Exhibit 10.22
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered
into at Santa Barbara, California, on the date hereinafter set forth, by and
between DOUGLAS B. OTTO (hereinafter referred to as the "Employee"), and DECKERS
OUTDOOR CORPORATION, a Delaware Corporation (hereinafter referred to as the
"Corporation").
The parties hereto, intending to be legally bound, do hereby
agree as follows:
1. EMPLOYMENT
1.1 POSITION AND DUTIES
The Corporation does hereby employ the Employee and the
Employee hereby accepts such employment as President and Chief Executive Officer
upon the terms and provisions set forth in this Agreement. The Employee shall
perform all duties assigned to him by the Corporation, shall observe and comply
with the Corporation's rules and regulations regarding the performance of his
duties, and shall carry out and perform all orders, directions and policies
stated to him by the Corporation periodically, either orally or in writing. The
Employee shall carry out the duties assigned to him in a trustworthy,
businesslike and loyal manner. The Employee agrees that this Agreement may be
terminated as provided in Paragraph 8 hereof.
1.2 PLACE OF EMPLOYMENT
Unless the parties agree otherwise in writing, during the
term of this Agreement, the Employee shall perform the services required by this
Agreement at the Corporation's administrative offices, provided, however, that
the Corporation may, from time to time, require the Employee to travel
temporarily in carrying out his duties.
2. TERM
This Agreement shall commence as of the Effective Date specified
in Section 10.7 herein and shall continue for a period of three (3) years from
the date of this Agreement, unless sooner terminated as herein provided.
3. COMPENSATION
3.1 Amount of Compensation
The Corporation shall pay to the Employee the annual
compensation set forth on EXHIBIT A hereto.
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3.2 BONUS
The Employee will be entitled to the Bonus payable
pursuant to the formula set forth on EXHIBIT A hereto.
3.3 REIMBURSEMENTS
The Employee shall be reimbursed by the Corporation only
for amounts actually expended by the Employee in the course of performing duties
for the Corporation where:
3.3.1 AUTHORIZATION
The Employee has been authorized by the Corporation
to incur such expenses that are reasonably consistent with current established
practices or policies as applied to the Employee, and those consistent with and
available to other Chief Executive Officers of companies with similar growth and
size to the Corporation's growth and size; or
3.3.2 DOCUMENTATION
The Employee tenders receipts or other
documentation substantiating the amounts as required by the Corporation.
3.4 FRINGE BENEFITS
The Corporation agrees that the Employee shall also be
entitled to the fringe benefits authorized and adopted, from time to time, by
the Corporation including, without limitation, all those currently provided to
the Employee. The Corporation may furnish such other benefits to the Employee
not specified herein as its Board shall determine, from time to time, within its
sole discretion, to be in the best interest of the Corporation including, but
not limited to, a car, medical and life insurance and other such fringe benefits
as are available to Chief Executive Officers of companies with similar growth
and size to the Corporation's growth and size.
4. COMPETITION
The Employee agrees that during the term of this Agreement he
diligently shall devote his time and efforts to the duties and responsibilities
assigned to him by the Corporation, and without prior express written
authorization of the Board, the Employee shall not, directly or indirectly,
either alone or in concert with others, during the term of this Agreement:
4.1 OTHER SERVICES
Perform or render any services of a business, professional
or commercial nature, relating to services or products competitive with the
Corporation,
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to or for the benefit of any other person or firm, whether for compensation or
otherwise, except for personal investments, trading and other Australian
projects, and for other activities approved by the Corporation;
4.2 COMPETITION
Engage in any activity directly or indirectly in
competition with or adverse to the Corporation;
4.3 SOLICITATION
Engage in any activity for purposes of influencing or
attempting to influence the Corporation's customers, either directly or
indirectly, to conduct business with any business enterprise in competition with
the Corporation;
4.4 COMPETING ENTERPRISE
Undertake or participate in any planning for or
organization of any business activity that is or will be in competition with the
Corporation in any field(s) or area(s) in which the Employee has worked or with
which the Employee has come into contact, or of which the Employee has gained
knowledge during the term of his employment under this Agreement; or
4.5 OTHER ACTIVITIES
Engage in any other business activity that would
materially interfere with the performance of any of the Employee's obligations
and duties under this Agreement.
5. COMPENSATED LEAVE
The Employee shall be entitled to the sick leave and vacation
time set forth in EXHIBIT A hereto. All sick leave or vacation time will be
prorated on a monthly basis in the event of termination of the Employee's
employment.
6. PROHIBITION AGAINST COMPETITION
6.1 AGREEMENT NOT TO COMPETE
As a result of the Employee's employment, the Employee
will have access to trade secrets and confidential information about the
Corporation, its products, its services, its customers and its methods of doing
business. In consideration for access to this information, the Employee agrees
that for a period of one (1) year after termination of employment, the Employee
will not, directly or indirectly, compete with the Corporation in all states of
the United States except Montana and Wyoming, without the Corporation's
approval.
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6.2 COMPETITION DEFINED
"Competition" means the manufacturing of sandals and other
footwear products. Indirect competition means employment by any competitor or
third party providing products competing with the Corporation's products, for
whom the Employee will perform the same or similar function as performed for the
Corporation under this Agreement.
7. DISCLOSURE OF CONFIDENTIAL INFORMATION
In the course of employment under this Agreement, the Employee
may have access to confidential information and trade secrets relating to the
Corporation's business. Except as required in the course of employment by the
Corporation, the Employee will not, without the Corporation's prior consent, for
a period of one (1) year after termination of employment, directly or indirectly
disclose to any third person any such confidential information or trade secrets.
8. TERMINATION OF AGREEMENT
8.1 GROUNDS
This Agreement shall terminate upon the occurrence of any
of the following events:
8.1.1 EXPIRATION OF TERM
Upon expiration of the term specified in Section 2
hereof;
8.2 MUTUAL AGREEMENT
Whenever the Corporation and the Employee mutually agree
in writing to termination;
8.2.1 DEATH
Upon the death of the Employee;
8.2.2 FOR CAUSE
This Agreement may be immediately terminated by the
Corporation for the following causes: the Employee's personal dishonesty,
incompetence, willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful violation of any
law, rule or regulation (other than traffic violations or similar offenses) or a
material breach of any provision of this Agreement.
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Any termination under Section 8.2.2 must be by the unanimous vote
of the Board of Directors (excluding the Employee) and any "For Cause"
termination is subject to the Employee's right to arbitrate the issue pursuant
to Section 10.6 hereof.
8.3 TERMINATION STATEMENT
The Employee agrees that upon termination of his
employment with the Corporation, for any cause or reason, he shall execute a
Termination Statement and shall fully comply with all of the terms, conditions
and representations contained therein.
8.4 DISABILITY
8.4.1 TERMINATION
In the event that the Employee is unable to perform
his assigned duties and responsibilities due to illness, physical or mental
disability or any other reason, and such disability continues for a period of
three (3) consecutive months after all available sick leave has been utilized,
the Corporation may terminate this Agreement upon ten (10) days' written notice.
9. SEVERANCE COMPENSATION
In consideration of the Employee's services provided hereunder,
upon termination of this Agreement for any reason whatsoever, including a "For
Cause" termination, the Corporation shall pay to the Employee, his heirs or
beneficiaries, the sum of THREE HUNDRED FORTY FIVE THOUSAND DOLLARS ($345,000)
per year (without set-off) for three (3) years (the "Severance Period")
commencing upon the date of termination of this Agreement for the Severance
Period. In addition, the Employee shall be entitled to all the fringe benefits
in effect at the Effective Date of this Agreement and any other fringe benefits
subsequently provided. The THREE HUNDRED FORTY FIVE THOUSAND DOLLARS ($345,000)
will be adjusted each year beginning on the first anniversary date of the
commencement of payments under this provision (the "Adjustment Date") by the
increase, if any, in the Official Consumer's Price Index for Urban Wage Earners
and Clerical Workers, All Items, for the Los Angeles, Anaheim-Riverside area,
1982-1984=100 Base, as published by the United States Department of Labor,
Bureau of Labor Statistics (the "Index") figure for October 2001, and for the
month of October prior to said Adjustment Date.
If the Index shall no longer be published, then appropriate
reference figures shall be derived from any successor or comparable index
mutually agreed by the parties to be authoritative, and if the parties are
unable to agree, then the substituted index shall be selected by the
then-presiding judge of the Superior Court of Santa Barbara County.
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The parties acknowledge that the index figure for each Adjustment
Date may not be available on such date. In such event, the rental in effect
immediately prior to said Adjustment Date shall continue in effect until the
appropriate index figure is available, at which time an appropriate adjustment
shall be made (retroactive to the Adjustment Date).
In addition, the Employee, for the three (3) year period, shall
be entitled to all the fringe benefits in effect for him or any other executive
employees at the date of termination of this Agreement.
10. MISCELLANEOUS
10.1 NOTICES
Any notice required to be given pursuant to this Agreement
shall be effective only if in writing and delivered personally or by mail. If
given by mail, such notice must be sent by registered or certified mail, postage
prepaid, mailed to the parties at the addresses set forth on the signature page
hereof, or at such other addresses as the parties may designate, from time to
time, by written notice. Mailed notices shall be deemed received two (2)
business days after the date of deposit in the mail.
10.2 REMEDIES
10.2.1 EQUITABLE REMEDIES
The Employee acknowledges and agrees that in the
event of any breach, violation or evasion of the terms, conditions and
provisions of Sections 4, 5, 7, 8 or 9 above, such breach, violation or evasion
shall result in immediate and irreparable injury and harm to the Corporation and
shall entitle the Corporation to injunctive relief and/or specific performance
of this Agreement, as well as to all other legal or equitable remedies to which
the Corporation may be entitled.
10.2.2 TERMINATION OF AGREEMENT
It is further agreed that in the event of such
breach, the Corporation may forthwith terminate this Agreement, notwithstanding
anything herein to the contrary.
10.3 PARTIAL INVALIDITY
If any term or provision of this Agreement or the
application thereof to any person or circumstance shall be held to be invalid or
unenforceable to any extent, the remainder of this Agreement or application of
such term or provision to persons or circumstances other than those to which it
is held invalid or unenforceable shall not be affected thereby, and each term
and provision of the Agreement shall be valid and be enforced to the fullest
extent permitted by law.
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10.4 WAIVER
No waiver of any right hereunder shall be effective for
any purpose unless in writing, signed by the party hereto possessing said right,
nor shall any such waiver be construed to be a waiver of any subsequent right,
term or provision of this Agreement.
10.5 ASSIGNMENT; EFFECT ON AGREEMENT
It is hereby acknowledged and agreed that the Employee's
rights and obligations under this Agreement are personal in nature and shall not
be assigned or delegated. This Agreement shall be binding on and inure to the
benefit of the heirs, personal representatives, successors and assigns of the
parties subject, however, to the restrictions on assignment and delegation
contained herein.
10.6 DISPUTES AND ARBITRATION
Any dispute arising in connection with the interpretation
or enforcement of the provisions of this Agreement, or its application or
validity, will be submitted to arbitration. Such arbitration proceedings will be
held in Santa Barbara, California, in accordance with the rules then existing of
the American Arbitration Association. This agreement to arbitrate is
specifically enforceable.
Any award rendered in any such arbitration proceeding will be
final and binding on each of the parties, and judgment may be entered thereon in
any court of competent jurisdiction. The costs and fees of any such arbitration
proceeding will be borne by the respective parties. The arbitrators may in their
discretion award costs and reasonable attorneys' fees to the prevailing party.
10.7 EFFECTIVE DATE
The effective date of this Agreement will be as of January
1, 2002 (the "Effective Date").
10.8 GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
10.9 ENTIRE AGREEMENT
This Agreement contains the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings, oral or written. No modification, termination or attempted
waiver shall be valid, unless in writing and signed by both parties.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the 29th day of March, 2002.
Corporation:
DECKERS OUTDOOR CORPORATION
By: /s/ Gene E. Burleson
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Name: Gene E. Burleson
Title: Chairman, Compensation Committee
Address:
495-A South Fairview Avenue
Goleta, CA 93117
Employee:
/s/ Douglas B. Otto
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DOUGLAS B. OTTO
Address:
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EXHIBIT A
TO EMPLOYMENT AGREEMENT
EMPLOYEE COMPENSATION
The Employee's salary will be THREE HUNDRED FORTY FIVE THOUSAND DOLLARS
($345,000) per year for three (3) years commencing upon the Effective Date of
this Agreement. In addition, the Employee shall be entitled to all the fringe
benefits in effect at the Effective Date of this Agreement and any other fringe
benefits subsequently provided. The THREE HUNDRED FORTY FIVE THOUSAND DOLLARS
($345,000) will be adjusted each year by the Compensation Committee of the Board
of Directors of the Corporation (the "Compensation Committee") starting January
1, 2003.
There will be no set-off claim or offset by the Corporation against
these payments.
BONUS
The Employee shall receive a performance bonus, approved by the
Compensation Committee, each year, including the performance bonus heretofore
approved by the Compensation Committee for the year commencing January 1, 2002.
The Corporation shall make a good faith estimate of the amount due and pay it on
or before December 31st of each year.
VACATION AND SICK LEAVE
The Employee will be entitled to the following for vacation and sick
leave: Three (3) weeks per year.