Exhibit 10.1
SENIOR EXECUTIVE
----------------
EMPLOYMENT AGREEMENT
--------------------
THIS SENIOR EXECUTIVE EMPLOYMENT AGREEMENT (the "Agreement") is to be
effective as of March 20, 2006 by and between DECKERS OUTDOOR CORPORATION, a
Delaware corporation (the "Company"), and PETER K. WORLEY (the "Executive").
ARTICLE I
DUTIES AND TERM
1.1 EMPLOYMENT. In consideration of their mutual covenants, Executive's
continued employment with the Company and other good and valuable consideration,
the receipt, adequacy, and sufficiency of which is hereby acknowledged, the
Company agrees to enter into this Agreement with the Executive, who is currently
an employee of the Company on an "at will" basis, and the Executive agrees to
enter into this Agreement and remain in the employ of the Company upon the terms
and conditions herein provided and in accordance with all applicable employment
rules of the Company.
1.2 POSITION AND RESPONSIBILITIES. The Executive will serve as Teva Brand
President, and will report to the Chief Executive Officer and President.
1.3 TERM. The term of the Executive's employment under this Agreement will
commence on the effective date of this Agreement as first written above and will
continue, unless sooner terminated, until December 31, 2007. Employment of the
Executive is at will and will continue until such time as written notice of
termination is given by the Company or written notice is given by the Executive.
1.4 AT-WILL EMPLOYMENT. Executive will continue to be employed as an
at-will employee of the Company. Subject to the provisions of Articles III and
IV, as an at-will employee, Executive is free to terminate his/her employment
with the Company at any time, for any reason, and the Company has the similar
right to terminate Executive's employment at any time, for any reason. Although
the Company may choose to terminate Executive's employment for cause,
Executive's employment is at-will and cause is not required.
1.5 REVIEW OF AGREEMENT. It is the parties intention that the terms of this
Agreement will be reviewed prior to December 31, 2007 to determine whether any
modifications are appropriate. This review of the Agreement terms may occur at
an earlier or later date, is not mandatory and does not impose any binding
obligations on either party.
ARTICLE II
COMPENSATION
For all services rendered by the Executive in any capacity during the
Executive's employment under this Agreement, the Company will compensate the
Executive as follows:
2.1 BASE SALARY. Effective as of March 20, 2006, and for a period of two
(2) years thereafter, the Company will pay to the Executive an annual base
salary of TWO HUNDRED TWENTY FIVE THOUSAND DOLLARS ($225,000) to be paid in
equal installments in accordance with the Company's general payment policies in
effect during the term hereof (the "Base Salary"). Executive's annual base
salary may be reviewed prior to December 31, 2007 and appropriate adjustments to
salary implemented. If Executive's annual base salary is not revised effective
January 1, 2008, his/her existing salary will continue on a monthly basis until
changed. This provision does not alter the at-will nature of Executive's
employment or the provisions of Articles III and IV below.
-1-
2.2 INCENTIVE BONUS. The Executive shall be eligible to receive a targeted
annual bonus based on performance criteria established annually by the
Compensation Committee (the "Incentive Bonus"). The Incentive Bonus criteria for
the year ending December 31, 2006 is set forth on Exhibit A hereto.
2.3 STOCK COMPENSATION. The Executive may be granted options to purchase
shares of Company Common Stock or Restricted Stock Units to purchase shares of
Company Common Stock in accordance with the Company's Stock Option Plan. Any
grants must be approved by the Compensation Committee.
2.4 ADDITIONAL BENEFITS. The Executive will be entitled to participate in
all benefit and welfare programs, plans, and arrangements that are from time to
time made available to the Company's like-level executive employees.
ARTICLE III
TERMINATION OF EMPLOYMENT
3.1 GENERAL. While Executive is an at-will employee as provided at Section
1.3 above, the following conditions for termination of employment are set forth
in order to determine the nature of Executive compensation entitlement upon
termination of employment as discussed in Article IV below. Neither the
provisions of Article III or Article IV of this Agreement shall alter the
at-will nature of Executive's employment with the Company.
3.2 DEATH OR RETIREMENT OF EXECUTIVE. The Executive's employment under this
Agreement will automatically terminate upon the death or Retirement (as defined
in Section 6.1) of the Executive.
3.3 BY EXECUTIVE. The Executive may terminate the Executive's employment
under this Agreement by giving Notice of Termination (as defined in Section 6.1
hereof) to the Company:
(a) for Good Reason (as defined in Section 6.1 hereof); and
(b) at any time without Good Reason.
3.4 BY COMPANY. The Company may terminate the Executive's employment under
this Agreement by giving Notice of Termination to the Executive:
(a) in the event of Executive's Total Disability (as defined in Section 6.1
hereof);
-2-
(b) for Cause (as defined in Section 6.1 hereof); and
(c) at any time without Cause.
ARTICLE IV
COMPENSATION UPON TERMINATION OF EMPLOYMENT
If the Executive's employment hereunder is terminated, in accordance with
the provisions of Article III hereof, and except for any other rights or
benefits specifically provided for herein to be effective following the
Executive's period of employment, the Company will provide compensation and
benefits to the Executive only as follows:
4.1 UPON TERMINATION FOR DEATH OR DISABILITY. If the Executive's employment
hereunder is terminated by reason of the Executive's death or Total Disability,
the Company will:
(a) pay the Executive (or the Executive's estate) or beneficiaries any Base
Salary that has accrued but was not paid as of the termination date (the
"Accrued Base Salary");
(b) pay the Executive (or the Executive's estate) or beneficiaries for
unused vacation days accrued as of the termination date in an amount equal to
the Executive's Base Salary multiplied by a fraction the numerator of which is
the number of accrued unused vacation days and the denominator of which is 260
(the "Accrued Vacation Payment");
(c) reimburse the Executive (or the Executive's estate) or beneficiaries
for expenses incurred by him prior to the date of termination that are subject
to reimbursement pursuant to this Agreement (the "Accrued Reimbursable
Expenses");
(d) provide to the Executive (or the Executive's estate) or beneficiaries
any accrued and vested benefits required to be provided by the terms of any
Company-sponsored benefit plans or programs (the "Accrued Benefits"), together
with any benefits required to be paid or provided in the event of the
Executive's death or Total Disability under applicable law;
(e) pay the Executive (or the Executive's estate) or beneficiaries any
Incentive Bonus with respect to a prior fiscal year that has been earned and
accrued but has not been paid (the "Accrued Incentive Bonus"); and
(f) the Executive (or the Executive's estate) or beneficiaries shall have
the right to exercise all vested unexercised stock options outstanding at the
termination date in accordance with terms of the plans and agreements pursuant
to which such options were issued.
4.2 UPON TERMINATION BY COMPANY FOR CAUSE OR BY EXECUTIVE WITHOUT GOOD
REASON. If the Executive's employment is terminated by the Company for Cause, or
if the Executive terminates the Executive's employment with the Company other
than (x) upon the Executive's death or Total Disability or (y) for Good Reason,
the Company will:
-3-
(a) pay the Executive the Accrued Base Salary;
(b) pay the Executive the Accrued Vacation Payment;
(c) pay the Executive the Accrued Reimbursable Expenses;
(d) pay the Executive the Accrued Benefits, together with any benefits
required to be paid or provided under applicable law;
(e) pay the Executive any Accrued Incentive Bonus; and
(f) the Executive will have the right to exercise vested options in
accordance with Section 4.1(f) hereof.
4.3 UPON TERMINATION BY THE COMPANY WITHOUT CAUSE OR BY EXECUTIVE FOR GOOD
REASON. If the Executive's employment is terminated by the Company without Cause
or by the Executive for Good Reason, the Company will:
(a) pay the Executive the Accrued Base Salary;
(b) pay the Executive the Accrued Vacation Payment;
(c) pay the Executive the Accrued Reimbursable Expenses;
(d) pay the Executive the Accrued Benefits, together with any benefits
required to be paid or provided under applicable law;
(e) pay the Executive any Accrued Incentive Bonus;
(f) pay the Executive severance, commencing on the thirtieth (30th) day
following the termination date, of six (6) monthly payments equal to one-twelfth
(1/12th) of the Executive's Annual Base Salary in effect immediately prior to
the time such termination occurs. Severance will be mitigated on a dollar for
dollar basis for any income received by Executive for duties performed for
Company or any third party during the six (6) months following termination. The
severance payment required under this subsection shall be conditioned upon the
Executive confirming the release in Section 5.2 hereof; and
-4-
(g) maintain in full force and effect, for the Executive's and the
Executive's eligible beneficiaries, until the first to occur of (x) the
Executive's attainment of alternative employment if such employment includes
health insurance benefits or (y) the six (6) month anniversary of termination of
employment, the benefits provided pursuant to Company-sponsored benefit plans,
programs, or other arrangements in which the Executive was entitled to
participate as a full-time employee immediately prior to such termination in
accordance with Section 2.4 hereof, subject to the terms and conditions of
participation as provided under the general terms and provisions of such plans,
programs, and arrangements, or in the alternate, the Company will arrange to
provide the Executive with continued benefits substantially similar to those
which the Executive would have been entitled to receive under such plans,
programs, and arrangements;
(h) the Executive shall have the right to exercise vested options in
accordance with Section 4.1(f).
4.4 UPON CHANGE OF CONTROL AND TERMINATION BY THE COMPANY WITHOUT CAUSE OR
BY EXECUTIVE FOR GOOD REASON. If the Executive's employment is terminated within
two (2) years of a Change of Control by the Company without Cause or by the
Executive for Good Reason, the Company will:
(a) pay the Executive the Accrued Base Salary;
(b) pay the Executive the Accrued Vacation Payment;
(c) pay the Executive the Accrued Reimbursable Expenses;
(d) pay the Executive the Accrued Benefits, together with any benefits
required to be paid or provided under applicable law;
(e) pay the Executive any Accrued Incentive Bonus; plus the pro-rata
Incentive Bonus based on actual performance for the year of termination.
(f) pay the Executive severance of one and one-half (1.5) times Executive's
Annual Base Salary in effect immediately prior to the time such termination
occurs plus the greater of (x) one and one-half (1.5) times the targeted
Incentive Bonus immediately prior to the time such termination occurs or (y) one
and one-half (1.5) times the average actual Incentive Bonus for the previous
three (3) years, whichever is greater. The severance payment required under this
subsection shall be conditioned upon the Executive confirming the release in
Section 5.2 hereof;
(g) maintain in full force and effect, for the Executive's and the
Executive's eligible beneficiaries, until the first to occur of (x) the
Executive's attainment of alternative employment if such employment includes
health insurance benefits or (y) the eighteen (18) month anniversary of
termination, the benefits provided pursuant to Company-sponsored benefit plans,
programs, or other arrangements in which the Executive was entitled to
participate as a full-time employee immediately prior to such termination in
accordance with Section 2.4 hereof, subject to the terms and conditions of
participation as provided under the general terms and provisions of such plans,
programs, and arrangements, or in the alternate, the Company will arrange to
provide the Executive with continued benefits substantially similar to those
which the Executive would have been entitled to receive under such plans,
programs, and arrangements;
(h) any payments will be grossed up for Internal Revenue Code Section 280G
excise tax penalty on "excess parachute payments;" and
-5-
(i) the Executive shall have the right to exercise vested options in
accordance with Section 4.1(f).
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 OTHER AGREEMENTS. As further material consideration for the Company
entering into this Agreement, the Executive will also execute the Company's
standard employee confidentially agreement, inventions assignment agreement, and
any other agreements required to be executed by all like level executives of the
Company.
5.2 EMPLOYEE'S RESTRICTIVE COVENANTS UPON TERMINATION. If the Executive's
employment is terminated for any reason, Executive agrees:
(a) To keep all of the Company's Confidential Information confidential in
perpetuity in accordance with the Company's policy;
(b) To not hire or solicit for hire or consultation employees of the
Company for a period of one and one-half (1 1/2) years after termination of
employment; and
(c) To release the Company from any and all claims, whether known or
unknown, except for those based upon this Agreement. Such release shall include
the rights of Section 1542 of the California Civil Code, which provides:
"A general release does not extend to claims which the creditor does not
know or suspect to exist in the Executive's favor at the time of executing the
release, which if known by him must have materially affected the Executive's
settlement with the debtor."
ARTICLE VI
MISCELLANEOUS
6.1 DEFINITIONS. For purposes of this Agreement, the following terms will
have the following meanings:
(a) "Accrued Base Salary" - as defined in Section 4.1(a) hereof.
(b) "Accrued Benefits" - as defined in Section 4.1(d) hereof.
(c) "Accrued Incentive Bonus" - as defined in Section 4.1(e) hereof.
(d) "Accrued Reimbursable Expenses" - as defined in Section 4.1(c) hereof.
(e) "Accrued Vacation Payment" - as defined in Section 4.1(b) hereof.
-6-
(f) "Affiliate" of a Person means a Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
(g) "Incentive Bonus" as defined in Section 2.2 hereof.
(h) "Base Salary" as defined in Section 2.1 hereof.
(i) "Cause" will mean any willful breach of duty by the Executive in the
course of the Executive's employment, continued violation of written Company
employment policies after written notice of such violation, violation of the
Company's Insider Trading Policies, conviction of a felony or any crime
involving fraud, theft, embezzlement, dishonesty or moral turpitude, engaging in
activities which materially defame the Company, engaging in conduct which is
material injurious to the Company or its Affiliates, or any of their respective
customer or supplier relationships, financially or otherwise, or the Executive's
gross negligence or continued failure to perform Executive's duties or his/her
continued incapacity to perform such duties.
(j) "Change of Control" will mean if there is a merger, consolidation, sale
of all or a major portion of the assets of the Company (or a successor
organization) or similar transaction or circumstance where any person or group
(other than Douglas B. Otto) acquires or obtains the right to acquire, in one or
more transactions, beneficial ownership of more than Fifty Percent (50%) of the
outstanding shares of any class of voting stock of the Company (or a successor
organization).
(k) "Compensation Committee" means the Compensation Committee of the
Company's Board of Directors.
(l) "Continued Benefits" as defined in Section 4.3(g) hereof.
(m) "Good Reason" will mean (1) the occurrence of material breach of this
Agreement by the Company, which breach is not cured within fifteen (15) calendar
days after written notice thereof is received by the Company, or (2) if within
two (2) years of a Change of Control, there is a reduction of the Employee's
total compensation, benefits, and perquisites, the Company's relocation is
greater than fifty (50) miles further from the Employee's home, or a material
change in the Employee's position or duties.
(n) "Notice of Termination" will mean a notice which shall indicate the
specific termination provision of this Agreement relied upon and shall generally
set forth the basis for termination of the Executive's employment under the
provision so indicated.
-7-
(o) "Person" means any natural person, firm, partnership, association,
corporation, company, limited liability company, limited partnership, trust,
business trust, governmental authority, or other entity.
(p) "Retirement" will mean normal retirement at age 65.
(q) "Severance" will mean payments after termination of Executive's
employment.
(r) "Total Disability" will mean the Executive's failure substantially to
perform the Executive's duties hereunder on a full-time basis for a period
exceeding one hundred eighty (180) consecutive days or for periods aggregating
more than one hundred eighty (180) days during any twelve (12) month period as a
result of incapacity due to physical or mental illness. If there is a dispute as
to whether the Executive is or was physically or mentally unable to perform the
Executive's duties under this Agreement, such dispute will be submitted for
resolution to a licensed physician agreed upon by the Company and the Executive,
or if an agreement cannot be promptly reached, the Company and the Executive
will promptly each select a physician, and if these physicians cannot agree, the
physicians will promptly select a third physician whose decision will be binding
on all parties. If such a dispute arises, the Executive will submit to such
examinations and will provide such information as such physician(s) may request,
and the determination of the physician(s) as to the Executive's physical or
mental condition will be binding and conclusive. Notwithstanding the foregoing,
if the Executive participates in any group disability plan provided by the
Company, which offers long-term disability benefits, "Total Disability" will
mean total disability as defined therein.
6.2 KEY MAN INSURANCE. The Company will have the right, in its sole
discretion, to purchase "key man" insurance on the life of the Executive. The
Company shall be the owner and beneficiary of any such policy. If the Company
elects to purchase such a policy, the Executive will take such physical
examinations and supply such information as may be reasonably requested by the
insurer.
6.3 SUCCESSORS; BINDING AGREEMENT. This Agreement will be binding upon any
successor to the Company and will inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, beneficiaries, designees,
executors, administrators, heirs, distributees, devisees and legatees.
6.4 MODIFICATION; NO WAIVER. This Agreement may not be modified or amended
except by an instrument in writing signed by the parties hereto. No term or
condition of this Agreement will be deemed to have been waived, nor will there
be any estoppel against the enforcement of any provision of this Agreement,
except by written instrument by the party charged with such waiver or estoppel.
No such written waiver will be deemed a continuing waiver unless specifically
stated therein, and each such waiver will operate only as to the specific term
or condition waived and will not constitute a waiver of such term or condition
for the future or as to any other term or condition.
-8-
6.5 SEVERABILITY. The covenants and agreements contained herein are
separate and severable and the invalidity or unenforceability of any one or more
of such covenants or agreements, if not material to the employment arrangement
that is the basis for this Agreement, will not affect the validity or
enforceability of any other covenant or agreement contained herein.
6.6 FORM OF NOTICE TO PARTIES. All notices, requests, demands, waivers and
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy or telegram, to the following address:
If to Executive: Peter K. Worley
2397 Moberly Court
Thousand Oaks, CA 91360
(805) 241-6955
If to Company: Deckers Outdoor Corporation
495-A South Fairview Avenue
Goleta, CA 93117
Attn: Angel Martinez
Facsimile #805-967-7862
or, in each case, at such other address as may be specified in writing to the
other parties hereto.
All such notices, requests, demands, waivers and other communications shall
be deemed to have been received (w) if by personal delivery on the day after
such delivery, (x) if by certified or registered mail, on the seventh business
day after the mailing thereof, (y) if by next-day or overnight mail or delivery,
on the day delivered, (z) if by telecopy or telegram, on the next day following
the day on which such telecopy or telegram was sent, provided that a copy is
also sent by certified or registered mail.
6.7 ASSIGNMENT. This Agreement and any rights hereunder will not be
assignable by either party without the prior written consent of the other party
except as otherwise specifically provided for herein.
6.8 ENTIRE UNDERSTANDING. This Agreement constitutes the entire
understanding between the parties hereto and no agreement, representation,
warranty or covenant has been made by either party except as expressly set forth
herein.
6.9 EXECUTIVE'S REPRESENTATIONS. The Executive represents and warrants that
neither the execution and delivery of this Agreement nor the performance of the
Executive's duties hereunder violates the provisions of any other agreement to
which he is a party or by which he is bound.
-9-
6.10 GOVERNING LAW. This Agreement will be construed in accordance with the
laws of the State of California, without regard to the conflict of laws
provisions thereof, with venue proper only in the County of Santa Barbara,
California.
6.11 ARBITRATION.
(a) Except as provided in Section 6.11(c) below, the parties hereto agree
that any dispute or controversy arising out of, relating to, or in connection
with this Agreement, or the interpretation, validity, construction, performance,
breach, or termination thereof, shall be finally settled by binding arbitration,
unless otherwise required by law, to be held in Santa Barbara, California under
the National Rules for the Resolution of Employment Disputes of the American
Arbitration Association as then in effect (the "Rules"). The arbitrator(s) may
grant injunctions or other relief in such dispute or controversy. The decision
of the arbitrator(s) shall be final, conclusive and binding on the parties to
the arbitration, and judgment may be entered on the decision of the
arbitrator(s) in any court having jurisdiction.
(b) The arbitrator(s) shall apply California law to the merits of any
dispute or claim, without reference to rules of conflicts of law.
(c) The parties may apply to any court of competent jurisdiction for a
temporary restraining order, preliminary injunction, or other interim or
conservatory relief, as necessary, without breach of this arbitration agreement
and without abridgement of the powers of the arbitrator.
(d) EMPLOYEE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EMPLOYEE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EMPLOYEE
AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, UNLESS OTHERWISE REQUIRED
BY LAW, AND THAT THIS ARBITRATION CLAUSE CONSTITUTES A WAIVER OF EMPLOYEE'S
RIGHT TO A JURY TRIAL AND RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO
EMPLOYEE'S RELATIONSHIP WITH THE COMPANY, INCLUDING BUT NOT LIMITED TO, CLAIMS
OF HARASSMENT, DISCRIMINATION, WRONGFUL TERMINATION AND ANY STATUTORY CLAIMS.
-10-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
COMPANY:
DECKERS OUTDOOR CORPORATION
By: /s/ Angel Martinez March 17, 2006
----------------------------------------
Name: Angel Martinez Date:
Title: Chief Executive Officer
EXECUTIVE:
/s/ Peter K. Worley March 17, 2006
---------------------------------------------
Name: Peter K. Worley Date:
Title: Teva Brand President
-11-
EXHIBIT A
TO
SENIOR EXECUTIVE EMPLOYMENT AGREEMENT
2006 Incentive Bonus Criteria
-----------------------------
Executive: Peter K. Worley
Target bonus: Potential 100% of base salary @ 100% level
Incentive Bonus Allocation:
25% Company Profit Component
75% Management Business Objective (MBO) Component
----
100%
====
Incentive bonus to be calculated and paid in accordance with the attached
Exhibit B.
-12-
EXHIBIT B
TO
SENIOR EXECUTIVE EMPLOYMENT AGREEMENT
-13-