside Director’s or Consultant’s service; provided that such Option shall terminate on and as of such earlier date. SECTION 8. CONTINUED EMPLOYMENT Nothing in this Plan, or in any Award granted pursuant to this Plan, shall confer on any Person any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate any Recipient’s employment or service at any time. SECTION 9. CHANGE IN CONTROL (A) Restricted Stock and RSU Awards. On a Change in Control, except as otherwise provided in the applicable Agreement and subject to compliance with Code section 409A, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall substitute similar benefits for the Restricted Stock Awards and RSU Awards outstanding under this Plan; or (ii) such Restricted Stock Awards or RSU Awards shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to substitute similar benefits for such Restricted Stock Awards and RSU Awards and refuses to continue such Restricted Stock Awards and RSU Awards in full force and effect, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then the Restricted Period relating to each such Restricted Stock Award or RSU Award shall terminate, and from and after such Change in Control, each such Restricted Stock Award or RSU Award shall be free of all other restrictions for all shares of Restricted Stock or RSUs that shall not theretofore have been acquired under the applicable Agreement. (B) Option Awards. On a Change in Control, except as otherwise provided in the applicable Agreements, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall assume all Options outstanding under this Plan or shall substitute similar options for those outstanding under this Plan, or (ii) such Options shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to assume or continue such Options or to substitute similar options for those outstanding under this Plan, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then each such Option shall become immediately exercisable for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, and shall be terminated if not exercised before or at the time of such Change of Control. (C) Cash-Out of Awards. In connection with a Change in Control, notwithstanding any of the foregoing provisions of this section 9 to the contrary, the Committee may, either pursuant to the applicable Agreement or by resolution adopted before the Change in Control, provide that any outstanding Award (or a portion thereof) shall, on such Change in Control, be cancelled in exchange for payment in cash of the amount, if any, by which the aggregate Fair Market Value of the shares of Common Stock subject to such Award exceeds the aggregate Exercise Price therefor. SECTION 10. WITHHOLDING TAXES Federal, state or local law may require the withholding of taxes resulting from the grant or vesting of an Award or the exercise of an Option. The Company may permit or require (subject to such conditions or procedures as may be established by the Committee) any such tax withholding obligation of a Participant to be satisfied by any of the following means, or by any combination of such means: (i) cash payment by such Participant to the Company; (ii) withholding from the shares of Common Stock otherwise issuable to such Participant pursuant to the vesting or exercise of an Award of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation; or (iii) delivery by the Participant to the Company of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation arising from the vesting or exercise of an Award. If the payment


 
16 or delivery specified in clause (i) or (iii) of the preceding sentence is required but is not paid by a Participant, the Company may refuse to issue Common Stock to such Participant under this Plan. SECTION 11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends, the number or kind of shares that may be issued under this Plan pursuant to section 3 hereof and the number or kind of shares subject to, or the price per share under any outstanding Award, shall be adjusted, automatically and without notice, so that the proportionate interests of the Recipients shall be maintained as before the occurrence of such event; provided that no adjustment shall be made pursuant to this section 11 that would (i) cause any Option intended to qualify as an ISO to fail to qualify as an ISO, (ii) cause an Award that is otherwise exempt from Code section 409A to become subject to Code section 409A, or (iii) cause an Award that is subject to Code section 409A to fail to satisfy the requirements of Code section 409A. SECTION 12. AMENDMENT AND TERMINATION The Committee may amend this Plan at any time or from time to time; provided that: (i) the Committee may not, without approval by the Board, materially increase the benefits provided to Recipients under this Plan; (ii) any amendment with respect to Restricted Stock Awards or RSU Awards granted to Outside Directors must be approved by the Board; and (iii) no amendment that requires stockholder approval in order for this Plan to continue to comply with any provision of the Exchange Act, any rule promulgated by the Securities and Exchange Commission under the Exchange Act, any rule of the New York Stock Exchange or any other securities exchange on which shares of Common Stock are listed, or any other applicable law, rule or regulation, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company within the time period required under such provision. Without the approval of the stockholders of the Company, (i) neither the Board nor the Committee will authorize the amendment of any outstanding Option to reduce the Exercise Price thereof, except for adjustments made pursuant to section 11 hereof, (ii) no outstanding Option will be cancelled and replaced with another Option Award having a lower Exercise Price, or for another Award, or for cash, except as provided in section 9 or 11 hereof, and (iii) no Option will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award; provided that this sentence is intended to prohibit, without stockholder approval, the re-pricing of Options that have Exercise Prices above Fair Market Value and will not be construed to limit or prohibit any adjustment pursuant to section 9 or 11 hereof. The Committee may terminate this Plan at any time; provided that such termination shall not affect any Awards theretofore made or any stock options theretofore granted under either of the Prior Plans and such Awards and stock options shall continue to be subject to all terms and conditions of this Plan (including the second paragraph of section 1 hereof) notwithstanding such termination. SECTION 13. MISCELLANEOUS PROVISIONS (A) No Rights to Awards. No Person has or shall have any claim or right to be granted an Award under this Plan. (B) Assignment and Transfer. No right or interest of any Recipient under this Plan or in any Award may be assigned or transferred as a whole or in part, directly or indirectly, by operation of law or otherwise (except by will or the laws of descent and distribution), including by way of execution, levy, garnishment, attachment, pledge or bankruptcy or in any other manner, and no such rights or interests of any Recipient in this Plan shall be subject to any obligation or liability of such Recipient; provided that the Committee may determine that a Recipient’s rights and interests under this Plan or in any Award may be made transferable by such Recipient during his or her lifetime, subject to such conditions as the Committee may specify. Except as provided in section 6 hereof, no Award shall entitle the Recipient thereof, as such, or any of such Recipient’s Beneficiaries or Personal


 
17 Representative, to any rights of a stockholder of the Company, unless and until shares subject to such Award are issued to and registered on the Company’s records in the name or names of such Recipient, Beneficiaries or Personal Representative, as the case may be, and then only with respect to such shares. (C) Compliance with Legal and Exchange Requirements. This Plan, the grant and exercise of Awards hereunder, the issuance of Common Stock and other interests hereunder, and the other obligations of the Company under this Plan and any Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as the Committee may determine are necessary or advisable. The Company or the Committee may postpone the grant or exercise of any Award, the issuance or delivery of Common Stock under any Award or any other action permitted under this Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation and may require any Recipient to make such representations and furnish such information as the Committee may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with any and all applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of this Plan or any Agreement to recognize the exercise of any Award or otherwise to sell or issue Common Stock in violation of any such law, rule or regulation. Any postponement of the exercise or settlement of any Award under this section 13(C) shall not extend the term of any Award. Neither the Company nor any Subsidiary nor any director or officer of the Company shall have any obligation or liability to any Recipient with respect to any Award (or Common Stock issuable thereunder) that shall lapse because of any such postponement. (D) Section 409A. Awards granted under this Plan shall be designed and administered in a manner that they are either exempt from the application of, or comply with, the requirements of Code section 409A. To the extent that the Committee determines that any Award is subject to Code section 409A, the Agreement relating to such Award shall incorporate terms and conditions necessary to avoid the imposition on the Recipient of additional tax under Code section 409A. Notwithstanding anything to the contrary in this Plan or any Agreement (unless such Agreement provides otherwise with specific reference to this section 13(D)): (i) no Award shall be granted, deferred, accelerated, extended, paid, settled, substituted or modified under this Plan in a manner that would result in the imposition on a Recipient of additional tax under Code section 409A; and (ii) if an Award is subject to Code section 409A, and if the Recipient to whom such Award is granted is a “specified employee” (as defined in Code section 409A, with such classification to be determined in accordance with methodology established by the Company), no distribution or payment of any amount under such Award shall be made before a date that is six months following the date of such Recipient’s “separation from service” (as defined in Code section 409A) or, if earlier, the date of such Recipient’s death. The Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Code section 409A; provided that the Company does not and shall not make any representation or warranty that any Award under this Plan will qualify for favorable tax treatment under Code section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Recipient for any tax, interest or penalties a Recipient might owe as a result of the grant, holding, vesting, exercise or payment of any Award. (E) Ratification and Consent. By accepting any Award under this Plan, each Recipient and each Personal Representative or Beneficiary claiming under or through such Recipient shall be conclusively deemed to have accepted, ratified and consented to all of the terms and conditions of this Plan and any and all action taken under this Plan by the Company, any Subsidiary, the Board or the Committee. (F) Other Compensation. Nothing in this Plan shall prevent, limit or otherwise affect the right, power and authority of the Board with respect to any other or additional compensation arrangements. (G) Grant Date. Each Recipient shall be deemed to have been granted an Award on the date that the Committee grants such Award under this Plan or such later date as the Committee shall determine at the time such grant is authorized. (H) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.


 
18 (I) Forfeiture Provision. Except as otherwise expressly provided by the applicable Agreement, the Committee may require a Recipient to forfeit all unexercised, unearned, unvested or unpaid Awards, if: (1) the Recipient, while employed by the Company or any Subsidiary, prepares to engage or engages, directly or indirectly, without the written consent of the Company, in any manner or capacity, as principal, agent, partner, officer, director, employee or otherwise, in any business or activity competitive with any business conducted by the Company or any Subsidiary, as determined by the Committee; (2) the Recipient performs any act or engages in any activity that the Committee determines is materially detrimental to the best interests of the Company or any Subsidiary; or (3) the Recipient materially breaches any agreement with or duty to the Company or any Subsidiary, including any non-competition agreement, non-solicitation agreement, confidentiality or non-disclosure agreement, or assignment of inventions or ownership of works agreement, as determined by the Committee. (J) Participants Outside the United States. Notwithstanding any provision of this Plan to the contrary, to comply with the laws of other countries in which the Company and the Subsidiaries operate or have Employees or Consultants, the Committee shall have the power and authority to: (i) determine which Subsidiaries shall be covered by this Plan; (ii) determine which Employees or Consultants outside the United States are eligible to participate in this Plan; (iii) modify the terms and conditions of any Award granted to Employees or Consultants outside the United States to comply with applicable foreign laws; (iv) modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (v) take any action, before or after an Award is made, that it deems necessary or advisable to obtain approval or comply with any government regulatory exemption or requirement; provided that the Committee is not authorized to take any action hereunder, and no Awards shall be granted, that would violate any applicable law. (K) Successors. All obligations of the Company under this Plan and with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other event, or a sale or disposition of all or substantially all of the business or assets of the Company, and references to the “Company” herein and in any Agreements shall be deemed to refer to such successors. (L) Severability. If any provision of this Plan, or the application of such provision to any Person or circumstance, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Plan, or the application of such provision to Persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. (M) Construction. The headings of the sections hereof are for convenience of reference only and are not part of this Plan. As used herein, each gender includes each other gender, and the singular includes the plural and vice versa, as the context may require. Reference herein to any section includes reference to each and all subsections of such section. For purposes of this Plan, each of the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” (N) Governing Law. This Plan shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware. SECTION 14. EFFECTIVENESS OF THIS PLAN This Plan shall be submitted to the stockholders of the Company for their approval at their annual meeting scheduled to be held on April 26, 2011, or at such other annual or special meeting as the Board may specify, or any adjournment or postponement thereof. This Plan will be effective as of the date of its approval by the stockholders of the Company.


 
1 Exhibit 10.13 2018 PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT Company: Simpson Manufacturing Co., Inc. Recipient: The recipient’s name (the “Recipient”) is set forth on the Recipient’s online award acceptance page on Morgan Stanley Smith Barney’s StockPlan Connect website (the “Acceptance Page”) at https://www.stockplanconnect.com, which is incorporated by reference to this Agreement. Target PSU Shares: The aggregate number of shares of Common Stock as stated on the Acceptance Page. The Number of Shares of Common Stock Subject to PSUs Granted Hereunder (the “PSU Shares”): 200% of the Target PSU Shares. The Effective Date of the Award (the “Award Date”): A date in 2018 as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Measurement Period (the “Measurement Period”): A three-year period beginning on January 1, 2018, and ending on December 31, 2020. The Date the PSU Shares Vest (the “Vesting Date”): A date subsequent to the Measurement Period as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Vesting Period (the “Vesting Period”): A period beginning on the Award Date, and ending on the Vesting Date; provided, however, that if the Vesting Date falls on a weekend or federal holiday, such period shall end on the immediately following business day.1 Specific Performance Goals (the “Specific Performance Goals”): The Specific Performance Goals are set forth on Exhibit A. This PERFORMANCE-BASED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made as of the Award Date stated on the Acceptance Page by and between Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), and the Recipient named on the Acceptance Page, with reference to the following facts: Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in the amended and restated Simpson Manufacturing Co., Inc. 2011 Incentive Plan effective on April 21, 2015 (as amended and/or restated from time to time, the “Plan”). The Board has delegated to the Committee all authority 1 For example, if the Award Date is determined by the Committee to be March 12, 2018 and the Vesting Date is determined by the Committee to be February 13, 2021, then the PSU Shares, if any (based on the Specific Performance Goals), will vest on February 16, 2021 (because February 13, 2021 falls on a Saturday and Monday February 15, 2021 is a federal holiday, President’s day, the immediately following business day is February 16, 2021) and the Vesting Period will be from March 12, 2018 to February 16, 2021.


 
2 to administer the Plan. The Committee has determined to grant to the Recipient, under the Plan, performance-based Restricted Stock Units (the “PSUs”) with respect to the PSU Shares stated on the Acceptance Page. To evidence the PSUs and to set forth the terms and conditions thereof, the Company and the Recipient agree as follows: 1. Confirmation of Grant. (a) The Company grants the PSUs to the Recipient and the Recipient agrees to accept the PSUs and participate in the Plan, effective as of the Award Date. As a condition of the grant, this Agreement and the PSUs shall be governed by the terms and conditions of the Plan and shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery policy. (b) The PSUs shall be reflected in a bookkeeping account maintained by the Company through the date on which the PSUs become vested pursuant to section 2 or are forfeited pursuant to section 3. The Recipient acknowledges and agrees that (i) the PSU Shares merely represent the maximum number of shares of Common Stock that are granted under the PSUs and are not necessarily the number of shares of Common Stock that will eventually vest in favor of the Recipient, and (ii) pursuant to section 2 and otherwise in accordance with this Agreement and the Plan, the number of shares of Common Stock, which will eventually vest in favor of the Recipient under the PSUs (the “Vested Shares”), will be subject to the Specific Performance Goals and will be between 0% and 200% of the Target PSU Shares. (c) The Company’s obligations under this Agreement shall be unfunded and unsecured. No special or separate fund shall be established therefor and no other segregation of assets shall be required or made with respect thereto. The rights of the Recipient under this Agreement shall be no greater than those of a general unsecured creditor of the Company. (d) Except as otherwise provided in this Agreement and the Plan, the PSUs shall be settled by the issuance and delivery of the Vested Shares, or as provided in this Section 1(d), by cash or a combination thereof (as determined by the Committee in its sole discretion), within sixty days after the last day of the Vesting Period (a time or fixed schedule specified for the purpose of Code section 409A) subject to satisfaction of any other terms and conditions applicable to the PSUs; provided, however, that the number of the Vested Shares issued or delivered (or for which a cash payment is made) to the Recipient in any calendar year, together with the number of shares of Common Stock issued or delivered (or for which a cash payment is made) to the Recipient in the same calendar year under any other RSU Awards, shall not exceed the annual maximum aggregate number of shares of Common Stock issuable or deliverable under RSU Awards as set forth in the Plan that is effective at the time of the issuance or delivery of (or making a cash payment for) the Vested Shares. In settling the PSUs pursuant to the foregoing, the Company (or its acquirer or successor) shall have the option (as determined by the Committee in its sole discretion) to make or provide for a cash payment to the Recipient, in exchange for the cancellation of the vested PSUs (or any portion thereof), in an amount equal to the product of (A) the number of the Vested Shares under the cancelled PSUs and (B) the average closing price of a share of Common Stock over the period ending on the date the PSUs become vested and starting 60 days prior to that date. Anything herein to the contrary notwithstanding, this Agreement does not create an obligation on the part of the Company to adopt any policy or procedure, agree to any amendment hereto, make any arrangement, or take any other action, to comply with Code section 409A. The Recipient agrees and acknowledges that the Company makes no representations that this Agreement, including the grant, vesting and/or delivery of the PSU Shares (and/or cash), does not violate Code section 409A, and the Company shall have no liability whatsoever to the Recipient if he or she is subject to any taxes or penalties under Code section 409A. 2. Vesting. Subject to the terms and conditions of this Agreement and the Plan and unless otherwise forfeited pursuant to section 3, the PSUs shall vest, and the Restricted Period with respect to the PSUs shall terminate, immediately following the last day of the Vesting Period; provided, however, that the PSUs shall vest during the Vesting Period on the date, (a) immediately preceding the effective date of the Recipient’s Retirement as determined by the Committee in relation to the PSUs: either (A) after reaching age 70 or (B) after reaching age 55 and having been employed or engaged by the Company or any Subsidiary for 15 years (provided that, if the Recipient retires after reaching age 56, for each year after age 55, the Recipient may work one year less for the


 
3 Company or any Subsidiary, as applicable, and still be qualified for Retirement under this sub-section (B)2), (b) immediately preceding the Recipient’s death or the effective date of the Recipient’s Disability, and (c) the effective date of the termination of the Recipient’s employment or engagement with the Company or any Subsidiary by the Company or Subsidiary (which, whenever used in this Agreement, includes any such entity’s successor) without Cause,3 or by the Recipient for a Good Reason,4 in either case only in connection with or within 24 months following a Sale Event.5 On the day that the PSUs become vested pursuant to the foregoing, the PSU Shares stated on the Acceptance Page shall be adjusted pursuant to the Specific Performance Goals as set forth on Exhibit A attached hereto, and after the adjustment, become the total number of the Vested Shares that will be used to settle the PSUs under section 1(d); provided, however, that, if the PSUs have vested during the Vesting Period, the PSUs shall continue to be subject to the terms and conditions of this Agreement, including adjustment pursuant to the Specific Performance Goals during the Vesting Period, and in addition, the number of Vested Shares that will be used to settle the PSUs under section 1(d) will be prorated so that the Recipient will only receive a portion of the Vested Shares that is equal to the product of (x) the number of the Vested Shares and (y) a percentage that is equal to the number of days between and including the first day of the Vesting Period and the day when the PSUs become vested as divided by the number of days of the whole Vesting Period. The Recipient explicitly acknowledges and agrees that (i) the Committee has the absolute discretion to determine the number of the Vested Shares, (ii) the Committee may engage professional advisors and consultants and rely on their opinions and advice to make such determination, (iii) such determination shall be binding on the Recipient, and (iv) the granting or vesting of the 2 For example, if the Recipient retires at age 60 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 10 years to be qualified for Retirement and receive the Vested Shares; and for example, if the Recipient retires at age 65 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 5 years to be qualified for Retirement and receive the Vested Shares. 3 “Cause” means, in addition to any cause for termination as provided in any other applicable written agreement between the Company, the applicable Subsidiary, or the acquirer or successor of the Company or Subsidiary, and the Recipient, (i) conviction of any felony, (ii) any material breach or violation by the Recipient of any agreement to which the Recipient and the Company or the Subsidiary that employs or engages the Recipient are parties or of any published policy or guideline of the Company, (iii) any act (other than retirement or other termination of employment or engagement) or omission to act by the Recipient which may have a material and adverse effect on the business of the Company or Subsidiary or on the Recipient’s ability to perform services for the Company or Subsidiary, including habitual insobriety or substance abuse or the commission of any crime, gross negligence, fraud or dishonesty with regard to the Company or Subsidiary, or (iv) any material misconduct or neglect of duties and responsibilities by the Recipient in connection with the business or affairs of the Company or Subsidiary; provided, however, that the Recipient first shall have received written notice, which shall specifically identify what the Company or Subsidiary believes constitutes Cause, and if the breach, act, omission, misconduct or neglect is capable of being cured, the Recipient shall have failed to cure after 15 days following such notice. 4 A “Good Reason” means the occurrence of any of the following events: (i) a material adverse change in the functions, duties or responsibilities of the Recipient’s position (other than a termination by the Company or Subsidiary) which would meaningfully reduce the level, importance or scope of such position (provided that, a change in the person, position and/or department to whom the Recipient is required to report shall not by itself constitute a material adverse change in the Recipient’s position), (ii) the relocation of the Company or Subsidiary office at which the Recipient is principally located immediately prior to a Sale Event (the “Original Office”) to a new location outside of the metropolitan area of the Original Office or the failure to place the Recipient’s own office in the Original Office (or at the office to which such office is relocated which is within the metropolitan area of the Original Office), or (iii) a material reduction in the Recipient’s base salary and incentive compensation opportunity as in effect immediately prior to a Sale Event; provided, however, that, within 90 days of the incident that provides the basis for a Good Reason termination, the Recipient shall have provided the Company or Subsidiary a written notice specifically identifying what the Recipient believes constitutes a Good Reason, and the Company or Subsidiary shall have failed to cure the adverse change, relocation or compensation reduction after 30 days following such notice. 5 A “Sale Event” shall mean (i) the sale or other disposition of all or substantially all of the assets of the Company or the Subsidiary that employs or engages the Recipient, including a majority or more of all outstanding stock of the Subsidiary, on a consolidated basis to one or more unrelated persons or entities, (ii) a Change in Control, or (iii) the sale or other transfer of outstanding Common Stock to one or more unrelated persons or entities (including by way of a merger, reorganization or consolidation in which the outstanding Common Stock are converted into or exchanged for securities of the successor entity) where the stockholders of the Company, immediately prior to such sale or other transfer, would not, immediately after such sale or transfer, beneficially own shares representing in the aggregate more than 50 percent of the voting shares of the acquirer or surviving entity (or its ultimate parent corporation, if any). For the purpose of sub-section (iii) of this definition, only voting shares of the acquirer or surviving entity (or its ultimate parent, if any) received by stockholders of the Company in exchange for Common Stock shall be counted, and any voting shares of the acquirer or surviving entity (or its ultimate parent, if any) already owned by stockholders of the Company prior to the transaction shall be disregarded.


 
4 PSUs as well as the Recipient’s holding of the Vested Shares shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery, stock ownership, and hedging, pledging and trading policies. 3. Forfeiture. Anything herein to the contrary notwithstanding, (a) all PSUs that are not vested in accordance with section 2 shall terminate immediately and be forfeited in their entirety if and at such time as (i) the Recipient ceases to be an Employee, Outside Director or Consultant, as the case may be, or (ii) 24 months have passed immediately following a Sale Event (provided that, in the event the surviving or acquiring entity or the new entity resulting from a Sale Event substitutes a similar equity award for the PSUs, such award will continue in accordance with its own terms and conditions), and (b) all PSUs, to the extent not theretofore settled in accordance with section 1(d), shall terminate immediately and be forfeited in their entirety when and as provided in section 13(I) of the Plan. 4. Tax Withholding. Pursuant to section 10 of the Plan, the Company may require the Recipient to enter into an arrangement providing for the payment in cash, Common Stock or otherwise by the Recipient to the Company of any tax withholding obligation of the Company arising by reason of (a) the granting or vesting of the PSUs, (b) the lapse of any substantial risk of forfeiture to which the PSUs or the Vested Shares are subject, or (c) the disposition of the PSUs or the Vested Shares, to the extent such arrangement does not cause a loss of the Section 16(b) exemption pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. 5. Representations and Warranties of the Company. The Company represents and warrants to the Recipient that the Vested Shares, when issued and delivered on the vesting of the PSUs in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. 6. Recipient Representations. The Recipient represents and warrants to the Company that the Recipient has received and read this Agreement and the Plan, that the Recipient has consulted with the Recipient’s own legal, financial and other advisers regarding this Agreement and the Plan to the extent that the Recipient considered necessary or appropriate, that the Recipient fully understands and accepts all of the terms and conditions of this Agreement and the Plan, and that the Recipient is relying solely on the Recipient’s own advisers with respect to the tax consequences of this Agreement and the PSUs. 7. Change in Control. Notwithstanding section 9 of the Plan, a Change in Control shall be treated as a Sale Event with respect to the PSUs granted hereunder. 8. Adjustments to Reflect Capital Changes. Subject to and except as otherwise provided in section 9 of the Plan, the number and kind of shares subject to the PSUs shall be appropriately adjusted, as the Committee may determine pursuant to section 11 of the Plan, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends. 9. No Rights as Stockholder. Neither the granting or vesting of the PSUs nor the issuance or delivery of the Vested Shares shall entitle the Recipient, as such, or any of the Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until the Vested Shares are registered on the Company’s records in the name or names of the Recipient or the Recipient’s Beneficiaries or Personal Representative, as the case may be, and then only with respect to such Vested Shares so registered. 10. No Right to Continued Employment. Nothing in this Agreement shall confer on the Recipient any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate the Recipient’s employment or service at any time. If the Award of the PSUs is in connection with the Recipient’s performance of services as a Consultant or Outside Director, references to employment, employee and similar terms shall be deemed to include the performance of services as a Consultant or an Outside Director, as the case may be; provided that no rights as an Employee shall arise by reason of the use of such terms.


 
5 11. Regulatory Compliance. Notwithstanding anything herein to the contrary, the issuance and delivery of the Vested Shares shall in all events be subject to and governed by section 13(C) of the Plan. 12. Notices. Any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally, when transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office in California, and, if to the Recipient, at the Recipient’s address on the Company’s records. Either party may change such party’s address or facsimile number from time to time by notice hereunder to the other. 13. Entire Agreement. This Agreement and the Plan together contain the entire agreement of the parties and supersede all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between the parties, regarding the PSUs. The Recipient specifically acknowledges and agrees that all descriptions of the PSUs in any prior letters, memoranda or other documents provided to him or her by the Company or any Subsidiary are hereby replaced and superseded in their entirety by this Agreement and shall be of no further force or effect. To the extent there is any inconsistency between the descriptions of any such documents and the terms of this Agreement, the terms of this Agreement shall prevail. 14. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by the Recipient and the Company. 15. Assignment. The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of this Agreement, any of the PSUs or any other rights hereunder, and shall not delegate any duties hereunder, except only as may be permitted pursuant to section 13(B) of the Plan; and any such action or transaction that may otherwise be attempted or purported by the Recipient shall be void and of no effect. 16. Successors. Subject to section 15, this Agreement shall bind and inure to the benefit of the Company and the Recipient and their respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any other Person any right or benefit in or under this Agreement or the Plan. 17. Separate Payments. All amounts payable in connection with the PSUs hereunder or any other Awards granted under the Plan shall be treated as separate payments for the purposes of Code section 409A. 18. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 20. Order of Precedence and Construction. This Agreement and the PSUs are subject to all provisions of the Plan (a copy of which is attached hereto as Exhibit B), including the Restricted Stock Unit provisions of section 6 thereof, and are further subject to all interpretations and amendments thereto that may from time to time be adopted pursuant to the Plan. In the event of any inconsistency between any provision of this Agreement and any provision of the Plan, the provision of the Plan shall govern. The headings of sections herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction or interpretation of any provision hereof. Whenever the context requires, the use in this Agreement of the singular number shall be deemed to include the plural and vice versa, and each gender shall be deemed to include each other gender. References herein to sections refer to sections of this Agreement, except as otherwise stated. The meaning of general words is not limited by specific examples introduced by “includes”, “including”, “for example”, “such as” or similar expressions, which shall be deemed to be followed by the phrase “without limitation”.


 
6 21. Further Assurances. The Recipient agrees to do and perform all acts and execute and deliver all additional documents, instruments and agreements as the Company or the Committee may reasonably request in connection with this Agreement. 22. Data Privacy. Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Recipient’s personal data as described in this Agreement by and among, as applicable, Recipient’s employer, the Company, and any Subsidiary for the exclusive purposes of implementing, administering, and managing Recipient’s participation in the Plan. Recipient understands that the Company and the employing Subsidiary may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, and any shares of stock or directorships held in the Company or any Subsidiary, details of all PSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor (“Personal Data”). Recipient understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these entities may be located in Recipient’s country, or elsewhere, and that the third parties’ country may have different data privacy laws and protections than Recipient’s country. Recipient understands that he or she may request a list with the names and addresses of any potential third parties in receipt of the Personal Data by contacting the Company’s Equity Plans Administrator. Recipient authorizes the third parties to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Personal Data as may be required to a broker or other third party with whom Recipient may elect to deposit any Vested Shares received upon vest of the PSUs. Recipient understands that Personal Data will be held as long as is necessary to administer and manage Recipient’s participation in the Plan. Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s Equity Plans Administrator. Recipient understands that refusal or withdrawal of consent may affect Recipient’s ability to realize benefits from the PSUs. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the Company’s Equity Plans Administrator. 23. Electronic Delivery. The Company may, in its sole discretion, decide (a) to deliver or effect by electronic means any documents or communications related to the PSUs granted under the Plan, Recipient’s participation in the Plan, or future Awards that may be granted under the Plan or (b) to request by electronic means Recipient’s consent to participate in the Plan and other communications related to the PSUs or the Plan. Recipient hereby consents to receive such documents and communications by electronic delivery and, if requested, to agree to participate in the Plan and deliver or effect such other communications through an on-line or electronic system established and maintained by the Company or any third party designated by the Company. [Signature Page Follows]


 
7 IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed by or on behalf of the Company and the Recipient as of the Award Date. COMPANY: SIMPSON MANUFACTURING CO., INC. By /s/Brian J. Magstadt, Chief Financial Officer Authorized Signatory for the Compensation and Leadership Development Committee of the Board of Directors ACCEPTANCE OF AGREEMENT: Through the electronic submission of his or her consent to this Restricted Stock Unit Agreement in accordance with the instructions on Morgan Stanley Smith Barney’s StockPlan Connect website, the Recipient hereby confirms, ratifies, approves and accepts all of the terms and conditions of this Restricted Stock Unit Agreement.


 
8 Exhibit A Specific Performance Goals (A). Basic Terms for the Specific Performance Goals. The parties agree on the following terms for the Specific Performance Goals: “Specific Performance Goals” means the number of the Vested Shares shall be equal to the sum of (1) the number of the Adjusted Shares Group I and (2) the number of the Adjusted Shares Group II; calculated as follows: ( ( (A) the number of the Target PSU Shares / 2) x the Revenue CAGR Multiplier ) + ( ( (A) the number of the Target PSU Shares / 2) x the Revenue ROIC Multiplier ); provided, however, that in case of a Sale Event during the Measurement Period, as determined by the Committee in its absolute discretion and to the extent as permitted under Code section 409A (without causing the PSUs to fail to be exempt from or comply with 409A), the Specific Performance Goals hereunder, including the Revenue CAGR Multiplier and/or the ROIC Multiplier, may be replaced by any of the Performance Goals defined under the Plan, after being adjusted for the accounting fair value of the Specific Performance Goals hereunder as of the Sale Event.6 (B). How to Determine the Specific Performance Goals. The Committee has the absolute discretion to determine, and its determination shall be binding on the Recipient with respect to, any of the following: “Adjusted Shares Group I” means the number of the PSU Shares that is equal to the product of (A) 50% of the number of the Target PSU Shares and (B) the Revenue CAGR Multiplier. “Adjusted Shares Group II” means the number of the PSU Shares that is equal to the product of (A) 50% of the number of the Target PSU Shares and (B) the ROIC Multiplier. 6 In case of a Sale Event during the Measurement Period, in which (a) the Company ceases to exist, (b) the Subsidiary with which the Recipient is employed or engaged is acquired, or (c) all or substantially all of the assets of the Company or Subsidiary are sold or otherwise disposed of, unless (i) the acquiring or surviving entity does not maintain an equity incentive program or (ii) a new entity is created through the Sale Event and all stockholders of the Company immediately prior to the Sale Event become stockholders of the new entity, with respect to the remaining fiscal years of the Measurement Period (including any unfinished fiscal year as of the Sale Event), as determined by the Committee in its absolute discretion and to the extent as permitted under Code section 409A (without causing the PSUs to fail to be exempt from or comply with 409A), the Specific Performance Goals hereunder may be replaced by the Specific Performance Goals that the acquiring or surviving entity uses in relation to the performance-based equity awards granted to its similarly-situated employees, consultants or outside directors, after being adjusted for the accounting fair value of the Specific Performance Goals hereunder as of the Sale Event. In the event a new entity results from the Sale Event and all stockholders of the Company immediately prior to the Sale Event become stockholders of the new entity, the Specific Performance Goals hereunder shall continue to apply to the PSUs, assumed, continued or substituted upon the Sale Event as if the new entity is the Company. For example, if a Sale Event takes place in June 2018, resulting in no new entity, and the Company ceases to exist, and if the Committee approves the goal replacement, the fiscal year 2018 will still be subject to the Specific Performance Goals hereunder while the fiscal years 2019 and 2020 will be subject to the aforementioned Performance Goals of the acquiring or surviving entity. In the event the acquiring or surviving entity does not maintain an equity incentive program or does not use any of the Performance Goals defined under the Plan with respect to the performance-based equity awards granted to its similarly-situated employees, consultants or outside directors, the Specific Performance Goals hereunder shall continue to apply to the PSUs, assumed, continued or substituted upon the Sale Event as if the acquiring or surviving entity is the Company.


 
9 “Prorated Allocation” means assigning a multiplier that is equal to the sum of (A) the applicable lower percentage limit and (B) the product of (1) the difference between the applicable lower and upper percentage limits and (2) a percentage that is equal to the Company’s TSR, Revenue CAGR or ROIC (each as defined below), as applicable, as divided by the difference between the applicable lower and upper goal limits. (B). Part I. Revenue CAGR Multiplier. “Revenue CAGR Multiplier” shall be determined by the Committee as follows: Revenue Growth Goal Revenue CAGR Multiplier the Company’s Revenue CAGR is < Revenue CAGR Threshold 0% the Company’s Revenue CAGR is = Revenue CAGR Threshold 50% the Company’s Revenue CAGR is > Revenue CAGR Threshold and < Revenue CAGR Target Prorated Allocation within >50% and < 100%7 the Company’s Revenue CAGR is = Revenue CAGR Target 100% the Company’s Revenue CAGR is > Revenue CAGR Target and < Revenue CAGR Max Prorated Allocation within >100% and < 200%8 the Company’s Revenue CAGR is >= Revenue CAGR Max 200% “Revenue CAGR” means, as certified by the Committee, the Company’s compound annual growth rate for the Measurement Period, calculated pursuant to GAAP based on the Company’s performance during the Measurement Period. “Revenue CAGR Threshold” means the threshold Revenue CAGR goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the Revenue CAGR Threshold has been determined by the Committee to be 5%. “Revenue CAGR Target” means the target Revenue CAGR goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the Revenue CAGR Target has been determined by the Committee to be 8%. “Revenue CAGR Max” means the aspirational Revenue CAGR goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the Revenue CAGR Max has been determined by the Committee to be 12%. (B). Part II. ROIC Multiplier. “ROIC Multiplier” shall be determined by the Committee as follows: ROIC Goal ROIC Multiplier 7 For example, if the Company’s CAGR is the average of CAGR Threshold and CAGR Target, the applicable CAGR Multiplier is 75%. 8 For example, if the Company’s CAGR is the average of CAGR Target and CAGR Max, the applicable CAGR Multiplier is 150%.


 
10 the Company’s ROIC is < ROIC Threshold 0% the Company’s ROIC is = ROIC Threshold 50% the Company’s ROIC is > ROIC Threshold and < ROIC Target Prorated Allocation within >50% and < 100%9 the Company’s ROIC is = ROIC Target 100% the Company’s ROIC is > ROIC Target and < ROIC Max Prorated Allocation within >100% and < 200%10 the Company’s ROIC is => ROIC Max 200% “ROIC” means, as certified by the Committee, the arithmetic mean of the Company’s annual returns on invested capital ratio for the three fiscal years of the Measurement Period, calculated based on (i) the net income of each fiscal year during the Measurement Period (with the net income as presented in the consolidated statements of operations of the Company prepared pursuant to GAAP for that year) as divided by (ii) the arithmetic mean of (x) the sum of the total stockholders’ equity and the total long-term liabilities of the same year and (y) the sum of the total stockholders’ equity and the total long-term liabilities of the prior year (with each of the total stockholders’ equity and the total long-term liabilities as presented in the consolidated balance sheets of the Company prepared pursuant to GAAP for that applicable year). “ROIC Threshold” means the threshold ROIC goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the ROIC Threshold has been determined by the Committee to be 9%. “ROIC Target” means the target ROIC goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the ROIC Target has been determined by the Committee to be 13.5%. “ROIC Max” means the aspirational ROIC goal determined by the Committee for the Measurement Period. Pursuant to the foregoing, as of the Award Date, the ROIC Max has been determined by the Committee to be 18%. (C). Timing of the Committee’s Determinations and Calculations. The Committee shall make any and all such determinations and calculations required under Section (B) above no later than the latest time permitted by the Internal Revenue Code of 1986, as amended, and the regulations and interpretations thereunder. (D). Representative Examples. Without prejudicing any of the foregoing, including the Committee’s absolute discretion under Section (B) above, the parties agree on the following representative (and non-exhaustive examples for the Specific Performance Goals:11 (D). Part I. Example 1. 9 For example, if the Company’s ROIC is the average of ROIC Threshold and ROIC Target, the applicable ROIC Multiplier is 75%. 10 For example, if the Company’s ROIC is the average of ROIC Target and ROIC Max, the applicable ROIC Multiplier is 150%. 11 No fractional shares will be issued or delivered pursuant to any Award, and therefore, any fractional shares may be forfeited or otherwise eliminated as determined by the Committee. As a result, the decimal fractions of the number of the Vested Shares presented in the examples below are rounded down to the nearest whole number.


 
11 If the Target PSU Shares is 20,000 shares, 50% of the number of the Target PSU Shares is 10,000 shares. Further under this example, because as of the Award Date, the Revenue CAGR Threshold has been determined by the Committee to be 5%, if following the end of the Measurement Period, the Company’s Revenue CAGR is determined by the Committee to be 4.9%, then the Revenue CAGR Multiplier is 0%. Still further under this example, because as of the Award Date, the ROIC Target has been determined by the Committee to be 13.5% and the ROIC Max has been determined by the Committee to be 18%, if following the end of the Measurement Period, the Company’s ROIC is determined by the Committee to be 13.95%, then the ROIC Multiplier is 110%. Then, as a result, the number of the Adjusted Shares Group I is 0 shares and the number of the Adjusted Shares Group II is 11,000 shares, respectively. Therefore, the number of the Vested Shares is 11,000 shares. (D). Part II. Example 2. If the Target PSU Shares is 20,000 shares, 50% of the number of the Target PSU Shares is 10,000 shares. Further under this example, because as of the Award Date, the Revenue CAGR Threshold has been determined by the Committee to be 5% and the Revenue CAGR Target has been determined by the Committee to be 8%, if following the end of the Measurement Period, the Company’s Revenue CAGR is determined by the Committee to be 6.5%, then the Revenue CAGR Multiplier is 75%. Still further under this example, because as of the Award Date, the ROIC Target has been determined by the Committee to be 13.5% and the ROIC Max has been determined by the Committee to be 18%, if following the end of the Measurement Period, the Company’s ROIC is determined by the Committee to be 13.59%, then the ROIC Multiplier is 102%. Then, as a result, the number of the Adjusted Shares Group I is 7,500 shares and the number of the Adjusted Shares Group II is 10,200 shares, respectively. Therefore, the number of the Vested Shares is 17,700 shares. (D). Part III. Example 3. If the Target PSU Shares is 20,000 shares, 50% of the number of the Target PSU Shares is 10,000 shares. Further under this example, because as of the Award Date, the Revenue CAGR Target has been determined by the Committee to be 8% and the Revenue CAGR Max has been determined by the Committee to be 12%, if following the end of the Measurement Period, the Company’s Revenue CAGR is determined by the Committee to be 8.48%, then the Revenue CAGR Multiplier is 112%. Still further under this example, because as of the Award Date, the ROIC Target has been determined by the Committee to be 13.5% and the ROIC Max has been determined by the Committee to be 18%, if following the end of the Measurement Period, the Company’s ROIC is determined by the Committee to be 14.4%, then the ROIC Multiplier is 120%. Then, as a result, the number of the Adjusted Shares Group I is 11,200 shares and the number of the Adjusted Shares Group II is 12,000 shares, respectively. Therefore, the number of the Vested Shares is 23,200 shares.


 
1 Exhibit B SIMPSON MANUFACTURING CO. INC. 2011 INCENTIVE PLAN Adopted April 26, 2011, and Amended and Restated April 21, 2015 SECTION 1. PURPOSE The purpose of the Simpson Manufacturing Co., Inc. 2011 Incentive Plan is to promote the interests of the Company and its stockholders by providing incentives to directors, officers and employees of, and consultants to, the Company and the Subsidiaries. Accordingly, the Company may grant to selected officers, Employees, Consultants and Outside Directors Option Awards, Restricted Stock Awards and RSU Awards in an effort to attract and retain qualified individuals as employees, directors and consultants and to provide such individuals with incentives to continue service with the Company, devote their best efforts to the Company and improve the Company’s economic performance, thus enhancing the value of the Company for the benefit of stockholders. This Plan amends and restates in their entirety, and incorporates and supersedes, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended (the “1994 Plan”), and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended (the “1995 Plan” and, together with the 1994 Plan, the “Prior Plans”); provided that any stock option granted under the 1994 Plan or the 1995 Plan that has not been exercised in full and that has not expired or terminated shall continue in effect in accordance with its terms and conditions and shall continue to be subject to and governed by the 1994 Plan or the 1995 Plan, respectively, as in effect immediately before the adoption of this Plan. SECTION 2. DEFINITIONS As used in this Plan, the following terms have the meanings indicated: “Agreement” means an agreement, in written or electronic form, entered into by the Company and a Recipient setting forth the terms and conditions applicable to an Award granted under this Plan. “Award” means an Option Award, a Restricted Stock Award or an RSU Award, in each case granted under this Plan. “Beneficial Ownership” and “Beneficially Own” have the meanings set forth in Rule 13d-3 under the Exchange Act. “Beneficiary” means each Person designated as such by a Recipient or, if no designation has been made, each Person entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Recipient’s death. “Board” means the Board of Directors of the Company.


 
2 “Change in Control” means the occurrence of any one (or more) of the following events: (i) the consummation of a consolidation or merger of the Company in which the Company is not the surviving corporation; (ii) the consummation of a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding such reverse merger are converted by virtue of such reverse merger into other property, whether securities, cash or otherwise; or (iii) the approval by the stockholders of the Company of a plan or proposal for the dissolution and liquidation of the Company; provided that a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the Common Stock immediately before such transaction or transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately thereafter. “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means the Compensation and Leadership Development Committee of the Board, as from time to time constituted, or any successor committee of the Board with similar functions, which shall consist of three or more members, each of whom shall be an outside director as defined in the regulations issued under Code section 162(m) and a non-employee director within the meaning of applicable regulatory requirements, including those promulgated under Exchange Act section 16. “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustment pursuant to section 11 hereof. “Company” means Simpson Manufacturing Co., Inc., a Delaware corporation, or any successor thereto. “Consultant” means a Person that (i) renders services to the Company as an independent contractor (and not as an Employee or Outside Director) pursuant to a contract between such Person and the Company and (ii) is selected by the Committee to receive an Award under this Plan. “Disability” means (i) in the case of a Participant, determination by the Committee that he or she has become unable to perform the functions required by his or her regular job due to physical or mental illness or incapacity and, in connection with the grant of an ISO, he or she is within the meaning of that term as provided in Code section 22(e)(3), and (ii) in the case of an Outside Director, determination by the Committee that he or she is unable to attend to his or her duties and responsibilities as a member of the Board due to physical or mental illness or incapacity. “Employee” means a regular, full-time or part-time employee of the Company or any Subsidiary; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of ISOs, the term “Employee” shall have the meaning ascribed to such term in Code section 3401(c). “Exercise Price” means, with respect to each share of Common Stock subject to an Option, the price fixed by the Committee at which such share may be purchased from the Company on the exercise of such Option. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Fair Market Value” means (i) as of any date, the closing sale price per share of Common Stock as reported on the Composite Tape of the New York Stock Exchange, or if there are no sales on such day, on the next prior trading day during which a sale occurred; and (ii) in the absence of such market for the shares of Common Stock,


 
3 the fair market value per share of Common Stock determined by the Committee in good faith (which determination shall, to the extent applicable, be made in a manner that complies with Code sections 422(b) and 409A). “Incentive Stock Option” or “ISO” means an Option that is intended by the Committee to meet the requirements of Code section 422 or any successor provision. “ISO Award” means an Award of an Incentive Stock Option pursuant to section 9 hereof. “NQSO” means an Option granted pursuant to this Plan that does not qualify as an Incentive Stock Option. “NQSO Award” means an Award of an NQSO pursuant to section 7 hereof. “Option” means the right to purchase Common Stock at an Exercise Price to be specified and on terms to be designated by the Committee or otherwise determined pursuant to this Plan. The Committee shall designate each Option as either an NQSO or an Incentive Stock Option. “Option Award” means an Award of an Option pursuant to section 7 hereof. “Outside Director” means a director of the Company, who is not also an Employee and who is selected by the Committee to receive an Award under this Plan. “Participant” means an Employee who is selected by the Committee to receive an Award under this Plan. “Performance Goals” means performance goals established by the Committee from time to time. Such goals may be absolute in their terms or measured against or in relation to other companies comparably or otherwise situated. Such performance goals may be particular to a Participant or the Subsidiary, division or other unit in which the Participant works or may be based on the performance of the Company as a whole. The Performance Goals applicable to any Award that is intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m) shall be based on one or more of (i) earnings, (ii) unit sales, sales volume or revenue, (iii) sales growth, (iv) stock price (including comparison with various stock market indices), (v) return on equity, (vi) return on investment, (vii) total return to stockholders, (viii) economic profit, (ix) debt rating, (x) operating income, (xi) cash flows, (xii) cost targets, (xiii) return on assets or margins or (xiv) implementation, completion or attainment of measurable objectives with respect to (1) software development, (2) new distribution channels, (3) customer growth targets, (4) acquisition identification and integration, (5) manufacturing, production or inventory targets, (6) new product introductions, (7) product quality control, (8) accounting and reporting, (9) recruiting and maintaining personnel, or (10) compliance or regulatory program targets. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time or against other companies or financial metrics), (c) on a per share basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company or (e) on a pre-tax or after tax basis. “Person” has the meaning ascribed to that term in Exchange Act section 3(a)(9), as modified and used in Exchange Act sections 13(d) and 14(d), except that such term shall not include (a) the Company, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (c) an underwriter temporarily holding securities pursuant to an offering on behalf of the Company.


 
4 “Personal Representative” means the Person or Persons who, on the Disability or incompetence of a Recipient, shall have acquired on behalf of the Recipient by legal proceeding or otherwise the right to receive benefits pursuant to this Plan. “Plan” means this Simpson Manufacturing Co., Inc. 2011 Incentive Plan. “Recipient” means a Participant, an Outside Director or a Consultant, as appropriate. “Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals or the occurrence of other events, as determined by the Committee). “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award, which are subject to the restrictions, terms, and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Restricted Stock Award” means an Award of Restricted Stock pursuant to section 6 hereof. “Restricted Stock Units” or “RSUs” means units issued pursuant to an RSU Award, which are valued in terms of shares of Common Stock equivalents and are subject to the restrictions, terms and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Retirement” means (i) in the case of a Participant, retirement from employment with the Company or any Subsidiary at any time as described in the Simpson Manufacturing Co., Inc. Profit Sharing Plan for Salaried Employees or in any successor plan, as from time to time in effect, or as otherwise determined by the Committee, (ii) in the case of an Outside Director, retirement from the Board after the date, if any, established by the Committee as the date for mandatory retirement, as from time to time in effect, or as otherwise determined by the Committee, and (iii) in the case of a Consultant, such date as is determined by the Committee. “RSU Award” means an Award of Restricted Stock Units pursuant to section 6 hereof. “Subsidiary” means a corporation, limited liability company, partnership or other entity (i) more than fifty percent of the outstanding voting equity securities (representing the right to vote for the election of directors or other managing authority) are now or hereafter owned or controlled, directly or indirectly, by the Company, or (ii) which does not have outstanding voting equity securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than fifty percent of the ownership interests of which, representing the right generally to make decisions for such entity, is now or hereafter owned or controlled, directly or indirectly, by the Company; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall have the meaning ascribed to such term in Code section 424(f), as interpreted by the regulations thereunder and applicable law. “Tax Date” means the date the withholding tax obligation arises with respect to an Award. SECTION 3. STOCK SUBJECT TO PLAN (A) Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, 16,320,000 shares of Common Stock are reserved for issuance under this Plan, any or all of which may be delivered with respect to


 
5 Option Awards, Restricted Stock Awards and RSU Awards and any or all of which may be authorized and unissued shares or treasury shares; provided that such 16,320,000 shares include all shares heretofore reserved for issuance pursuant to the Prior Plans. Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, the following limits shall apply with respect to Awards that are intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m): (i) the maximum aggregate number of shares of Common Stock that may be subject to Options granted in any calendar year to any one Participant shall be 150,000 shares; and (ii) the maximum aggregate number of Restricted Stock Awards and shares of Common Stock issuable or deliverable under RSU Awards granted in any calendar year to any one Participant shall be 100,000 shares. (B) Shares of Common Stock subject to Awards under this Plan or stock options granted under the Prior Plans that are forfeited, terminated, canceled or settled without the delivery of Common Stock under this Plan or the Prior Plans, respectively, will again be available for Awards under this Plan as if such Awards or grants had not been made; provided that, notwithstanding any other provision herein to the contrary, the aggregate number of shares of Common Stock that may be issued under this Plan shall not be increased by (i) shares of Common Stock tendered in full or partial payment of the Exercise Price of any Option or any stock option granted under either of the Prior Plans, (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy any tax withholding obligation, or (iii) shares of Common Stock that are repurchased by the Company. (C) Notwithstanding anything in this section 3 to the contrary and solely for purposes of determining whether shares are available for the grant of ISOs, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this section 3 that, if taken into account, would cause this Plan to fail the requirement under Code section 422 that this Plan designate a maximum aggregate number of shares that may be issued. SECTION 4. ADMINISTRATION The Committee shall have exclusive authority to administer this Plan. In addition to any implied powers and duties that may be needed to carry out the provisions hereof, the Committee shall have all the powers vested in it by the terms hereof, including exclusive authority to select the Recipients, to determine the type, size and terms of any and all Awards to be made to each Recipient, to determine the time when Awards will be granted, and to prescribe the form, terms and conditions of any Agreement relating to any Award under this Plan. The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, to make any other determinations that the Committee believes necessary or advisable for the administration hereof, and to correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent that the Committee deems desirable and consistent with the intent of this Plan. The Committee may exercise any and all of the Committee’s rights, powers, authority and discretion under this Plan in the Committee’s absolute and exclusive discretion, and the Committee is authorized and empowered to grant or give any consent, approval or authorization, make any determination or do or perform any other act or thing conditionally or unconditionally, arbitrarily, or inconsistently in varying or similar circumstances, without any accountability to any Recipient, except only as otherwise expressly provided by this Plan or any Agreement with such Recipient. Any decision, determination, direction or other action of the Committee in the administration of this Plan shall be final, binding and conclusive for all purposes, subject only to the further exercise of authority of the Committee hereunder. SECTION 5. ELIGIBILITY


 
6 Awards may be granted only to Recipients; provided that no Outside Director or Consultant may be granted an ISO Award. SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNIT (RSU) AWARDS (A) Grant. Any Recipient may receive one or more Restricted Stock Awards or RSU Awards. (B) Restricted Periods. The Restricted Period for each Restricted Stock Award or RSU Award shall be set forth in the applicable Agreement. Except as otherwise provided in the applicable Agreement on a termination of employment or engagement, or pursuant to section 9 hereof in the event of a Change in Control, each Restricted Stock Award or RSU Award shall have such Restricted Period and be subject to such Performance Goals as the Committee may determine. Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Restricted Stock Award or RSU Award is made to a Recipient whose employment or service as a director or Consultant subsequently terminates for any reason before the lapse of all restrictions thereon, such Restricted Stock or RSU with respect to which such restrictions shall not have lapsed shall be forfeited to that extent by such Recipient. (C) Certain Restricted Stock Award Provisions. (1) Stockholder Rights. On the granting of a Restricted Stock Award, a Recipient shall be entitled to all rights incident to ownership of Common Stock of the Company with respect to his or her Restricted Stock, including the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid in cash or shares of Restricted Stock, as set forth in the applicable Agreement or as determined by the Committee. Each grant of Restricted Stock may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) Certificates; Dividends on Restricted Stock; Restrictions on Transferability. During the Restricted Period, each certificate representing Restricted Stock shall be registered in the respective Recipient’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in this Plan and the applicable Agreement. Each such certificate shall be deposited by the Recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, that will permit transfer to the Company of all or any portion of the Restricted Stock that may be forfeited in accordance with this Plan and the applicable Agreement. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes, except that: (i) no Recipient will be entitled to delivery of a certificate representing Restricted Stock until expiration of the restrictions applicable thereto; (ii) the Company will retain custody of all Restricted Stock issued as a dividend or otherwise with respect to an Award of Restricted Stock, which shall be subject to the same restrictions, terms and conditions as are applicable to the awarded Restricted Stock, until such time, if ever, as such Restricted Stock becomes vested, and no Restricted Stock shall bear interest or be segregated in separate accounts; (iii) subject to section 13(B) hereof, no Recipient shall have any right or power to sell, assign, transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of any Restricted Stock during the applicable Restricted Period; and (iv) unless otherwise determined and directed by the Committee, a breach of any restriction, term or condition in this Plan or the applicable Agreement or established by the Committee with respect to any Restricted Stock will cause a forfeiture of such Restricted Stock, including any Restricted Stock issued as a dividend or otherwise with respect thereto. (D) Certain Restricted Stock Unit (RSU) Award Provisions.


 
7 (1) General. Each grant of Restricted Stock Units shall constitute an agreement by the Company to issue or deliver shares of Common Stock or cash to the Recipient thereof following the end of the applicable Restricted Period in consideration of the performance of services. Each such grant of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) No Stockholder Rights. A Recipient who receives an RSU Award shall not have any rights as a stockholder with respect to the shares of Common Stock subject to such RSUs until such time, if any, as shares of Common Stock are delivered to such Recipient pursuant to the applicable Agreement. (3) Payment. Unless otherwise determined by the Committee, each Agreement relating to an RSU Award shall set forth the payment date for such RSU Award, which date shall not be earlier than the end of the applicable Restricted Period. Payment of earned Restricted Stock Units may be made in one or more installments and may be made wholly in cash, wholly in shares of Common Stock or a combination thereof, as determined by the Committee. SECTION 7. OPTION AWARDS (A) Grant. Any Recipient may receive one or more Option Awards. (B) Designation and Price. (1) Any Option granted under this Plan may be granted as an ISO or as an NQSO as shall be determined by the Committee at the time of the grant of such Option. Only Participants may be granted ISOs. Each Option shall, as directed by the Committee, be evidenced by an Agreement, which shall specify whether the Option is an ISO or an NQSO and shall contain such terms and conditions as the Committee may determine in accordance with this Plan. (2) Every ISO or NQSO shall provide for a fixed expiration date of not later than ten years from the date that such ISO or NQSO is granted. (3) The Exercise Price pursuant to each Option shall be fixed by the Committee at the time of the granting of the Option, but shall not in any event be less than the Fair Market Value on the date that such Option is granted, subject to adjustment as provided in section 11 hereof. (C) Exercise. The Committee may provide for Options granted under this Plan to be exercisable as a whole at any time or in part from time to time. Shares of Common Stock to be issued on any exercise of an Option will be issued after the Company receives (i) notice (in such form as the Committee may require) from the holder thereof of the exercise of such Option, and (ii) payment as provided in section 7(D) hereof of the aggregate Exercise Price for all shares with respect to which such Option is exercised. Each such notice and payment shall be delivered at such place and in such manner as the Committee may specify from time to time. (D) Payment. The Exercise Price for the shares of Common Stock issuable on the exercise of an Option shall be paid in full at the time of such exercise either in cash or by such other means as the Committee may approve, which may include tendering unencumbered shares of Common Stock then owned by the Recipient


 
8 exercising such Option having an aggregate Fair Market Value at the time of such exercise equal to the aggregate Exercise Price of the shares being purchased on such exercise or cashless exercise through a securities broker. (E) Expiration or Termination of Awards. (1) Participants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Participant who holds an outstanding Option dies while employed, during the period when such Participant, if Disabled, would be entitled to exercise such Option, or after such Participant’s Retirement, then such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by the Beneficiaries of the decedent for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s death. (b) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of a Participant who holds an outstanding Option ceases by reason of Disability at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by such Participant or his or her Personal Representative for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Disability. (c) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of any Participant who holds an outstanding Option ceases by reason of Retirement, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Retirement. (d) Notwithstanding any provision of this Plan to the contrary, any Option may, in the discretion of the Committee or as provided in the applicable Agreement, become exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, from and after the time the Participant ceases to be an Employee as a result of the sale or other disposition by the Company or any Subsidiary of assets or property (including shares of any Subsidiary) in respect of which such Participant shall theretofore have been employed or as a result of which such Participant’s continued employment is no longer required. (e) Except as otherwise provided in subsections (a), (b), (c) and (d) of this section 7(E)(1) and sections 9(D) and 13(I) hereof, if the employment of any Participant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Participant’s employment, for the number of shares that such Participant could have acquired on exercise of such Option immediately before the cessation of such Participant’s employment; provided that such Option shall terminate on and as of such earlier date. (2) Outside Directors and Consultants.


 
9 (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the service of any Outside Director or Consultant who holds an outstanding Option ceases by reason of Retirement, death or Disability, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, by such Outside Director or Consultant, his or her Personal Representative or his or her Beneficiaries for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before such Outside Director’s or Consultant’s Retirement, death or Disability. (b) Except as otherwise provided in subsection (a) of this section 7(E)(2) and sections 9(D) and 13(I) hereof, if the service of any Outside Director or Consultant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Outside Director’s or Consultant’s service, for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before the cessation of such Outside Director’s or Consultant’s service; provided that such Option shall terminate on and as of such earlier date. SECTION 8. CONTINUED EMPLOYMENT Nothing in this Plan, or in any Award granted pursuant to this Plan, shall confer on any Person any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate any Recipient’s employment or service at any time. SECTION 9. CHANGE IN CONTROL (A) Restricted Stock and RSU Awards. On a Change in Control, except as otherwise provided in the applicable Agreement and subject to compliance with Code section 409A, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall substitute similar benefits for the Restricted Stock Awards and RSU Awards outstanding under this Plan; or (ii) such Restricted Stock Awards or RSU Awards shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to substitute similar benefits for such Restricted Stock Awards and RSU Awards and refuses to continue such Restricted Stock Awards and RSU Awards in full force and effect, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then the Restricted Period relating to each such Restricted Stock Award or RSU Award shall terminate, and from and after such Change in Control, each such Restricted Stock Award or RSU Award shall be free of all other restrictions for all shares of Restricted Stock or RSUs that shall not theretofore have been acquired under the applicable Agreement. (B) Option Awards. On a Change in Control, except as otherwise provided in the applicable Agreements, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall assume all Options outstanding under this Plan or shall substitute similar options for those outstanding under this Plan, or (ii) such Options shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to assume or continue such Options or to substitute similar options for those outstanding under this Plan, and if the nature and terms of employment or engagement, including compensation and benefits, of the


 
10 respective Recipients will change significantly as a result of the Change in Control, then each such Option shall become immediately exercisable for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, and shall be terminated if not exercised before or at the time of such Change of Control. (C) Cash-Out of Awards. In connection with a Change in Control, notwithstanding any of the foregoing provisions of this section 9 to the contrary, the Committee may, either pursuant to the applicable Agreement or by resolution adopted before the Change in Control, provide that any outstanding Award (or a portion thereof) shall, on such Change in Control, be cancelled in exchange for payment in cash of the amount, if any, by which the aggregate Fair Market Value of the shares of Common Stock subject to such Award exceeds the aggregate Exercise Price therefor. SECTION 10. WITHHOLDING TAXES Federal, state or local law may require the withholding of taxes resulting from the grant or vesting of an Award or the exercise of an Option. The Company may permit or require (subject to such conditions or procedures as may be established by the Committee) any such tax withholding obligation of a Participant to be satisfied by any of the following means, or by any combination of such means: (i) cash payment by such Participant to the Company; (ii) withholding from the shares of Common Stock otherwise issuable to such Participant pursuant to the vesting or exercise of an Award of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation; or (iii) delivery by the Participant to the Company of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation arising from the vesting or exercise of an Award. If the payment or delivery specified in clause (i) or (iii) of the preceding sentence is required but is not paid by a Participant, the Company may refuse to issue Common Stock to such Participant under this Plan. SECTION 11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends, the number or kind of shares that may be issued under this Plan pursuant to section 3 hereof and the number or kind of shares subject to, or the price per share under any outstanding Award, shall be adjusted, automatically and without notice, so that the proportionate interests of the Recipients shall be maintained as before the occurrence of such event; provided that no adjustment shall be made pursuant to this section 11 that would (i) cause any Option intended to qualify as an ISO to fail to qualify as an ISO, (ii) cause an Award that is otherwise exempt from Code section 409A to become subject to Code section 409A, or (iii) cause an Award that is subject to Code section 409A to fail to satisfy the requirements of Code section 409A. SECTION 12. AMENDMENT AND TERMINATION The Committee may amend this Plan at any time or from time to time; provided that: (i) the Committee may not, without approval by the Board, materially increase the benefits provided to Recipients under this Plan; (ii) any amendment with respect to Restricted Stock Awards or RSU Awards granted to Outside Directors must be approved by the Board; and (iii) no amendment that requires stockholder approval in order for this Plan to continue to comply with any provision of the Exchange Act, any rule promulgated by the Securities and Exchange Commission under the Exchange Act, any rule of the New York Stock Exchange or any other securities exchange on


 
11 which shares of Common Stock are listed, or any other applicable law, rule or regulation, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company within the time period required under such provision. Without the approval of the stockholders of the Company, (i) neither the Board nor the Committee will authorize the amendment of any outstanding Option to reduce the Exercise Price thereof, except for adjustments made pursuant to section 11 hereof, (ii) no outstanding Option will be cancelled and replaced with another Option Award having a lower Exercise Price, or for another Award, or for cash, except as provided in section 9 or 11 hereof, and (iii) no Option will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award; provided that this sentence is intended to prohibit, without stockholder approval, the re-pricing of Options that have Exercise Prices above Fair Market Value and will not be construed to limit or prohibit any adjustment pursuant to section 9 or 11 hereof. The Committee may terminate this Plan at any time; provided that such termination shall not affect any Awards theretofore made or any stock options theretofore granted under either of the Prior Plans and such Awards and stock options shall continue to be subject to all terms and conditions of this Plan (including the second paragraph of section 1 hereof) notwithstanding such termination. SECTION 13. MISCELLANEOUS PROVISIONS (A) No Rights to Awards. No Person has or shall have any claim or right to be granted an Award under this Plan. (B) Assignment and Transfer. No right or interest of any Recipient under this Plan or in any Award may be assigned or transferred as a whole or in part, directly or indirectly, by operation of law or otherwise (except by will or the laws of descent and distribution), including by way of execution, levy, garnishment, attachment, pledge or bankruptcy or in any other manner, and no such rights or interests of any Recipient in this Plan shall be subject to any obligation or liability of such Recipient; provided that the Committee may determine that a Recipient’s rights and interests under this Plan or in any Award may be made transferable by such Recipient during his or her lifetime, subject to such conditions as the Committee may specify. Except as provided in section 6 hereof, no Award shall entitle the Recipient thereof, as such, or any of such Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until shares subject to such Award are issued to and registered on the Company’s records in the name or names of such Recipient, Beneficiaries or Personal Representative, as the case may be, and then only with respect to such shares. (C) Compliance with Legal and Exchange Requirements. This Plan, the grant and exercise of Awards hereunder, the issuance of Common Stock and other interests hereunder, and the other obligations of the Company under this Plan and any Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as the Committee may determine are necessary or advisable. The Company or the Committee may postpone the grant or exercise of any Award, the issuance or delivery of Common Stock under any Award or any other action permitted under this Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation and may require any Recipient to make such representations and furnish such information as the Committee may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with any and all applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of this Plan or any Agreement to recognize the exercise of any Award or otherwise to sell or issue Common Stock in violation of any such law, rule


 
12 or regulation. Any postponement of the exercise or settlement of any Award under this section 13(C) shall not extend the term of any Award. Neither the Company nor any Subsidiary nor any director or officer of the Company shall have any obligation or liability to any Recipient with respect to any Award (or Common Stock issuable thereunder) that shall lapse because of any such postponement. (D) Section 409A. Awards granted under this Plan shall be designed and administered in a manner that they are either exempt from the application of, or comply with, the requirements of Code section 409A. To the extent that the Committee determines that any Award is subject to Code section 409A, the Agreement relating to such Award shall incorporate terms and conditions necessary to avoid the imposition on the Recipient of additional tax under Code section 409A. Notwithstanding anything to the contrary in this Plan or any Agreement (unless such Agreement provides otherwise with specific reference to this section 13(D)): (i) no Award shall be granted, deferred, accelerated, extended, paid, settled, substituted or modified under this Plan in a manner that would result in the imposition on a Recipient of additional tax under Code section 409A; and (ii) if an Award is subject to Code section 409A, and if the Recipient to whom such Award is granted is a “specified employee” (as defined in Code section 409A, with such classification to be determined in accordance with methodology established by the Company), no distribution or payment of any amount under such Award shall be made before a date that is six months following the date of such Recipient’s “separation from service” (as defined in Code section 409A) or, if earlier, the date of such Recipient’s death. The Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Code section 409A; provided that the Company does not and shall not make any representation or warranty that any Award under this Plan will qualify for favorable tax treatment under Code section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Recipient for any tax, interest or penalties a Recipient might owe as a result of the grant, holding, vesting, exercise or payment of any Award. (E) Ratification and Consent. By accepting any Award under this Plan, each Recipient and each Personal Representative or Beneficiary claiming under or through such Recipient shall be conclusively deemed to have accepted, ratified and consented to all of the terms and conditions of this Plan and any and all action taken under this Plan by the Company, any Subsidiary, the Board or the Committee. (F) Other Compensation. Nothing in this Plan shall prevent, limit or otherwise affect the right, power and authority of the Board with respect to any other or additional compensation arrangements. (G) Grant Date. Each Recipient shall be deemed to have been granted an Award on the date that the Committee grants such Award under this Plan or such later date as the Committee shall determine at the time such grant is authorized. (H) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. (I) Forfeiture Provision. Except as otherwise expressly provided by the applicable Agreement, the Committee may require a Recipient to forfeit all unexercised, unearned, unvested or unpaid Awards, if: (1) the Recipient, while employed by the Company or any Subsidiary, prepares to engage or engages, directly or indirectly, without the written consent of the Company, in any manner or capacity, as principal, agent, partner, officer, director, employee or otherwise, in any business or activity competitive with any business conducted by the Company or any Subsidiary, as determined by the Committee;


 
13 (2) the Recipient performs any act or engages in any activity that the Committee determines is materially detrimental to the best interests of the Company or any Subsidiary; or (3) the Recipient materially breaches any agreement with or duty to the Company or any Subsidiary, including any non-competition agreement, non-solicitation agreement, confidentiality or non-disclosure agreement, or assignment of inventions or ownership of works agreement, as determined by the Committee. (J) Participants Outside the United States. Notwithstanding any provision of this Plan to the contrary, to comply with the laws of other countries in which the Company and the Subsidiaries operate or have Employees or Consultants, the Committee shall have the power and authority to: (i) determine which Subsidiaries shall be covered by this Plan; (ii) determine which Employees or Consultants outside the United States are eligible to participate in this Plan; (iii) modify the terms and conditions of any Award granted to Employees or Consultants outside the United States to comply with applicable foreign laws; (iv) modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (v) take any action, before or after an Award is made, that it deems necessary or advisable to obtain approval or comply with any government regulatory exemption or requirement; provided that the Committee is not authorized to take any action hereunder, and no Awards shall be granted, that would violate any applicable law. (K) Successors. All obligations of the Company under this Plan and with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other event, or a sale or disposition of all or substantially all of the business or assets of the Company, and references to the “Company” herein and in any Agreements shall be deemed to refer to such successors. (L) Severability. If any provision of this Plan, or the application of such provision to any Person or circumstance, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Plan, or the application of such provision to Persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. (M) Construction. The headings of the sections hereof are for convenience of reference only and are not part of this Plan. As used herein, each gender includes each other gender, and the singular includes the plural and vice versa, as the context may require. Reference herein to any section includes reference to each and all subsections of such section. For purposes of this Plan, each of the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” (N) Governing Law. This Plan shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware. SECTION 14. EFFECTIVENESS OF THIS PLAN This amended and restated Plan shall be submitted to the stockholders of the Company for their approval at their annual meeting scheduled to be held on April 21, 2015, or at such other annual or special meeting as the Board may specify, or any adjournment or postponement thereof. This Plan will be effective as of the date of its approval by the stockholders of the Company.


 
1 Exhibit 10.14 2018 TIME-BASED RESTRICTED STOCK UNIT AGREEMENT Company: Simpson Manufacturing Co., Inc. Recipient: The recipient’s name (the “Recipient”) is set forth on the Recipient’s online award acceptance page on Morgan Stanley Smith Barney’s StockPlan Connect website (the “Acceptance Page”) at https://www.stockplanconnect.com, which is incorporated by reference to this Agreement. The Number of Shares of Common Stock Subject to RSUs Granted Hereunder (the “RSU Shares”): The aggregate number of shares of Common Stock as stated on the Acceptance Page. The Effective Date of the Award (the “Award Date”): A date in 2018 as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. The Date the RSU Shares Start To Vest (the “Vesting Start Date”): A date subsequent to the Award Date as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Vesting Schedule (the “Vesting Schedule”): One fifth of the RSU Shares will vest on the first anniversary of the Vesting Start Date and two fifths of the RSU Shares will vest on each of the second and third anniversaries of the Vesting Start Date; provided, however, that if any of such dates falls on a weekend or federal holiday, the applicable portion of the RSU Shares shall vest on the immediately following business day.1 Vesting Period (the “Vesting Period”): A period beginning on the Vesting Start Date, and ending on the third anniversary of the Vesting Start Date; provided, however, that if such anniversary date falls on a weekend or federal holiday, such period shall end on the immediately following business day.2 This TIME-BASED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made as of the Award Date stated on the Acceptance Page by and between Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), and the Recipient named on the Acceptance Page, with reference to the following facts: 1 For example, if the Vesting Start Date is determined by the Committee to be February 15, 2018, then 1/5 of the RSU Shares will vest on February 15, 2019, 2/5 of the RSU Shares will vest on each of February 18, 2020 (because February 15, 2020 falls on a Saturday and Monday February 17, 2020 is a federal holiday, President’s day, the immediately following business day is February 18, 2020) and February 16, 2021 (because Monday February 17, 2021 is a federal holiday, President’s day, the immediately following business day is February 16, 2021), and the Vesting Period will be from February 15, 2018 to February 16, 2021. 2 See footnote 1, supra.


 
2 Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in the amended and restated Simpson Manufacturing Co., Inc. 2011 Incentive Plan effective on April 21, 2015 (as amended and/or restated from time to time, the “Plan”). The Board has delegated to the Committee all authority to administer the Plan. The Committee has determined to grant to the Recipient, under the Plan, time-based Restricted Stock Units (the “RSUs”) with respect to the RSU Shares stated on the Acceptance Page. To evidence the RSUs and to set forth the terms and conditions thereof, the Company and the Recipient agree as follows: 1. Confirmation of Grant. (a) The Company grants the RSUs to the Recipient and the Recipient agrees to accept the RSUs and participate in the Plan, effective as of the Award Date. As a condition of the grant, this Agreement and the RSUs shall be governed by the terms and conditions of the Plan and shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery policy. (b) The RSUs shall be reflected in a bookkeeping account maintained by the Company through the date on which the RSUs become fully vested pursuant to section 2 or are forfeited pursuant to section 3. If and when the RSUs become fully vested pursuant to section 2, and on the satisfaction of all other conditions applicable to the RSUs, the RSUs not forfeited pursuant to section 3 shall be settled in the number of shares of Common Stock as provided in section 1(d) and otherwise in accordance with the Plan. (c) The Company’s obligations under this Agreement shall be unfunded and unsecured. No special or separate fund shall be established therefor and no other segregation of assets shall be required or made with respect thereto. The rights of the Recipient under this Agreement shall be no greater than those of a general unsecured creditor of the Company. (d) Except as otherwise provided in this Agreement and the Plan, the RSUs shall be settled by the issuance and delivery of the RSU Shares, or as provided in this Section 1(d), by cash or a combination thereof (as determined by the Committee in its sole discretion), within sixty days after the RSUs have vested pursuant to section 2 subject to satisfaction of any other terms and conditions applicable to the RSUs; provided, however, that to the extent the Committee determines that any of the RSUs are subject to Code section 409A, to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such RSUs shall be made until the earliest of the date (i) set for such RSUs to vest according to the Vesting Schedule (a time or fixed schedule specified for the purpose of Code section 409A), (ii) of the Recipient’s “separation from service” (as defined in Code section 409A), (iii) of the Recipient’s death, or (iv) when the Recipient becomes “disabled” (as defined in Code section 409A); and further provided that, the number of the RSU Shares issued or delivered (or for which a cash payment is made) to the Recipient in any calendar year, together with the number of shares of Common Stock issued or delivered (or for which a cash payment is made) to the Recipient in the same calendar year under any other RSU Awards, shall not exceed the annual maximum aggregate number of shares of Common Stock issuable or deliverable under RSU Awards as set forth in the Plan that is effective at the time of the issuance or delivery of (or making a cash payment for) the RSU Shares. Notwithstanding the foregoing, to the extent the Committee determines that any of the RSUs are subject to Code section 409A and the Recipient is a Specified Employee3 on the 3 The determination of whether the Recipient is a Specified Employee will be made annually by the Committee or its delegate pursuant to Code section 409A for the 12-month period ending every December 31st (the “Specified Employee Identification Date”). The Committee’s determination shall be final and binding on the Recipient. If the Recipient was determined by the Committee as a Specified Employee at any time during such 12-month period ending on the Specified Employee Identification Date, he or she shall be considered a Specified Employee for the 12-month period commencing on the February 1st immediately following the Specified Employee Identification Date (i.e., from February 1st to the following January 31st), even if he or she is no longer employed or engaged by the Company on or after the Specified Employee Identification Date. For the purposes of this section 1(d), a “Specified Employee” shall mean: • the Recipient owns 5% or more of all outstanding Common Stock; • the Recipient owns 1% or more of all outstanding Common Stock and has an annual compensation of more than $150,000; and/or


 
3 date of his or her “separation from service” (as defined in Code section 409A), to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such RSUs that is otherwise payable pursuant to this Section 1(d) upon a separation from service shall be made before the date that is six months after the date of the Recipient’s separation from service. In settling the RSUs pursuant to the foregoing, the Company (or its acquirer or successor) shall have the option (as determined by the Committee in its sole discretion) to make or provide for a cash payment to the Recipient, in exchange for the cancellation of the vested RSUs (or any portion thereof), in an amount equal to the product of (A) the number of the RSU Shares under the cancelled RSUs and (B) the average closing price of a share of Common Stock over the period ending on the date the RSUs (or the portion thereof) become vested and starting 60 days prior to that date. Anything herein to the contrary notwithstanding, this Agreement does not create an obligation on the part of the Company to adopt any policy or procedure, agree to any amendment hereto, make any arrangement, or take any other action, to comply with Code section 409A. The Recipient agrees and acknowledges that the Company makes no representations that this Agreement, including the grant, vesting and/or delivery of the RSU Shares (or cash equivalent), does not violate Code section 409A, and the Company shall have no liability whatsoever to the Recipient if he or she is subject to any taxes or penalties under Code section 409A. 2. Vesting. Subject to the terms and conditions of this Agreement and the Plan and unless otherwise forfeited pursuant to section 3,4 the RSUs shall vest (that is, the Restricted Period with respect thereto shall terminate) pursuant to the Vesting Schedule; provided, however, that the unvested RSUs shall vest in full during the Vesting Period on the date, (a) immediately preceding the effective date of the Recipient’s Retirement as determined by the Committee in relation to the RSUs: either (A) after reaching age 70 or (B) after reaching age 55 and having been employed or engaged by the Company or any Subsidiary for 15 years (provided that, if the Recipient retires after reaching age 56, for each year after age 55, the Recipient may work one year less for the Company or any Subsidiary, as applicable, and still be qualified for Retirement under this sub-section (B)5), (b) immediately preceding the Recipient’s death or the effective date of the Recipient’s Disability, or (c) immediately preceding the effective date of the termination of the Recipient’s employment or engagement with the Company or any Subsidiary by the Company or Subsidiary (which, whenever used in this Agreement, includes any such entity’s successor) without Cause,6 or by the Recipient for a Good Reason,7 in either case only in connection with or within 24 months • the Recipient is among the top 50 most highly-compensated officers of the Company and the Subsidiaries forming a controlled group of corporations within the meaning of Code section 1563(a) (based on total W-2 compensation plus elective 401(k) plan deferrals) and has an annual compensation exceeding the indexed dollar limit then in effect pursuant to Treas. Reg. § 1.409A-1(i) promulgated under Code (which is $175,000 for 2018). 4 For example, pursuant to section 3, before the Vesting Start Date, (I) if the Recipient’s employment or engagement with the Company or any Subsidiary is terminated by the Recipient for any reason, or (II) if the Recipient retires, dies or becomes Disabled, the RSUs shall be forfeited in their entirety and no distribution or payment of any amount under such RSUs shall ever be made to the Recipient. 5 For example, if the Recipient retires at age 60 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 10 years to be qualified for Retirement and receive the RSU Shares; and for example, if the Recipient retires at age 65 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 5 years to be qualified for Retirement and receive the RSU Shares. 6 “Cause” means, in addition to any cause for termination as provided in any other applicable written agreement between the Company, the applicable Subsidiary, or the acquirer or successor of the Company or Subsidiary, and the Recipient, (i) conviction of any felony, (ii) any material breach or violation by the Recipient of any agreement to which the Recipient and the Company or the Subsidiary that employs or engages the Recipient are parties or of any published policy or guideline of the Company, (iii) any act (other than retirement or other termination of employment or engagement) or omission to act by the Recipient which may have a material and adverse effect on the business of the Company or Subsidiary or on the Recipient’s ability to perform services for the Company or Subsidiary, including habitual insobriety or substance abuse or the commission of any crime, gross negligence, fraud or dishonesty with regard to the Company or Subsidiary, or (iv) any material misconduct or neglect of duties and responsibilities by the Recipient in connection with the business or affairs of the Company or Subsidiary; provided, however, that the Recipient first shall have received written notice, which shall specifically identify what the Company or Subsidiary believes constitutes Cause, and if the breach, act, omission, misconduct or neglect is capable of being cured, the Recipient shall have failed to cure after 15 days following such notice. 7 A “Good Reason” means the occurrence of any of the following events: (i) a material adverse change in the functions, duties or responsibilities of the Recipient’s position (other than a termination by the Company or Subsidiary) which would meaningfully reduce the level, importance or scope of such position (provided that, a change in the person, position and/or department to whom the Recipient is required to report shall not by itself constitute a material adverse change in the Recipient’s position), (ii) the


 
4 following a Sale Event.8 The Recipient explicitly acknowledges and agrees that the granting or vesting of the RSUs as well as the Recipient’s holding of the RSU Shares shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery, stock ownership, and hedging, pledging and trading policies. 3. Forfeiture. Anything herein to the contrary notwithstanding, (a) all RSUs that are not vested in accordance with section 2 shall terminate immediately and be forfeited in their entirety if and at such time as (i) the Recipient ceases to be an Employee, Outside Director or Consultant, as the case may be, or (ii) 24 months have passed immediately following a Sale Event (provided that, in the event the surviving or acquiring entity or the new entity resulting from a Sale Event substitutes a similar equity award for the RSUs, such award will continue in accordance with its own terms and conditions), and (b) all RSUs, to the extent not theretofore settled in accordance with section 1(d), shall terminate immediately and be forfeited in their entirety when and as provided in section 13(I) of the Plan. 4. Tax Withholding. Pursuant to section 10 of the Plan, the Company may require the Recipient to enter into an arrangement providing for the payment in cash, Common Stock or otherwise by the Recipient to the Company of any tax withholding obligation of the Company arising by reason of (a) the granting or vesting of the RSUs, (b) the lapse of any substantial risk of forfeiture to which the RSUs or the RSU Shares are subject, or (c) the disposition of the RSUs or the RSU Shares, to the extent such arrangement does not cause a loss of the Section 16(b) exemption pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. 5. Representations and Warranties of the Company. The Company represents and warrants to the Recipient that the RSU Shares, when issued and delivered on the vesting of the RSUs in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. 6. Recipient Representations. The Recipient represents and warrants to the Company that the Recipient has received and read this Agreement and the Plan, that the Recipient has consulted with the Recipient’s own legal, financial and other advisers regarding this Agreement and the Plan to the extent that the Recipient considered necessary or appropriate, that the Recipient fully understands and accepts all of the terms and conditions of this Agreement and the Plan, and that the Recipient is relying solely on the Recipient’s own advisers with respect to the tax consequences of this Agreement and the RSUs. 7. Change in Control. Notwithstanding section 9 of the Plan, a Change in Control shall be treated as a Sale Event with respect to the RSUs granted hereunder. relocation of the Company or Subsidiary office at which the Recipient is principally located immediately prior to a Sale Event (the “Original Office”) to a new location outside of the metropolitan area of the Original Office or the failure to place the Recipient’s own office in the Original Office (or at the office to which such office is relocated which is within the metropolitan area of the Original Office), or (iii) a material reduction in the Recipient’s base salary and incentive compensation opportunity as in effect immediately prior to a Sale Event; provided, however, that, within 90 days of the incident that provides the basis for a Good Reason termination, the Recipient shall have provided the Company or Subsidiary a written notice specifically identifying what the Recipient believes constitutes a Good Reason, and the Company or Subsidiary shall have failed to cure the adverse change, relocation or compensation reduction after 30 days following such notice. 8 A “Sale Event” shall mean (i) the sale or other disposition of all or substantially all of the assets of the Company or the Subsidiary that employs or engages the Recipient, including a majority or more of all outstanding stock of the Subsidiary, on a consolidated basis to one or more unrelated persons or entities, (ii) a Change in Control, or (iii) the sale or other transfer of outstanding Common Stock to one or more unrelated persons or entities (including by way of a merger, reorganization or consolidation in which the outstanding Common Stock are converted into or exchanged for securities of the successor entity) where the stockholders of the Company, immediately prior to such sale or other transfer, would not, immediately after such sale or transfer, beneficially own shares representing in the aggregate more than 50 percent of the voting shares of the acquirer or surviving entity (or its ultimate parent corporation, if any). For the purpose of sub-section (iii) of this definition, only voting shares of the acquirer or surviving entity (or its ultimate parent, if any) received by stockholders of the Company in exchange for Common Stock shall be counted, and any voting shares of the acquirer or surviving entity (or its ultimate parent, if any) already owned by stockholders of the Company prior to the transaction shall be disregarded.


 
5 8. Adjustments to Reflect Capital Changes. Subject to and except as otherwise provided in section 9 of the Plan, the number and kind of shares subject to the RSUs shall be appropriately adjusted, as the Committee may determine pursuant to section 11 of the Plan, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends. 9. No Rights as Stockholder. Neither the granting or vesting of the RSUs nor the issuance or delivery of the RSU Shares shall entitle the Recipient, as such, or any of the Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until the RSU Shares are registered on the Company’s records in the name or names of the Recipient or the Recipient’s Beneficiaries or Personal Representative, as the case may be, and then only with respect to such RSU Shares so registered. 10. No Right to Continued Employment. Nothing in this Agreement shall confer on the Recipient any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate the Recipient’s employment or service at any time. If the Award of the RSUs is in connection with the Recipient’s performance of services as a Consultant or Outside Director, references to employment, employee and similar terms shall be deemed to include the performance of services as a Consultant or an Outside Director, as the case may be; provided that no rights as an Employee shall arise by reason of the use of such terms. 11. Regulatory Compliance. Notwithstanding anything herein to the contrary, the issuance and delivery of the RSU Shares shall in all events be subject to and governed by section 13(C) of the Plan. 12. Notices. Any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally, when transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office in California, and, if to the Recipient, at the Recipient’s address on the Company’s records. Either party may change such party’s address or facsimile number from time to time by notice hereunder to the other. 13. Entire Agreement. This Agreement and the Plan together contain the entire agreement of the parties and supersede all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between the parties, regarding the RSUs. The Recipient specifically acknowledges and agrees that all descriptions of the RSUs in any prior letters, memoranda or other documents provided to him or her by the Company or any Subsidiary are hereby replaced and superseded in their entirety by this Agreement and shall be of no further force or effect. To the extent there is any inconsistency between the descriptions of any such documents and the terms of this Agreement, the terms of this Agreement shall prevail. 14. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by the Recipient and the Company. 15. Assignment. The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of this Agreement, any of the RSUs or any other rights hereunder, and shall not delegate any duties hereunder, except only as may be permitted pursuant to section 13(B) of the Plan, and any such action or transaction that may otherwise be attempted or purported by the Recipient shall be void and of no effect. 16. Successors. Subject to section 15, this Agreement shall bind and inure to the benefit of the Company and the Recipient and their respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any other Person any right or benefit in or under this Agreement or the Plan. 17. Separate Payments. All amounts payable in connection with the RSUs hereunder or any other Awards granted under the Plan shall be treated as separate payments for the purposes of Code section 409A.


 
6 18. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 20. Order of Precedence and Construction. This Agreement, the RSUs and the RSU Shares are subject to all provisions of the Plan (a copy of which is attached hereto as Exhibit A), including the Restricted Stock Unit provisions of section 6 thereof, and are further subject to all interpretations and amendments thereto that may from time to time be adopted pursuant to the Plan. In the event of any inconsistency between any provision of this Agreement and any provision of the Plan, the provision of the Plan shall govern. The headings of sections herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction or interpretation of any provision hereof. Whenever the context requires, the use in this Agreement of the singular number shall be deemed to include the plural and vice versa, and each gender shall be deemed to include each other gender. References herein to sections refer to sections of this Agreement, except as otherwise stated. The meaning of general words is not limited by specific examples introduced by “includes”, “including”, “for example”, “such as” or similar expressions, which shall be deemed to be followed by the phrase “without limitation”. 21. Further Assurances. The Recipient agrees to do and perform all acts and execute and deliver all additional documents, instruments and agreements as the Company or the Committee may reasonably request in connection with this Agreement. 22. Data Privacy. Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Recipient’s personal data as described in this Agreement by and among, as applicable, Recipient’s employer, the Company, and any Subsidiary for the exclusive purposes of implementing, administering, and managing Recipient’s participation in the Plan. Recipient understands that the Company and the employing Subsidiary may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, and any shares of stock or directorships held in the Company or any Subsidiary, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor (“Personal Data”). Recipient understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these entities may be located in Recipient’s country, or elsewhere, and that the third parties’ country may have different data privacy laws and protections than Recipient’s country. Recipient understands that he or she may request a list with the names and addresses of any potential third parties in receipt of the Personal Data by contacting the Company’s Equity Plans Administrator. Recipient authorizes the third parties to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Personal Data as may be required to a broker or other third party with whom Recipient may elect to deposit any RSU Shares received upon vest of the RSUs. Recipient understands that Personal Data will be held as long as is necessary to administer and manage Recipient’s participation in the Plan. Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s Equity Plans Administrator. Recipient understands that refusal or withdrawal of consent may affect Recipient’s ability to realize benefits from the RSUs. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the Company’s Equity Plans Administrator. 23. Electronic Delivery. The Company may, in its sole discretion, decide (a) to deliver or effect by electronic means any documents or communications related to the RSUs granted under the Plan, Recipient’s participation in the Plan, or future Awards that may be granted under the Plan or (b) to request by electronic means Recipient’s consent to participate in the Plan and other communications related to the RSUs or the Plan. Recipient hereby consents to receive such documents and communications by electronic delivery and, if requested, to agree to participate in the Plan and deliver or effect such other communications through an on-line or electronic system established and maintained by the Company or any third party designated by the Company.


 
7 [Signature Page Follows]


 
8 IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed by or on behalf of the Company and the Recipient as of the Award Date. COMPANY: SIMPSON MANUFACTURING CO., INC. By /s/Brian J. Magstadt, Chief Financial Officer Authorized Signatory for the Compensation and Leadership Development Committee of the Board of Directors ACCEPTANCE OF AGREEMENT: Through the electronic submission of his or her consent to this Restricted Stock Unit Agreement in accordance with the instructions on Morgan Stanley Smith Barney’s StockPlan Connect website, the Recipient hereby confirms, ratifies, approves and accepts all of the terms and conditions of this Restricted Stock Unit Agreement.


 
1 Exhibit A SIMPSON MANUFACTURING CO. INC. 2011 INCENTIVE PLAN Adopted April 26, 2011, and Amended and Restated April 21, 2015 SECTION 1. PURPOSE The purpose of the Simpson Manufacturing Co., Inc. 2011 Incentive Plan is to promote the interests of the Company and its stockholders by providing incentives to directors, officers and employees of, and consultants to, the Company and the Subsidiaries. Accordingly, the Company may grant to selected officers, Employees, Consultants and Outside Directors Option Awards, Restricted Stock Awards and RSU Awards in an effort to attract and retain qualified individuals as employees, directors and consultants and to provide such individuals with incentives to continue service with the Company, devote their best efforts to the Company and improve the Company’s economic performance, thus enhancing the value of the Company for the benefit of stockholders. This Plan amends and restates in their entirety, and incorporates and supersedes, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended (the “1994 Plan”), and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended (the “1995 Plan” and, together with the 1994 Plan, the “Prior Plans”); provided that any stock option granted under the 1994 Plan or the 1995 Plan that has not been exercised in full and that has not expired or terminated shall continue in effect in accordance with its terms and conditions and shall continue to be subject to and governed by the 1994 Plan or the 1995 Plan, respectively, as in effect immediately before the adoption of this Plan. SECTION 2. DEFINITIONS As used in this Plan, the following terms have the meanings indicated: “Agreement” means an agreement, in written or electronic form, entered into by the Company and a Recipient setting forth the terms and conditions applicable to an Award granted under this Plan. “Award” means an Option Award, a Restricted Stock Award or an RSU Award, in each case granted under this Plan. “Beneficial Ownership” and “Beneficially Own” have the meanings set forth in Rule 13d-3 under the Exchange Act. “Beneficiary” means each Person designated as such by a Recipient or, if no designation has been made, each Person entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Recipient’s death. “Board” means the Board of Directors of the Company. “Change in Control” means the occurrence of any one (or more) of the following events: (i) the consummation of a consolidation or merger of the Company in which the Company is not the surviving corporation; (ii) the consummation of a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding such reverse merger are converted by virtue of such reverse merger into other property, whether securities, cash or otherwise; or (iii) the approval by the stockholders of the Company of a plan or proposal for the dissolution and liquidation of the Company; provided that a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the Common Stock immediately before such transaction or transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately thereafter.


 
2 “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means the Compensation and Leadership Development Committee of the Board, as from time to time constituted, or any successor committee of the Board with similar functions, which shall consist of three or more members, each of whom shall be an outside director as defined in the regulations issued under Code section 162(m) and a non-employee director within the meaning of applicable regulatory requirements, including those promulgated under Exchange Act section 16. “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustment pursuant to section 11 hereof. “Company” means Simpson Manufacturing Co., Inc., a Delaware corporation, or any successor thereto. “Consultant” means a Person that (i) renders services to the Company as an independent contractor (and not as an Employee or Outside Director) pursuant to a contract between such Person and the Company and (ii) is selected by the Committee to receive an Award under this Plan. “Disability” means (i) in the case of a Participant, determination by the Committee that he or she has become unable to perform the functions required by his or her regular job due to physical or mental illness or incapacity and, in connection with the grant of an ISO, he or she is within the meaning of that term as provided in Code section 22(e)(3), and (ii) in the case of an Outside Director, determination by the Committee that he or she is unable to attend to his or her duties and responsibilities as a member of the Board due to physical or mental illness or incapacity. “Employee” means a regular, full-time or part-time employee of the Company or any Subsidiary; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of ISOs, the term “Employee” shall have the meaning ascribed to such term in Code section 3401(c). “Exercise Price” means, with respect to each share of Common Stock subject to an Option, the price fixed by the Committee at which such share may be purchased from the Company on the exercise of such Option. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Fair Market Value” means (i) as of any date, the closing sale price per share of Common Stock as reported on the Composite Tape of the New York Stock Exchange, or if there are no sales on such day, on the next prior trading day during which a sale occurred; and (ii) in the absence of such market for the shares of Common Stock, the fair market value per share of Common Stock determined by the Committee in good faith (which determination shall, to the extent applicable, be made in a manner that complies with Code sections 422(b) and 409A). “Incentive Stock Option” or “ISO” means an Option that is intended by the Committee to meet the requirements of Code section 422 or any successor provision. “ISO Award” means an Award of an Incentive Stock Option pursuant to section 9 hereof. “NQSO” means an Option granted pursuant to this Plan that does not qualify as an Incentive Stock Option. “NQSO Award” means an Award of an NQSO pursuant to section 7 hereof. “Option” means the right to purchase Common Stock at an Exercise Price to be specified and on terms to be designated by the Committee or otherwise determined pursuant to this Plan. The Committee shall designate each Option as either an NQSO or an Incentive Stock Option. “Option Award” means an Award of an Option pursuant to section 7 hereof.


 
3 “Outside Director” means a director of the Company, who is not also an Employee and who is selected by the Committee to receive an Award under this Plan. “Participant” means an Employee who is selected by the Committee to receive an Award under this Plan. “Performance Goals” means performance goals established by the Committee from time to time. Such goals may be absolute in their terms or measured against or in relation to other companies comparably or otherwise situated. Such performance goals may be particular to a Participant or the Subsidiary, division or other unit in which the Participant works or may be based on the performance of the Company as a whole. The Performance Goals applicable to any Award that is intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m) shall be based on one or more of (i) earnings, (ii) unit sales, sales volume or revenue, (iii) sales growth, (iv) stock price (including comparison with various stock A-3 market indicies), (v) return on equity, (vi) return on investment, (vii) total return to stockholders, (viii) economic profit, (ix) debt rating, (x) operating income, (xi) cash flows, (xii) cost targets, (xiii) return on assets or margins or (xiv) implementation, completion or attainment of measurable objectives with respect to (1) software development, (2) new distribution channels, (3) customer growth targets, (4) acquisition identification and integration, (5) manufacturing, production or inventory targets, (6) new product introductions, (7) product quality control, (8) accounting and reporting, (9) recruiting and maintaining personnel, or (10) compliance or regulatory program targets. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time or against other companies or financial metrics), (c) on a per share basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company or (e) on a pre-tax or after tax basis. “Person” has the meaning ascribed to that term in Exchange Act section 3(a)(9), as modified and used in Exchange Act sections 13(d) and 14(d), except that such term shall not include (a) the Company, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (c) an underwriter temporarily holding securities pursuant to an offering on behalf of the Company. “Personal Representative” means the Person or Persons who, on the Disability or incompetence of a Recipient, shall have acquired on behalf of the Recipient by legal proceeding or otherwise the right to receive benefits pursuant to this Plan. “Plan” means this Simpson Manufacturing Co., Inc. 2011 Incentive Plan. “Recipient” means a Participant, an Outside Director or a Consultant, as appropriate. “Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals or the occurrence of other events, as determined by the Committee). “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award, which are subject to the restrictions, terms, and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Restricted Stock Award” means an Award of Restricted Stock pursuant to section 6 hereof. “Restricted Stock Units” or “RSUs” means units issued pursuant to an RSU Award, which are valued in terms of shares of Common Stock equivalents and are subject to the restrictions, terms and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Retirement” means (i) in the case of a Participant, retirement from employment with the Company or any Subsidiary at any time as described in the Simpson Manufacturing Co., Inc. Profit Sharing Plan for Salaried Employees or in any successor plan, as from time to time in effect, or as otherwise determined by the Committee, (ii) in the case of an Outside Director, retirement from the Board after the date, if any, established by the Committee


 
4 as the date for mandatory retirement, as from time to time in effect, or as otherwise determined by the Committee, and (iii) in the case of a Consultant, such date as is determined by the Committee. “RSU Award” means an Award of Restricted Stock Units pursuant to section 6 hereof. “Subsidiary” means a corporation, limited liability company, partnership or other entity (i) more than fifty percent of the outstanding voting equity securities (representing the right to vote for the election of directors or other managing authority) are now or hereafter owned or controlled, directly or indirectly, by the Company, or (ii) which does not have outstanding voting equity securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than fifty percent of the ownership interests of which, representing the right generally to make decisions for such entity, is now or hereafter owned or controlled, directly or indirectly, by the Company; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall have the meaning ascribed to such term in Code section 424(f), as interpreted by the regulations thereunder and applicable law. “Tax Date” means the date the withholding tax obligation arises with respect to an Award. SECTION 3. STOCK SUBJECT TO PLAN (A) Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, 16,320,000 shares of Common Stock are reserved for issuance under this Plan, any or all of which may be delivered with respect to Option Awards, Restricted Stock Awards and RSU Awards and any or all of which may be authorized and unissued shares or treasury shares; provided that such 16,320,000 shares include all shares heretofore reserved for issuance pursuant to the Prior Plans. Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, the following limits shall apply with respect to Awards that are intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m): (i) the maximum aggregate number of shares of Common Stock that may be subject to Options granted in any calendar year to any one Participant shall be 150,000 shares; and (ii) the maximum aggregate number of Restricted Stock Awards and shares of Common Stock issuable or deliverable under RSU Awards granted in any calendar year to any one Participant shall be 100,000 shares. (B) Shares of Common Stock subject to Awards under this Plan or stock options granted under the Prior Plans that are forfeited, terminated, canceled or settled without the delivery of Common Stock under this Plan or the Prior Plans, respectively, will again be available for Awards under this Plan as if such Awards or grants had not been made; provided that, notwithstanding any other provision herein to the contrary, the aggregate number of shares of Common Stock that may be issued under this Plan shall not be increased by (i) shares of Common Stock tendered in full or partial payment of the Exercise Price of any Option or any stock option granted under either of the Prior Plans, (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy any tax withholding obligation, or (iii) shares of Common Stock that are repurchased by the Company. (C) Notwithstanding anything in this section 3 to the contrary and solely for purposes of determining whether shares are available for the grant of ISOs, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this section 3 that, if taken into account, would cause this Plan to fail the requirement under Code section 422 that this Plan designate a maximum aggregate number of shares that may be issued. SECTION 4. ADMINISTRATION The Committee shall have exclusive authority to administer this Plan. In addition to any implied powers and duties that may be needed to carry out the provisions hereof, the Committee shall have all the powers vested in it by the terms hereof, including exclusive authority to select the Recipients, to determine the type, size and terms of any and all Awards to be made to each Recipient, to determine the time when Awards will be granted, and to prescribe the form, terms and conditions of any Agreement relating to any Award under this Plan. The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, to make any other determinations that the Committee believes necessary or advisable for the administration hereof, and to correct any defect or supply any omission or reconcile any


 
5 inconsistency in this Plan or in any Award in the manner and to the extent that the Committee deems desirable and consistent with the intent of this Plan. The Committee may exercise any and all of the Committee’s rights, powers, authority and discretion under this Plan in the Committee’s absolute and exclusive discretion, and the Committee is authorized and empowered to grant or give any consent, approval or authorization, make any determination or do or perform any other act or thing conditionally or unconditionally, arbitrarily, or inconsistently in varying or similar circumstances, without any accountability to any Recipient, except only as otherwise expressly provided by this Plan or any Agreement with such Recipient. Any decision, determination, direction or other action of the Committee in the administration of this Plan shall be final, binding and conclusive for all purposes, subject only to the further exercise of authority of the Committee hereunder. SECTION 5. ELIGIBILITY Awards may be granted only to Recipients; provided that no Outside Director or Consultant may be granted an ISO Award. SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNIT (RSU) AWARDS (A) Grant. Any Recipient may receive one or more Restricted Stock Awards or RSU Awards. (B) Restricted Periods. The Restricted Period for each Restricted Stock Award or RSU Award shall be set forth in the applicable Agreement. Except as otherwise provided in the applicable Agreement on a termination of employment or engagement, or pursuant to section 9 hereof in the event of a Change in Control, each Restricted Stock Award or RSU Award shall have such Restricted Period and be subject to such Performance Goals as the Committee may determine. Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Restricted Stock Award or RSU Award is made to a Recipient whose employment or service as a director or Consultant subsequently terminates for any reason before the lapse of all restrictions thereon, such Restricted Stock or RSU with respect to which such restrictions shall not have lapsed shall be forfeited to that extent by such Recipient. (C) Certain Restricted Stock Award Provisions. (1) Stockholder Rights. On the granting of a Restricted Stock Award, a Recipient shall be entitled to all rights incident to ownership of Common Stock of the Company with respect to his or her Restricted Stock, including the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid in cash or shares of Restricted Stock, as set forth in the applicable Agreement or as determined by the Committee. Each grant of Restricted Stock may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) Certificates; Dividends on Restricted Stock; Restrictions on Transferability. During the Restricted Period, each certificate representing Restricted Stock shall be registered in the respective Recipient’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in this Plan and the applicable Agreement. Each such certificate shall be deposited by the Recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, that will permit transfer to the Company of all or any portion of the Restricted Stock that may be forfeited in accordance with this Plan and the applicable Agreement. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes, except that: (i) no Recipient will be entitled to delivery of a certificate representing Restricted Stock until expiration of the restrictions applicable thereto; (ii) the Company will retain custody of all Restricted Stock issued as a dividend or otherwise with respect to an Award of Restricted Stock, which shall be subject to the same restrictions, terms and conditions as are applicable to the awarded Restricted Stock, until such time, if ever, as such Restricted Stock becomes vested, and no Restricted Stock shall bear interest or be segregated in separate accounts; (iii) subject to section 13(B) hereof, no Recipient shall have any right or power to sell, assign, transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of any Restricted Stock during the applicable Restricted Period; and (iv) unless otherwise determined and directed by the Committee, a breach of any restriction, term or condition in this Plan or the applicable Agreement or established by the Committee with respect to any Restricted Stock will cause a


 
6 forfeiture of such Restricted Stock, including any Restricted Stock issued as a dividend or otherwise with respect thereto. (D) Certain Restricted Stock Unit (RSU) Award Provisions. (1) General. Each grant of Restricted Stock Units shall constitute an agreement by the Company to issue or deliver shares of Common Stock or cash to the Recipient thereof following the end of the applicable Restricted Period in consideration of the performance of services. Each such grant of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) No Stockholder Rights. A Recipient who receives an RSU Award shall not have any rights as a stockholder with respect to the shares of Common Stock subject to such RSUs until such time, if any, as shares of Common Stock are delivered to such Recipient pursuant to the applicable Agreement. (3) Payment. Unless otherwise determined by the Committee, each Agreement relating to an RSU Award shall set forth the payment date for such RSU Award, which date shall not be earlier than the end of the applicable Restricted Period. Payment of earned Restricted Stock Units may be made in one or more installments and may be made wholly in cash, wholly in shares of Common Stock or a combination thereof, as determined by the Committee. SECTION 7. OPTION AWARDS (A) Grant. Any Recipient may receive one or more Option Awards. (B) Designation and Price. (1) Any Option granted under this Plan may be granted as an ISO or as an NQSO as shall be determined by the Committee at the time of the grant of such Option. Only Participants may be granted ISOs. Each Option shall, as directed by the Committee, be evidenced by an Agreement, which shall specify whether the Option is an ISO or an NQSO and shall contain such terms and conditions as the Committee may determine in accordance with this Plan. (2) Every ISO or NQSO shall provide for a fixed expiration date of not later than ten years from the date that such ISO or NQSO is granted. (3) The Exercise Price pursuant to each Option shall be fixed by the Committee at the time of the granting of the Option, but shall not in any event be less than the Fair Market Value on the date that such Option is granted, subject to adjustment as provided in section 11 hereof. (C) Exercise. The Committee may provide for Options granted under this Plan to be exercisable as a whole at any time or in part from time to time. Shares of Common Stock to be issued on any exercise of an Option will be issued after the Company receives (i) notice (in such form as the Committee may require) from the holder thereof of the exercise of such Option, and (ii) payment as provided in section 7(D) hereof of the aggregate Exercise Price for all shares with respect to which such Option is exercised. Each such notice and payment shall be delivered at such place and in such manner as the Committee may specify from time to time. (D) Payment. The Exercise Price for the shares of Common Stock issuable on the exercise of an Option shall be paid in full at the time of such exercise either in cash or by such other means as the Committee may approve, which may include tendering unencumbered shares of Common Stock then owned by the Recipient exercising such Option having an aggregate Fair Market Value at the time of such exercise equal to the aggregate Exercise Price of the shares being purchased on such exercise or cashless exercise through a securities broker.


 
7 (E) Expiration or Termination of Awards. (1) Participants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Participant who holds an outstanding Option dies while employed, during the period when such Participant, if Disabled, would be entitled to exercise such Option, or after such Participant’s Retirement, then such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by the Beneficiaries of the decedent for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s death. (b) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of a Participant who holds an outstanding Option ceases by reason of Disability at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by such Participant or his or her Personal Representative for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Disability. (c) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of any Participant who holds an outstanding Option ceases by reason of Retirement, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Retirement. (d) Notwithstanding any provision of this Plan to the contrary, any Option may, in the discretion of the Committee or as provided in the applicable Agreement, become exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, from and after the time the Participant ceases to be an Employee as a result of the sale or other disposition by the Company or any Subsidiary of assets or property (including shares of any Subsidiary) in respect of which such Participant shall theretofore have been employed or as a result of which such Participant’s continued employment is no longer required. (e) Except as otherwise provided in subsections (a), (b), (c) and (d) of this section 7(E)(1) and sections 9(D) and 13(I) hereof, if the employment of any Participant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Participant’s employment, for the number of shares that such Participant could have acquired on exercise of such Option immediately before the cessation of such Participant’s employment; provided that such Option shall terminate on and as of such earlier date. (2) Outside Directors and Consultants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the service of any Outside Director or Consultant who holds an outstanding Option ceases by reason of Retirement, death or Disability, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, by such Outside Director or Consultant, his or her Personal Representative or his or her Beneficiaries for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before such Outside Director’s or Consultant’s Retirement, death or Disability. (b) Except as otherwise provided in subsection (a) of this section 7(E)(2) and sections 9(D) and 13(I) hereof, if the service of any Outside Director or Consultant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Outside


 
8 Director’s or Consultant’s service, for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before the cessation of such Outside Director’s or Consultant’s service; provided that such Option shall terminate on and as of such earlier date. SECTION 8. CONTINUED EMPLOYMENT Nothing in this Plan, or in any Award granted pursuant to this Plan, shall confer on any Person any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate any Recipient’s employment or service at any time. SECTION 9. CHANGE IN CONTROL (A) Restricted Stock and RSU Awards. On a Change in Control, except as otherwise provided in the applicable Agreement and subject to compliance with Code section 409A, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall substitute similar benefits for the Restricted Stock Awards and RSU Awards outstanding under this Plan; or (ii) such Restricted Stock Awards or RSU Awards shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to substitute similar benefits for such Restricted Stock Awards and RSU Awards and refuses to continue such Restricted Stock Awards and RSU Awards in full force and effect, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then the Restricted Period relating to each such Restricted Stock Award or RSU Award shall terminate, and from and after such Change in Control, each such Restricted Stock Award or RSU Award shall be free of all other restrictions for all shares of Restricted Stock or RSUs that shall not theretofore have been acquired under the applicable Agreement. (B) Option Awards. On a Change in Control, except as otherwise provided in the applicable Agreements, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall assume all Options outstanding under this Plan or shall substitute similar options for those outstanding under this Plan, or (ii) such Options shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to assume or continue such Options or to substitute similar options for those outstanding under this Plan, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then each such Option shall become immediately exercisable for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, and shall be terminated if not exercised before or at the time of such Change of Control. (C) Cash-Out of Awards. In connection with a Change in Control, notwithstanding any of the foregoing provisions of this section 9 to the contrary, the Committee may, either pursuant to the applicable Agreement or by resolution adopted before the Change in Control, provide that any outstanding Award (or a portion thereof) shall, on such Change in Control, be cancelled in exchange for payment in cash of the amount, if any, by which the aggregate Fair Market Value of the shares of Common Stock subject to such Award exceeds the aggregate Exercise Price therefor. SECTION 10. WITHHOLDING TAXES Federal, state or local law may require the withholding of taxes resulting from the grant or vesting of an Award or the exercise of an Option. The Company may permit or require (subject to such conditions or procedures as may be established by the Committee) any such tax withholding obligation of a Participant to be satisfied by any of the following means, or by any combination of such means: (i) cash payment by such Participant to the Company; (ii) withholding from the shares of Common Stock otherwise issuable to such Participant pursuant to the vesting or exercise of an Award of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation; or (iii) delivery by the Participant to the Company of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation arising from the vesting or exercise of an Award. If the payment


 
9 or delivery specified in clause (i) or (iii) of the preceding sentence is required but is not paid by a Participant, the Company may refuse to issue Common Stock to such Participant under this Plan. SECTION 11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends, the number or kind of shares that may be issued under this Plan pursuant to section 3 hereof and the number or kind of shares subject to, or the price per share under any outstanding Award, shall be adjusted, automatically and without notice, so that the proportionate interests of the Recipients shall be maintained as before the occurrence of such event; provided that no adjustment shall be made pursuant to this section 11 that would (i) cause any Option intended to qualify as an ISO to fail to qualify as an ISO, (ii) cause an Award that is otherwise exempt from Code section 409A to become subject to Code section 409A, or (iii) cause an Award that is subject to Code section 409A to fail to satisfy the requirements of Code section 409A. SECTION 12. AMENDMENT AND TERMINATION The Committee may amend this Plan at any time or from time to time; provided that: (i) the Committee may not, without approval by the Board, materially increase the benefits provided to Recipients under this Plan; (ii) any amendment with respect to Restricted Stock Awards or RSU Awards granted to Outside Directors must be approved by the Board; and (iii) no amendment that requires stockholder approval in order for this Plan to continue to comply with any provision of the Exchange Act, any rule promulgated by the Securities and Exchange Commission under the Exchange Act, any rule of the New York Stock Exchange or any other securities exchange on which shares of Common Stock are listed, or any other applicable law, rule or regulation, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company within the time period required under such provision. Without the approval of the stockholders of the Company, (i) neither the Board nor the Committee will authorize the amendment of any outstanding Option to reduce the Exercise Price thereof, except for adjustments made pursuant to section 11 hereof, (ii) no outstanding Option will be cancelled and replaced with another Option Award having a lower Exercise Price, or for another Award, or for cash, except as provided in section 9 or 11 hereof, and (iii) no Option will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award; provided that this sentence is intended to prohibit, without stockholder approval, the re-pricing of Options that have Exercise Prices above Fair Market Value and will not be construed to limit or prohibit any adjustment pursuant to section 9 or 11 hereof. The Committee may terminate this Plan at any time; provided that such termination shall not affect any Awards theretofore made or any stock options theretofore granted under either of the Prior Plans and such Awards and stock options shall continue to be subject to all terms and conditions of this Plan (including the second paragraph of section 1 hereof) notwithstanding such termination. SECTION 13. MISCELLANEOUS PROVISIONS (A) No Rights to Awards. No Person has or shall have any claim or right to be granted an Award under this Plan. (B) Assignment and Transfer. No right or interest of any Recipient under this Plan or in any Award may be assigned or transferred as a whole or in part, directly or indirectly, by operation of law or otherwise (except by will or the laws of descent and distribution), including by way of execution, levy, garnishment, attachment, pledge or bankruptcy or in any other manner, and no such rights or interests of any Recipient in this Plan shall be subject to any obligation or liability of such Recipient; provided that the Committee may determine that a Recipient’s rights and interests under this Plan or in any Award may be made transferable by such Recipient during his or her lifetime, subject to such conditions as the Committee may specify. Except as provided in section 6 hereof, no Award shall entitle the Recipient thereof, as such, or any of such Recipient’s Beneficiaries or Personal


 
10 Representative, to any rights of a stockholder of the Company, unless and until shares subject to such Award are issued to and registered on the Company’s records in the name or names of such Recipient, Beneficiaries or Personal Representative, as the case may be, and then only with respect to such shares. (C) Compliance with Legal and Exchange Requirements. This Plan, the grant and exercise of Awards hereunder, the issuance of Common Stock and other interests hereunder, and the other obligations of the Company under this Plan and any Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as the Committee may determine are necessary or advisable. The Company or the Committee may postpone the grant or exercise of any Award, the issuance or delivery of Common Stock under any Award or any other action permitted under this Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation and may require any Recipient to make such representations and furnish such information as the Committee may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with any and all applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of this Plan or any Agreement to recognize the exercise of any Award or otherwise to sell or issue Common Stock in violation of any such law, rule or regulation. Any postponement of the exercise or settlement of any Award under this section 13(C) shall not extend the term of any Award. Neither the Company nor any Subsidiary nor any director or officer of the Company shall have any obligation or liability to any Recipient with respect to any Award (or Common Stock issuable thereunder) that shall lapse because of any such postponement. (D) Section 409A. Awards granted under this Plan shall be designed and administered in a manner that they are either exempt from the application of, or comply with, the requirements of Code section 409A. To the extent that the Committee determines that any Award is subject to Code section 409A, the Agreement relating to such Award shall incorporate terms and conditions necessary to avoid the imposition on the Recipient of additional tax under Code section 409A. Notwithstanding anything to the contrary in this Plan or any Agreement (unless such Agreement provides otherwise with specific reference to this section 13(D)): (i) no Award shall be granted, deferred, accelerated, extended, paid, settled, substituted or modified under this Plan in a manner that would result in the imposition on a Recipient of additional tax under Code section 409A; and (ii) if an Award is subject to Code section 409A, and if the Recipient to whom such Award is granted is a “specified employee” (as defined in Code section 409A, with such classification to be determined in accordance with methodology established by the Company), no distribution or payment of any amount under such Award shall be made before a date that is six months following the date of such Recipient’s “separation from service” (as defined in Code section 409A) or, if earlier, the date of such Recipient’s death. The Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Code section 409A; provided that the Company does not and shall not make any representation or warranty that any Award under this Plan will qualify for favorable tax treatment under Code section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Recipient for any tax, interest or penalties a Recipient might owe as a result of the grant, holding, vesting, exercise or payment of any Award. (E) Ratification and Consent. By accepting any Award under this Plan, each Recipient and each Personal Representative or Beneficiary claiming under or through such Recipient shall be conclusively deemed to have accepted, ratified and consented to all of the terms and conditions of this Plan and any and all action taken under this Plan by the Company, any Subsidiary, the Board or the Committee. (F) Other Compensation. Nothing in this Plan shall prevent, limit or otherwise affect the right, power and authority of the Board with respect to any other or additional compensation arrangements. (G) Grant Date. Each Recipient shall be deemed to have been granted an Award on the date that the Committee grants such Award under this Plan or such later date as the Committee shall determine at the time such grant is authorized. (H) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.


 
11 (I) Forfeiture Provision. Except as otherwise expressly provided by the applicable Agreement, the Committee may require a Recipient to forfeit all unexercised, unearned, unvested or unpaid Awards, if: (1) the Recipient, while employed by the Company or any Subsidiary, prepares to engage or engages, directly or indirectly, without the written consent of the Company, in any manner or capacity, as principal, agent, partner, officer, director, employee or otherwise, in any business or activity competitive with any business conducted by the Company or any Subsidiary, as determined by the Committee; (2) the Recipient performs any act or engages in any activity that the Committee determines is materially detrimental to the best interests of the Company or any Subsidiary; or (3) the Recipient materially breaches any agreement with or duty to the Company or any Subsidiary, including any non-competition agreement, non-solicitation agreement, confidentiality or non-disclosure agreement, or assignment of inventions or ownership of works agreement, as determined by the Committee. (J) Participants Outside the United States. Notwithstanding any provision of this Plan to the contrary, to comply with the laws of other countries in which the Company and the Subsidiaries operate or have Employees or Consultants, the Committee shall have the power and authority to: (i) determine which Subsidiaries shall be covered by this Plan; (ii) determine which Employees or Consultants outside the United States are eligible to participate in this Plan; (iii) modify the terms and conditions of any Award granted to Employees or Consultants outside the United States to comply with applicable foreign laws; (iv) modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (v) take any action, before or after an Award is made, that it deems necessary or advisable to obtain approval or comply with any government regulatory exemption or requirement; provided that the Committee is not authorized to take any action hereunder, and no Awards shall be granted, that would violate any applicable law. (K) Successors. All obligations of the Company under this Plan and with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other event, or a sale or disposition of all or substantially all of the business or assets of the Company, and references to the “Company” herein and in any Agreements shall be deemed to refer to such successors. (L) Severability. If any provision of this Plan, or the application of such provision to any Person or circumstance, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Plan, or the application of such provision to Persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. (M) Construction. The headings of the sections hereof are for convenience of reference only and are not part of this Plan. As used herein, each gender includes each other gender, and the singular includes the plural and vice versa, as the context may require. Reference herein to any section includes reference to each and all subsections of such section. For purposes of this Plan, each of the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” (N) Governing Law. This Plan shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware. SECTION 14. EFFECTIVENESS OF THIS PLAN This Plan shall be submitted to the stockholders of the Company for their approval at their annual meeting scheduled to be held on April 26, 2011, or at such other annual or special meeting as the Board may specify, or any adjournment or postponement thereof. This Plan will be effective as of the date of its approval by the stockholders of the Company.


 
1 Exhibit 10.15 2018 DIRECTOR TIME-BASED RESTRICTED STOCK UNIT AGREEMENT Company: Simpson Manufacturing Co., Inc. Recipient: The recipient’s name (the “Recipient”) is set forth on the Recipient’s online award acceptance page on Morgan Stanley Smith Barney’s StockPlan Connect website (the “Acceptance Page”) at https://www.stockplanconnect.com, which is incorporated by reference to this Agreement. The Number of Shares of Common Stock Subject to RSUs Granted Hereunder (the “RSU Shares”): The aggregate number of shares of Common Stock as stated on the Acceptance Page. The Effective Date of the Award (the “Award Date”): A date in 2018 as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Vesting Schedule (the “Vesting Schedule”): 100% of the RSU Shares will vest on the Award Date. This TIME-BASED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made as of the Award Date stated on the Acceptance Page by and between Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), and the Recipient named on the Acceptance Page, with reference to the following facts: Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in the amended and restated Simpson Manufacturing Co., Inc. 2011 Incentive Plan effective on April 21, 2015 (as amended from time to time, the “Plan”). The Board has delegated to the Committee all authority to administer the Plan. The Committee has determined to grant to the Recipient, under the Plan, time-based Restricted Stock Units (the “RSUs”) with respect to the RSU Shares stated on the Acceptance Page. To evidence the RSUs and to set forth the terms and conditions thereof, the Company and the Recipient agree as follows: 1. Confirmation of Grant. (a) The Company grants the RSUs to the Recipient and the Recipient agrees to accept the RSUs and participate in the Plan, effective as of the Award Date. As a condition of the grant, this Agreement and the RSUs shall be governed by the terms and conditions of the Plan and shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery policy. (b) The RSUs shall be reflected in a bookkeeping account maintained by the Company through the date on which the RSUs become fully vested pursuant to section 2 or are forfeited pursuant to section 3. If and when the RSUs become fully vested pursuant to section 2, and on the satisfaction of all other conditions applicable to the RSUs, the RSUs not forfeited pursuant to section 3 shall be settled in the number of shares of Common Stock as provided in section 1(d) and otherwise in accordance with the Plan. (c) The Company’s obligations under this Agreement shall be unfunded and unsecured. No special or separate fund shall be established therefor and no other segregation of assets shall be required or made


 
2 with respect thereto. The rights of the Recipient under this Agreement shall be no greater than those of a general unsecured creditor of the Company. (d) Except as otherwise provided in this Agreement and the Plan, the RSUs shall be settled by the issuance and delivery of the RSU Shares, or as provided in this Section 1(d), by cash or a combination thereof (as determined by the Committee in its sole discretion), within sixty days after the RSUs have vested pursuant to section 2 subject to satisfaction of any other terms and conditions applicable to the RSUs; provided, however, that, the number of the RSU Shares issued or delivered (or for which a cash payment is made) to the Recipient in any calendar year, together with the number of shares of Common Stock issued or delivered (or for which a cash payment is made) to the Recipient in the same calendar year under any other RSU Awards, shall not exceed the annual maximum aggregate number of shares of Common Stock issuable or deliverable under RSU Awards as set forth in the Plan that is effective at the time of the issuance or delivery of (or making a cash payment for) the RSUs. In settling the RSUs pursuant to the foregoing, the Company (or its acquirer or successor) shall have the option (as determined by the Committee in its sole discretion) to make or provide for a cash payment to the Recipient, in exchange for the cancellation of the vested RSUs (or any portion thereof), in an amount equal to the product of (A) the number of the RSU Shares under the cancelled RSUs and (B) the average closing price of a share of Common Stock over the period ending on the date the RSUs (or the portion thereof) become vested and starting 60 days prior to that date. Anything herein to the contrary notwithstanding, this Agreement does not create an obligation on the part of the Company to adopt any policy or procedure, agree to any amendment hereto, make any arrangement, or take any other action, to comply with Code section 409A. The Recipient agrees and acknowledges that the Company makes no representations that this Agreement, including the grant, vesting and/or delivery of the RSU Shares (and/or cash), does not violate Code section 409A, and the Company shall have no liability whatsoever to the Recipient if he or she is subject to any taxes or penalties under Code section 409A. 2. Vesting. Subject to the terms and conditions of this Agreement and the Plan and unless otherwise forfeited pursuant to section 3, the RSUs shall vest (that is, the Restricted Period with respect thereto shall terminate) pursuant to the Vesting Schedule. The Recipient explicitly acknowledges and agrees that the granting or vesting of the RSUs as well as the Recipient’s holding of the RSU Shares shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery, stock ownership, and hedging, pledging and trading policies. 3. Forfeiture. Anything herein to the contrary notwithstanding, (a) all RSUs that are not vested in accordance with section 2 shall terminate immediately and be forfeited in their entirety if, and at such time as, the Recipient ceases to be an Outside Director,1 and (b) all RSUs, to the extent not theretofore settled in accordance with section 1(d), shall terminate immediately and be forfeited in their entirety when and as provided in section 13(I) of the Plan. 4. Tax Withholding. Pursuant to section 10 of the Plan, the Company may require the Recipient to enter into an arrangement providing for the payment in cash, Common Stock or otherwise by the Recipient to the Company of any tax withholding obligation of the Company arising by reason of (a) the granting or vesting of the RSUs, (b) the lapse of any substantial risk of forfeiture to which the RSUs or the RSU Shares are subject, or (c) the disposition of the RSUs or the RSU Shares, to the extent such arrangement does not cause a loss of the Section 16(b) exemption pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. 5. Representations and Warranties of the Company. The Company represents and warrants to the Recipient that the RSU Shares, when issued and delivered on the vesting of the RSUs in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. 6. Recipient Representations. The Recipient represents and warrants to the Company that the Recipient has received and read this Agreement and the Plan, that the Recipient has consulted with the Recipient’s 1 For example, pursuant to section 3, before the Award Date, (I) if the Recipient’s engagement with the Company as an Outside Director is terminated by the Company or by the Recipient for any reason or for no reason, or (II) if the Recipient retires, dies or becomes Disabled, the RSUs shall be forfeited in their entirety and no distribution or payment of any amount under such RSUs shall ever be made to the Recipient.


 
3 own legal, financial and other advisers regarding this Agreement and the Plan to the extent that the Recipient considered necessary or appropriate, that the Recipient fully understands and accepts all of the terms and conditions of this Agreement and the Plan, and that the Recipient is relying solely on the Recipient’s own advisers with respect to the tax consequences of this Agreement and the RSUs. 7. Change in Control. On a Change in Control, the RSUs shall be subject to the applicable provisions of section 9 of the Plan, as the Committee may determine. 8. Adjustments to Reflect Capital Changes. Subject to and except as otherwise provided in section 9 of the Plan, the number and kind of shares subject to the RSUs shall be appropriately adjusted, as the Committee may determine pursuant to section 11 of the Plan, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends. 9. No Rights as Stockholder. Neither the granting or vesting of the RSUs nor the issuance or delivery of the RSU Shares shall entitle the Recipient, as such, or any of the Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until the RSU Shares are registered on the Company’s records in the name or names of the Recipient or the Recipient’s Beneficiaries or Personal Representative, as the case may be, and then only with respect to such RSU Shares so registered. 10. No Right to Continued Employment. Nothing in this Agreement shall confer on the Recipient any right to continue in the engagement with, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate the Recipient’s engagement or service at any time. 11. Regulatory Compliance. Notwithstanding anything herein to the contrary, the issuance and delivery of the RSU Shares shall in all events be subject to and governed by section 13(C) of the Plan. 12. Notices. Any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally, when transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office in California, and, if to the Recipient, at the Recipient’s address on the Company’s records. Either party may change such party’s address or facsimile number from time to time by notice hereunder to the other. 13. Entire Agreement. This Agreement and the Plan together contain the entire agreement of the parties and supersede all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between the parties, regarding the RSUs. The Recipient specifically acknowledges and agrees that all descriptions of the RSUs in any prior letters, memoranda or other documents provided to him or her by the Company or any Subsidiary are hereby replaced and superseded in their entirety by this Agreement and shall be of no further force or effect. To the extent there is any inconsistency between the descriptions of any such documents and the terms of this Agreement, the terms of this Agreement shall prevail. 14. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by the Recipient and the Company. 15. Assignment. The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of this Agreement, any of the RSUs or any other rights hereunder, and shall not delegate any duties hereunder, except only as may be permitted pursuant to section 13(B) of the Plan, and any such action or transaction that may otherwise be attempted or purported by the Recipient shall be void and of no effect. 16. Successors. Subject to section 15, this Agreement shall bind and inure to the benefit of the Company and the Recipient and their respective successors, assigns, heirs, legatees, devisees, executors,


 
4 administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any other Person any right or benefit in or under this Agreement or the Plan. 17. Separate Payments. All amounts payable in connection with the RSUs hereunder or any other Awards granted under the Plan shall be treated as separate payments for the purposes of Code section 409A. 18. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 20. Order of Precedence and Construction. This Agreement, the RSUs and the RSU Shares are subject to all provisions of the Plan (a copy of which is attached hereto as Exhibit A), including the Restricted Stock Unit provisions of section 6 thereof, and are further subject to all interpretations and amendments thereto that may from time to time be adopted pursuant to the Plan. In the event of any inconsistency between any provision of this Agreement and any provision of the Plan, the provision of the Plan shall govern. The headings of sections herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction or interpretation of any provision hereof. Whenever the context requires, the use in this Agreement of the singular number shall be deemed to include the plural and vice versa, and each gender shall be deemed to include each other gender. References herein to sections refer to sections of this Agreement, except as otherwise stated. The meaning of general words is not limited by specific examples introduced by “includes”, “including”, “for example”, “such as” or similar expressions, which shall be deemed to be followed by the phrase “without limitation”. 21. Further Assurances. The Recipient agrees to do and perform all acts and execute and deliver all additional documents, instruments and agreements as the Company or the Committee may reasonably request in connection with this Agreement. 22. Data Privacy. Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Recipient’s personal data as described in this Agreement by and among, as applicable, Recipient’s employer, the Company, and any Subsidiary for the exclusive purposes of implementing, administering, and managing Recipient’s participation in the Plan. Recipient understands that the Company and the employing Subsidiary may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, and any shares of stock or directorships held in the Company or any Subsidiary, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor (“Personal Data”). Recipient understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these entities may be located in Recipient’s country, or elsewhere, and that the third parties’ country may have different data privacy laws and protections than Recipient’s country. Recipient understands that he or she may request a list with the names and addresses of any potential third parties in receipt of the Personal Data by contacting the Company’s Equity Plans Administrator. Recipient authorizes the third parties to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Personal Data as may be required to a broker or other third party with whom Recipient may elect to deposit any RSU Shares received upon vest of the RSUs. Recipient understands that Personal Data will be held as long as is necessary to administer and manage Recipient’s participation in the Plan. Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s Equity Plans Administrator. Recipient understands that refusal or withdrawal of consent may affect Recipient’s ability to realize benefits from the RSUs. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the Company’s Equity Plans Administrator. 23. Electronic Delivery. The Company may, in its sole discretion, decide (a) to deliver or effect by electronic means any documents or communications related to the RSUs granted under the Plan, Recipient’s


 
5 participation in the Plan, or future Awards that may be granted under the Plan or (b) to request by electronic means Recipient’s consent to participate in the Plan and other communications related to the RSUs or the Plan. Recipient hereby consents to receive such documents and communications by electronic delivery and, if requested, to agree to participate in the Plan and deliver or effect such other communications through an on-line or electronic system established and maintained by the Company or any third party designated by the Company. [Signature Page Follows]


 
6 IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed by or on behalf of the Company and the Recipient as of the Award Date. COMPANY: SIMPSON MANUFACTURING CO., INC. By /s/Brian J. Magstadt, Chief Financial Officer Authorized Signatory for the Compensation and Leadership Development Committee of the Board of Directors ACCEPTANCE OF AGREEMENT: Through the electronic submission of his or her consent to this Restricted Stock Unit Agreement in accordance with the instructions on Morgan Stanley Smith Barney’s StockPlan Connect website, the Recipient hereby confirms, ratifies, approves and accepts all of the terms and conditions of this Restricted Stock Unit Agreement.


 
1 Exhibit A SIMPSON MANUFACTURING CO. INC. 2011 INCENTIVE PLAN Adopted April 26, 2011, and Amended and Restated April 21, 2015 SECTION 1. PURPOSE The purpose of the Simpson Manufacturing Co., Inc. 2011 Incentive Plan is to promote the interests of the Company and its stockholders by providing incentives to directors, officers and employees of, and consultants to, the Company and the Subsidiaries. Accordingly, the Company may grant to selected officers, Employees, Consultants and Outside Directors Option Awards, Restricted Stock Awards and RSU Awards in an effort to attract and retain qualified individuals as employees, directors and consultants and to provide such individuals with incentives to continue service with the Company, devote their best efforts to the Company and improve the Company’s economic performance, thus enhancing the value of the Company for the benefit of stockholders. This Plan amends and restates in their entirety, and incorporates and supersedes, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended (the “1994 Plan”), and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended (the “1995 Plan” and, together with the 1994 Plan, the “Prior Plans”); provided that any stock option granted under the 1994 Plan or the 1995 Plan that has not been exercised in full and that has not expired or terminated shall continue in effect in accordance with its terms and conditions and shall continue to be subject to and governed by the 1994 Plan or the 1995 Plan, respectively, as in effect immediately before the adoption of this Plan. SECTION 2. DEFINITIONS As used in this Plan, the following terms have the meanings indicated: “Agreement” means an agreement, in written or electronic form, entered into by the Company and a Recipient setting forth the terms and conditions applicable to an Award granted under this Plan. “Award” means an Option Award, a Restricted Stock Award or an RSU Award, in each case granted under this Plan. “Beneficial Ownership” and “Beneficially Own” have the meanings set forth in Rule 13d-3 under the Exchange Act. “Beneficiary” means each Person designated as such by a Recipient or, if no designation has been made, each Person entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Recipient’s death. “Board” means the Board of Directors of the Company. “Change in Control” means the occurrence of any one (or more) of the following events: (i) the consummation of a consolidation or merger of the Company in which the Company is not the surviving corporation; (ii) the consummation of a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding such reverse merger are converted by virtue of such reverse merger into other property, whether securities, cash or otherwise; or (iii) the approval by the stockholders of the Company of a plan or proposal for the dissolution and liquidation of the Company; provided that a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the Common Stock immediately before such transaction or transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately thereafter.


 
2 “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means the Compensation and Leadership Development Committee of the Board, as from time to time constituted, or any successor committee of the Board with similar functions, which shall consist of three or more members, each of whom shall be an outside director as defined in the regulations issued under Code section 162(m) and a non-employee director within the meaning of applicable regulatory requirements, including those promulgated under Exchange Act section 16. “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustment pursuant to section 11 hereof. “Company” means Simpson Manufacturing Co., Inc., a Delaware corporation, or any successor thereto. “Consultant” means a Person that (i) renders services to the Company as an independent contractor (and not as an Employee or Outside Director) pursuant to a contract between such Person and the Company and (ii) is selected by the Committee to receive an Award under this Plan. “Disability” means (i) in the case of a Participant, determination by the Committee that he or she has become unable to perform the functions required by his or her regular job due to physical or mental illness or incapacity and, in connection with the grant of an ISO, he or she is within the meaning of that term as provided in Code section 22(e)(3), and (ii) in the case of an Outside Director, determination by the Committee that he or she is unable to attend to his or her duties and responsibilities as a member of the Board due to physical or mental illness or incapacity. “Employee” means a regular, full-time or part-time employee of the Company or any Subsidiary; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of ISOs, the term “Employee” shall have the meaning ascribed to such term in Code section 3401(c). “Exercise Price” means, with respect to each share of Common Stock subject to an Option, the price fixed by the Committee at which such share may be purchased from the Company on the exercise of such Option. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Fair Market Value” means (i) as of any date, the closing sale price per share of Common Stock as reported on the Composite Tape of the New York Stock Exchange, or if there are no sales on such day, on the next prior trading day during which a sale occurred; and (ii) in the absence of such market for the shares of Common Stock, the fair market value per share of Common Stock determined by the Committee in good faith (which determination shall, to the extent applicable, be made in a manner that complies with Code sections 422(b) and 409A). “Incentive Stock Option” or “ISO” means an Option that is intended by the Committee to meet the requirements of Code section 422 or any successor provision. “ISO Award” means an Award of an Incentive Stock Option pursuant to section 9 hereof. “NQSO” means an Option granted pursuant to this Plan that does not qualify as an Incentive Stock Option. “NQSO Award” means an Award of an NQSO pursuant to section 7 hereof. “Option” means the right to purchase Common Stock at an Exercise Price to be specified and on terms to be designated by the Committee or otherwise determined pursuant to this Plan. The Committee shall designate each Option as either an NQSO or an Incentive Stock Option. “Option Award” means an Award of an Option pursuant to section 7 hereof.


 
3 “Outside Director” means a director of the Company, who is not also an Employee and who is selected by the Committee to receive an Award under this Plan. “Participant” means an Employee who is selected by the Committee to receive an Award under this Plan. “Performance Goals” means performance goals established by the Committee from time to time. Such goals may be absolute in their terms or measured against or in relation to other companies comparably or otherwise situated. Such performance goals may be particular to a Participant or the Subsidiary, division or other unit in which the Participant works or may be based on the performance of the Company as a whole. The Performance Goals applicable to any Award that is intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m) shall be based on one or more of (i) earnings, (ii) unit sales, sales volume or revenue, (iii) sales growth, (iv) stock price (including comparison with various stock A-3 market indicies), (v) return on equity, (vi) return on investment, (vii) total return to stockholders, (viii) economic profit, (ix) debt rating, (x) operating income, (xi) cash flows, (xii) cost targets, (xiii) return on assets or margins or (xiv) implementation, completion or attainment of measurable objectives with respect to (1) software development, (2) new distribution channels, (3) customer growth targets, (4) acquisition identification and integration, (5) manufacturing, production or inventory targets, (6) new product introductions, (7) product quality control, (8) accounting and reporting, (9) recruiting and maintaining personnel, or (10) compliance or regulatory program targets. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time or against other companies or financial metrics), (c) on a per share basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company or (e) on a pre-tax or after tax basis. “Person” has the meaning ascribed to that term in Exchange Act section 3(a)(9), as modified and used in Exchange Act sections 13(d) and 14(d), except that such term shall not include (a) the Company, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (c) an underwriter temporarily holding securities pursuant to an offering on behalf of the Company. “Personal Representative” means the Person or Persons who, on the Disability or incompetence of a Recipient, shall have acquired on behalf of the Recipient by legal proceeding or otherwise the right to receive benefits pursuant to this Plan. “Plan” means this Simpson Manufacturing Co., Inc. 2011 Incentive Plan. “Recipient” means a Participant, an Outside Director or a Consultant, as appropriate. “Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals or the occurrence of other events, as determined by the Committee). “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award, which are subject to the restrictions, terms, and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Restricted Stock Award” means an Award of Restricted Stock pursuant to section 6 hereof. “Restricted Stock Units” or “RSUs” means units issued pursuant to an RSU Award, which are valued in terms of shares of Common Stock equivalents and are subject to the restrictions, terms and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Retirement” means (i) in the case of a Participant, retirement from employment with the Company or any Subsidiary at any time as described in the Simpson Manufacturing Co., Inc. Profit Sharing Plan for Salaried Employees or in any successor plan, as from time to time in effect, or as otherwise determined by the Committee, (ii) in the case of an Outside Director, retirement from the Board after the date, if any, established by the Committee


 
4 as the date for mandatory retirement, as from time to time in effect, or as otherwise determined by the Committee, and (iii) in the case of a Consultant, such date as is determined by the Committee. “RSU Award” means an Award of Restricted Stock Units pursuant to section 6 hereof. “Subsidiary” means a corporation, limited liability company, partnership or other entity (i) more than fifty percent of the outstanding voting equity securities (representing the right to vote for the election of directors or other managing authority) are now or hereafter owned or controlled, directly or indirectly, by the Company, or (ii) which does not have outstanding voting equity securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than fifty percent of the ownership interests of which, representing the right generally to make decisions for such entity, is now or hereafter owned or controlled, directly or indirectly, by the Company; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall have the meaning ascribed to such term in Code section 424(f), as interpreted by the regulations thereunder and applicable law. “Tax Date” means the date the withholding tax obligation arises with respect to an Award. SECTION 3. STOCK SUBJECT TO PLAN (A) Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, 16,320,000 shares of Common Stock are reserved for issuance under this Plan, any or all of which may be delivered with respect to Option Awards, Restricted Stock Awards and RSU Awards and any or all of which may be authorized and unissued shares or treasury shares; provided that such 16,320,000 shares include all shares heretofore reserved for issuance pursuant to the Prior Plans. Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, the following limits shall apply with respect to Awards that are intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m): (i) the maximum aggregate number of shares of Common Stock that may be subject to Options granted in any calendar year to any one Participant shall be 150,000 shares; and (ii) the maximum aggregate number of Restricted Stock Awards and shares of Common Stock issuable or deliverable under RSU Awards granted in any calendar year to any one Participant shall be 100,000 shares. (B) Shares of Common Stock subject to Awards under this Plan or stock options granted under the Prior Plans that are forfeited, terminated, canceled or settled without the delivery of Common Stock under this Plan or the Prior Plans, respectively, will again be available for Awards under this Plan as if such Awards or grants had not been made; provided that, notwithstanding any other provision herein to the contrary, the aggregate number of shares of Common Stock that may be issued under this Plan shall not be increased by (i) shares of Common Stock tendered in full or partial payment of the Exercise Price of any Option or any stock option granted under either of the Prior Plans, (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy any tax withholding obligation, or (iii) shares of Common Stock that are repurchased by the Company. (C) Notwithstanding anything in this section 3 to the contrary and solely for purposes of determining whether shares are available for the grant of ISOs, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this section 3 that, if taken into account, would cause this Plan to fail the requirement under Code section 422 that this Plan designate a maximum aggregate number of shares that may be issued. SECTION 4. ADMINISTRATION The Committee shall have exclusive authority to administer this Plan. In addition to any implied powers and duties that may be needed to carry out the provisions hereof, the Committee shall have all the powers vested in it by the terms hereof, including exclusive authority to select the Recipients, to determine the type, size and terms of any and all Awards to be made to each Recipient, to determine the time when Awards will be granted, and to prescribe the form, terms and conditions of any Agreement relating to any Award under this Plan. The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, to make any other determinations that the Committee believes necessary or advisable for the administration hereof, and to correct any defect or supply any omission or reconcile any


 
5 inconsistency in this Plan or in any Award in the manner and to the extent that the Committee deems desirable and consistent with the intent of this Plan. The Committee may exercise any and all of the Committee’s rights, powers, authority and discretion under this Plan in the Committee’s absolute and exclusive discretion, and the Committee is authorized and empowered to grant or give any consent, approval or authorization, make any determination or do or perform any other act or thing conditionally or unconditionally, arbitrarily, or inconsistently in varying or similar circumstances, without any accountability to any Recipient, except only as otherwise expressly provided by this Plan or any Agreement with such Recipient. Any decision, determination, direction or other action of the Committee in the administration of this Plan shall be final, binding and conclusive for all purposes, subject only to the further exercise of authority of the Committee hereunder. SECTION 5. ELIGIBILITY Awards may be granted only to Recipients; provided that no Outside Director or Consultant may be granted an ISO Award. SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNIT (RSU) AWARDS (A) Grant. Any Recipient may receive one or more Restricted Stock Awards or RSU Awards. (B) Restricted Periods. The Restricted Period for each Restricted Stock Award or RSU Award shall be set forth in the applicable Agreement. Except as otherwise provided in the applicable Agreement on a termination of employment or engagement, or pursuant to section 9 hereof in the event of a Change in Control, each Restricted Stock Award or RSU Award shall have such Restricted Period and be subject to such Performance Goals as the Committee may determine. Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Restricted Stock Award or RSU Award is made to a Recipient whose employment or service as a director or Consultant subsequently terminates for any reason before the lapse of all restrictions thereon, such Restricted Stock or RSU with respect to which such restrictions shall not have lapsed shall be forfeited to that extent by such Recipient. (C) Certain Restricted Stock Award Provisions. (1) Stockholder Rights. On the granting of a Restricted Stock Award, a Recipient shall be entitled to all rights incident to ownership of Common Stock of the Company with respect to his or her Restricted Stock, including the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid in cash or shares of Restricted Stock, as set forth in the applicable Agreement or as determined by the Committee. Each grant of Restricted Stock may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) Certificates; Dividends on Restricted Stock; Restrictions on Transferability. During the Restricted Period, each certificate representing Restricted Stock shall be registered in the respective Recipient’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in this Plan and the applicable Agreement. Each such certificate shall be deposited by the Recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, that will permit transfer to the Company of all or any portion of the Restricted Stock that may be forfeited in accordance with this Plan and the applicable Agreement. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes, except that: (i) no Recipient will be entitled to delivery of a certificate representing Restricted Stock until expiration of the restrictions applicable thereto; (ii) the Company will retain custody of all Restricted Stock issued as a dividend or otherwise with respect to an Award of Restricted Stock, which shall be subject to the same restrictions, terms and conditions as are applicable to the awarded Restricted Stock, until such time, if ever, as such Restricted Stock becomes vested, and no Restricted Stock shall bear interest or be segregated in separate accounts; (iii) subject to section 13(B) hereof, no Recipient shall have any right or power to sell, assign, transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of any Restricted Stock during the applicable Restricted Period; and (iv) unless otherwise determined and directed by the Committee, a breach of any restriction, term or condition in this Plan or the applicable Agreement or established by the Committee with respect to any Restricted Stock will cause a


 
6 forfeiture of such Restricted Stock, including any Restricted Stock issued as a dividend or otherwise with respect thereto. (D) Certain Restricted Stock Unit (RSU) Award Provisions. (1) General. Each grant of Restricted Stock Units shall constitute an agreement by the Company to issue or deliver shares of Common Stock or cash to the Recipient thereof following the end of the applicable Restricted Period in consideration of the performance of services. Each such grant of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) No Stockholder Rights. A Recipient who receives an RSU Award shall not have any rights as a stockholder with respect to the shares of Common Stock subject to such RSUs until such time, if any, as shares of Common Stock are delivered to such Recipient pursuant to the applicable Agreement. (3) Payment. Unless otherwise determined by the Committee, each Agreement relating to an RSU Award shall set forth the payment date for such RSU Award, which date shall not be earlier than the end of the applicable Restricted Period. Payment of earned Restricted Stock Units may be made in one or more installments and may be made wholly in cash, wholly in shares of Common Stock or a combination thereof, as determined by the Committee. SECTION 7. OPTION AWARDS (A) Grant. Any Recipient may receive one or more Option Awards. (B) Designation and Price. (1) Any Option granted under this Plan may be granted as an ISO or as an NQSO as shall be determined by the Committee at the time of the grant of such Option. Only Participants may be granted ISOs. Each Option shall, as directed by the Committee, be evidenced by an Agreement, which shall specify whether the Option is an ISO or an NQSO and shall contain such terms and conditions as the Committee may determine in accordance with this Plan. (2) Every ISO or NQSO shall provide for a fixed expiration date of not later than ten years from the date that such ISO or NQSO is granted. (3) The Exercise Price pursuant to each Option shall be fixed by the Committee at the time of the granting of the Option, but shall not in any event be less than the Fair Market Value on the date that such Option is granted, subject to adjustment as provided in section 11 hereof. (C) Exercise. The Committee may provide for Options granted under this Plan to be exercisable as a whole at any time or in part from time to time. Shares of Common Stock to be issued on any exercise of an Option will be issued after the Company receives (i) notice (in such form as the Committee may require) from the holder thereof of the exercise of such Option, and (ii) payment as provided in section 7(D) hereof of the aggregate Exercise Price for all shares with respect to which such Option is exercised. Each such notice and payment shall be delivered at such place and in such manner as the Committee may specify from time to time. (D) Payment. The Exercise Price for the shares of Common Stock issuable on the exercise of an Option shall be paid in full at the time of such exercise either in cash or by such other means as the Committee may approve, which may include tendering unencumbered shares of Common Stock then owned by the Recipient exercising such Option having an aggregate Fair Market Value at the time of such exercise equal to the aggregate Exercise Price of the shares being purchased on such exercise or cashless exercise through a securities broker.


 
7 (E) Expiration or Termination of Awards. (1) Participants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Participant who holds an outstanding Option dies while employed, during the period when such Participant, if Disabled, would be entitled to exercise such Option, or after such Participant’s Retirement, then such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by the Beneficiaries of the decedent for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s death. (b) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of a Participant who holds an outstanding Option ceases by reason of Disability at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by such Participant or his or her Personal Representative for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Disability. (c) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of any Participant who holds an outstanding Option ceases by reason of Retirement, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Retirement. (d) Notwithstanding any provision of this Plan to the contrary, any Option may, in the discretion of the Committee or as provided in the applicable Agreement, become exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, from and after the time the Participant ceases to be an Employee as a result of the sale or other disposition by the Company or any Subsidiary of assets or property (including shares of any Subsidiary) in respect of which such Participant shall theretofore have been employed or as a result of which such Participant’s continued employment is no longer required. (e) Except as otherwise provided in subsections (a), (b), (c) and (d) of this section 7(E)(1) and sections 9(D) and 13(I) hereof, if the employment of any Participant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Participant’s employment, for the number of shares that such Participant could have acquired on exercise of such Option immediately before the cessation of such Participant’s employment; provided that such Option shall terminate on and as of such earlier date. (2) Outside Directors and Consultants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the service of any Outside Director or Consultant who holds an outstanding Option ceases by reason of Retirement, death or Disability, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, by such Outside Director or Consultant, his or her Personal Representative or his or her Beneficiaries for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before such Outside Director’s or Consultant’s Retirement, death or Disability. (b) Except as otherwise provided in subsection (a) of this section 7(E)(2) and sections 9(D) and 13(I) hereof, if the service of any Outside Director or Consultant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Outside


 
8 Director’s or Consultant’s service, for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before the cessation of such Outside Director’s or Consultant’s service; provided that such Option shall terminate on and as of such earlier date. SECTION 8. CONTINUED EMPLOYMENT Nothing in this Plan, or in any Award granted pursuant to this Plan, shall confer on any Person any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate any Recipient’s employment or service at any time. SECTION 9. CHANGE IN CONTROL (A) Restricted Stock and RSU Awards. On a Change in Control, except as otherwise provided in the applicable Agreement and subject to compliance with Code section 409A, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall substitute similar benefits for the Restricted Stock Awards and RSU Awards outstanding under this Plan; or (ii) such Restricted Stock Awards or RSU Awards shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to substitute similar benefits for such Restricted Stock Awards and RSU Awards and refuses to continue such Restricted Stock Awards and RSU Awards in full force and effect, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then the Restricted Period relating to each such Restricted Stock Award or RSU Award shall terminate, and from and after such Change in Control, each such Restricted Stock Award or RSU Award shall be free of all other restrictions for all shares of Restricted Stock or RSUs that shall not theretofore have been acquired under the applicable Agreement. (B) Option Awards. On a Change in Control, except as otherwise provided in the applicable Agreements, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall assume all Options outstanding under this Plan or shall substitute similar options for those outstanding under this Plan, or (ii) such Options shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to assume or continue such Options or to substitute similar options for those outstanding under this Plan, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then each such Option shall become immediately exercisable for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, and shall be terminated if not exercised before or at the time of such Change of Control. (C) Cash-Out of Awards. In connection with a Change in Control, notwithstanding any of the foregoing provisions of this section 9 to the contrary, the Committee may, either pursuant to the applicable Agreement or by resolution adopted before the Change in Control, provide that any outstanding Award (or a portion thereof) shall, on such Change in Control, be cancelled in exchange for payment in cash of the amount, if any, by which the aggregate Fair Market Value of the shares of Common Stock subject to such Award exceeds the aggregate Exercise Price therefor. SECTION 10. WITHHOLDING TAXES Federal, state or local law may require the withholding of taxes resulting from the grant or vesting of an Award or the exercise of an Option. The Company may permit or require (subject to such conditions or procedures as may be established by the Committee) any such tax withholding obligation of a Participant to be satisfied by any of the following means, or by any combination of such means: (i) cash payment by such Participant to the Company; (ii) withholding from the shares of Common Stock otherwise issuable to such Participant pursuant to the vesting or exercise of an Award of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation; or (iii) delivery by the Participant to the Company of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation arising from the vesting or exercise of an Award. If the payment


 
9 or delivery specified in clause (i) or (iii) of the preceding sentence is required but is not paid by a Participant, the Company may refuse to issue Common Stock to such Participant under this Plan. SECTION 11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends, the number or kind of shares that may be issued under this Plan pursuant to section 3 hereof and the number or kind of shares subject to, or the price per share under any outstanding Award, shall be adjusted, automatically and without notice, so that the proportionate interests of the Recipients shall be maintained as before the occurrence of such event; provided that no adjustment shall be made pursuant to this section 11 that would (i) cause any Option intended to qualify as an ISO to fail to qualify as an ISO, (ii) cause an Award that is otherwise exempt from Code section 409A to become subject to Code section 409A, or (iii) cause an Award that is subject to Code section 409A to fail to satisfy the requirements of Code section 409A. SECTION 12. AMENDMENT AND TERMINATION The Committee may amend this Plan at any time or from time to time; provided that: (i) the Committee may not, without approval by the Board, materially increase the benefits provided to Recipients under this Plan; (ii) any amendment with respect to Restricted Stock Awards or RSU Awards granted to Outside Directors must be approved by the Board; and (iii) no amendment that requires stockholder approval in order for this Plan to continue to comply with any provision of the Exchange Act, any rule promulgated by the Securities and Exchange Commission under the Exchange Act, any rule of the New York Stock Exchange or any other securities exchange on which shares of Common Stock are listed, or any other applicable law, rule or regulation, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company within the time period required under such provision. Without the approval of the stockholders of the Company, (i) neither the Board nor the Committee will authorize the amendment of any outstanding Option to reduce the Exercise Price thereof, except for adjustments made pursuant to section 11 hereof, (ii) no outstanding Option will be cancelled and replaced with another Option Award having a lower Exercise Price, or for another Award, or for cash, except as provided in section 9 or 11 hereof, and (iii) no Option will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award; provided that this sentence is intended to prohibit, without stockholder approval, the re-pricing of Options that have Exercise Prices above Fair Market Value and will not be construed to limit or prohibit any adjustment pursuant to section 9 or 11 hereof. The Committee may terminate this Plan at any time; provided that such termination shall not affect any Awards theretofore made or any stock options theretofore granted under either of the Prior Plans and such Awards and stock options shall continue to be subject to all terms and conditions of this Plan (including the second paragraph of section 1 hereof) notwithstanding such termination. SECTION 13. MISCELLANEOUS PROVISIONS (A) No Rights to Awards. No Person has or shall have any claim or right to be granted an Award under this Plan. (B) Assignment and Transfer. No right or interest of any Recipient under this Plan or in any Award may be assigned or transferred as a whole or in part, directly or indirectly, by operation of law or otherwise (except by will or the laws of descent and distribution), including by way of execution, levy, garnishment, attachment, pledge or bankruptcy or in any other manner, and no such rights or interests of any Recipient in this Plan shall be subject to any obligation or liability of such Recipient; provided that the Committee may determine that a Recipient’s rights and interests under this Plan or in any Award may be made transferable by such Recipient during his or her lifetime, subject to such conditions as the Committee may specify. Except as provided in section 6 hereof, no Award shall entitle the Recipient thereof, as such, or any of such Recipient’s Beneficiaries or Personal


 
10 Representative, to any rights of a stockholder of the Company, unless and until shares subject to such Award are issued to and registered on the Company’s records in the name or names of such Recipient, Beneficiaries or Personal Representative, as the case may be, and then only with respect to such shares. (C) Compliance with Legal and Exchange Requirements. This Plan, the grant and exercise of Awards hereunder, the issuance of Common Stock and other interests hereunder, and the other obligations of the Company under this Plan and any Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as the Committee may determine are necessary or advisable. The Company or the Committee may postpone the grant or exercise of any Award, the issuance or delivery of Common Stock under any Award or any other action permitted under this Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation and may require any Recipient to make such representations and furnish such information as the Committee may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with any and all applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of this Plan or any Agreement to recognize the exercise of any Award or otherwise to sell or issue Common Stock in violation of any such law, rule or regulation. Any postponement of the exercise or settlement of any Award under this section 13(C) shall not extend the term of any Award. Neither the Company nor any Subsidiary nor any director or officer of the Company shall have any obligation or liability to any Recipient with respect to any Award (or Common Stock issuable thereunder) that shall lapse because of any such postponement. (D) Section 409A. Awards granted under this Plan shall be designed and administered in a manner that they are either exempt from the application of, or comply with, the requirements of Code section 409A. To the extent that the Committee determines that any Award is subject to Code section 409A, the Agreement relating to such Award shall incorporate terms and conditions necessary to avoid the imposition on the Recipient of additional tax under Code section 409A. Notwithstanding anything to the contrary in this Plan or any Agreement (unless such Agreement provides otherwise with specific reference to this section 13(D)): (i) no Award shall be granted, deferred, accelerated, extended, paid, settled, substituted or modified under this Plan in a manner that would result in the imposition on a Recipient of additional tax under Code section 409A; and (ii) if an Award is subject to Code section 409A, and if the Recipient to whom such Award is granted is a “specified employee” (as defined in Code section 409A, with such classification to be determined in accordance with methodology established by the Company), no distribution or payment of any amount under such Award shall be made before a date that is six months following the date of such Recipient’s “separation from service” (as defined in Code section 409A) or, if earlier, the date of such Recipient’s death. The Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Code section 409A; provided that the Company does not and shall not make any representation or warranty that any Award under this Plan will qualify for favorable tax treatment under Code section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Recipient for any tax, interest or penalties a Recipient might owe as a result of the grant, holding, vesting, exercise or payment of any Award. (E) Ratification and Consent. By accepting any Award under this Plan, each Recipient and each Personal Representative or Beneficiary claiming under or through such Recipient shall be conclusively deemed to have accepted, ratified and consented to all of the terms and conditions of this Plan and any and all action taken under this Plan by the Company, any Subsidiary, the Board or the Committee. (F) Other Compensation. Nothing in this Plan shall prevent, limit or otherwise affect the right, power and authority of the Board with respect to any other or additional compensation arrangements. (G) Grant Date. Each Recipient shall be deemed to have been granted an Award on the date that the Committee grants such Award under this Plan or such later date as the Committee shall determine at the time such grant is authorized. (H) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.


 
11 (I) Forfeiture Provision. Except as otherwise expressly provided by the applicable Agreement, the Committee may require a Recipient to forfeit all unexercised, unearned, unvested or unpaid Awards, if: (1) the Recipient, while employed by the Company or any Subsidiary, prepares to engage or engages, directly or indirectly, without the written consent of the Company, in any manner or capacity, as principal, agent, partner, officer, director, employee or otherwise, in any business or activity competitive with any business conducted by the Company or any Subsidiary, as determined by the Committee; (2) the Recipient performs any act or engages in any activity that the Committee determines is materially detrimental to the best interests of the Company or any Subsidiary; or (3) the Recipient materially breaches any agreement with or duty to the Company or any Subsidiary, including any non-competition agreement, non-solicitation agreement, confidentiality or non-disclosure agreement, or assignment of inventions or ownership of works agreement, as determined by the Committee. (J) Participants Outside the United States. Notwithstanding any provision of this Plan to the contrary, to comply with the laws of other countries in which the Company and the Subsidiaries operate or have Employees or Consultants, the Committee shall have the power and authority to: (i) determine which Subsidiaries shall be covered by this Plan; (ii) determine which Employees or Consultants outside the United States are eligible to participate in this Plan; (iii) modify the terms and conditions of any Award granted to Employees or Consultants outside the United States to comply with applicable foreign laws; (iv) modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (v) take any action, before or after an Award is made, that it deems necessary or advisable to obtain approval or comply with any government regulatory exemption or requirement; provided that the Committee is not authorized to take any action hereunder, and no Awards shall be granted, that would violate any applicable law. (K) Successors. All obligations of the Company under this Plan and with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other event, or a sale or disposition of all or substantially all of the business or assets of the Company, and references to the “Company” herein and in any Agreements shall be deemed to refer to such successors. (L) Severability. If any provision of this Plan, or the application of such provision to any Person or circumstance, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Plan, or the application of such provision to Persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. (M) Construction. The headings of the sections hereof are for convenience of reference only and are not part of this Plan. As used herein, each gender includes each other gender, and the singular includes the plural and vice versa, as the context may require. Reference herein to any section includes reference to each and all subsections of such section. For purposes of this Plan, each of the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” (N) Governing Law. This Plan shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware. SECTION 14. EFFECTIVENESS OF THIS PLAN This Plan shall be submitted to the stockholders of the Company for their approval at their annual meeting scheduled to be held on April 26, 2011, or at such other annual or special meeting as the Board may specify, or any adjournment or postponement thereof. This Plan will be effective as of the date of its approval by the stockholders of the Company.


 
1 Exhibit 99.2 2017 PERFORMANCE & TIME BASED RESTRICTED STOCK UNIT AGREEMENT Company: Simpson Manufacturing Co., Inc. Recipient: The recipient’s name (the “Recipient”) is set forth on the Recipient’s online award acceptance page on Morgan Stanley Smith Barney’s StockPlan Connect website (the “Acceptance Page”) at https://www.stockplanconnect.com, which is incorporated by reference to this Agreement. The Number of Shares of Common Stock Subject to PRSUs Granted Hereunder (the “PRSU Shares”):1 The aggregate number of shares of Common Stock as stated on the Acceptance Page. The Effective Date of the Award (the “Award Date”): A date in 2017 as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Measurement Period (the “Measurement Period”): A one-year period beginning on January 1, 2017, and ending on December 31, 2017. The Date the PRSU Shares Start To Vest (the “Vesting Start Date”): A date subsequent to the Measurement Period as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Vesting Schedule (the “Vesting Schedule”): One fourth of the Vested Shares (defined below) will vest on each of the Vesting Start Date and the first, second and third anniversaries thereof; provided, however, that if any of such dates falls on a weekend or federal holiday, the applicable one fourth of the Vested Shares shall vest on the immediately following business day.2 Vesting Period (the “Vesting Period”): A period beginning on the Vesting Start Date, and ending on the third anniversary of the Vesting Start Date; provided, however, that if such anniversary date falls on a weekend or federal holiday, such period shall end on the immediately following business day.3 Specific Performance Goals (the “Specific Performance Goals”): The Specific Performance Goals are set forth on Exhibit A. This PERFORMANCE & TIME BASED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made as of the Award Date stated on the Acceptance Page by and between Simpson Manufacturing 1 100% of the Targeted PRSU Shares. 2 For example, if the Vesting Start Date is determined by the Committee to be February 15, 2018, then 1/4 of the PRSU Shares, if any (based on the Specific Performance Goals), will vest on each of February 15, 2018, February 15, 2019, February 18, 2020 (because February 15, 2020 falls on a Saturday and February 17, 2020 is a federal holiday, the President’s day, the immediately following business day is February 18, 2020) and February 15, 2021, and the Vesting Period should be from February 15, 2018 to February 15, 2021. 3 See footnote 2, supra.


 
2 Co., Inc., a Delaware corporation (the “Company”), and the Recipient named on the Acceptance Page, with reference to the following facts: Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in the amended and restated Simpson Manufacturing Co., Inc. 2011 Incentive Plan effective on April 21, 2015 (as amended from time to time, the “Plan”). The Board has delegated to the Committee all authority to administer the Plan. The Committee has determined to grant to the Recipient, under the Plan, performance and time based Restricted Stock Units (the “PRSUs”) with respect to the PRSU Shares stated on the Acceptance Page. To evidence the PRSUs and to set forth the terms and conditions thereof, the Company and the Recipient agree as follows: 1. Confirmation of Grant. (a) The Company grants the PRSUs to the Recipient and the Recipient agrees to accept the PRSUs and participate in the Plan, effective as of the Award Date. As a condition of the grant, this Agreement and the PRSUs shall be governed by the terms and conditions of the Plan and shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery policy. (b) The PRSUs shall be reflected in a bookkeeping account maintained by the Company through the date on which the PRSUs become vested pursuant to section 2 or are forfeited pursuant to section 3. The Recipient acknowledges and agrees that (i) the PRSU Shares merely represent the maximum number of shares of Common Stock that are granted under the PRSUs and are not necessarily the number of shares of Common Stock that will eventually vest in favor of the Recipient, and (ii) pursuant to section 2 and otherwise in accordance with this Agreement and the Plan, the number of shares of Common Stock, which will eventually vest in favor of the Recipient under the PRSUs (the “Vested Shares”), will be subject to the Specific Performance Goals and will be between 0% and 100% of the Targeted PRSU Shares as defined on Exhibit A. (c) The Company’s obligations under this Agreement shall be unfunded and unsecured. No special or separate fund shall be established therefor and no other segregation of assets shall be required or made with respect thereto. The rights of the Recipient under this Agreement shall be no greater than those of a general unsecured creditor of the Company. (d) Except as otherwise provided in this Agreement and the Plan, the PRSUs shall be settled by the issuance and delivery of the Vested Shares, or as provided in this Section 1(d), by cash (as determined by the Committee in its sole discretion), within sixty days after the PRSUs have vested pursuant to section 2 subject to satisfaction of any other terms and conditions applicable to the PRSUs; provided, however, that to the extent the Committee determines that any of the PRSUs are subject to Code section 409A, to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such PRSUs shall be made until the earliest of the date (i) set for such PRSUs to vest according to the Vesting Schedule (a time or fixed schedule specified for the purpose of Code section 409A), (ii) of the Recipient’s “separation from service” (as defined in Code section 409A), (iii) of the Recipient’s death, or (iv) when the Recipient becomes “disabled” (as defined in Code section 409A); and further provided that, the number of the Vested Shares issued or delivered (or for which a cash payment is made) to the Recipient in any calendar year, together with the number of shares of Common Stock issued or delivered (or for which a cash payment is made) to the Recipient in the same calendar year under any other RSU Awards, shall not exceed the annual maximum aggregate number of shares of Common Stock issuable or deliverable under RSU Awards as set forth in the Plan that is effective at the time of the issuance or delivery of (or making a cash payment for) the PRSUs. Notwithstanding the foregoing, to the extent the Committee determines that any of the PRSUs are subject to Code section 409A and the Recipient is a Specified Employee4 on the date of his or 4 The determination of whether the Recipient is a Specified Employee will be made annually by the Committee or its delegate pursuant to Code section 409A for the 12-month period ending every December 31st (the “Specified Employee Identification


 
3 her “separation from service” (as defined in Code section 409A), to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such PRSUs that is otherwise payable pursuant to this Section 1(d) upon a separation from service shall be made before the date that is six months after the date of the Recipient’s separation from service. In settling the PRSUs pursuant to the foregoing, the Company (or its acquirer or successor) shall have the option (as determined by the Committee in its sole discretion) to make or provide for a cash payment to the Recipient, in exchange for the cancellation of the vested PRSUs (or any portion thereof), in an amount equal to the product of (A) the number of the Vested Shares under the cancelled PRSUs and (B) the average closing price of a share of Common Stock of the period ending on the date the PRSUs (or the portion thereof) become vested and starting on 100 days prior to that date. 2. Vesting. (A) On the last day of the Measurement Period, the PRSU Shares stated on the Acceptance Page shall be adjusted pursuant to the Specific Performance Goals as set forth on Exhibit A attached hereto, and after the adjustment, become the total number of the Vested Shares that will be used to settle the PRSUs under section 1(d); provided, however that (x) if the Recipient’s employment or engagement with the Company or any Subsidiary is terminated before the Vesting Start Date for any reason, (y) if the Recipient retires, dies or becomes Disabled before the Vesting Start Date, or (z) if a Sale Event5 takes place prior to the Vesting Start Date and the surviving or acquiring entity or the new entity resulting from the Sale Event refuses to assume or continue the PRSUs or to substitute a similar equity award, the PRSUs shall be forfeited in their entirety and no distribution or payment of any amount under such PRSUs shall ever be made to the Recipient. For clarity, any PRSUs, assumed, continued or substituted following the Sale Event (that takes place prior to the Vesting Start Date) will be subject to section 2(B) below. (B) Subject to the terms and conditions of this Agreement and the Plan and unless otherwise forfeited pursuant to section 3, following the Measurement Period, the PRSUs shall vest (that is, the Restricted Period with respect thereto shall terminate) pursuant to the Vesting Schedule; provided, however, that the unvested PRSUs shall vest in full during the Vesting Period on the date, (a) immediately preceding the effective date of the Recipient’s Retirement as determined by the Committee in relation to the PRSUs: either (A) after reaching age 70 or (B) after reaching age 55 and having been employed or engaged by the Company or any Subsidiary for 15 years (provided that, if the Recipient retires after reaching age 56, for each year after age 55, the Recipient may work one year less for the Company or any Subsidiary, as Date”). The Committee’s determination shall be final and binding on the Recipient. If the Recipient was determined by the Committee as a Specified Employee at any time during such 12-month period ending on the Specified Employee Identification Date, he or she shall be considered a Specified Employee for the 12-month period commencing on the February 1st immediately following the Specified Employee Identification Date (i.e., from February 1st to the following January 31st), even if he or she is no longer employed or engaged by the Company on or after the Specified Employee Identification Date. For the purposes of this section 1(d), a “Specified Employee” shall mean: • the Recipient owns 5% or more of all outstanding Common Stock; • the Recipient owns 1% or more of all outstanding Common Stock and has an annual compensation of more than $150,000; and/or • the Recipient is among the top 50 most highly-compensated officers of the Company and the Subsidiaries forming a controlled group of corporations within the meaning of Code section 1563(a) (based on total W-2 compensation plus elective 401(k) plan deferrals) and has an annual compensation exceeding the indexed dollar limit then in effect pursuant to Treas. Reg. § 1.409A-1(i) promulgated under Code (which is $175,000 for 2017). 5 A “Sale Event” shall mean (i) the sale or other disposition of all or substantially all of the assets of the Company or the Subsidiary that employs or engages the Recipient, including a majority or more of all outstanding stock of the Subsidiary, on a consolidated basis to one or more unrelated persons or entities, (ii) a Change in Control, or (iii) the sale or other transfer of outstanding Common Stock to one or more unrelated persons or entities (including by way of a merger, reorganization or consolidation in which the outstanding Common Stock are converted into or exchanged for securities of the successor entity) where the stockholders of the Company, immediately prior to such sale or other transfer, would not, immediately after such sale or transfer, beneficially own shares representing in the aggregate more than 50 percent of the voting shares of the acquirer or surviving entity (or its ultimate parent corporation, if any). For the purpose of sub-section (iii) of this definition, only voting shares of the acquirer or surviving entity (or its ultimate parent, if any) received by stockholders of the Company in exchange for Common Stock shall be counted, and any voting shares of the acquirer or surviving entity (or its ultimate parent, if any) already owned by stockholders of the Company prior to the transaction shall be disregarded.


 
4 applicable, and still be qualified for Retirement under this sub-section (B)6), (b) immediately preceding the Recipient’s death or immediately preceding the effective date of the Recipient’s Disability, and (c) immediately preceding the effective date of the termination of the Recipient’s employment or engagement with the Company or any Subsidiary by the Company or Subsidiary (which, whenever used in this Agreement, includes any such entity’s successor) without Cause,7 or by the Recipient for a Good Reason,8 in either case only in connection with or within 24 months following a Sale Event. (C) The Recipient explicitly acknowledges and agrees that (i) the Committee has the absolute discretion to determine the number of the Vested Shares, (ii) the Committee may engage professional advisors and consultants and rely on their opinions and advice to make the determination, (iii) such determination shall be binding on the Recipient, and (iv) the granting or vesting of the PRSUs as well as the Recipient’s holding of the Vested Shares shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery, stock ownership, and hedging, pledging and trading policies. 3. Forfeiture. Anything herein to the contrary notwithstanding, (a) all PRSUs that are not vested in accordance with section 2 shall terminate immediately and be forfeited in their entirety if and at such time as (i) the Recipient ceases to be an Employee, Outside Director or Consultant, as the case may be, or (ii) 24 months have passed immediately following a Sale Event (provided that, in the event the surviving or acquiring entity or the new entity resulting from a Sale Event substitutes a similar equity award for the PRSUs, such award will continue in accordance with its own terms and conditions), and (b) all PRSUs, to the extent not theretofore settled in accordance with section 1(d), shall terminate immediately and be forfeited in their entirety when and as provided in section 13(I) of the Plan. 4. Tax Withholding. Pursuant to section 10 of the Plan, the Company may require the Recipient to enter into an arrangement providing for the payment in cash, Common Stock or otherwise by the Recipient to the Company of any tax withholding obligation of the Company arising by reason of (a) the granting or vesting of the PRSUs, (b) the lapse of any substantial risk of forfeiture to which the PRSUs or the Vested Shares are subject, or (c) 6 For example, if the Recipient retires at age 60 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 10 years to be qualified for retirement and receive the Vested Shares; and for example, if the Recipient retires at age 65 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 5 years to be qualified for retirement and receive the Vested Shares. 7 “Cause” means, in addition to any cause for termination as provided in any other applicable written agreement between the Company, the applicable Subsidiary, or the acquirer or successor of the Company or Subsidiary, and the Recipient, (i) conviction of any felony, (ii) any material breach or violation by the Recipient of any agreement to which the Recipient and the Company or the Subsidiary that employs or engages the Recipient are parties or of any published policy or guideline of the Company, (iii) any act (other than retirement or other termination of employment or engagement) or omission to act by the Recipient which may have a material and adverse effect on the business of the Company or Subsidiary or on the Recipient’s ability to perform services for the Company or Subsidiary, including habitual insobriety or substance abuse or the commission of any crime, gross negligence, fraud or dishonesty with regard to the Company or Subsidiary, or (iv) any material misconduct or neglect of duties and responsibilities by the Recipient in connection with the business or affairs of the Company or Subsidiary; provided, however, that the Recipient first shall have received written notice, which shall specifically identify what the Company or Subsidiary believes constitutes Cause, and if the breach, act, omission, misconduct or neglect is capable of being cured, the Recipient shall have failed to cure after 15 days following such notice. 8 A “Good Reason” means the occurrence of any of the following events: (i) a material adverse change in the functions, duties or responsibilities of the Recipient’s position (other than a termination by the Company or Subsidiary) which would meaningfully reduce the level, importance or scope of such position (provided that, a change in the person, position and/or department to whom the Recipient is required to report shall not by itself constitute a material adverse change in the Recipient’s position), (ii) the relocation of the Company or Subsidiary office at which the Recipient is principally located immediately prior to a Sale Event (the “Original Office”) to a new location outside of the metropolitan area of the Original Office or the failure to place the Recipient’s own office in the Original Office (or at the office to which such office is relocated which is within the metropolitan area of the Original Office), or (iii) a material reduction in the Recipient’s base salary and incentive compensation opportunity as in effect immediately prior to a Sale Event; provided, however, that, within 90 days of the incident that provides the basis for a Good Reason termination, the Recipient shall have provided the Company or Subsidiary a written notice specifically identifying what the Recipient believes constitutes a Good Reason, and the Company or Subsidiary shall have failed to cure the adverse change, relocation or compensation reduction after 30 days following such notice.


 
5 the disposition of the PRSUs or the Vested Shares, to the extent such arrangement does not cause a loss of the Section 16(b) exemption pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. 5. Representations and Warranties of the Company. The Company represents and warrants to the Recipient that the Vested Shares, when issued and delivered on the vesting of the PRSUs in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. 6. Recipient Representations. The Recipient represents and warrants to the Company that the Recipient has received and read this Agreement and the Plan, that the Recipient has consulted with the Recipient’s own legal, financial and other advisers regarding this Agreement and the Plan to the extent that the Recipient considered necessary or appropriate, that the Recipient fully understands and accepts all of the terms and conditions of this Agreement and the Plan, and that the Recipient is relying solely on the Recipient’s own advisers with respect to the tax consequences of this Agreement and the PRSUs. 7. Change in Control. Notwithstanding section 9 of the Plan, a Change in Control shall be treated as a Sale Event with respect to the PRSUs granted hereunder. 8. Adjustments to Reflect Capital Changes. Subject to and except as otherwise provided in section 9 of the Plan, the number and kind of shares subject to the PRSUs shall be appropriately adjusted, as the Committee may determine pursuant to section 11 of the Plan, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends. 9. No Rights as Stockholder. Neither the granting or vesting of the PRSUs nor the issuance or delivery of the Vested Shares shall entitle the Recipient, as such, or any of the Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until the Vested Shares are registered on the Company’s records in the name or names of the Recipient or the Recipient’s Beneficiaries or Personal Representative, as the case may be, and then only with respect to such Vested Shares so registered. 10. No Right to Continued Employment. Nothing in this Agreement shall confer on the Recipient any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate the Recipient’s employment or service at any time. If the Award of the PRSUs is in connection with the Recipient’s performance of services as a Consultant or Outside Director, references to employment, employee and similar terms shall be deemed to include the performance of services as a Consultant or an Outside Director, as the case may be; provided that no rights as an Employee shall arise by reason of the use of such terms. 11. Regulatory Compliance. Notwithstanding anything herein to the contrary, the issuance and delivery of the Vested Shares shall in all events be subject to and governed by section 13(C) of the Plan. 12. Notices. Any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally, when transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office in California, and, if to the Recipient, at the Recipient’s address on the Company’s records. Either party may change such party’s address or facsimile number from time to time by notice hereunder to the other. 13. Entire Agreement. This Agreement and the Plan together contain the entire agreement of the parties and supersede all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between the parties, regarding the PRSUs. The Recipient specifically acknowledges and agrees that all descriptions of the PRSUs in any prior letters, memoranda or other documents provided to him or her by the Company or any Subsidiary are hereby replaced and superseded in their entirety by this Agreement and shall


 
6 be of no further force or effect. To the extent there is any inconsistency between the descriptions of any such documents and the terms of this Agreement, the terms of this Agreement shall prevail. 14. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by the Recipient and the Company. 15. Assignment. The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of this Agreement, any of the PRSUs or any other rights hereunder, and shall not delegate any duties hereunder, except only as may be permitted pursuant to section 13(B) of the Plan; and any such action or transaction that may otherwise be attempted or purported by the Recipient shall be void and of no effect. 16. Successors. Subject to section 15, this Agreement shall bind and inure to the benefit of the Company and the Recipient and their respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any other Person any right or benefit in or under this Agreement or the Plan. 17. Separate Payments. All amounts payable in connection with the PRSUs hereunder or any other Awards granted under the Plan shall be treated as separate payments for the purposes of Code section 409A. 18. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 20. Order of Precedence and Construction. This Agreement and the PRSUs are subject to all provisions of the Plan (a copy of which is attached hereto as Exhibit B), including the Restricted Stock Unit provisions of section 6 thereof, and are further subject to all interpretations and amendments thereto that may from time to time be adopted pursuant to the Plan. In the event of any inconsistency between any provision of this Agreement and any provision of the Plan, the provision of the Plan shall govern. The headings of sections herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction or interpretation of any provision hereof. Whenever the context requires, the use in this Agreement of the singular number shall be deemed to include the plural and vice versa, and each gender shall be deemed to include each other gender. References herein to sections refer to sections of this Agreement, except as otherwise stated. The meaning of general words is not limited by specific examples introduced by “includes”, “including”, “for example”, “such as” or similar expressions, which shall be deemed to be followed by the phrase “without limitation”. 21. Further Assurances. The Recipient agrees to do and perform all acts and execute and deliver all additional documents, instruments and agreements as the Company or the Committee may reasonably request in connection with this Agreement. 22. Data Privacy. Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Recipient’s personal data as described in this Agreement by and among, as applicable, Recipient’s employer, the Company, and any Subsidiary for the exclusive purposes of implementing, administering, and managing Recipient’s participation in the Plan. Recipient understands that the Company and the employing Subsidiary may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, and any shares of stock or directorships held in the Company or any Subsidiary, details of all PRSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor (“Personal Data”). Recipient understands that Personal Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these entities may be located in Recipient’s country, or elsewhere, and that the third parties’ country may have different data privacy laws and protections than Recipient’s country. Recipient understands that he or she may request a list with the names and addresses of any potential third parties in receipt of the Personal Data by contacting the Company’s Equity Plans Administrator. Recipient authorizes the third parties to receive, possess, use, retain and transfer the


 
7 Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Personal Data as may be required to a broker or other third party with whom Recipient may elect to deposit any Vested Shares received upon vest of the PRSUs. Recipient understands that Personal Data will be held as long as is necessary to administer and manage Recipient’s participation in the Plan. Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s Equity Plans Administrator. Recipient understands that refusal or withdrawal of consent may affect Recipient’s ability to realize benefits from the PRSUs. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the Company’s Equity Plans Administrator. 23. Electronic Delivery. The Company may, in its sole discretion, decide (a) to deliver or effect by electronic means any documents or communications related to the PRSUs granted under the Plan, Recipient’s participation in the Plan, or future Awards that may be granted under the Plan or (b) to request by electronic means Recipient’s consent to participate in the Plan and other communications related to the PRSUs or the Plan. Recipient hereby consents to receive such documents and communications by electronic delivery and, if requested, to agree to participate in the Plan and deliver or effect such other communications through an on-line or electronic system established and maintained by the Company or any third party designated by the Company. [Signature Page Follows]


 
8 IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed by or on behalf of the Company and the Recipient as of the Award Date. COMPANY: SIMPSON MANUFACTURING CO., INC. By /s/Brian J. Magstadt, Chief Financial Officer Authorized Signatory for the Compensation and Leadership Development Committee of the Board of Directors ACCEPTANCE OF AGREEMENT: Through the electronic submission of his or her consent to this Restricted Stock Unit Agreement in accordance with the instructions on Morgan Stanley Smith Barney’s StockPlan Connect website, the Recipient hereby confirms, ratifies, approves and accepts all of the terms and conditions of this Restricted Stock Unit Agreement.


 
1 Exhibit A Specific Performance Goals (A). Basic Terms for the Specific Performance Goals. The parties agree on the following terms for the Specific Performance Goals:  “Specific Performance Goals” means the number of the Vested Shares shall be equal to the sum of (1) the number of the Adjusted Shares I and (2) the number of the Adjusted Shares II.  “Targeted PRSU Shares” means 100% of the PRSU Shares. (B). How to Determine the Specific Performance Goals. The Committee has the absolute discretion to determine, and its determination shall be binding on the Recipient with respect to, any of the following:  “Adjusted Shares I” means (A) the number of the PRSU Shares that is equal to 50% of the number of the Targeted PRSU Shares, if Simpson Strong-Tie Company Inc. achieves its company-wide operating profit goal for the Measurement Period as decided by the Committee; or (B) 0, if Simpson Strong-Tie Company Inc. does not achieve its company-wide 2017 operating profit goal as decided by the Committee.  “Adjusted Shares II” means (A) the number of the PRSU Shares that is equal to 50% of the number of the Targeted PRSU Shares, if the Recipient’s branch of Simpson Strong-Tie Company Inc. achieves its branch-wide operating profit goal for the Measurement Period as decided by the Committee; or (B) 0, if the Recipient’s branch of Simpson Strong-Tie Company Inc. does not achieve its branch-wide 2017 operating profit goal as decided by the Committee. (C). Representative Example. Without prejudicing any of the foregoing, including the Committee’s absolute discretion under Section (B) above, the parties agree on the following representative (and non-exhaustive) example for the Specific Performance Goals: If the number of the PRSU Shares, as stated on the Recipient’s Acceptance Page, is 100 shares of Common Stock, then the number of the Targeted PRSU Shares is 100 shares. Under this example, if Simpson Strong-Tie Company Inc. achieves its company-wide operating profit goal for the Measurement Period as decided by the Committee, and if the Recipient’s branch of Simpson Strong-Tie Company Inc. does not achieve its branch-wide operating profit goal for the Measurement Period as decided by the Committee, then the number of the Adjusted Shares I is 50 shares, and the number of the Adjusted Shares II is 0 shares, respectively. As a result, the number of the Vested Shares is 50 shares and 12.5 Shares will vest on each of the first, second, third and fourth anniversaries of the Award Date.


 
1 Exhibit B SIMPSON MANUFACTURING CO. INC. 2011 INCENTIVE PLAN Adopted April 26, 2011, and Amended and Restated April 21, 2015 SECTION 1. PURPOSE The purpose of the Simpson Manufacturing Co., Inc. 2011 Incentive Plan is to promote the interests of the Company and its stockholders by providing incentives to directors, officers and employees of, and consultants to, the Company and the Subsidiaries. Accordingly, the Company may grant to selected officers, Employees, Consultants and Outside Directors Option Awards, Restricted Stock Awards and RSU Awards in an effort to attract and retain qualified individuals as employees, directors and consultants and to provide such individuals with incentives to continue service with the Company, devote their best efforts to the Company and improve the Company’s economic performance, thus enhancing the value of the Company for the benefit of stockholders. This Plan amends and restates in their entirety, and incorporates and supersedes, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended (the “1994 Plan”), and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended (the “1995 Plan” and, together with the 1994 Plan, the “Prior Plans”); provided that any stock option granted under the 1994 Plan or the 1995 Plan that has not been exercised in full and that has not expired or terminated shall continue in effect in accordance with its terms and conditions and shall continue to be subject to and governed by the 1994 Plan or the 1995 Plan, respectively, as in effect immediately before the adoption of this Plan. SECTION 2. DEFINITIONS As used in this Plan, the following terms have the meanings indicated: “Agreement” means an agreement, in written or electronic form, entered into by the Company and a Recipient setting forth the terms and conditions applicable to an Award granted under this Plan. “Award” means an Option Award, a Restricted Stock Award or an RSU Award, in each case granted under this Plan. “Beneficial Ownership” and “Beneficially Own” have the meanings set forth in Rule 13d-3 under the Exchange Act. “Beneficiary” means each Person designated as such by a Recipient or, if no designation has been made, each Person entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Recipient’s death.


 
2 “Board” means the Board of Directors of the Company. “Change in Control” means the occurrence of any one (or more) of the following events: (i) the consummation of a consolidation or merger of the Company in which the Company is not the surviving corporation; (ii) the consummation of a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding such reverse merger are converted by virtue of such reverse merger into other property, whether securities, cash or otherwise; or (iii) the approval by the stockholders of the Company of a plan or proposal for the dissolution and liquidation of the Company; provided that a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the Common Stock immediately before such transaction or transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately thereafter. “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means the Compensation and Leadership Development Committee of the Board, as from time to time constituted, or any successor committee of the Board with similar functions, which shall consist of three or more members, each of whom shall be an outside director as defined in the regulations issued under Code section 162(m) and a non-employee director within the meaning of applicable regulatory requirements, including those promulgated under Exchange Act section 16. “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustment pursuant to section 11 hereof. “Company” means Simpson Manufacturing Co., Inc., a Delaware corporation, or any successor thereto. “Consultant” means a Person that (i) renders services to the Company as an independent contractor (and not as an Employee or Outside Director) pursuant to a contract between such Person and the Company and (ii) is selected by the Committee to receive an Award under this Plan. “Disability” means (i) in the case of a Participant, determination by the Committee that he or she has become unable to perform the functions required by his or her regular job due to physical or mental illness or incapacity and, in connection with the grant of an ISO, he or she is within the meaning of that term as provided in Code section 22(e)(3), and (ii) in the case of an Outside Director, determination by the Committee that he or she is unable to attend to his or her duties and responsibilities as a member of the Board due to physical or mental illness or incapacity. “Employee” means a regular, full-time or part-time employee of the Company or any Subsidiary; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of ISOs, the term “Employee” shall have the meaning ascribed to such term in Code section 3401(c). “Exercise Price” means, with respect to each share of Common Stock subject to an Option, the price fixed by the Committee at which such share may be purchased from the Company on the exercise of such Option. “Exchange Act” means the Securities Exchange Act of 1934, as amended.


 
3 “Fair Market Value” means (i) as of any date, the closing sale price per share of Common Stock as reported on the Composite Tape of the New York Stock Exchange, or if there are no sales on such day, on the next prior trading day during which a sale occurred; and (ii) in the absence of such market for the shares of Common Stock, the fair market value per share of Common Stock determined by the Committee in good faith (which determination shall, to the extent applicable, be made in a manner that complies with Code sections 422(b) and 409A). “Incentive Stock Option” or “ISO” means an Option that is intended by the Committee to meet the requirements of Code section 422 or any successor provision. “ISO Award” means an Award of an Incentive Stock Option pursuant to section 9 hereof. “NQSO” means an Option granted pursuant to this Plan that does not qualify as an Incentive Stock Option. “NQSO Award” means an Award of an NQSO pursuant to section 7 hereof. “Option” means the right to purchase Common Stock at an Exercise Price to be specified and on terms to be designated by the Committee or otherwise determined pursuant to this Plan. The Committee shall designate each Option as either an NQSO or an Incentive Stock Option. “Option Award” means an Award of an Option pursuant to section 7 hereof. “Outside Director” means a director of the Company, who is not also an Employee and who is selected by the Committee to receive an Award under this Plan. “Participant” means an Employee who is selected by the Committee to receive an Award under this Plan. “Performance Goals” means performance goals established by the Committee from time to time. Such goals may be absolute in their terms or measured against or in relation to other companies comparably or otherwise situated. Such performance goals may be particular to a Participant or the Subsidiary, division or other unit in which the Participant works or may be based on the performance of the Company as a whole. The Performance Goals applicable to any Award that is intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m) shall be based on one or more of (i) earnings, (ii) unit sales, sales volume or revenue, (iii) sales growth, (iv) stock price (including comparison with various stock market indices), (v) return on equity, (vi) return on investment, (vii) total return to stockholders, (viii) economic profit, (ix) debt rating, (x) operating income, (xi) cash flows, (xii) cost targets, (xiii) return on assets or margins or (xiv) implementation, completion or attainment of measurable objectives with respect to (1) software development, (2) new distribution channels, (3) customer growth targets, (4) acquisition identification and integration, (5) manufacturing, production or inventory targets, (6) new product introductions, (7) product quality control, (8) accounting and reporting, (9) recruiting and maintaining personnel, or (10) compliance or regulatory program targets. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time or against other companies or financial metrics), (c) on a per share basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company or (e) on a pre-tax or after tax basis. “Person” has the meaning ascribed to that term in Exchange Act section 3(a)(9), as modified and used in Exchange Act sections 13(d) and 14(d), except that such term shall not include (a) the Company, (b) a trustee or


 
4 other fiduciary holding securities under an employee benefit plan of the Company, or (c) an underwriter temporarily holding securities pursuant to an offering on behalf of the Company. “Personal Representative” means the Person or Persons who, on the Disability or incompetence of a Recipient, shall have acquired on behalf of the Recipient by legal proceeding or otherwise the right to receive benefits pursuant to this Plan. “Plan” means this Simpson Manufacturing Co., Inc. 2011 Incentive Plan. “Recipient” means a Participant, an Outside Director or a Consultant, as appropriate. “Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals or the occurrence of other events, as determined by the Committee). “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award, which are subject to the restrictions, terms, and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Restricted Stock Award” means an Award of Restricted Stock pursuant to section 6 hereof. “Restricted Stock Units” or “RSUs” means units issued pursuant to an RSU Award, which are valued in terms of shares of Common Stock equivalents and are subject to the restrictions, terms and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Retirement” means (i) in the case of a Participant, retirement from employment with the Company or any Subsidiary at any time as described in the Simpson Manufacturing Co., Inc. Profit Sharing Plan for Salaried Employees or in any successor plan, as from time to time in effect, or as otherwise determined by the Committee, (ii) in the case of an Outside Director, retirement from the Board after the date, if any, established by the Committee as the date for mandatory retirement, as from time to time in effect, or as otherwise determined by the Committee, and (iii) in the case of a Consultant, such date as is determined by the Committee. “RSU Award” means an Award of Restricted Stock Units pursuant to section 6 hereof. “Subsidiary” means a corporation, limited liability company, partnership or other entity (i) more than fifty percent of the outstanding voting equity securities (representing the right to vote for the election of directors or other managing authority) are now or hereafter owned or controlled, directly or indirectly, by the Company, or (ii) which does not have outstanding voting equity securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than fifty percent of the ownership interests of which, representing the right generally to make decisions for such entity, is now or hereafter owned or controlled, directly or indirectly, by the Company; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall have the meaning ascribed to such term in Code section 424(f), as interpreted by the regulations thereunder and applicable law. “Tax Date” means the date the withholding tax obligation arises with respect to an Award. SECTION 3. STOCK SUBJECT TO PLAN


 
5 (A) Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, 16,320,000 shares of Common Stock are reserved for issuance under this Plan, any or all of which may be delivered with respect to Option Awards, Restricted Stock Awards and RSU Awards and any or all of which may be authorized and unissued shares or treasury shares; provided that such 16,320,000 shares include all shares heretofore reserved for issuance pursuant to the Prior Plans. Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, the following limits shall apply with respect to Awards that are intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m): (i) the maximum aggregate number of shares of Common Stock that may be subject to Options granted in any calendar year to any one Participant shall be 150,000 shares; and (ii) the maximum aggregate number of Restricted Stock Awards and shares of Common Stock issuable or deliverable under RSU Awards granted in any calendar year to any one Participant shall be 100,000 shares. (B) Shares of Common Stock subject to Awards under this Plan or stock options granted under the Prior Plans that are forfeited, terminated, canceled or settled without the delivery of Common Stock under this Plan or the Prior Plans, respectively, will again be available for Awards under this Plan as if such Awards or grants had not been made; provided that, notwithstanding any other provision herein to the contrary, the aggregate number of shares of Common Stock that may be issued under this Plan shall not be increased by (i) shares of Common Stock tendered in full or partial payment of the Exercise Price of any Option or any stock option granted under either of the Prior Plans, (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy any tax withholding obligation, or (iii) shares of Common Stock that are repurchased by the Company. (C) Notwithstanding anything in this section 3 to the contrary and solely for purposes of determining whether shares are available for the grant of ISOs, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this section 3 that, if taken into account, would cause this Plan to fail the requirement under Code section 422 that this Plan designate a maximum aggregate number of shares that may be issued. SECTION 4. ADMINISTRATION The Committee shall have exclusive authority to administer this Plan. In addition to any implied powers and duties that may be needed to carry out the provisions hereof, the Committee shall have all the powers vested in it by the terms hereof, including exclusive authority to select the Recipients, to determine the type, size and terms of any and all Awards to be made to each Recipient, to determine the time when Awards will be granted, and to prescribe the form, terms and conditions of any Agreement relating to any Award under this Plan. The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, to make any other determinations that the Committee believes necessary or advisable for the administration hereof, and to correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent that the Committee deems desirable and consistent with the intent of this Plan. The Committee may exercise any and all of the Committee’s rights, powers, authority and discretion under this Plan in the Committee’s absolute and exclusive discretion, and the Committee is authorized and empowered to grant or give any consent, approval or authorization, make any determination or do or perform any other act or thing conditionally or unconditionally, arbitrarily, or inconsistently in varying or similar circumstances, without any accountability to any Recipient, except only as otherwise expressly provided by this Plan or any Agreement with such Recipient. Any decision, determination, direction or other action of the Committee in the administration of this Plan shall be final, binding and conclusive for all purposes, subject only to the further exercise of authority of the Committee hereunder.


 
6 SECTION 5. ELIGIBILITY Awards may be granted only to Recipients; provided that no Outside Director or Consultant may be granted an ISO Award. SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNIT (RSU) AWARDS (A) Grant. Any Recipient may receive one or more Restricted Stock Awards or RSU Awards. (B) Restricted Periods. The Restricted Period for each Restricted Stock Award or RSU Award shall be set forth in the applicable Agreement. Except as otherwise provided in the applicable Agreement on a termination of employment or engagement, or pursuant to section 9 hereof in the event of a Change in Control, each Restricted Stock Award or RSU Award shall have such Restricted Period and be subject to such Performance Goals as the Committee may determine. Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Restricted Stock Award or RSU Award is made to a Recipient whose employment or service as a director or Consultant subsequently terminates for any reason before the lapse of all restrictions thereon, such Restricted Stock or RSU with respect to which such restrictions shall not have lapsed shall be forfeited to that extent by such Recipient. (C) Certain Restricted Stock Award Provisions. (1) Stockholder Rights. On the granting of a Restricted Stock Award, a Recipient shall be entitled to all rights incident to ownership of Common Stock of the Company with respect to his or her Restricted Stock, including the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid in cash or shares of Restricted Stock, as set forth in the applicable Agreement or as determined by the Committee. Each grant of Restricted Stock may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) Certificates; Dividends on Restricted Stock; Restrictions on Transferability. During the Restricted Period, each certificate representing Restricted Stock shall be registered in the respective Recipient’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in this Plan and the applicable Agreement. Each such certificate shall be deposited by the Recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, that will permit transfer to the Company of all or any portion of the Restricted Stock that may be forfeited in accordance with this Plan and the applicable Agreement. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes, except that: (i) no Recipient will be entitled to delivery of a certificate representing Restricted Stock until expiration of the restrictions applicable thereto; (ii) the Company will retain custody of all Restricted Stock issued as a dividend or otherwise with respect to an Award of Restricted Stock, which shall be subject to the same restrictions, terms and conditions as are applicable to the awarded Restricted Stock, until such time, if ever, as such Restricted Stock becomes vested, and no Restricted Stock shall bear interest or be segregated in separate accounts; (iii) subject to section 13(B) hereof, no Recipient shall have any right or power to sell, assign, transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of any Restricted Stock during the applicable Restricted Period; and (iv) unless otherwise determined and directed by the Committee, a breach of any restriction, term or condition in this Plan or the applicable Agreement or established by the Committee with respect to any Restricted Stock will cause a forfeiture of such Restricted Stock, including any Restricted Stock issued as a dividend or otherwise with respect thereto.


 
7 (D) Certain Restricted Stock Unit (RSU) Award Provisions. (1) General. Each grant of Restricted Stock Units shall constitute an agreement by the Company to issue or deliver shares of Common Stock or cash to the Recipient thereof following the end of the applicable Restricted Period in consideration of the performance of services. Each such grant of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) No Stockholder Rights. A Recipient who receives an RSU Award shall not have any rights as a stockholder with respect to the shares of Common Stock subject to such RSUs until such time, if any, as shares of Common Stock are delivered to such Recipient pursuant to the applicable Agreement. (3) Payment. Unless otherwise determined by the Committee, each Agreement relating to an RSU Award shall set forth the payment date for such RSU Award, which date shall not be earlier than the end of the applicable Restricted Period. Payment of earned Restricted Stock Units may be made in one or more installments and may be made wholly in cash, wholly in shares of Common Stock or a combination thereof, as determined by the Committee. SECTION 7. OPTION AWARDS (A) Grant. Any Recipient may receive one or more Option Awards. (B) Designation and Price. (1) Any Option granted under this Plan may be granted as an ISO or as an NQSO as shall be determined by the Committee at the time of the grant of such Option. Only Participants may be granted ISOs. Each Option shall, as directed by the Committee, be evidenced by an Agreement, which shall specify whether the Option is an ISO or an NQSO and shall contain such terms and conditions as the Committee may determine in accordance with this Plan. (2) Every ISO or NQSO shall provide for a fixed expiration date of not later than ten years from the date that such ISO or NQSO is granted. (3) The Exercise Price pursuant to each Option shall be fixed by the Committee at the time of the granting of the Option, but shall not in any event be less than the Fair Market Value on the date that such Option is granted, subject to adjustment as provided in section 11 hereof. (C) Exercise. The Committee may provide for Options granted under this Plan to be exercisable as a whole at any time or in part from time to time. Shares of Common Stock to be issued on any exercise of an Option will be issued after the Company receives (i) notice (in such form as the Committee may require) from the holder thereof of the exercise of such Option, and (ii) payment as provided in section 7(D) hereof of the aggregate Exercise Price for all shares with respect to which such Option is exercised. Each such notice and payment shall be delivered at such place and in such manner as the Committee may specify from time to time. (D) Payment. The Exercise Price for the shares of Common Stock issuable on the exercise of an Option shall be paid in full at the time of such exercise either in cash or by such other means as the Committee may


 
8 approve, which may include tendering unencumbered shares of Common Stock then owned by the Recipient exercising such Option having an aggregate Fair Market Value at the time of such exercise equal to the aggregate Exercise Price of the shares being purchased on such exercise or cashless exercise through a securities broker. (E) Expiration or Termination of Awards. (1) Participants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Participant who holds an outstanding Option dies while employed, during the period when such Participant, if Disabled, would be entitled to exercise such Option, or after such Participant’s Retirement, then such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by the Beneficiaries of the decedent for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s death. (b) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of a Participant who holds an outstanding Option ceases by reason of Disability at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by such Participant or his or her Personal Representative for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Disability. (c) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of any Participant who holds an outstanding Option ceases by reason of Retirement, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Retirement. (d) Notwithstanding any provision of this Plan to the contrary, any Option may, in the discretion of the Committee or as provided in the applicable Agreement, become exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, from and after the time the Participant ceases to be an Employee as a result of the sale or other disposition by the Company or any Subsidiary of assets or property (including shares of any Subsidiary) in respect of which such Participant shall theretofore have been employed or as a result of which such Participant’s continued employment is no longer required. (e) Except as otherwise provided in subsections (a), (b), (c) and (d) of this section 7(E)(1) and sections 9(D) and 13(I) hereof, if the employment of any Participant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Participant’s employment, for the number of shares that such Participant could have acquired on exercise of such Option immediately before the cessation of such Participant’s employment; provided that such Option shall terminate on and as of such earlier date. (2) Outside Directors and Consultants.


 
9 (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the service of any Outside Director or Consultant who holds an outstanding Option ceases by reason of Retirement, death or Disability, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, by such Outside Director or Consultant, his or her Personal Representative or his or her Beneficiaries for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before such Outside Director’s or Consultant’s Retirement, death or Disability. (b) Except as otherwise provided in subsection (a) of this section 7(E)(2) and sections 9(D) and 13(I) hereof, if the service of any Outside Director or Consultant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Outside Director’s or Consultant’s service, for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before the cessation of such Outside Director’s or Consultant’s service; provided that such Option shall terminate on and as of such earlier date. SECTION 8. CONTINUED EMPLOYMENT Nothing in this Plan, or in any Award granted pursuant to this Plan, shall confer on any Person any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate any Recipient’s employment or service at any time. SECTION 9. CHANGE IN CONTROL (A) Restricted Stock and RSU Awards. On a Change in Control, except as otherwise provided in the applicable Agreement and subject to compliance with Code section 409A, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall substitute similar benefits for the Restricted Stock Awards and RSU Awards outstanding under this Plan; or (ii) such Restricted Stock Awards or RSU Awards shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to substitute similar benefits for such Restricted Stock Awards and RSU Awards and refuses to continue such Restricted Stock Awards and RSU Awards in full force and effect, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then the Restricted Period relating to each such Restricted Stock Award or RSU Award shall terminate, and from and after such Change in Control, each such Restricted Stock Award or RSU Award shall be free of all other restrictions for all shares of Restricted Stock or RSUs that shall not theretofore have been acquired under the applicable Agreement. (B) Option Awards. On a Change in Control, except as otherwise provided in the applicable Agreements, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall assume all Options outstanding under this Plan or shall substitute similar options for those outstanding under this Plan, or (ii) such Options shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to assume or continue such Options or to substitute similar options for those outstanding under this Plan, and if the nature and terms of employment or engagement, including compensation and benefits, of the


 
10 respective Recipients will change significantly as a result of the Change in Control, then each such Option shall become immediately exercisable for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, and shall be terminated if not exercised before or at the time of such Change of Control. (C) Cash-Out of Awards. In connection with a Change in Control, notwithstanding any of the foregoing provisions of this section 9 to the contrary, the Committee may, either pursuant to the applicable Agreement or by resolution adopted before the Change in Control, provide that any outstanding Award (or a portion thereof) shall, on such Change in Control, be cancelled in exchange for payment in cash of the amount, if any, by which the aggregate Fair Market Value of the shares of Common Stock subject to such Award exceeds the aggregate Exercise Price therefor. SECTION 10. WITHHOLDING TAXES Federal, state or local law may require the withholding of taxes resulting from the grant or vesting of an Award or the exercise of an Option. The Company may permit or require (subject to such conditions or procedures as may be established by the Committee) any such tax withholding obligation of a Participant to be satisfied by any of the following means, or by any combination of such means: (i) cash payment by such Participant to the Company; (ii) withholding from the shares of Common Stock otherwise issuable to such Participant pursuant to the vesting or exercise of an Award of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation; or (iii) delivery by the Participant to the Company of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation arising from the vesting or exercise of an Award. If the payment or delivery specified in clause (i) or (iii) of the preceding sentence is required but is not paid by a Participant, the Company may refuse to issue Common Stock to such Participant under this Plan. SECTION 11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends, the number or kind of shares that may be issued under this Plan pursuant to section 3 hereof and the number or kind of shares subject to, or the price per share under any outstanding Award, shall be adjusted, automatically and without notice, so that the proportionate interests of the Recipients shall be maintained as before the occurrence of such event; provided that no adjustment shall be made pursuant to this section 11 that would (i) cause any Option intended to qualify as an ISO to fail to qualify as an ISO, (ii) cause an Award that is otherwise exempt from Code section 409A to become subject to Code section 409A, or (iii) cause an Award that is subject to Code section 409A to fail to satisfy the requirements of Code section 409A. SECTION 12. AMENDMENT AND TERMINATION The Committee may amend this Plan at any time or from time to time; provided that: (i) the Committee may not, without approval by the Board, materially increase the benefits provided to Recipients under this Plan; (ii) any amendment with respect to Restricted Stock Awards or RSU Awards granted to Outside Directors must be approved by the Board; and (iii) no amendment that requires stockholder approval in order for this Plan to continue to comply with any provision of the Exchange Act, any rule promulgated by the Securities and Exchange Commission under the Exchange Act, any rule of the New York Stock Exchange or any other securities exchange on


 
11 which shares of Common Stock are listed, or any other applicable law, rule or regulation, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company within the time period required under such provision. Without the approval of the stockholders of the Company, (i) neither the Board nor the Committee will authorize the amendment of any outstanding Option to reduce the Exercise Price thereof, except for adjustments made pursuant to section 11 hereof, (ii) no outstanding Option will be cancelled and replaced with another Option Award having a lower Exercise Price, or for another Award, or for cash, except as provided in section 9 or 11 hereof, and (iii) no Option will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award; provided that this sentence is intended to prohibit, without stockholder approval, the re-pricing of Options that have Exercise Prices above Fair Market Value and will not be construed to limit or prohibit any adjustment pursuant to section 9 or 11 hereof. The Committee may terminate this Plan at any time; provided that such termination shall not affect any Awards theretofore made or any stock options theretofore granted under either of the Prior Plans and such Awards and stock options shall continue to be subject to all terms and conditions of this Plan (including the second paragraph of section 1 hereof) notwithstanding such termination. SECTION 13. MISCELLANEOUS PROVISIONS (A) No Rights to Awards. No Person has or shall have any claim or right to be granted an Award under this Plan. (B) Assignment and Transfer. No right or interest of any Recipient under this Plan or in any Award may be assigned or transferred as a whole or in part, directly or indirectly, by operation of law or otherwise (except by will or the laws of descent and distribution), including by way of execution, levy, garnishment, attachment, pledge or bankruptcy or in any other manner, and no such rights or interests of any Recipient in this Plan shall be subject to any obligation or liability of such Recipient; provided that the Committee may determine that a Recipient’s rights and interests under this Plan or in any Award may be made transferable by such Recipient during his or her lifetime, subject to such conditions as the Committee may specify. Except as provided in section 6 hereof, no Award shall entitle the Recipient thereof, as such, or any of such Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until shares subject to such Award are issued to and registered on the Company’s records in the name or names of such Recipient, Beneficiaries or Personal Representative, as the case may be, and then only with respect to such shares. (C) Compliance with Legal and Exchange Requirements. This Plan, the grant and exercise of Awards hereunder, the issuance of Common Stock and other interests hereunder, and the other obligations of the Company under this Plan and any Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as the Committee may determine are necessary or advisable. The Company or the Committee may postpone the grant or exercise of any Award, the issuance or delivery of Common Stock under any Award or any other action permitted under this Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation and may require any Recipient to make such representations and furnish such information as the Committee may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with any and all applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of this Plan or any Agreement to recognize the exercise of any Award or otherwise to sell or issue Common Stock in violation of any such law, rule


 
12 or regulation. Any postponement of the exercise or settlement of any Award under this section 13(C) shall not extend the term of any Award. Neither the Company nor any Subsidiary nor any director or officer of the Company shall have any obligation or liability to any Recipient with respect to any Award (or Common Stock issuable thereunder) that shall lapse because of any such postponement. (D) Section 409A. Awards granted under this Plan shall be designed and administered in a manner that they are either exempt from the application of, or comply with, the requirements of Code section 409A. To the extent that the Committee determines that any Award is subject to Code section 409A, the Agreement relating to such Award shall incorporate terms and conditions necessary to avoid the imposition on the Recipient of additional tax under Code section 409A. Notwithstanding anything to the contrary in this Plan or any Agreement (unless such Agreement provides otherwise with specific reference to this section 13(D)): (i) no Award shall be granted, deferred, accelerated, extended, paid, settled, substituted or modified under this Plan in a manner that would result in the imposition on a Recipient of additional tax under Code section 409A; and (ii) if an Award is subject to Code section 409A, and if the Recipient to whom such Award is granted is a “specified employee” (as defined in Code section 409A, with such classification to be determined in accordance with methodology established by the Company), no distribution or payment of any amount under such Award shall be made before a date that is six months following the date of such Recipient’s “separation from service” (as defined in Code section 409A) or, if earlier, the date of such Recipient’s death. The Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Code section 409A; provided that the Company does not and shall not make any representation or warranty that any Award under this Plan will qualify for favorable tax treatment under Code section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Recipient for any tax, interest or penalties a Recipient might owe as a result of the grant, holding, vesting, exercise or payment of any Award. (E) Ratification and Consent. By accepting any Award under this Plan, each Recipient and each Personal Representative or Beneficiary claiming under or through such Recipient shall be conclusively deemed to have accepted, ratified and consented to all of the terms and conditions of this Plan and any and all action taken under this Plan by the Company, any Subsidiary, the Board or the Committee. (F) Other Compensation. Nothing in this Plan shall prevent, limit or otherwise affect the right, power and authority of the Board with respect to any other or additional compensation arrangements. (G) Grant Date. Each Recipient shall be deemed to have been granted an Award on the date that the Committee grants such Award under this Plan or such later date as the Committee shall determine at the time such grant is authorized. (H) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. (I) Forfeiture Provision. Except as otherwise expressly provided by the applicable Agreement, the Committee may require a Recipient to forfeit all unexercised, unearned, unvested or unpaid Awards, if: (1) the Recipient, while employed by the Company or any Subsidiary, prepares to engage or engages, directly or indirectly, without the written consent of the Company, in any manner or capacity, as principal, agent, partner, officer, director, employee or otherwise, in any business or activity competitive with any business conducted by the Company or any Subsidiary, as determined by the Committee;


 
13 (2) the Recipient performs any act or engages in any activity that the Committee determines is materially detrimental to the best interests of the Company or any Subsidiary; or (3) the Recipient materially breaches any agreement with or duty to the Company or any Subsidiary, including any non-competition agreement, non-solicitation agreement, confidentiality or non-disclosure agreement, or assignment of inventions or ownership of works agreement, as determined by the Committee. (J) Participants Outside the United States. Notwithstanding any provision of this Plan to the contrary, to comply with the laws of other countries in which the Company and the Subsidiaries operate or have Employees or Consultants, the Committee shall have the power and authority to: (i) determine which Subsidiaries shall be covered by this Plan; (ii) determine which Employees or Consultants outside the United States are eligible to participate in this Plan; (iii) modify the terms and conditions of any Award granted to Employees or Consultants outside the United States to comply with applicable foreign laws; (iv) modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (v) take any action, before or after an Award is made, that it deems necessary or advisable to obtain approval or comply with any government regulatory exemption or requirement; provided that the Committee is not authorized to take any action hereunder, and no Awards shall be granted, that would violate any applicable law. (K) Successors. All obligations of the Company under this Plan and with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other event, or a sale or disposition of all or substantially all of the business or assets of the Company, and references to the “Company” herein and in any Agreements shall be deemed to refer to such successors. (L) Severability. If any provision of this Plan, or the application of such provision to any Person or circumstance, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Plan, or the application of such provision to Persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. (M) Construction. The headings of the sections hereof are for convenience of reference only and are not part of this Plan. As used herein, each gender includes each other gender, and the singular includes the plural and vice versa, as the context may require. Reference herein to any section includes reference to each and all subsections of such section. For purposes of this Plan, each of the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” (N) Governing Law. This Plan shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware. SECTION 14. EFFECTIVENESS OF THIS PLAN This amended and restated Plan shall be submitted to the stockholders of the Company for their approval at their annual meeting scheduled to be held on April 21, 2015, or at such other annual or special meeting as the Board may specify, or any adjournment or postponement thereof. This Plan will be effective as of the date of its approval by the stockholders of the Company.


 
1 Exhibit 99.3 2018 COMPANY OP PERFORMANCE & TIME BASED RESTRICTED STOCK UNIT AGREEMENT Company: Simpson Manufacturing Co., Inc. Recipient: The recipient’s name (the “Recipient”) is set forth on the Recipient’s online award acceptance page on Morgan Stanley Smith Barney’s StockPlan Connect website (the “Acceptance Page”) at https://www.stockplanconnect.com, which is incorporated by reference to this Agreement. Target PRSU Shares: The aggregate number of shares of Common Stock as stated on the Acceptance Page. The Number of Shares of Common Stock Subject to PRSUs Granted Hereunder (the “PRSU Shares”): 100% of the Target PRSU Shares. The Effective Date of the Award (the “Award Date”): A date in 2018 as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Measurement Period (the “Measurement Period”): A one-year period beginning on January 1, 2018, and ending on December 31, 2018. The Date the PRSU Shares Start To Vest (the “Vesting Start Date”): A date subsequent to the Measurement Period as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Vesting Schedule (the “Vesting Schedule”): One fourth of the Adjusted Shares (defined on Exhibit A) will vest on each of the Vesting Start Date and the first, second and third anniversaries thereof; provided, however, that if any of such dates falls on a weekend or federal holiday, the applicable portion of the Adjusted Shares shall vest on the immediately following business day.1 Vesting Period (the “Vesting Period”): A period beginning on the Vesting Start Date, and ending on the third anniversary of the Vesting Start Date; provided, however, that if such anniversary date falls on a weekend or federal holiday, such period shall end on the immediately following business day.2 Specific Performance Goals (the “Specific Performance Goals”): The Specific Performance Goals are set forth on Exhibit A. 1 For example, if the Vesting Start Date is determined by the Committee to be February 15, 2019, then 1 then 1/4 of the Adjusted Shares, if any (based on the Specific Performance Goals), will vest on each of (i) February 15, 2019, (ii) February 18, 2020 (because February 15, 2020 falls on a Saturday and Monday February 17, 2020 is a federal holiday, President’s day, the immediately following business day is February 18, 2020), (iii) February 16, 2021 (because Monday February 17, 2021 is a federal holiday, President’s day, the immediately following business day is February 16, 2021) and (iv) February 15, 2022, and the Vesting Period will be from February 15, 2019 to February 15, 2022. 2 See footnote 2, supra.


 
2 This PERFORMANCE & TIME BASED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made as of the Award Date stated on the Acceptance Page by and between Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), and the Recipient named on the Acceptance Page, with reference to the following facts: Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in the amended and restated Simpson Manufacturing Co., Inc. 2011 Incentive Plan effective on April 21, 2015 (as amended from time to time, the “Plan”). The Board has delegated to the Committee all authority to administer the Plan. The Committee has determined to grant to the Recipient, under the Plan, performance and time based Restricted Stock Units (the “PRSUs”) with respect to the PRSU Shares stated on the Acceptance Page. To evidence the PRSUs and to set forth the terms and conditions thereof, the Company and the Recipient agree as follows: 1. Confirmation of Grant. (a) The Company grants the PRSUs to the Recipient and the Recipient agrees to accept the PRSUs and participate in the Plan, effective as of the Award Date. As a condition of the grant, this Agreement and the PRSUs shall be governed by the terms and conditions of the Plan and shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery policy. (b) The PRSUs shall be reflected in a bookkeeping account maintained by the Company through the date on which the PRSUs become vested pursuant to section 2 or are forfeited pursuant to section 3. The Recipient acknowledges and agrees that (i) the PRSU Shares merely represent the maximum number of shares of Common Stock that are granted under the PRSUs and are not necessarily the number of shares of Common Stock that will eventually vest in favor of the Recipient, and (ii) pursuant to section 2 and otherwise in accordance with this Agreement and the Plan, the number of shares of Common Stock, which will eventually vest in favor of the Recipient under the PRSUs (the “Vested Shares”), will be subject to the Specific Performance Goals and will be between 0% and 100% of the Target PRSU Shares. (c) The Company’s obligations under this Agreement shall be unfunded and unsecured. No special or separate fund shall be established therefor and no other segregation of assets shall be required or made with respect thereto. The rights of the Recipient under this Agreement shall be no greater than those of a general unsecured creditor of the Company. (d) Except as otherwise provided in this Agreement and the Plan, the PRSUs shall be settled by the issuance and delivery of the Vested Shares, or as provided in this Section 1(d), by cash (as determined by the Committee in its sole discretion), within sixty days after the PRSUs have vested pursuant to section 2 subject to satisfaction of any other terms and conditions applicable to the PRSUs; provided, however, that to the extent the Committee determines that any of the PRSUs are subject to Code section 409A, to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such PRSUs shall be made until the earliest of the date (i) set for such PRSUs to vest according to the Vesting Schedule (a time or fixed schedule specified for the purpose of Code section 409A), (ii) of the Recipient’s “separation from service” (as defined in Code section 409A), (iii) of the Recipient’s death, or (iv) when the Recipient becomes “disabled” (as defined in Code section 409A); and further provided that, the number of the Vested Shares issued or delivered (or for which a cash payment is made) to the Recipient in any calendar year, together with the number of shares of Common Stock issued or delivered (or for which a cash payment is made) to the Recipient in the same calendar year under any other RSU Awards, shall not exceed the annual maximum aggregate number of shares of Common Stock issuable or deliverable under RSU Awards as set forth in the Plan that is effective at the time of the issuance or delivery of (or making a cash payment for) the Vested Shares. Notwithstanding the foregoing, to the extent the Committee determines that any of the PRSUs are subject to Code section 409A and the Recipient is a Specified Employee 3 on 3 The determination of whether the Recipient is a Specified Employee will be made annually by the Committee or its delegate pursuant to Code section 409A for the 12-month period ending every December 31st (the “Specified Employee Identification


 
3 the date of his or her “separation from service” (as defined in Code section 409A), to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such PRSUs that is otherwise payable pursuant to this Section 1(d) upon a separation from service shall be made before the date that is six months after the date of the Recipient’s separation from service. In settling the PRSUs pursuant to the foregoing, the Company (or its acquirer or successor) shall have the option (as determined by the Committee in its sole discretion) to make or provide for a cash payment to the Recipient, in exchange for the cancellation of the vested PRSUs (or any portion thereof), in an amount equal to the product of (A) the number of the Vested Shares under the cancelled PRSUs and (B) the average closing price of a share of Common Stock of the period ending on the date the PRSUs (or the portion thereof) become vested and starting on 60 days prior to that date. Anything herein to the contrary notwithstanding, this Agreement does not create an obligation on the part of the Company to adopt any policy or procedure, agree to any amendment hereto, make any arrangement, or take any other action, to comply with Code section 409A. The Recipient agrees and acknowledges that the Company makes no representations that this Agreement, including the grant, vesting and/or delivery of the PRSU Shares (and/or cash), does not violate Code section 409A, and the Company shall have no liability whatsoever to the Recipient if he or she is subject to any taxes or penalties under Code section 409A. 2. Vesting. (A) On the last day of the Measurement Period, the PRSU Shares stated on the Acceptance Page shall be adjusted pursuant to the Specific Performance Goals as set forth on Exhibit A attached hereto, and after the adjustment, become the total number of the Vested Shares that will be used to settle the PRSUs under section 1(d); provided, however, that (x) if the Recipient’s employment or engagement with the Company or any Subsidiary is terminated before the Vesting Start Date for any reason, (y) if the Recipient retires, dies or becomes Disabled before the Vesting Start Date, or (z) if a Sale Event 4 takes place prior to the Vesting Start Date and the surviving or acquiring entity or the new entity resulting from the Sale Event refuses to assume or continue the PRSUs or to substitute a similar equity award, the PRSUs shall be forfeited in their entirety and no distribution or payment of any amount under such PRSUs shall ever be made to the Recipient. For clarity, any PRSUs, assumed, continued or substituted following the Sale Event (that takes place prior to the Vesting Start Date) will be subject to section 2(B) below. (B) Subject to the terms and conditions of this Agreement and the Plan and unless otherwise forfeited pursuant to section 3, following the Measurement Period, the PRSUs shall vest (that is, the Restricted Date”). The Committee’s determination shall be final and binding on the Recipient. If the Recipient was determined by the Committee as a Specified Employee at any time during such 12-month period ending on the Specified Employee Identification Date, he or she shall be considered a Specified Employee for the 12-month period commencing on the February 1st immediately following the Specified Employee Identification Date (i.e., from February 1st to the following January 31st), even if he or she is no longer employed or engaged by the Company on or after the Specified Employee Identification Date. For the purposes of this section 1(d), a “Specified Employee” shall mean: • the Recipient owns 5% or more of all outstanding Common Stock; • the Recipient owns 1% or more of all outstanding Common Stock and has an annual compensation of more than $150,000; and/or • the Recipient is among the top 50 most highly-compensated officers of the Company and the Subsidiaries forming a controlled group of corporations within the meaning of Code section 1563(a) (based on total W-2 compensation plus elective 401(k) plan deferrals) and has an annual compensation exceeding the indexed dollar limit then in effect pursuant to Treas. Reg. § 1.409A-1(i) promulgated under Code (which is $175,000 for 2018). 4 A “Sale Event” shall mean (i) the sale or other disposition of all or substantially all of the assets of the Company or the Subsidiary that employs or engages the Recipient, including a majority or more of all outstanding stock of the Subsidiary, on a consolidated basis to one or more unrelated persons or entities, (ii) a Change in Control, or (iii) the sale or other transfer of outstanding Common Stock to one or more unrelated persons or entities (including by way of a merger, reorganization or consolidation in which the outstanding Common Stock are converted into or exchanged for securities of the successor entity) where the stockholders of the Company, immediately prior to such sale or other transfer, would not, immediately after such sale or transfer, beneficially own shares representing in the aggregate more than 50 percent of the voting shares of the acquirer or surviving entity (or its ultimate parent corporation, if any). For the purpose of sub-section (iii) of this definition, only voting shares of the acquirer or surviving entity (or its ultimate parent, if any) received by stockholders of the Company in exchange for Common Stock shall be counted, and any voting shares of the acquirer or surviving entity (or its ultimate parent, if any) already owned by stockholders of the Company prior to the transaction shall be disregarded.


 
4 Period with respect thereto shall terminate) pursuant to the Vesting Schedule; provided, however, that the unvested PRSUs shall vest in full during the Vesting Period on the date, (a) immediately preceding the effective date of the Recipient’s Retirement as determined by the Committee in relation to the PRSUs: either (A) after reaching age 70 or (B) after reaching age 55 and having been employed or engaged by the Company or any Subsidiary for 15 years (provided that, if the Recipient retires after reaching age 56, for each year after age 55, the Recipient may work one year less for the Company or any Subsidiary, as applicable, and still be qualified for Retirement under this sub-section (B)5), (b) immediately preceding the Recipient’s death or immediately preceding the effective date of the Recipient’s Disability, and (c) immediately preceding the effective date of the termination of the Recipient’s employment or engagement with the Company or any Subsidiary by the Company or Subsidiary (which, whenever used in this Agreement, includes any such entity’s successor) without Cause,6 or by the Recipient for a Good Reason,7 in either case only in connection with or within 24 months following a Sale Event. (C) The Recipient explicitly acknowledges and agrees that (i) the Committee has the absolute discretion to determine the number of the Vested Shares, (ii) the Committee may engage professional advisors and consultants and rely on their opinions and advice to make the determination, (iii) such determination shall be binding on the Recipient, and (iv) the granting or vesting of the PRSUs as well as the Recipient’s holding of the Vested Shares shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery, stock ownership, and hedging, pledging and trading policies. 3. Forfeiture. Anything herein to the contrary notwithstanding, (a) all PRSUs that are not vested in accordance with section 2 shall terminate immediately and be forfeited in their entirety if and at such time as (i) the Recipient ceases to be an Employee, Outside Director or Consultant, as the case may be, or (ii) 24 months have passed immediately following a Sale Event (provided that, in the event the surviving or acquiring entity or the new entity resulting from a Sale Event substitutes a similar equity award for the PRSUs, such award will continue in accordance with its own terms and conditions), and (b) all PRSUs, to the extent not theretofore settled in accordance 5 For example, if the Recipient retires at age 60 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 10 years to be qualified for Retirement and receive the Vested Shares; and for example, if the Recipient retires at age 65 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 5 years to be qualified for Retirement and receive the Vested Shares. 6 “Cause” means, in addition to any cause for termination as provided in any other applicable written agreement between the Company, the applicable Subsidiary, or the acquirer or successor of the Company or Subsidiary, and the Recipient, (i) conviction of any felony, (ii) any material breach or violation by the Recipient of any agreement to which the Recipient and the Company or the Subsidiary that employs or engages the Recipient are parties or of any published policy or guideline of the Company, (iii) any act (other than retirement or other termination of employment or engagement) or omission to act by the Recipient which may have a material and adverse effect on the business of the Company or Subsidiary or on the Recipient’s ability to perform services for the Company or Subsidiary, including habitual insobriety or substance abuse or the commission of any crime, gross negligence, fraud or dishonesty with regard to the Company or Subsidiary, or (iv) any material misconduct or neglect of duties and responsibilities by the Recipient in connection with the business or affairs of the Company or Subsidiary; provided, however, that the Recipient first shall have received written notice, which shall specifically identify what the Company or Subsidiary believes constitutes Cause, and if the breach, act, omission, misconduct or neglect is capable of being cured, the Recipient shall have failed to cure after 15 days following such notice. 7 A “Good Reason” means the occurrence of any of the following events: (i) a material adverse change in the functions, duties or responsibilities of the Recipient’s position (other than a termination by the Company or Subsidiary) which would meaningfully reduce the level, importance or scope of such position (provided that, a change in the person, position and/or department to whom the Recipient is required to report shall not by itself constitute a material adverse change in the Recipient’s position), (ii) the relocation of the Company or Subsidiary office at which the Recipient is principally located immediately prior to a Sale Event (the “Original Office”) to a new location outside of the metropolitan area of the Original Office or the failure to place the Recipient’s own office in the Original Office (or at the office to which such office is relocated which is within the metropolitan area of the Original Office), or (iii) a material reduction in the Recipient’s base salary and incentive compensation opportunity as in effect immediately prior to a Sale Event; provided, however, that, within 90 days of the incident that provides the basis for a Good Reason termination, the Recipient shall have provided the Company or Subsidiary a written notice specifically identifying what the Recipient believes constitutes a Good Reason, and the Company or Subsidiary shall have failed to cure the adverse change, relocation or compensation reduction after 30 days following such notice.


 
5 with section 1(d), shall terminate immediately and be forfeited in their entirety when and as provided in section 13(I) of the Plan. 4. Tax Withholding. Pursuant to section 10 of the Plan, the Company may require the Recipient to enter into an arrangement providing for the payment in cash, Common Stock or otherwise by the Recipient to the Company of any tax withholding obligation of the Company arising by reason of (a) the granting or vesting of the PRSUs, (b) the lapse of any substantial risk of forfeiture to which the PRSUs or the Vested Shares are subject, or (c) the disposition of the PRSUs or the Vested Shares, to the extent such arrangement does not cause a loss of the Section 16(b) exemption pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. 5. Representations and Warranties of the Company. The Company represents and warrants to the Recipient that the Vested Shares, when issued and delivered on the vesting of the PRSUs in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. 6. Recipient Representations. The Recipient represents and warrants to the Company that the Recipient has received and read this Agreement and the Plan, that the Recipient has consulted with the Recipient’s own legal, financial and other advisers regarding this Agreement and the Plan to the extent that the Recipient considered necessary or appropriate, that the Recipient fully understands and accepts all of the terms and conditions of this Agreement and the Plan, and that the Recipient is relying solely on the Recipient’s own advisers with respect to the tax consequences of this Agreement and the PRSUs. 7. Change in Control. Notwithstanding section 9 of the Plan, a Change in Control shall be treated as a Sale Event with respect to the PRSUs granted hereunder. 8. Adjustments to Reflect Capital Changes. Subject to and except as otherwise provided in section 9 of the Plan, the number and kind of shares subject to the PRSUs shall be appropriately adjusted, as the Committee may determine pursuant to section 11 of the Plan, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends. 9. No Rights as Stockholder. Neither the granting or vesting of the PRSUs nor the issuance or delivery of the Vested Shares shall entitle the Recipient, as such, or any of the Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until the Vested Shares are registered on the Company’s records in the name or names of the Recipient or the Recipient’s Beneficiaries or Personal Representative, as the case may be, and then only with respect to such Vested Shares so registered. 10. No Right to Continued Employment. Nothing in this Agreement shall confer on the Recipient any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate the Recipient’s employment or service at any time. If the Award of the PRSUs is in connection with the Recipient’s performance of services as a Consultant or Outside Director, references to employment, employee and similar terms shall be deemed to include the performance of services as a Consultant or an Outside Director, as the case may be; provided that no rights as an Employee shall arise by reason of the use of such terms. 11. Regulatory Compliance. Notwithstanding anything herein to the contrary, the issuance and delivery of the Vested Shares shall in all events be subject to and governed by section 13(C) of the Plan. 12. Notices. Any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally, when transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office in California, and, if to the Recipient, at the Recipient’s address on the Company’s records. Either party may change such party’s address or facsimile number from time to time by notice hereunder to the other.


 
6 13. Entire Agreement. This Agreement and the Plan together contain the entire agreement of the parties and supersede all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between the parties, regarding the PRSUs. The Recipient specifically acknowledges and agrees that all descriptions of the PRSUs in any prior letters, memoranda or other documents provided to him or her by the Company or any Subsidiary are hereby replaced and superseded in their entirety by this Agreement and shall be of no further force or effect. To the extent there is any inconsistency between the descriptions of any such documents and the terms of this Agreement, the terms of this Agreement shall prevail. 14. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by the Recipient and the Company. 15. Assignment. The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of this Agreement, any of the PRSUs or any other rights hereunder, and shall not delegate any duties hereunder, except only as may be permitted pursuant to section 13(B) of the Plan; and any such action or transaction that may otherwise be attempted or purported by the Recipient shall be void and of no effect. 16. Successors. Subject to section 15, this Agreement shall bind and inure to the benefit of the Company and the Recipient and their respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any other Person any right or benefit in or under this Agreement or the Plan. 17. Separate Payments. All amounts payable in connection with the PRSUs hereunder or any other Awards granted under the Plan shall be treated as separate payments for the purposes of Code section 409A. 18. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 20. Order of Precedence and Construction. This Agreement and the PRSUs are subject to all provisions of the Plan (a copy of which is attached hereto as Exhibit B), including the Restricted Stock Unit provisions of section 6 thereof, and are further subject to all interpretations and amendments thereto that may from time to time be adopted pursuant to the Plan. In the event of any inconsistency between any provision of this Agreement and any provision of the Plan, the provision of the Plan shall govern. The headings of sections herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction or interpretation of any provision hereof. Whenever the context requires, the use in this Agreement of the singular number shall be deemed to include the plural and vice versa, and each gender shall be deemed to include each other gender. References herein to sections refer to sections of this Agreement, except as otherwise stated. The meaning of general words is not limited by specific examples introduced by “includes”, “including”, “for example”, “such as” or similar expressions, which shall be deemed to be followed by the phrase “without limitation”. 21. Further Assurances. The Recipient agrees to do and perform all acts and execute and deliver all additional documents, instruments and agreements as the Company or the Committee may reasonably request in connection with this Agreement. 22. Data Privacy. Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Recipient’s personal data as described in this Agreement by and among, as applicable, Recipient’s employer, the Company, and any Subsidiary for the exclusive purposes of implementing, administering, and managing Recipient’s participation in the Plan. Recipient understands that the Company and the employing Subsidiary may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, and any shares of stock or directorships held in the Company or any Subsidiary, details of all PRSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor (“Personal Data”). Recipient understands that Personal Data may be transferred to


 
7 any third parties assisting in the implementation, administration and management of the Plan, that these entities may be located in Recipient’s country, or elsewhere, and that the third parties’ country may have different data privacy laws and protections than Recipient’s country. Recipient understands that he or she may request a list with the names and addresses of any potential third parties in receipt of the Personal Data by contacting the Company’s Equity Plans Administrator. Recipient authorizes the third parties to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Personal Data as may be required to a broker or other third party with whom Recipient may elect to deposit any Vested Shares received upon vest of the PRSUs. Recipient understands that Personal Data will be held as long as is necessary to administer and manage Recipient’s participation in the Plan. Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s Equity Plans Administrator. Recipient understands that refusal or withdrawal of consent may affect Recipient’s ability to realize benefits from the PRSUs. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the Company’s Equity Plans Administrator. 23. Electronic Delivery. The Company may, in its sole discretion, decide (a) to deliver or effect by electronic means any documents or communications related to the PRSUs granted under the Plan, Recipient’s participation in the Plan, or future Awards that may be granted under the Plan or (b) to request by electronic means Recipient’s consent to participate in the Plan and other communications related to the PRSUs or the Plan. Recipient hereby consents to receive such documents and communications by electronic delivery and, if requested, to agree to participate in the Plan and deliver or effect such other communications through an on-line or electronic system established and maintained by the Company or any third party designated by the Company. [Signature Page Follows]


 
8 IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed by or on behalf of the Company and the Recipient as of the Award Date. COMPANY: SIMPSON MANUFACTURING CO., INC. By /s/Brian J. Magstadt, Chief Financial Officer Authorized Signatory for the Compensation and Leadership Development Committee of the Board of Directors ACCEPTANCE OF AGREEMENT: Through the electronic submission of his or her consent to this Restricted Stock Unit Agreement in accordance with the instructions on Morgan Stanley Smith Barney’s StockPlan Connect website, the Recipient hereby confirms, ratifies, approves and accepts all of the terms and conditions of this Restricted Stock Unit Agreement.


 
1 Exhibit A Specific Performance Goals (A). Basic Terms for the Specific Performance Goals. The parties agree on the following terms for the Specific Performance Goals:  “Specific Performance Goals” means the number of the Vested Shares shall be equal to the number of the Adjusted Shares. (B). How to Determine the Specific Performance Goals. The Committee has the absolute discretion to determine, and its determination shall be binding on the Recipient with respect to, any of the following:8  “Adjusted Shares” means (A) the number of the PRSU Shares that is equal to 100% of the number of the Target PRSU Shares, if the Company achieves its company-wide operating profit goal for the Measurement Period as decided by the Committee; or (B) 0, if the Company does not achieve its company-wide 2018 operating profit goal as decided by the Committee. (C). Representative Example. Without prejudicing any of the foregoing, including the Committee’s absolute discretion under Section (B) above, the parties agree on the following representative (and non-exhaustive) example for the Specific Performance Goals:9 If the number of the Target PRSU Shares is 100 shares, then the number of the PRSU Shares is 100 shares. Under this example, if the Company achieves its company-wide operating profit goal for the Measurement Period as decided by the Committee, then the number of the Adjusted Shares is 100 shares. As a result, the number of the Vested Shares is 100 shares, and 25 shares will vest on each of the Vesting Start Date and the first, second and third anniversaries of the Vesting Start Date. 8 Subject to Section 2(A)(z) of this Agreement, in case of a Sale Event during the Measurement Period, the Specific Performance Goals hereunder shall continue to apply to the PRSUs assumed, continued or substituted upon the Sale Event. 9 No fractional shares will be issued or delivered pursuant to any Award, and therefore, any fractional shares may be forfeited or otherwise eliminated as determined by the Committee. As a result, the decimal fractions of the number of the Vested Shares presented in the examples below are rounded down to the nearest whole number.


 
1 Exhibit B SIMPSON MANUFACTURING CO. INC. 2011 INCENTIVE PLAN Adopted April 26, 2011, and Amended and Restated April 21, 2015 SECTION 1. PURPOSE The purpose of the Simpson Manufacturing Co., Inc. 2011 Incentive Plan is to promote the interests of the Company and its stockholders by providing incentives to directors, officers and employees of, and consultants to, the Company and the Subsidiaries. Accordingly, the Company may grant to selected officers, Employees, Consultants and Outside Directors Option Awards, Restricted Stock Awards and RSU Awards in an effort to attract and retain qualified individuals as employees, directors and consultants and to provide such individuals with incentives to continue service with the Company, devote their best efforts to the Company and improve the Company’s economic performance, thus enhancing the value of the Company for the benefit of stockholders. This Plan amends and restates in their entirety, and incorporates and supersedes, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended (the “1994 Plan”), and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended (the “1995 Plan” and, together with the 1994 Plan, the “Prior Plans”); provided that any stock option granted under the 1994 Plan or the 1995 Plan that has not been exercised in full and that has not expired or terminated shall continue in effect in accordance with its terms and conditions and shall continue to be subject to and governed by the 1994 Plan or the 1995 Plan, respectively, as in effect immediately before the adoption of this Plan. SECTION 2. DEFINITIONS As used in this Plan, the following terms have the meanings indicated: “Agreement” means an agreement, in written or electronic form, entered into by the Company and a Recipient setting forth the terms and conditions applicable to an Award granted under this Plan. “Award” means an Option Award, a Restricted Stock Award or an RSU Award, in each case granted under this Plan. “Beneficial Ownership” and “Beneficially Own” have the meanings set forth in Rule 13d-3 under the Exchange Act. “Beneficiary” means each Person designated as such by a Recipient or, if no designation has been made, each Person entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Recipient’s death. “Board” means the Board of Directors of the Company.


 
2 “Change in Control” means the occurrence of any one (or more) of the following events: (i) the consummation of a consolidation or merger of the Company in which the Company is not the surviving corporation; (ii) the consummation of a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding such reverse merger are converted by virtue of such reverse merger into other property, whether securities, cash or otherwise; or (iii) the approval by the stockholders of the Company of a plan or proposal for the dissolution and liquidation of the Company; provided that a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the Common Stock immediately before such transaction or transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately thereafter. “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means the Compensation and Leadership Development Committee of the Board, as from time to time constituted, or any successor committee of the Board with similar functions, which shall consist of three or more members, each of whom shall be an outside director as defined in the regulations issued under Code section 162(m) and a non-employee director within the meaning of applicable regulatory requirements, including those promulgated under Exchange Act section 16. “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustment pursuant to section 11 hereof. “Company” means Simpson Manufacturing Co., Inc., a Delaware corporation, or any successor thereto. “Consultant” means a Person that (i) renders services to the Company as an independent contractor (and not as an Employee or Outside Director) pursuant to a contract between such Person and the Company and (ii) is selected by the Committee to receive an Award under this Plan. “Disability” means (i) in the case of a Participant, determination by the Committee that he or she has become unable to perform the functions required by his or her regular job due to physical or mental illness or incapacity and, in connection with the grant of an ISO, he or she is within the meaning of that term as provided in Code section 22(e)(3), and (ii) in the case of an Outside Director, determination by the Committee that he or she is unable to attend to his or her duties and responsibilities as a member of the Board due to physical or mental illness or incapacity. “Employee” means a regular, full-time or part-time employee of the Company or any Subsidiary; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of ISOs, the term “Employee” shall have the meaning ascribed to such term in Code section 3401(c). “Exercise Price” means, with respect to each share of Common Stock subject to an Option, the price fixed by the Committee at which such share may be purchased from the Company on the exercise of such Option. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Fair Market Value” means (i) as of any date, the closing sale price per share of Common Stock as reported on the Composite Tape of the New York Stock Exchange, or if there are no sales on such day, on the next prior trading day during which a sale occurred; and (ii) in the absence of such market for the shares of Common Stock,


 
3 the fair market value per share of Common Stock determined by the Committee in good faith (which determination shall, to the extent applicable, be made in a manner that complies with Code sections 422(b) and 409A). “Incentive Stock Option” or “ISO” means an Option that is intended by the Committee to meet the requirements of Code section 422 or any successor provision. “ISO Award” means an Award of an Incentive Stock Option pursuant to section 9 hereof. “NQSO” means an Option granted pursuant to this Plan that does not qualify as an Incentive Stock Option. “NQSO Award” means an Award of an NQSO pursuant to section 7 hereof. “Option” means the right to purchase Common Stock at an Exercise Price to be specified and on terms to be designated by the Committee or otherwise determined pursuant to this Plan. The Committee shall designate each Option as either an NQSO or an Incentive Stock Option. “Option Award” means an Award of an Option pursuant to section 7 hereof. “Outside Director” means a director of the Company, who is not also an Employee and who is selected by the Committee to receive an Award under this Plan. “Participant” means an Employee who is selected by the Committee to receive an Award under this Plan. “Performance Goals” means performance goals established by the Committee from time to time. Such goals may be absolute in their terms or measured against or in relation to other companies comparably or otherwise situated. Such performance goals may be particular to a Participant or the Subsidiary, division or other unit in which the Participant works or may be based on the performance of the Company as a whole. The Performance Goals applicable to any Award that is intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m) shall be based on one or more of (i) earnings, (ii) unit sales, sales volume or revenue, (iii) sales growth, (iv) stock price (including comparison with various stock market indices), (v) return on equity, (vi) return on investment, (vii) total return to stockholders, (viii) economic profit, (ix) debt rating, (x) operating income, (xi) cash flows, (xii) cost targets, (xiii) return on assets or margins or (xiv) implementation, completion or attainment of measurable objectives with respect to (1) software development, (2) new distribution channels, (3) customer growth targets, (4) acquisition identification and integration, (5) manufacturing, production or inventory targets, (6) new product introductions, (7) product quality control, (8) accounting and reporting, (9) recruiting and maintaining personnel, or (10) compliance or regulatory program targets. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time or against other companies or financial metrics), (c) on a per share basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company or (e) on a pre-tax or after tax basis. “Person” has the meaning ascribed to that term in Exchange Act section 3(a)(9), as modified and used in Exchange Act sections 13(d) and 14(d), except that such term shall not include (a) the Company, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (c) an underwriter temporarily holding securities pursuant to an offering on behalf of the Company.


 
4 “Personal Representative” means the Person or Persons who, on the Disability or incompetence of a Recipient, shall have acquired on behalf of the Recipient by legal proceeding or otherwise the right to receive benefits pursuant to this Plan. “Plan” means this Simpson Manufacturing Co., Inc. 2011 Incentive Plan. “Recipient” means a Participant, an Outside Director or a Consultant, as appropriate. “Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals or the occurrence of other events, as determined by the Committee). “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award, which are subject to the restrictions, terms, and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Restricted Stock Award” means an Award of Restricted Stock pursuant to section 6 hereof. “Restricted Stock Units” or “RSUs” means units issued pursuant to an RSU Award, which are valued in terms of shares of Common Stock equivalents and are subject to the restrictions, terms and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Retirement” means (i) in the case of a Participant, retirement from employment with the Company or any Subsidiary at any time as described in the Simpson Manufacturing Co., Inc. Profit Sharing Plan for Salaried Employees or in any successor plan, as from time to time in effect, or as otherwise determined by the Committee, (ii) in the case of an Outside Director, retirement from the Board after the date, if any, established by the Committee as the date for mandatory retirement, as from time to time in effect, or as otherwise determined by the Committee, and (iii) in the case of a Consultant, such date as is determined by the Committee. “RSU Award” means an Award of Restricted Stock Units pursuant to section 6 hereof. “Subsidiary” means a corporation, limited liability company, partnership or other entity (i) more than fifty percent of the outstanding voting equity securities (representing the right to vote for the election of directors or other managing authority) are now or hereafter owned or controlled, directly or indirectly, by the Company, or (ii) which does not have outstanding voting equity securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than fifty percent of the ownership interests of which, representing the right generally to make decisions for such entity, is now or hereafter owned or controlled, directly or indirectly, by the Company; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall have the meaning ascribed to such term in Code section 424(f), as interpreted by the regulations thereunder and applicable law. “Tax Date” means the date the withholding tax obligation arises with respect to an Award. SECTION 3. STOCK SUBJECT TO PLAN (A) Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, 16,320,000 shares of Common Stock are reserved for issuance under this Plan, any or all of which may be delivered with respect to


 
5 Option Awards, Restricted Stock Awards and RSU Awards and any or all of which may be authorized and unissued shares or treasury shares; provided that such 16,320,000 shares include all shares heretofore reserved for issuance pursuant to the Prior Plans. Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, the following limits shall apply with respect to Awards that are intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m): (i) the maximum aggregate number of shares of Common Stock that may be subject to Options granted in any calendar year to any one Participant shall be 150,000 shares; and (ii) the maximum aggregate number of Restricted Stock Awards and shares of Common Stock issuable or deliverable under RSU Awards granted in any calendar year to any one Participant shall be 100,000 shares. (B) Shares of Common Stock subject to Awards under this Plan or stock options granted under the Prior Plans that are forfeited, terminated, canceled or settled without the delivery of Common Stock under this Plan or the Prior Plans, respectively, will again be available for Awards under this Plan as if such Awards or grants had not been made; provided that, notwithstanding any other provision herein to the contrary, the aggregate number of shares of Common Stock that may be issued under this Plan shall not be increased by (i) shares of Common Stock tendered in full or partial payment of the Exercise Price of any Option or any stock option granted under either of the Prior Plans, (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy any tax withholding obligation, or (iii) shares of Common Stock that are repurchased by the Company. (C) Notwithstanding anything in this section 3 to the contrary and solely for purposes of determining whether shares are available for the grant of ISOs, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this section 3 that, if taken into account, would cause this Plan to fail the requirement under Code section 422 that this Plan designate a maximum aggregate number of shares that may be issued. SECTION 4. ADMINISTRATION The Committee shall have exclusive authority to administer this Plan. In addition to any implied powers and duties that may be needed to carry out the provisions hereof, the Committee shall have all the powers vested in it by the terms hereof, including exclusive authority to select the Recipients, to determine the type, size and terms of any and all Awards to be made to each Recipient, to determine the time when Awards will be granted, and to prescribe the form, terms and conditions of any Agreement relating to any Award under this Plan. The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, to make any other determinations that the Committee believes necessary or advisable for the administration hereof, and to correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent that the Committee deems desirable and consistent with the intent of this Plan. The Committee may exercise any and all of the Committee’s rights, powers, authority and discretion under this Plan in the Committee’s absolute and exclusive discretion, and the Committee is authorized and empowered to grant or give any consent, approval or authorization, make any determination or do or perform any other act or thing conditionally or unconditionally, arbitrarily, or inconsistently in varying or similar circumstances, without any accountability to any Recipient, except only as otherwise expressly provided by this Plan or any Agreement with such Recipient. Any decision, determination, direction or other action of the Committee in the administration of this Plan shall be final, binding and conclusive for all purposes, subject only to the further exercise of authority of the Committee hereunder. SECTION 5. ELIGIBILITY


 
6 Awards may be granted only to Recipients; provided that no Outside Director or Consultant may be granted an ISO Award. SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNIT (RSU) AWARDS (A) Grant. Any Recipient may receive one or more Restricted Stock Awards or RSU Awards. (B) Restricted Periods. The Restricted Period for each Restricted Stock Award or RSU Award shall be set forth in the applicable Agreement. Except as otherwise provided in the applicable Agreement on a termination of employment or engagement, or pursuant to section 9 hereof in the event of a Change in Control, each Restricted Stock Award or RSU Award shall have such Restricted Period and be subject to such Performance Goals as the Committee may determine. Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Restricted Stock Award or RSU Award is made to a Recipient whose employment or service as a director or Consultant subsequently terminates for any reason before the lapse of all restrictions thereon, such Restricted Stock or RSU with respect to which such restrictions shall not have lapsed shall be forfeited to that extent by such Recipient. (C) Certain Restricted Stock Award Provisions. (1) Stockholder Rights. On the granting of a Restricted Stock Award, a Recipient shall be entitled to all rights incident to ownership of Common Stock of the Company with respect to his or her Restricted Stock, including the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid in cash or shares of Restricted Stock, as set forth in the applicable Agreement or as determined by the Committee. Each grant of Restricted Stock may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) Certificates; Dividends on Restricted Stock; Restrictions on Transferability. During the Restricted Period, each certificate representing Restricted Stock shall be registered in the respective Recipient’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in this Plan and the applicable Agreement. Each such certificate shall be deposited by the Recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, that will permit transfer to the Company of all or any portion of the Restricted Stock that may be forfeited in accordance with this Plan and the applicable Agreement. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes, except that: (i) no Recipient will be entitled to delivery of a certificate representing Restricted Stock until expiration of the restrictions applicable thereto; (ii) the Company will retain custody of all Restricted Stock issued as a dividend or otherwise with respect to an Award of Restricted Stock, which shall be subject to the same restrictions, terms and conditions as are applicable to the awarded Restricted Stock, until such time, if ever, as such Restricted Stock becomes vested, and no Restricted Stock shall bear interest or be segregated in separate accounts; (iii) subject to section 13(B) hereof, no Recipient shall have any right or power to sell, assign, transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of any Restricted Stock during the applicable Restricted Period; and (iv) unless otherwise determined and directed by the Committee, a breach of any restriction, term or condition in this Plan or the applicable Agreement or established by the Committee with respect to any Restricted Stock will cause a forfeiture of such Restricted Stock, including any Restricted Stock issued as a dividend or otherwise with respect thereto. (D) Certain Restricted Stock Unit (RSU) Award Provisions.


 
7 (1) General. Each grant of Restricted Stock Units shall constitute an agreement by the Company to issue or deliver shares of Common Stock or cash to the Recipient thereof following the end of the applicable Restricted Period in consideration of the performance of services. Each such grant of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) No Stockholder Rights. A Recipient who receives an RSU Award shall not have any rights as a stockholder with respect to the shares of Common Stock subject to such RSUs until such time, if any, as shares of Common Stock are delivered to such Recipient pursuant to the applicable Agreement. (3) Payment. Unless otherwise determined by the Committee, each Agreement relating to an RSU Award shall set forth the payment date for such RSU Award, which date shall not be earlier than the end of the applicable Restricted Period. Payment of earned Restricted Stock Units may be made in one or more installments and may be made wholly in cash, wholly in shares of Common Stock or a combination thereof, as determined by the Committee. SECTION 7. OPTION AWARDS (A) Grant. Any Recipient may receive one or more Option Awards. (B) Designation and Price. (1) Any Option granted under this Plan may be granted as an ISO or as an NQSO as shall be determined by the Committee at the time of the grant of such Option. Only Participants may be granted ISOs. Each Option shall, as directed by the Committee, be evidenced by an Agreement, which shall specify whether the Option is an ISO or an NQSO and shall contain such terms and conditions as the Committee may determine in accordance with this Plan. (2) Every ISO or NQSO shall provide for a fixed expiration date of not later than ten years from the date that such ISO or NQSO is granted. (3) The Exercise Price pursuant to each Option shall be fixed by the Committee at the time of the granting of the Option, but shall not in any event be less than the Fair Market Value on the date that such Option is granted, subject to adjustment as provided in section 11 hereof. (C) Exercise. The Committee may provide for Options granted under this Plan to be exercisable as a whole at any time or in part from time to time. Shares of Common Stock to be issued on any exercise of an Option will be issued after the Company receives (i) notice (in such form as the Committee may require) from the holder thereof of the exercise of such Option, and (ii) payment as provided in section 7(D) hereof of the aggregate Exercise Price for all shares with respect to which such Option is exercised. Each such notice and payment shall be delivered at such place and in such manner as the Committee may specify from time to time. (D) Payment. The Exercise Price for the shares of Common Stock issuable on the exercise of an Option shall be paid in full at the time of such exercise either in cash or by such other means as the Committee may approve, which may include tendering unencumbered shares of Common Stock then owned by the Recipient


 
8 exercising such Option having an aggregate Fair Market Value at the time of such exercise equal to the aggregate Exercise Price of the shares being purchased on such exercise or cashless exercise through a securities broker. (E) Expiration or Termination of Awards. (1) Participants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Participant who holds an outstanding Option dies while employed, during the period when such Participant, if Disabled, would be entitled to exercise such Option, or after such Participant’s Retirement, then such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by the Beneficiaries of the decedent for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s death. (b) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of a Participant who holds an outstanding Option ceases by reason of Disability at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by such Participant or his or her Personal Representative for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Disability. (c) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of any Participant who holds an outstanding Option ceases by reason of Retirement, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Retirement. (d) Notwithstanding any provision of this Plan to the contrary, any Option may, in the discretion of the Committee or as provided in the applicable Agreement, become exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, from and after the time the Participant ceases to be an Employee as a result of the sale or other disposition by the Company or any Subsidiary of assets or property (including shares of any Subsidiary) in respect of which such Participant shall theretofore have been employed or as a result of which such Participant’s continued employment is no longer required. (e) Except as otherwise provided in subsections (a), (b), (c) and (d) of this section 7(E)(1) and sections 9(D) and 13(I) hereof, if the employment of any Participant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Participant’s employment, for the number of shares that such Participant could have acquired on exercise of such Option immediately before the cessation of such Participant’s employment; provided that such Option shall terminate on and as of such earlier date. (2) Outside Directors and Consultants.


 
9 (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the service of any Outside Director or Consultant who holds an outstanding Option ceases by reason of Retirement, death or Disability, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, by such Outside Director or Consultant, his or her Personal Representative or his or her Beneficiaries for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before such Outside Director’s or Consultant’s Retirement, death or Disability. (b) Except as otherwise provided in subsection (a) of this section 7(E)(2) and sections 9(D) and 13(I) hereof, if the service of any Outside Director or Consultant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Outside Director’s or Consultant’s service, for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before the cessation of such Outside Director’s or Consultant’s service; provided that such Option shall terminate on and as of such earlier date. SECTION 8. CONTINUED EMPLOYMENT Nothing in this Plan, or in any Award granted pursuant to this Plan, shall confer on any Person any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate any Recipient’s employment or service at any time. SECTION 9. CHANGE IN CONTROL (A) Restricted Stock and RSU Awards. On a Change in Control, except as otherwise provided in the applicable Agreement and subject to compliance with Code section 409A, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall substitute similar benefits for the Restricted Stock Awards and RSU Awards outstanding under this Plan; or (ii) such Restricted Stock Awards or RSU Awards shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to substitute similar benefits for such Restricted Stock Awards and RSU Awards and refuses to continue such Restricted Stock Awards and RSU Awards in full force and effect, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then the Restricted Period relating to each such Restricted Stock Award or RSU Award shall terminate, and from and after such Change in Control, each such Restricted Stock Award or RSU Award shall be free of all other restrictions for all shares of Restricted Stock or RSUs that shall not theretofore have been acquired under the applicable Agreement. (B) Option Awards. On a Change in Control, except as otherwise provided in the applicable Agreements, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall assume all Options outstanding under this Plan or shall substitute similar options for those outstanding under this Plan, or (ii) such Options shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to assume or continue such Options or to substitute similar options for those outstanding under this Plan, and if the nature and terms of employment or engagement, including compensation and benefits, of the


 
10 respective Recipients will change significantly as a result of the Change in Control, then each such Option shall become immediately exercisable for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, and shall be terminated if not exercised before or at the time of such Change of Control. (C) Cash-Out of Awards. In connection with a Change in Control, notwithstanding any of the foregoing provisions of this section 9 to the contrary, the Committee may, either pursuant to the applicable Agreement or by resolution adopted before the Change in Control, provide that any outstanding Award (or a portion thereof) shall, on such Change in Control, be cancelled in exchange for payment in cash of the amount, if any, by which the aggregate Fair Market Value of the shares of Common Stock subject to such Award exceeds the aggregate Exercise Price therefor. SECTION 10. WITHHOLDING TAXES Federal, state or local law may require the withholding of taxes resulting from the grant or vesting of an Award or the exercise of an Option. The Company may permit or require (subject to such conditions or procedures as may be established by the Committee) any such tax withholding obligation of a Participant to be satisfied by any of the following means, or by any combination of such means: (i) cash payment by such Participant to the Company; (ii) withholding from the shares of Common Stock otherwise issuable to such Participant pursuant to the vesting or exercise of an Award of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation; or (iii) delivery by the Participant to the Company of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation arising from the vesting or exercise of an Award. If the payment or delivery specified in clause (i) or (iii) of the preceding sentence is required but is not paid by a Participant, the Company may refuse to issue Common Stock to such Participant under this Plan. SECTION 11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends, the number or kind of shares that may be issued under this Plan pursuant to section 3 hereof and the number or kind of shares subject to, or the price per share under any outstanding Award, shall be adjusted, automatically and without notice, so that the proportionate interests of the Recipients shall be maintained as before the occurrence of such event; provided that no adjustment shall be made pursuant to this section 11 that would (i) cause any Option intended to qualify as an ISO to fail to qualify as an ISO, (ii) cause an Award that is otherwise exempt from Code section 409A to become subject to Code section 409A, or (iii) cause an Award that is subject to Code section 409A to fail to satisfy the requirements of Code section 409A. SECTION 12. AMENDMENT AND TERMINATION The Committee may amend this Plan at any time or from time to time; provided that: (i) the Committee may not, without approval by the Board, materially increase the benefits provided to Recipients under this Plan; (ii) any amendment with respect to Restricted Stock Awards or RSU Awards granted to Outside Directors must be approved by the Board; and (iii) no amendment that requires stockholder approval in order for this Plan to continue to comply with any provision of the Exchange Act, any rule promulgated by the Securities and Exchange Commission under the Exchange Act, any rule of the New York Stock Exchange or any other securities exchange on


 
11 which shares of Common Stock are listed, or any other applicable law, rule or regulation, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company within the time period required under such provision. Without the approval of the stockholders of the Company, (i) neither the Board nor the Committee will authorize the amendment of any outstanding Option to reduce the Exercise Price thereof, except for adjustments made pursuant to section 11 hereof, (ii) no outstanding Option will be cancelled and replaced with another Option Award having a lower Exercise Price, or for another Award, or for cash, except as provided in section 9 or 11 hereof, and (iii) no Option will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award; provided that this sentence is intended to prohibit, without stockholder approval, the re-pricing of Options that have Exercise Prices above Fair Market Value and will not be construed to limit or prohibit any adjustment pursuant to section 9 or 11 hereof. The Committee may terminate this Plan at any time; provided that such termination shall not affect any Awards theretofore made or any stock options theretofore granted under either of the Prior Plans and such Awards and stock options shall continue to be subject to all terms and conditions of this Plan (including the second paragraph of section 1 hereof) notwithstanding such termination. SECTION 13. MISCELLANEOUS PROVISIONS (A) No Rights to Awards. No Person has or shall have any claim or right to be granted an Award under this Plan. (B) Assignment and Transfer. No right or interest of any Recipient under this Plan or in any Award may be assigned or transferred as a whole or in part, directly or indirectly, by operation of law or otherwise (except by will or the laws of descent and distribution), including by way of execution, levy, garnishment, attachment, pledge or bankruptcy or in any other manner, and no such rights or interests of any Recipient in this Plan shall be subject to any obligation or liability of such Recipient; provided that the Committee may determine that a Recipient’s rights and interests under this Plan or in any Award may be made transferable by such Recipient during his or her lifetime, subject to such conditions as the Committee may specify. Except as provided in section 6 hereof, no Award shall entitle the Recipient thereof, as such, or any of such Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until shares subject to such Award are issued to and registered on the Company’s records in the name or names of such Recipient, Beneficiaries or Personal Representative, as the case may be, and then only with respect to such shares. (C) Compliance with Legal and Exchange Requirements. This Plan, the grant and exercise of Awards hereunder, the issuance of Common Stock and other interests hereunder, and the other obligations of the Company under this Plan and any Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as the Committee may determine are necessary or advisable. The Company or the Committee may postpone the grant or exercise of any Award, the issuance or delivery of Common Stock under any Award or any other action permitted under this Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation and may require any Recipient to make such representations and furnish such information as the Committee may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with any and all applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of this Plan or any Agreement to recognize the exercise of any Award or otherwise to sell or issue Common Stock in violation of any such law, rule


 
12 or regulation. Any postponement of the exercise or settlement of any Award under this section 13(C) shall not extend the term of any Award. Neither the Company nor any Subsidiary nor any director or officer of the Company shall have any obligation or liability to any Recipient with respect to any Award (or Common Stock issuable thereunder) that shall lapse because of any such postponement. (D) Section 409A. Awards granted under this Plan shall be designed and administered in a manner that they are either exempt from the application of, or comply with, the requirements of Code section 409A. To the extent that the Committee determines that any Award is subject to Code section 409A, the Agreement relating to such Award shall incorporate terms and conditions necessary to avoid the imposition on the Recipient of additional tax under Code section 409A. Notwithstanding anything to the contrary in this Plan or any Agreement (unless such Agreement provides otherwise with specific reference to this section 13(D)): (i) no Award shall be granted, deferred, accelerated, extended, paid, settled, substituted or modified under this Plan in a manner that would result in the imposition on a Recipient of additional tax under Code section 409A; and (ii) if an Award is subject to Code section 409A, and if the Recipient to whom such Award is granted is a “specified employee” (as defined in Code section 409A, with such classification to be determined in accordance with methodology established by the Company), no distribution or payment of any amount under such Award shall be made before a date that is six months following the date of such Recipient’s “separation from service” (as defined in Code section 409A) or, if earlier, the date of such Recipient’s death. The Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Code section 409A; provided that the Company does not and shall not make any representation or warranty that any Award under this Plan will qualify for favorable tax treatment under Code section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Recipient for any tax, interest or penalties a Recipient might owe as a result of the grant, holding, vesting, exercise or payment of any Award. (E) Ratification and Consent. By accepting any Award under this Plan, each Recipient and each Personal Representative or Beneficiary claiming under or through such Recipient shall be conclusively deemed to have accepted, ratified and consented to all of the terms and conditions of this Plan and any and all action taken under this Plan by the Company, any Subsidiary, the Board or the Committee. (F) Other Compensation. Nothing in this Plan shall prevent, limit or otherwise affect the right, power and authority of the Board with respect to any other or additional compensation arrangements. (G) Grant Date. Each Recipient shall be deemed to have been granted an Award on the date that the Committee grants such Award under this Plan or such later date as the Committee shall determine at the time such grant is authorized. (H) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. (I) Forfeiture Provision. Except as otherwise expressly provided by the applicable Agreement, the Committee may require a Recipient to forfeit all unexercised, unearned, unvested or unpaid Awards, if: (1) the Recipient, while employed by the Company or any Subsidiary, prepares to engage or engages, directly or indirectly, without the written consent of the Company, in any manner or capacity, as principal, agent, partner, officer, director, employee or otherwise, in any business or activity competitive with any business conducted by the Company or any Subsidiary, as determined by the Committee;


 
13 (2) the Recipient performs any act or engages in any activity that the Committee determines is materially detrimental to the best interests of the Company or any Subsidiary; or (3) the Recipient materially breaches any agreement with or duty to the Company or any Subsidiary, including any non-competition agreement, non-solicitation agreement, confidentiality or non-disclosure agreement, or assignment of inventions or ownership of works agreement, as determined by the Committee. (J) Participants Outside the United States. Notwithstanding any provision of this Plan to the contrary, to comply with the laws of other countries in which the Company and the Subsidiaries operate or have Employees or Consultants, the Committee shall have the power and authority to: (i) determine which Subsidiaries shall be covered by this Plan; (ii) determine which Employees or Consultants outside the United States are eligible to participate in this Plan; (iii) modify the terms and conditions of any Award granted to Employees or Consultants outside the United States to comply with applicable foreign laws; (iv) modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (v) take any action, before or after an Award is made, that it deems necessary or advisable to obtain approval or comply with any government regulatory exemption or requirement; provided that the Committee is not authorized to take any action hereunder, and no Awards shall be granted, that would violate any applicable law. (K) Successors. All obligations of the Company under this Plan and with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other event, or a sale or disposition of all or substantially all of the business or assets of the Company, and references to the “Company” herein and in any Agreements shall be deemed to refer to such successors. (L) Severability. If any provision of this Plan, or the application of such provision to any Person or circumstance, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Plan, or the application of such provision to Persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. (M) Construction. The headings of the sections hereof are for convenience of reference only and are not part of this Plan. As used herein, each gender includes each other gender, and the singular includes the plural and vice versa, as the context may require. Reference herein to any section includes reference to each and all subsections of such section. For purposes of this Plan, each of the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” (N) Governing Law. This Plan shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware. SECTION 14. EFFECTIVENESS OF THIS PLAN This amended and restated Plan shall be submitted to the stockholders of the Company for their approval at their annual meeting scheduled to be held on April 21, 2015, or at such other annual or special meeting as the Board may specify, or any adjournment or postponement thereof. This Plan will be effective as of the date of its approval by the stockholders of the Company.


 
1 Exhibit 99.4 2018 BRANCH OP PERFORMANCE & TIME BASED RESTRICTED STOCK UNIT AGREEMENT Company: Simpson Manufacturing Co., Inc. Recipient: The recipient’s name (the “Recipient”) is set forth on the Recipient’s online award acceptance page on Morgan Stanley Smith Barney’s StockPlan Connect website (the “Acceptance Page”) at https://www.stockplanconnect.com, which is incorporated by reference to this Agreement. Target PRSU Shares: The aggregate number of shares of Common Stock as stated on the Acceptance Page. The Number of Shares of Common Stock Subject to PRSUs Granted Hereunder (the “PRSU Shares”): 100% of the Target PRSU Shares. The Effective Date of the Award (the “Award Date”): A date in 2018 as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Measurement Period (the “Measurement Period”): A one-year period beginning on January 1, 2018, and ending on December 31, 2018. The Date the PRSU Shares Start To Vest (the “Vesting Start Date”): A date subsequent to the Measurement Period as determined by the Committee in its absolute discretion and as set forth on the Acceptance Page. Vesting Schedule (the “Vesting Schedule”): One fourth of the Adjusted Shares (defined on Exhibit A) will vest on each of the Vesting Start Date and the first, second and third anniversaries thereof; provided, however, that if any of such dates falls on a weekend or federal holiday, the applicable portion of the Adjusted Shares shall vest on the immediately following business day.1 Vesting Period (the “Vesting Period”): A period beginning on the Vesting Start Date, and ending on the third anniversary of the Vesting Start Date; provided, however, that if such anniversary date falls on a weekend or federal holiday, such period shall end on the immediately following business day.2 Specific Performance Goals (the “Specific Performance Goals”): The Specific Performance Goals are set forth on Exhibit A. 1 For example, if the Vesting Start Date is determined by the Committee to be February 15, 2019, then 1 then 1/4 of the Adjusted Shares, if any (based on the Specific Performance Goals), will vest on each of (i) February 15, 2019, (ii) February 18, 2020 (because February 15, 2020 falls on a Saturday and Monday February 17, 2020 is a federal holiday, President’s day, the immediately following business day is February 18, 2020), (iii) February 16, 2021 (because Monday February 17, 2021 is a federal holiday, President’s day, the immediately following business day is February 16, 2021) and (iv) February 15, 2022, and the Vesting Period will be from February 15, 2019 to February 15, 2022. 2 See footnote 2, supra.


 
2 This PERFORMANCE & TIME BASED RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) is made as of the Award Date stated on the Acceptance Page by and between Simpson Manufacturing Co., Inc., a Delaware corporation (the “Company”), and the Recipient named on the Acceptance Page, with reference to the following facts: Capitalized terms used and not otherwise defined in this Agreement have the meanings ascribed to such terms in the amended and restated Simpson Manufacturing Co., Inc. 2011 Incentive Plan effective on April 21, 2015 (as amended from time to time, the “Plan”). The Board has delegated to the Committee all authority to administer the Plan. The Committee has determined to grant to the Recipient, under the Plan, performance and time based Restricted Stock Units (the “PRSUs”) with respect to the PRSU Shares stated on the Acceptance Page. To evidence the PRSUs and to set forth the terms and conditions thereof, the Company and the Recipient agree as follows: 1. Confirmation of Grant. (a) The Company grants the PRSUs to the Recipient and the Recipient agrees to accept the PRSUs and participate in the Plan, effective as of the Award Date. As a condition of the grant, this Agreement and the PRSUs shall be governed by the terms and conditions of the Plan and shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery policy. (b) The PRSUs shall be reflected in a bookkeeping account maintained by the Company through the date on which the PRSUs become vested pursuant to section 2 or are forfeited pursuant to section 3. The Recipient acknowledges and agrees that (i) the PRSU Shares merely represent the maximum number of shares of Common Stock that are granted under the PRSUs and are not necessarily the number of shares of Common Stock that will eventually vest in favor of the Recipient, and (ii) pursuant to section 2 and otherwise in accordance with this Agreement and the Plan, the number of shares of Common Stock, which will eventually vest in favor of the Recipient under the PRSUs (the “Vested Shares”), will be subject to the Specific Performance Goals and will be between 0% and 100% of the Target PRSU Shares. (c) The Company’s obligations under this Agreement shall be unfunded and unsecured. No special or separate fund shall be established therefor and no other segregation of assets shall be required or made with respect thereto. The rights of the Recipient under this Agreement shall be no greater than those of a general unsecured creditor of the Company. (d) Except as otherwise provided in this Agreement and the Plan, the PRSUs shall be settled by the issuance and delivery of the Vested Shares, or as provided in this Section 1(d), by cash (as determined by the Committee in its sole discretion), within sixty days after the PRSUs have vested pursuant to section 2 subject to satisfaction of any other terms and conditions applicable to the PRSUs; provided, however, that to the extent the Committee determines that any of the PRSUs are subject to Code section 409A, to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such PRSUs shall be made until the earliest of the date (i) set for such PRSUs to vest according to the Vesting Schedule (a time or fixed schedule specified for the purpose of Code section 409A), (ii) of the Recipient’s “separation from service” (as defined in Code section 409A), (iii) of the Recipient’s death, or (iv) when the Recipient becomes “disabled” (as defined in Code section 409A); and further provided that, the number of the Vested Shares issued or delivered (or for which a cash payment is made) to the Recipient in any calendar year, together with the number of shares of Common Stock issued or delivered (or for which a cash payment is made) to the Recipient in the same calendar year under any other RSU Awards, shall not exceed the annual maximum aggregate number of shares of Common Stock issuable or deliverable under RSU Awards as set forth in the Plan that is effective at the time of the issuance or delivery of (or making a cash payment for) the Vested Shares. Notwithstanding the foregoing, to the extent the Committee determines that any of the PRSUs are subject to Code section 409A and the Recipient is a Specified Employee 3 on 3 The determination of whether the Recipient is a Specified Employee will be made annually by the Committee or its delegate pursuant to Code section 409A for the 12-month period ending every December 31st (the “Specified Employee Identification


 
3 the date of his or her “separation from service” (as defined in Code section 409A), to the extent necessary to comply with Code section 409A, no distribution or payment of any amount under such PRSUs that is otherwise payable pursuant to this Section 1(d) upon a separation from service shall be made before the date that is six months after the date of the Recipient’s separation from service. In settling the PRSUs pursuant to the foregoing, the Company (or its acquirer or successor) shall have the option (as determined by the Committee in its sole discretion) to make or provide for a cash payment to the Recipient, in exchange for the cancellation of the vested PRSUs (or any portion thereof), in an amount equal to the product of (A) the number of the Vested Shares under the cancelled PRSUs and (B) the average closing price of a share of Common Stock of the period ending on the date the PRSUs (or the portion thereof) become vested and starting on 60 days prior to that date. Anything herein to the contrary notwithstanding, this Agreement does not create an obligation on the part of the Company to adopt any policy or procedure, agree to any amendment hereto, make any arrangement, or take any other action, to comply with Code section 409A. The Recipient agrees and acknowledges that the Company makes no representations that this Agreement, including the grant, vesting and/or delivery of the PRSU Shares (and/or cash), does not violate Code section 409A, and the Company shall have no liability whatsoever to the Recipient if he or she is subject to any taxes or penalties under Code section 409A. 2. Vesting. (A) On the last day of the Measurement Period, the PRSU Shares stated on the Acceptance Page shall be adjusted pursuant to the Specific Performance Goals as set forth on Exhibit A attached hereto, and after the adjustment, become the total number of the Vested Shares that will be used to settle the PRSUs under section 1(d); provided, however, that (x) if the Recipient’s employment or engagement with the Company or any Subsidiary is terminated before the Vesting Start Date for any reason, (y) if the Recipient retires, dies or becomes Disabled before the Vesting Start Date, or (z) if a Sale Event4 takes place prior to the Vesting Start Date and the surviving or acquiring entity or the new entity resulting from the Sale Event refuses to assume or continue the PRSUs or to substitute a similar equity award, the PRSUs shall be forfeited in their entirety and no distribution or payment of any amount under such PRSUs shall ever be made to the Recipient. For clarity, any PRSUs, assumed, continued or substituted following the Sale Event (that takes place prior to the Vesting Start Date) will be subject to section 2(B) below. (B) Subject to the terms and conditions of this Agreement and the Plan and unless otherwise forfeited pursuant to section 3, following the Measurement Period, the PRSUs shall vest (that is, the Restricted Date”). The Committee’s determination shall be final and binding on the Recipient. If the Recipient was determined by the Committee as a Specified Employee at any time during such 12-month period ending on the Specified Employee Identification Date, he or she shall be considered a Specified Employee for the 12-month period commencing on the February 1st immediately following the Specified Employee Identification Date (i.e., from February 1st to the following January 31st), even if he or she is no longer employed or engaged by the Company on or after the Specified Employee Identification Date. For the purposes of this section 1(d), a “Specified Employee” shall mean: • the Recipient owns 5% or more of all outstanding Common Stock; • the Recipient owns 1% or more of all outstanding Common Stock and has an annual compensation of more than $150,000; and/or • the Recipient is among the top 50 most highly-compensated officers of the Company and the Subsidiaries forming a controlled group of corporations within the meaning of Code section 1563(a) (based on total W-2 compensation plus elective 401(k) plan deferrals) and has an annual compensation exceeding the indexed dollar limit then in effect pursuant to Treas. Reg. § 1.409A-1(i) promulgated under Code (which is $175,000 for 2018). 4 A “Sale Event” shall mean (i) the sale or other disposition of all or substantially all of the assets of the Company or the Subsidiary that employs or engages the Recipient, including a majority or more of all outstanding stock of the Subsidiary, on a consolidated basis to one or more unrelated persons or entities, (ii) a Change in Control, or (iii) the sale or other transfer of outstanding Common Stock to one or more unrelated persons or entities (including by way of a merger, reorganization or consolidation in which the outstanding Common Stock are converted into or exchanged for securities of the successor entity) where the stockholders of the Company, immediately prior to such sale or other transfer, would not, immediately after such sale or transfer, beneficially own shares representing in the aggregate more than 50 percent of the voting shares of the acquirer or surviving entity (or its ultimate parent corporation, if any). For the purpose of sub-section (iii) of this definition, only voting shares of the acquirer or surviving entity (or its ultimate parent, if any) received by stockholders of the Company in exchange for Common Stock shall be counted, and any voting shares of the acquirer or surviving entity (or its ultimate parent, if any) already owned by stockholders of the Company prior to the transaction shall be disregarded.


 
4 Period with respect thereto shall terminate) pursuant to the Vesting Schedule; provided, however, that the unvested PRSUs shall vest in full during the Vesting Period on the date, (a) immediately preceding the effective date of the Recipient’s Retirement as determined by the Committee in relation to the PRSUs: either (A) after reaching age 70 or (B) after reaching age 55 and having been employed or engaged by the Company or any Subsidiary for 15 years (provided that, if the Recipient retires after reaching age 56, for each year after age 55, the Recipient may work one year less for the Company or any Subsidiary, as applicable, and still be qualified for Retirement under this sub-section (B)5), (b) immediately preceding the Recipient’s death or immediately preceding the effective date of the Recipient’s Disability, and (c) immediately preceding the effective date of the termination of the Recipient’s employment or engagement with the Company or any Subsidiary by the Company or Subsidiary (which, whenever used in this Agreement, includes any such entity’s successor) without Cause,6 or by the Recipient for a Good Reason,7 in either case only in connection with or within 24 months following a Sale Event. (C) The Recipient explicitly acknowledges and agrees that (i) the Committee has the absolute discretion to determine the number of the Vested Shares, (ii) the Committee may engage professional advisors and consultants and rely on their opinions and advice to make the determination, (iii) such determination shall be binding on the Recipient, and (iv) the granting or vesting of the PRSUs as well as the Recipient’s holding of the Vested Shares shall be subject to all applicable policies and guidelines of the Company, including the Company’s compensation recovery, stock ownership, and hedging, pledging and trading policies. 3. Forfeiture. Anything herein to the contrary notwithstanding, (a) all PRSUs that are not vested in accordance with section 2 shall terminate immediately and be forfeited in their entirety if and at such time as (i) the Recipient ceases to be an Employee, Outside Director or Consultant, as the case may be, or (ii) 24 months have passed immediately following a Sale Event (provided that, in the event the surviving or acquiring entity or the new entity resulting from a Sale Event substitutes a similar equity award for the PRSUs, such award will continue in accordance with its own terms and conditions), and (b) all PRSUs, to the extent not theretofore settled in accordance 5 For example, if the Recipient retires at age 60 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 10 years to be qualified for Retirement and receive the Vested Shares; and for example, if the Recipient retires at age 65 during the Vesting Period, he or she only needs to have worked for the Company or the applicable Subsidiary for 5 years to be qualified for Retirement and receive the Vested Shares. 6 “Cause” means, in addition to any cause for termination as provided in any other applicable written agreement between the Company, the applicable Subsidiary, or the acquirer or successor of the Company or Subsidiary, and the Recipient, (i) conviction of any felony, (ii) any material breach or violation by the Recipient of any agreement to which the Recipient and the Company or the Subsidiary that employs or engages the Recipient are parties or of any published policy or guideline of the Company, (iii) any act (other than retirement or other termination of employment or engagement) or omission to act by the Recipient which may have a material and adverse effect on the business of the Company or Subsidiary or on the Recipient’s ability to perform services for the Company or Subsidiary, including habitual insobriety or substance abuse or the commission of any crime, gross negligence, fraud or dishonesty with regard to the Company or Subsidiary, or (iv) any material misconduct or neglect of duties and responsibilities by the Recipient in connection with the business or affairs of the Company or Subsidiary; provided, however, that the Recipient first shall have received written notice, which shall specifically identify what the Company or Subsidiary believes constitutes Cause, and if the breach, act, omission, misconduct or neglect is capable of being cured, the Recipient shall have failed to cure after 15 days following such notice. 7 A “Good Reason” means the occurrence of any of the following events: (i) a material adverse change in the functions, duties or responsibilities of the Recipient’s position (other than a termination by the Company or Subsidiary) which would meaningfully reduce the level, importance or scope of such position (provided that, a change in the person, position and/or department to whom the Recipient is required to report shall not by itself constitute a material adverse change in the Recipient’s position), (ii) the relocation of the Company or Subsidiary office at which the Recipient is principally located immediately prior to a Sale Event (the “Original Office”) to a new location outside of the metropolitan area of the Original Office or the failure to place the Recipient’s own office in the Original Office (or at the office to which such office is relocated which is within the metropolitan area of the Original Office), or (iii) a material reduction in the Recipient’s base salary and incentive compensation opportunity as in effect immediately prior to a Sale Event; provided, however, that, within 90 days of the incident that provides the basis for a Good Reason termination, the Recipient shall have provided the Company or Subsidiary a written notice specifically identifying what the Recipient believes constitutes a Good Reason, and the Company or Subsidiary shall have failed to cure the adverse change, relocation or compensation reduction after 30 days following such notice.


 
5 with section 1(d), shall terminate immediately and be forfeited in their entirety when and as provided in section 13(I) of the Plan. 4. Tax Withholding. Pursuant to section 10 of the Plan, the Company may require the Recipient to enter into an arrangement providing for the payment in cash, Common Stock or otherwise by the Recipient to the Company of any tax withholding obligation of the Company arising by reason of (a) the granting or vesting of the PRSUs, (b) the lapse of any substantial risk of forfeiture to which the PRSUs or the Vested Shares are subject, or (c) the disposition of the PRSUs or the Vested Shares, to the extent such arrangement does not cause a loss of the Section 16(b) exemption pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended. 5. Representations and Warranties of the Company. The Company represents and warrants to the Recipient that the Vested Shares, when issued and delivered on the vesting of the PRSUs in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable. 6. Recipient Representations. The Recipient represents and warrants to the Company that the Recipient has received and read this Agreement and the Plan, that the Recipient has consulted with the Recipient’s own legal, financial and other advisers regarding this Agreement and the Plan to the extent that the Recipient considered necessary or appropriate, that the Recipient fully understands and accepts all of the terms and conditions of this Agreement and the Plan, and that the Recipient is relying solely on the Recipient’s own advisers with respect to the tax consequences of this Agreement and the PRSUs. 7. Change in Control. Notwithstanding section 9 of the Plan, a Change in Control shall be treated as a Sale Event with respect to the PRSUs granted hereunder. 8. Adjustments to Reflect Capital Changes. Subject to and except as otherwise provided in section 9 of the Plan, the number and kind of shares subject to the PRSUs shall be appropriately adjusted, as the Committee may determine pursuant to section 11 of the Plan, to reflect any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends. 9. No Rights as Stockholder. Neither the granting or vesting of the PRSUs nor the issuance or delivery of the Vested Shares shall entitle the Recipient, as such, or any of the Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until the Vested Shares are registered on the Company’s records in the name or names of the Recipient or the Recipient’s Beneficiaries or Personal Representative, as the case may be, and then only with respect to such Vested Shares so registered. 10. No Right to Continued Employment. Nothing in this Agreement shall confer on the Recipient any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate the Recipient’s employment or service at any time. If the Award of the PRSUs is in connection with the Recipient’s performance of services as a Consultant or Outside Director, references to employment, employee and similar terms shall be deemed to include the performance of services as a Consultant or an Outside Director, as the case may be; provided that no rights as an Employee shall arise by reason of the use of such terms. 11. Regulatory Compliance. Notwithstanding anything herein to the contrary, the issuance and delivery of the Vested Shares shall in all events be subject to and governed by section 13(C) of the Plan. 12. Notices. Any notice, consent, demand or other communication to be given under or in connection with this Agreement shall be in writing and shall be deemed duly given and received when delivered personally, when transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being mailed by first class mail, charges or postage prepaid, properly addressed, if to the Company, at its principal office in California, and, if to the Recipient, at the Recipient’s address on the Company’s records. Either party may change such party’s address or facsimile number from time to time by notice hereunder to the other.


 
6 13. Entire Agreement. This Agreement and the Plan together contain the entire agreement of the parties and supersede all prior or contemporaneous negotiations, correspondence, understandings and agreements, whether written or oral, between the parties, regarding the PRSUs. The Recipient specifically acknowledges and agrees that all descriptions of the PRSUs in any prior letters, memoranda or other documents provided to him or her by the Company or any Subsidiary are hereby replaced and superseded in their entirety by this Agreement and shall be of no further force or effect. To the extent there is any inconsistency between the descriptions of any such documents and the terms of this Agreement, the terms of this Agreement shall prevail. 14. Amendment. This Agreement may be amended, modified or supplemented only by a written instrument signed by the Recipient and the Company. 15. Assignment. The Recipient shall not sell, assign, transfer, pledge, hypothecate or otherwise encumber or dispose of this Agreement, any of the PRSUs or any other rights hereunder, and shall not delegate any duties hereunder, except only as may be permitted pursuant to section 13(B) of the Plan; and any such action or transaction that may otherwise be attempted or purported by the Recipient shall be void and of no effect. 16. Successors. Subject to section 15, this Agreement shall bind and inure to the benefit of the Company and the Recipient and their respective successors, assigns, heirs, legatees, devisees, executors, administrators and legal representatives. Nothing in this Agreement, express or implied, is intended to confer on any other Person any right or benefit in or under this Agreement or the Plan. 17. Separate Payments. All amounts payable in connection with the PRSUs hereunder or any other Awards granted under the Plan shall be treated as separate payments for the purposes of Code section 409A. 18. Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware. 19. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 20. Order of Precedence and Construction. This Agreement and the PRSUs are subject to all provisions of the Plan (a copy of which is attached hereto as Exhibit B), including the Restricted Stock Unit provisions of section 6 thereof, and are further subject to all interpretations and amendments thereto that may from time to time be adopted pursuant to the Plan. In the event of any inconsistency between any provision of this Agreement and any provision of the Plan, the provision of the Plan shall govern. The headings of sections herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction or interpretation of any provision hereof. Whenever the context requires, the use in this Agreement of the singular number shall be deemed to include the plural and vice versa, and each gender shall be deemed to include each other gender. References herein to sections refer to sections of this Agreement, except as otherwise stated. The meaning of general words is not limited by specific examples introduced by “includes”, “including”, “for example”, “such as” or similar expressions, which shall be deemed to be followed by the phrase “without limitation”. 21. Further Assurances. The Recipient agrees to do and perform all acts and execute and deliver all additional documents, instruments and agreements as the Company or the Committee may reasonably request in connection with this Agreement. 22. Data Privacy. Recipient hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Recipient’s personal data as described in this Agreement by and among, as applicable, Recipient’s employer, the Company, and any Subsidiary for the exclusive purposes of implementing, administering, and managing Recipient’s participation in the Plan. Recipient understands that the Company and the employing Subsidiary may hold certain personal information about Recipient, including, but not limited to, Recipient’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, and any shares of stock or directorships held in the Company or any Subsidiary, details of all PRSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Recipient’s favor (“Personal Data”). Recipient understands that Personal Data may be transferred to


 
7 any third parties assisting in the implementation, administration and management of the Plan, that these entities may be located in Recipient’s country, or elsewhere, and that the third parties’ country may have different data privacy laws and protections than Recipient’s country. Recipient understands that he or she may request a list with the names and addresses of any potential third parties in receipt of the Personal Data by contacting the Company’s Equity Plans Administrator. Recipient authorizes the third parties to receive, possess, use, retain and transfer the Personal Data, in electronic or other form, for the purposes of implementing, administering and managing Recipient’s participation in the Plan, including any requisite transfer of such Personal Data as may be required to a broker or other third party with whom Recipient may elect to deposit any Vested Shares received upon vest of the PRSUs. Recipient understands that Personal Data will be held as long as is necessary to administer and manage Recipient’s participation in the Plan. Recipient understands that he or she may, at any time, view Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data or refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s Equity Plans Administrator. Recipient understands that refusal or withdrawal of consent may affect Recipient’s ability to realize benefits from the PRSUs. For more information on the consequences of Recipient’s refusal to consent or withdrawal of consent, Recipient understands that he or she may contact the Company’s Equity Plans Administrator. 23. Electronic Delivery. The Company may, in its sole discretion, decide (a) to deliver or effect by electronic means any documents or communications related to the PRSUs granted under the Plan, Recipient’s participation in the Plan, or future Awards that may be granted under the Plan or (b) to request by electronic means Recipient’s consent to participate in the Plan and other communications related to the PRSUs or the Plan. Recipient hereby consents to receive such documents and communications by electronic delivery and, if requested, to agree to participate in the Plan and deliver or effect such other communications through an on-line or electronic system established and maintained by the Company or any third party designated by the Company. [Signature Page Follows]


 
8 IN WITNESS WHEREOF, this Restricted Stock Unit Agreement has been duly executed by or on behalf of the Company and the Recipient as of the Award Date. COMPANY: SIMPSON MANUFACTURING CO., INC. By /s/Brian J. Magstadt, Chief Financial Officer Authorized Signatory for the Compensation and Leadership Development Committee of the Board of Directors ACCEPTANCE OF AGREEMENT: Through the electronic submission of his or her consent to this Restricted Stock Unit Agreement in accordance with the instructions on Morgan Stanley Smith Barney’s StockPlan Connect website, the Recipient hereby confirms, ratifies, approves and accepts all of the terms and conditions of this Restricted Stock Unit Agreement.


 
1 Exhibit A Specific Performance Goals (A). Basic Terms for the Specific Performance Goals. The parties agree on the following terms for the Specific Performance Goals:  “Specific Performance Goals” means the number of the Vested Shares shall be equal to the number of the Adjusted Shares. (B). How to Determine the Specific Performance Goals. The Committee has the absolute discretion to determine, and its determination shall be binding on the Recipient with respect to, any of the following:8  “Adjusted Shares” means (A) the number of the PRSU Shares that is equal to 100% of the number of the Target PRSU Shares, if the Recipient’s branch achieves its branch-wide operating profit goal for the Measurement Period as decided by the Committee; or (B) 0, if the Recipient’s branch does not achieve its branch-wide 2018 operating profit goal as decided by the Committee. (C). Representative Example. Without prejudicing any of the foregoing, including the Committee’s absolute discretion under Section (B) above, the parties agree on the following representative (and non-exhaustive) example for the Specific Performance Goals:9 If the number of the Target PRSU Shares is 100 shares, then the number of the PRSU Shares is 100 shares. Under this example, if the Recipient’s branch achieves its branch-wide operating profit goal for the Measurement Period as decided by the Committee, then the number of the Adjusted Shares is 100 shares. As a result, the number of the Vested Shares is 100 shares, and 25 shares will vest on each of the Vesting Start Date and the first, second and third anniversaries of the Vesting Start Date. 8 Subject to Section 2(A)(z) of this Agreement, in case of a Sale Event during the Measurement Period, the Specific Performance Goals hereunder shall continue to apply to the PRSUs assumed, continued or substituted upon the Sale Event. 9 No fractional shares will be issued or delivered pursuant to any Award, and therefore, any fractional shares may be forfeited or otherwise eliminated as determined by the Committee. As a result, the decimal fractions of the number of the Vested Shares presented in the examples below are rounded down to the nearest whole number.


 
1 Exhibit B SIMPSON MANUFACTURING CO. INC. 2011 INCENTIVE PLAN Adopted April 26, 2011, and Amended and Restated April 21, 2015 SECTION 1. PURPOSE The purpose of the Simpson Manufacturing Co., Inc. 2011 Incentive Plan is to promote the interests of the Company and its stockholders by providing incentives to directors, officers and employees of, and consultants to, the Company and the Subsidiaries. Accordingly, the Company may grant to selected officers, Employees, Consultants and Outside Directors Option Awards, Restricted Stock Awards and RSU Awards in an effort to attract and retain qualified individuals as employees, directors and consultants and to provide such individuals with incentives to continue service with the Company, devote their best efforts to the Company and improve the Company’s economic performance, thus enhancing the value of the Company for the benefit of stockholders. This Plan amends and restates in their entirety, and incorporates and supersedes, both the Simpson Manufacturing Co., Inc. 1994 Stock Option Plan, as amended (the “1994 Plan”), and the Simpson Manufacturing Co., Inc. 1995 Independent Director Stock Option Plan, as amended (the “1995 Plan” and, together with the 1994 Plan, the “Prior Plans”); provided that any stock option granted under the 1994 Plan or the 1995 Plan that has not been exercised in full and that has not expired or terminated shall continue in effect in accordance with its terms and conditions and shall continue to be subject to and governed by the 1994 Plan or the 1995 Plan, respectively, as in effect immediately before the adoption of this Plan. SECTION 2. DEFINITIONS As used in this Plan, the following terms have the meanings indicated: “Agreement” means an agreement, in written or electronic form, entered into by the Company and a Recipient setting forth the terms and conditions applicable to an Award granted under this Plan. “Award” means an Option Award, a Restricted Stock Award or an RSU Award, in each case granted under this Plan. “Beneficial Ownership” and “Beneficially Own” have the meanings set forth in Rule 13d-3 under the Exchange Act. “Beneficiary” means each Person designated as such by a Recipient or, if no designation has been made, each Person entitled by will or the laws of descent and distribution to receive the benefits specified under this Plan in the event of a Recipient’s death. “Board” means the Board of Directors of the Company.


 
2 “Change in Control” means the occurrence of any one (or more) of the following events: (i) the consummation of a consolidation or merger of the Company in which the Company is not the surviving corporation; (ii) the consummation of a reverse merger in which the Company is the surviving corporation but the shares of the Common Stock outstanding immediately preceding such reverse merger are converted by virtue of such reverse merger into other property, whether securities, cash or otherwise; or (iii) the approval by the stockholders of the Company of a plan or proposal for the dissolution and liquidation of the Company; provided that a “Change in Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of related transactions immediately following which the record holders of the Common Stock immediately before such transaction or transactions continue to have substantially the same proportionate ownership in an entity that owns all or substantially all of the assets of the Company immediately thereafter. “Code” means the Internal Revenue Code of 1986, as amended from time to time. “Committee” means the Compensation and Leadership Development Committee of the Board, as from time to time constituted, or any successor committee of the Board with similar functions, which shall consist of three or more members, each of whom shall be an outside director as defined in the regulations issued under Code section 162(m) and a non-employee director within the meaning of applicable regulatory requirements, including those promulgated under Exchange Act section 16. “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, subject to adjustment pursuant to section 11 hereof. “Company” means Simpson Manufacturing Co., Inc., a Delaware corporation, or any successor thereto. “Consultant” means a Person that (i) renders services to the Company as an independent contractor (and not as an Employee or Outside Director) pursuant to a contract between such Person and the Company and (ii) is selected by the Committee to receive an Award under this Plan. “Disability” means (i) in the case of a Participant, determination by the Committee that he or she has become unable to perform the functions required by his or her regular job due to physical or mental illness or incapacity and, in connection with the grant of an ISO, he or she is within the meaning of that term as provided in Code section 22(e)(3), and (ii) in the case of an Outside Director, determination by the Committee that he or she is unable to attend to his or her duties and responsibilities as a member of the Board due to physical or mental illness or incapacity. “Employee” means a regular, full-time or part-time employee of the Company or any Subsidiary; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of ISOs, the term “Employee” shall have the meaning ascribed to such term in Code section 3401(c). “Exercise Price” means, with respect to each share of Common Stock subject to an Option, the price fixed by the Committee at which such share may be purchased from the Company on the exercise of such Option. “Exchange Act” means the Securities Exchange Act of 1934, as amended. “Fair Market Value” means (i) as of any date, the closing sale price per share of Common Stock as reported on the Composite Tape of the New York Stock Exchange, or if there are no sales on such day, on the next prior trading day during which a sale occurred; and (ii) in the absence of such market for the shares of Common Stock,


 
3 the fair market value per share of Common Stock determined by the Committee in good faith (which determination shall, to the extent applicable, be made in a manner that complies with Code sections 422(b) and 409A). “Incentive Stock Option” or “ISO” means an Option that is intended by the Committee to meet the requirements of Code section 422 or any successor provision. “ISO Award” means an Award of an Incentive Stock Option pursuant to section 9 hereof. “NQSO” means an Option granted pursuant to this Plan that does not qualify as an Incentive Stock Option. “NQSO Award” means an Award of an NQSO pursuant to section 7 hereof. “Option” means the right to purchase Common Stock at an Exercise Price to be specified and on terms to be designated by the Committee or otherwise determined pursuant to this Plan. The Committee shall designate each Option as either an NQSO or an Incentive Stock Option. “Option Award” means an Award of an Option pursuant to section 7 hereof. “Outside Director” means a director of the Company, who is not also an Employee and who is selected by the Committee to receive an Award under this Plan. “Participant” means an Employee who is selected by the Committee to receive an Award under this Plan. “Performance Goals” means performance goals established by the Committee from time to time. Such goals may be absolute in their terms or measured against or in relation to other companies comparably or otherwise situated. Such performance goals may be particular to a Participant or the Subsidiary, division or other unit in which the Participant works or may be based on the performance of the Company as a whole. The Performance Goals applicable to any Award that is intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m) shall be based on one or more of (i) earnings, (ii) unit sales, sales volume or revenue, (iii) sales growth, (iv) stock price (including comparison with various stock market indices), (v) return on equity, (vi) return on investment, (vii) total return to stockholders, (viii) economic profit, (ix) debt rating, (x) operating income, (xi) cash flows, (xii) cost targets, (xiii) return on assets or margins or (xiv) implementation, completion or attainment of measurable objectives with respect to (1) software development, (2) new distribution channels, (3) customer growth targets, (4) acquisition identification and integration, (5) manufacturing, production or inventory targets, (6) new product introductions, (7) product quality control, (8) accounting and reporting, (9) recruiting and maintaining personnel, or (10) compliance or regulatory program targets. Any criteria used may be measured, as applicable, (a) in absolute terms, (b) in relative terms (including but not limited to, the passage of time or against other companies or financial metrics), (c) on a per share basis, (d) against the performance of the Company as a whole or against particular entities, segments, operating units or products of the Company or (e) on a pre-tax or after tax basis. “Person” has the meaning ascribed to that term in Exchange Act section 3(a)(9), as modified and used in Exchange Act sections 13(d) and 14(d), except that such term shall not include (a) the Company, (b) a trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (c) an underwriter temporarily holding securities pursuant to an offering on behalf of the Company.


 
4 “Personal Representative” means the Person or Persons who, on the Disability or incompetence of a Recipient, shall have acquired on behalf of the Recipient by legal proceeding or otherwise the right to receive benefits pursuant to this Plan. “Plan” means this Simpson Manufacturing Co., Inc. 2011 Incentive Plan. “Recipient” means a Participant, an Outside Director or a Consultant, as appropriate. “Restricted Period” means the period during which Restricted Stock or Restricted Stock Units are subject to a substantial risk of forfeiture (based on the passage of time, the achievement of Performance Goals or the occurrence of other events, as determined by the Committee). “Restricted Stock” means those shares of Common Stock issued pursuant to a Restricted Stock Award, which are subject to the restrictions, terms, and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Restricted Stock Award” means an Award of Restricted Stock pursuant to section 6 hereof. “Restricted Stock Units” or “RSUs” means units issued pursuant to an RSU Award, which are valued in terms of shares of Common Stock equivalents and are subject to the restrictions, terms and conditions set forth in the related Agreement or designated by the Committee in accordance with this Plan. “Retirement” means (i) in the case of a Participant, retirement from employment with the Company or any Subsidiary at any time as described in the Simpson Manufacturing Co., Inc. Profit Sharing Plan for Salaried Employees or in any successor plan, as from time to time in effect, or as otherwise determined by the Committee, (ii) in the case of an Outside Director, retirement from the Board after the date, if any, established by the Committee as the date for mandatory retirement, as from time to time in effect, or as otherwise determined by the Committee, and (iii) in the case of a Consultant, such date as is determined by the Committee. “RSU Award” means an Award of Restricted Stock Units pursuant to section 6 hereof. “Subsidiary” means a corporation, limited liability company, partnership or other entity (i) more than fifty percent of the outstanding voting equity securities (representing the right to vote for the election of directors or other managing authority) are now or hereafter owned or controlled, directly or indirectly, by the Company, or (ii) which does not have outstanding voting equity securities (as may be the case in a partnership, limited liability company, joint venture or unincorporated association), but more than fifty percent of the ownership interests of which, representing the right generally to make decisions for such entity, is now or hereafter owned or controlled, directly or indirectly, by the Company; provided that, for purposes of determining whether any Person may be a Participant for purposes of any grant of Incentive Stock Options, the term “Subsidiary” shall have the meaning ascribed to such term in Code section 424(f), as interpreted by the regulations thereunder and applicable law. “Tax Date” means the date the withholding tax obligation arises with respect to an Award. SECTION 3. STOCK SUBJECT TO PLAN (A) Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, 16,320,000 shares of Common Stock are reserved for issuance under this Plan, any or all of which may be delivered with respect to


 
5 Option Awards, Restricted Stock Awards and RSU Awards and any or all of which may be authorized and unissued shares or treasury shares; provided that such 16,320,000 shares include all shares heretofore reserved for issuance pursuant to the Prior Plans. Subject to section 3(B) hereof and to adjustment pursuant to section 11 hereof, the following limits shall apply with respect to Awards that are intended to qualify for the performance-based exception from the tax deductibility limitations of Code section 162(m): (i) the maximum aggregate number of shares of Common Stock that may be subject to Options granted in any calendar year to any one Participant shall be 150,000 shares; and (ii) the maximum aggregate number of Restricted Stock Awards and shares of Common Stock issuable or deliverable under RSU Awards granted in any calendar year to any one Participant shall be 100,000 shares. (B) Shares of Common Stock subject to Awards under this Plan or stock options granted under the Prior Plans that are forfeited, terminated, canceled or settled without the delivery of Common Stock under this Plan or the Prior Plans, respectively, will again be available for Awards under this Plan as if such Awards or grants had not been made; provided that, notwithstanding any other provision herein to the contrary, the aggregate number of shares of Common Stock that may be issued under this Plan shall not be increased by (i) shares of Common Stock tendered in full or partial payment of the Exercise Price of any Option or any stock option granted under either of the Prior Plans, (ii) shares of Common Stock withheld by the Company or any Subsidiary to satisfy any tax withholding obligation, or (iii) shares of Common Stock that are repurchased by the Company. (C) Notwithstanding anything in this section 3 to the contrary and solely for purposes of determining whether shares are available for the grant of ISOs, the maximum aggregate number of shares that may be granted under this Plan shall be determined without regard to any shares restored pursuant to this section 3 that, if taken into account, would cause this Plan to fail the requirement under Code section 422 that this Plan designate a maximum aggregate number of shares that may be issued. SECTION 4. ADMINISTRATION The Committee shall have exclusive authority to administer this Plan. In addition to any implied powers and duties that may be needed to carry out the provisions hereof, the Committee shall have all the powers vested in it by the terms hereof, including exclusive authority to select the Recipients, to determine the type, size and terms of any and all Awards to be made to each Recipient, to determine the time when Awards will be granted, and to prescribe the form, terms and conditions of any Agreement relating to any Award under this Plan. The Committee is authorized to interpret this Plan and the Awards granted under this Plan, to establish, amend and rescind any rules and regulations relating to this Plan, to make any other determinations that the Committee believes necessary or advisable for the administration hereof, and to correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any Award in the manner and to the extent that the Committee deems desirable and consistent with the intent of this Plan. The Committee may exercise any and all of the Committee’s rights, powers, authority and discretion under this Plan in the Committee’s absolute and exclusive discretion, and the Committee is authorized and empowered to grant or give any consent, approval or authorization, make any determination or do or perform any other act or thing conditionally or unconditionally, arbitrarily, or inconsistently in varying or similar circumstances, without any accountability to any Recipient, except only as otherwise expressly provided by this Plan or any Agreement with such Recipient. Any decision, determination, direction or other action of the Committee in the administration of this Plan shall be final, binding and conclusive for all purposes, subject only to the further exercise of authority of the Committee hereunder. SECTION 5. ELIGIBILITY


 
6 Awards may be granted only to Recipients; provided that no Outside Director or Consultant may be granted an ISO Award. SECTION 6. RESTRICTED STOCK AND RESTRICTED STOCK UNIT (RSU) AWARDS (A) Grant. Any Recipient may receive one or more Restricted Stock Awards or RSU Awards. (B) Restricted Periods. The Restricted Period for each Restricted Stock Award or RSU Award shall be set forth in the applicable Agreement. Except as otherwise provided in the applicable Agreement on a termination of employment or engagement, or pursuant to section 9 hereof in the event of a Change in Control, each Restricted Stock Award or RSU Award shall have such Restricted Period and be subject to such Performance Goals as the Committee may determine. Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Restricted Stock Award or RSU Award is made to a Recipient whose employment or service as a director or Consultant subsequently terminates for any reason before the lapse of all restrictions thereon, such Restricted Stock or RSU with respect to which such restrictions shall not have lapsed shall be forfeited to that extent by such Recipient. (C) Certain Restricted Stock Award Provisions. (1) Stockholder Rights. On the granting of a Restricted Stock Award, a Recipient shall be entitled to all rights incident to ownership of Common Stock of the Company with respect to his or her Restricted Stock, including the right to vote such shares of Restricted Stock and to receive dividends thereon when, as and if paid in cash or shares of Restricted Stock, as set forth in the applicable Agreement or as determined by the Committee. Each grant of Restricted Stock may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) Certificates; Dividends on Restricted Stock; Restrictions on Transferability. During the Restricted Period, each certificate representing Restricted Stock shall be registered in the respective Recipient’s name and bear a restrictive legend to the effect that ownership of such Restricted Stock and the enjoyment of all rights appurtenant thereto are subject to the restrictions, terms and conditions provided in this Plan and the applicable Agreement. Each such certificate shall be deposited by the Recipient with the Company, together with stock powers or other instruments of assignment, each endorsed in blank, that will permit transfer to the Company of all or any portion of the Restricted Stock that may be forfeited in accordance with this Plan and the applicable Agreement. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all corporate purposes, except that: (i) no Recipient will be entitled to delivery of a certificate representing Restricted Stock until expiration of the restrictions applicable thereto; (ii) the Company will retain custody of all Restricted Stock issued as a dividend or otherwise with respect to an Award of Restricted Stock, which shall be subject to the same restrictions, terms and conditions as are applicable to the awarded Restricted Stock, until such time, if ever, as such Restricted Stock becomes vested, and no Restricted Stock shall bear interest or be segregated in separate accounts; (iii) subject to section 13(B) hereof, no Recipient shall have any right or power to sell, assign, transfer, pledge, hypothecate, exchange, encumber or otherwise dispose of any Restricted Stock during the applicable Restricted Period; and (iv) unless otherwise determined and directed by the Committee, a breach of any restriction, term or condition in this Plan or the applicable Agreement or established by the Committee with respect to any Restricted Stock will cause a forfeiture of such Restricted Stock, including any Restricted Stock issued as a dividend or otherwise with respect thereto. (D) Certain Restricted Stock Unit (RSU) Award Provisions.


 
7 (1) General. Each grant of Restricted Stock Units shall constitute an agreement by the Company to issue or deliver shares of Common Stock or cash to the Recipient thereof following the end of the applicable Restricted Period in consideration of the performance of services. Each such grant of Restricted Stock Units may be made without additional consideration or in consideration of a payment by such Recipient that is less than the Fair Market Value at the date of grant. (2) No Stockholder Rights. A Recipient who receives an RSU Award shall not have any rights as a stockholder with respect to the shares of Common Stock subject to such RSUs until such time, if any, as shares of Common Stock are delivered to such Recipient pursuant to the applicable Agreement. (3) Payment. Unless otherwise determined by the Committee, each Agreement relating to an RSU Award shall set forth the payment date for such RSU Award, which date shall not be earlier than the end of the applicable Restricted Period. Payment of earned Restricted Stock Units may be made in one or more installments and may be made wholly in cash, wholly in shares of Common Stock or a combination thereof, as determined by the Committee. SECTION 7. OPTION AWARDS (A) Grant. Any Recipient may receive one or more Option Awards. (B) Designation and Price. (1) Any Option granted under this Plan may be granted as an ISO or as an NQSO as shall be determined by the Committee at the time of the grant of such Option. Only Participants may be granted ISOs. Each Option shall, as directed by the Committee, be evidenced by an Agreement, which shall specify whether the Option is an ISO or an NQSO and shall contain such terms and conditions as the Committee may determine in accordance with this Plan. (2) Every ISO or NQSO shall provide for a fixed expiration date of not later than ten years from the date that such ISO or NQSO is granted. (3) The Exercise Price pursuant to each Option shall be fixed by the Committee at the time of the granting of the Option, but shall not in any event be less than the Fair Market Value on the date that such Option is granted, subject to adjustment as provided in section 11 hereof. (C) Exercise. The Committee may provide for Options granted under this Plan to be exercisable as a whole at any time or in part from time to time. Shares of Common Stock to be issued on any exercise of an Option will be issued after the Company receives (i) notice (in such form as the Committee may require) from the holder thereof of the exercise of such Option, and (ii) payment as provided in section 7(D) hereof of the aggregate Exercise Price for all shares with respect to which such Option is exercised. Each such notice and payment shall be delivered at such place and in such manner as the Committee may specify from time to time. (D) Payment. The Exercise Price for the shares of Common Stock issuable on the exercise of an Option shall be paid in full at the time of such exercise either in cash or by such other means as the Committee may approve, which may include tendering unencumbered shares of Common Stock then owned by the Recipient


 
8 exercising such Option having an aggregate Fair Market Value at the time of such exercise equal to the aggregate Exercise Price of the shares being purchased on such exercise or cashless exercise through a securities broker. (E) Expiration or Termination of Awards. (1) Participants. (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if a Participant who holds an outstanding Option dies while employed, during the period when such Participant, if Disabled, would be entitled to exercise such Option, or after such Participant’s Retirement, then such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by the Beneficiaries of the decedent for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s death. (b) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of a Participant who holds an outstanding Option ceases by reason of Disability at any time during the term of the Option, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, by such Participant or his or her Personal Representative for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Disability. (c) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the employment of any Participant who holds an outstanding Option ceases by reason of Retirement, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in such Option, for the number of shares that such Participant could have acquired on exercise of such Option immediately before such Participant’s Retirement. (d) Notwithstanding any provision of this Plan to the contrary, any Option may, in the discretion of the Committee or as provided in the applicable Agreement, become exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, from and after the time the Participant ceases to be an Employee as a result of the sale or other disposition by the Company or any Subsidiary of assets or property (including shares of any Subsidiary) in respect of which such Participant shall theretofore have been employed or as a result of which such Participant’s continued employment is no longer required. (e) Except as otherwise provided in subsections (a), (b), (c) and (d) of this section 7(E)(1) and sections 9(D) and 13(I) hereof, if the employment of any Participant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Participant’s employment, for the number of shares that such Participant could have acquired on exercise of such Option immediately before the cessation of such Participant’s employment; provided that such Option shall terminate on and as of such earlier date. (2) Outside Directors and Consultants.


 
9 (a) Except as otherwise provided in the applicable Agreement or as determined by the Committee, if the service of any Outside Director or Consultant who holds an outstanding Option ceases by reason of Retirement, death or Disability, such Option shall be exercisable, at any time or from time to time, before the fixed termination date set forth in the Agreement relating to such Option, by such Outside Director or Consultant, his or her Personal Representative or his or her Beneficiaries for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before such Outside Director’s or Consultant’s Retirement, death or Disability. (b) Except as otherwise provided in subsection (a) of this section 7(E)(2) and sections 9(D) and 13(I) hereof, if the service of any Outside Director or Consultant who holds an outstanding Option ceases, such Option shall be exercisable, at any time or from time to time, before the earlier of the fixed termination date set forth in the Agreement relating to such Option and the ninetieth day after the cessation of such Outside Director’s or Consultant’s service, for the number of shares that such Outside Director or Consultant could have acquired on exercise of such Option immediately before the cessation of such Outside Director’s or Consultant’s service; provided that such Option shall terminate on and as of such earlier date. SECTION 8. CONTINUED EMPLOYMENT Nothing in this Plan, or in any Award granted pursuant to this Plan, shall confer on any Person any right to continue in the employment of, or service to, the Company or any Subsidiary or limit, interfere with or otherwise affect in any way the right of the Company or any Subsidiary to terminate any Recipient’s employment or service at any time. SECTION 9. CHANGE IN CONTROL (A) Restricted Stock and RSU Awards. On a Change in Control, except as otherwise provided in the applicable Agreement and subject to compliance with Code section 409A, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall substitute similar benefits for the Restricted Stock Awards and RSU Awards outstanding under this Plan; or (ii) such Restricted Stock Awards or RSU Awards shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to substitute similar benefits for such Restricted Stock Awards and RSU Awards and refuses to continue such Restricted Stock Awards and RSU Awards in full force and effect, and if the nature and terms of employment or engagement, including compensation and benefits, of the respective Recipients will change significantly as a result of the Change in Control, then the Restricted Period relating to each such Restricted Stock Award or RSU Award shall terminate, and from and after such Change in Control, each such Restricted Stock Award or RSU Award shall be free of all other restrictions for all shares of Restricted Stock or RSUs that shall not theretofore have been acquired under the applicable Agreement. (B) Option Awards. On a Change in Control, except as otherwise provided in the applicable Agreements, either: (i) the surviving or resulting corporation or the successor to the business of the Company shall assume all Options outstanding under this Plan or shall substitute similar options for those outstanding under this Plan, or (ii) such Options shall continue in full force and effect; provided that, if such surviving or resulting corporation or such successor refuses to assume or continue such Options or to substitute similar options for those outstanding under this Plan, and if the nature and terms of employment or engagement, including compensation and benefits, of the


 
10 respective Recipients will change significantly as a result of the Change in Control, then each such Option shall become immediately exercisable for the full number of shares subject to such Option or any thereof, less such number as shall theretofore have been acquired on exercise of such Option, and shall be terminated if not exercised before or at the time of such Change of Control. (C) Cash-Out of Awards. In connection with a Change in Control, notwithstanding any of the foregoing provisions of this section 9 to the contrary, the Committee may, either pursuant to the applicable Agreement or by resolution adopted before the Change in Control, provide that any outstanding Award (or a portion thereof) shall, on such Change in Control, be cancelled in exchange for payment in cash of the amount, if any, by which the aggregate Fair Market Value of the shares of Common Stock subject to such Award exceeds the aggregate Exercise Price therefor. SECTION 10. WITHHOLDING TAXES Federal, state or local law may require the withholding of taxes resulting from the grant or vesting of an Award or the exercise of an Option. The Company may permit or require (subject to such conditions or procedures as may be established by the Committee) any such tax withholding obligation of a Participant to be satisfied by any of the following means, or by any combination of such means: (i) cash payment by such Participant to the Company; (ii) withholding from the shares of Common Stock otherwise issuable to such Participant pursuant to the vesting or exercise of an Award of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation; or (iii) delivery by the Participant to the Company of a number of shares of Common Stock having an aggregate Fair Market Value, as of the Tax Date, sufficient to satisfy the withholding tax obligation arising from the vesting or exercise of an Award. If the payment or delivery specified in clause (i) or (iii) of the preceding sentence is required but is not paid by a Participant, the Company may refuse to issue Common Stock to such Participant under this Plan. SECTION 11. ADJUSTMENTS ON CHANGES IN CAPITALIZATION In the event of any change in the outstanding Common Stock of the Company by reason of any stock split, stock dividend, recapitalization, merger, consolidation, reorganization, combination, exchange of shares, split-up, split-off, spin-off, liquidation or other similar change in capitalization, or any distribution to common stockholders other than normal cash dividends, the number or kind of shares that may be issued under this Plan pursuant to section 3 hereof and the number or kind of shares subject to, or the price per share under any outstanding Award, shall be adjusted, automatically and without notice, so that the proportionate interests of the Recipients shall be maintained as before the occurrence of such event; provided that no adjustment shall be made pursuant to this section 11 that would (i) cause any Option intended to qualify as an ISO to fail to qualify as an ISO, (ii) cause an Award that is otherwise exempt from Code section 409A to become subject to Code section 409A, or (iii) cause an Award that is subject to Code section 409A to fail to satisfy the requirements of Code section 409A. SECTION 12. AMENDMENT AND TERMINATION The Committee may amend this Plan at any time or from time to time; provided that: (i) the Committee may not, without approval by the Board, materially increase the benefits provided to Recipients under this Plan; (ii) any amendment with respect to Restricted Stock Awards or RSU Awards granted to Outside Directors must be approved by the Board; and (iii) no amendment that requires stockholder approval in order for this Plan to continue to comply with any provision of the Exchange Act, any rule promulgated by the Securities and Exchange Commission under the Exchange Act, any rule of the New York Stock Exchange or any other securities exchange on


 
11 which shares of Common Stock are listed, or any other applicable law, rule or regulation, shall be effective unless such amendment shall be approved by the requisite vote of stockholders of the Company within the time period required under such provision. Without the approval of the stockholders of the Company, (i) neither the Board nor the Committee will authorize the amendment of any outstanding Option to reduce the Exercise Price thereof, except for adjustments made pursuant to section 11 hereof, (ii) no outstanding Option will be cancelled and replaced with another Option Award having a lower Exercise Price, or for another Award, or for cash, except as provided in section 9 or 11 hereof, and (iii) no Option will provide for the payment, at the time of exercise, of a cash bonus or grant or sale of another Award; provided that this sentence is intended to prohibit, without stockholder approval, the re-pricing of Options that have Exercise Prices above Fair Market Value and will not be construed to limit or prohibit any adjustment pursuant to section 9 or 11 hereof. The Committee may terminate this Plan at any time; provided that such termination shall not affect any Awards theretofore made or any stock options theretofore granted under either of the Prior Plans and such Awards and stock options shall continue to be subject to all terms and conditions of this Plan (including the second paragraph of section 1 hereof) notwithstanding such termination. SECTION 13. MISCELLANEOUS PROVISIONS (A) No Rights to Awards. No Person has or shall have any claim or right to be granted an Award under this Plan. (B) Assignment and Transfer. No right or interest of any Recipient under this Plan or in any Award may be assigned or transferred as a whole or in part, directly or indirectly, by operation of law or otherwise (except by will or the laws of descent and distribution), including by way of execution, levy, garnishment, attachment, pledge or bankruptcy or in any other manner, and no such rights or interests of any Recipient in this Plan shall be subject to any obligation or liability of such Recipient; provided that the Committee may determine that a Recipient’s rights and interests under this Plan or in any Award may be made transferable by such Recipient during his or her lifetime, subject to such conditions as the Committee may specify. Except as provided in section 6 hereof, no Award shall entitle the Recipient thereof, as such, or any of such Recipient’s Beneficiaries or Personal Representative, to any rights of a stockholder of the Company, unless and until shares subject to such Award are issued to and registered on the Company’s records in the name or names of such Recipient, Beneficiaries or Personal Representative, as the case may be, and then only with respect to such shares. (C) Compliance with Legal and Exchange Requirements. This Plan, the grant and exercise of Awards hereunder, the issuance of Common Stock and other interests hereunder, and the other obligations of the Company under this Plan and any Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as the Committee may determine are necessary or advisable. The Company or the Committee may postpone the grant or exercise of any Award, the issuance or delivery of Common Stock under any Award or any other action permitted under this Plan to permit the Company, with reasonable diligence, to complete such stock exchange listing or registration or qualification of such Common Stock or other required action under any federal or state law, rule or regulation and may require any Recipient to make such representations and furnish such information as the Committee may consider appropriate in connection with the issuance or delivery of Common Stock in compliance with any and all applicable laws, rules and regulations. The Company shall not be obligated by virtue of any provision of this Plan or any Agreement to recognize the exercise of any Award or otherwise to sell or issue Common Stock in violation of any such law, rule


 
12 or regulation. Any postponement of the exercise or settlement of any Award under this section 13(C) shall not extend the term of any Award. Neither the Company nor any Subsidiary nor any director or officer of the Company shall have any obligation or liability to any Recipient with respect to any Award (or Common Stock issuable thereunder) that shall lapse because of any such postponement. (D) Section 409A. Awards granted under this Plan shall be designed and administered in a manner that they are either exempt from the application of, or comply with, the requirements of Code section 409A. To the extent that the Committee determines that any Award is subject to Code section 409A, the Agreement relating to such Award shall incorporate terms and conditions necessary to avoid the imposition on the Recipient of additional tax under Code section 409A. Notwithstanding anything to the contrary in this Plan or any Agreement (unless such Agreement provides otherwise with specific reference to this section 13(D)): (i) no Award shall be granted, deferred, accelerated, extended, paid, settled, substituted or modified under this Plan in a manner that would result in the imposition on a Recipient of additional tax under Code section 409A; and (ii) if an Award is subject to Code section 409A, and if the Recipient to whom such Award is granted is a “specified employee” (as defined in Code section 409A, with such classification to be determined in accordance with methodology established by the Company), no distribution or payment of any amount under such Award shall be made before a date that is six months following the date of such Recipient’s “separation from service” (as defined in Code section 409A) or, if earlier, the date of such Recipient’s death. The Company intends to administer this Plan so that Awards will be exempt from, or will comply with, the requirements of Code section 409A; provided that the Company does not and shall not make any representation or warranty that any Award under this Plan will qualify for favorable tax treatment under Code section 409A or any other provision of federal, state, local or foreign law. The Company shall not be liable to any Recipient for any tax, interest or penalties a Recipient might owe as a result of the grant, holding, vesting, exercise or payment of any Award. (E) Ratification and Consent. By accepting any Award under this Plan, each Recipient and each Personal Representative or Beneficiary claiming under or through such Recipient shall be conclusively deemed to have accepted, ratified and consented to all of the terms and conditions of this Plan and any and all action taken under this Plan by the Company, any Subsidiary, the Board or the Committee. (F) Other Compensation. Nothing in this Plan shall prevent, limit or otherwise affect the right, power and authority of the Board with respect to any other or additional compensation arrangements. (G) Grant Date. Each Recipient shall be deemed to have been granted an Award on the date that the Committee grants such Award under this Plan or such later date as the Committee shall determine at the time such grant is authorized. (H) No Fractional Shares. No fractional shares shall be issued or delivered pursuant to this Plan or any Award. The Committee shall determine whether cash or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated. (I) Forfeiture Provision. Except as otherwise expressly provided by the applicable Agreement, the Committee may require a Recipient to forfeit all unexercised, unearned, unvested or unpaid Awards, if: (1) the Recipient, while employed by the Company or any Subsidiary, prepares to engage or engages, directly or indirectly, without the written consent of the Company, in any manner or capacity, as principal, agent, partner, officer, director, employee or otherwise, in any business or activity competitive with any business conducted by the Company or any Subsidiary, as determined by the Committee;


 
13 (2) the Recipient performs any act or engages in any activity that the Committee determines is materially detrimental to the best interests of the Company or any Subsidiary; or (3) the Recipient materially breaches any agreement with or duty to the Company or any Subsidiary, including any non-competition agreement, non-solicitation agreement, confidentiality or non-disclosure agreement, or assignment of inventions or ownership of works agreement, as determined by the Committee. (J) Participants Outside the United States. Notwithstanding any provision of this Plan to the contrary, to comply with the laws of other countries in which the Company and the Subsidiaries operate or have Employees or Consultants, the Committee shall have the power and authority to: (i) determine which Subsidiaries shall be covered by this Plan; (ii) determine which Employees or Consultants outside the United States are eligible to participate in this Plan; (iii) modify the terms and conditions of any Award granted to Employees or Consultants outside the United States to comply with applicable foreign laws; (iv) modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable; and (v) take any action, before or after an Award is made, that it deems necessary or advisable to obtain approval or comply with any government regulatory exemption or requirement; provided that the Committee is not authorized to take any action hereunder, and no Awards shall be granted, that would violate any applicable law. (K) Successors. All obligations of the Company under this Plan and with respect to Awards shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation or other event, or a sale or disposition of all or substantially all of the business or assets of the Company, and references to the “Company” herein and in any Agreements shall be deemed to refer to such successors. (L) Severability. If any provision of this Plan, or the application of such provision to any Person or circumstance, shall be held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Plan, or the application of such provision to Persons or circumstances other than those to which it is held to be invalid or unenforceable, shall not be affected thereby. (M) Construction. The headings of the sections hereof are for convenience of reference only and are not part of this Plan. As used herein, each gender includes each other gender, and the singular includes the plural and vice versa, as the context may require. Reference herein to any section includes reference to each and all subsections of such section. For purposes of this Plan, each of the words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” (N) Governing Law. This Plan shall be governed by and interpreted and construed in accordance with the laws of the State of Delaware. SECTION 14. EFFECTIVENESS OF THIS PLAN This amended and restated Plan shall be submitted to the stockholders of the Company for their approval at their annual meeting scheduled to be held on April 21, 2015, or at such other annual or special meeting as the Board may specify, or any adjournment or postponement thereof. This Plan will be effective as of the date of its approval by the stockholders of the Company.