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EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the ____ day of June,
1999 (the "Effective Date"), by and between Skechers U.S.A., Inc., a Delaware
corporation, hereinafter referred to as "Employer" and Xxxxxx X.
Xxxxxxxxx, hereinafter referred to as "Employee."
The parties contract with reference to the following facts:
A. Employer desires to employ Employee as its Chairman of the Board and
Chief Executive Officer and Employee desires to accept employment with Employer
in such capacity.
B. The parties are willing to enter into an Agreement providing for
such employment upon the terms and conditions hereinafter set forth.
THEREFORE, the parties agree as follows:
1. EMPLOYMENT. Employer hereby agrees to employ, and does hereby
employ, Employee and Employee agrees to accept and hereby accepts employment by
Employer, on the terms and subject to the conditions set forth in this
Agreement.
2. COMPENSATION.
2.1 Salary. Employer shall pay to Employee a gross annual
salary, as determined from time to time by the Board of Directors of Employer,
provided; however, that in no event shall Employee's salary hereunder be at an
annual rate less than Five Hundred Thousand Dollars ($500,000) ("Salary"). Said
Salary to be paid bi-weekly or in accordance with Employer's regular payroll
practices.
2.2 Performance-Based Annual Bonus. For each full year during
Employee's term as set forth in Section 5, commencing on the Effective Date,
Employee shall be eligible to receive a cash bonus based on Employer's
achievement of certain financial goals ("Performance-Based Annual Bonus"). For
calendar year 1999, and until changed by the Board's Compensation Committee, the
annual cash bonus award shall be determined on the basis of Employer's annual
return on average equity ("XXX").
(a) if XXX for the calendar year is between 20.0% and
24.9%, the cash bonus shall be equal to 50% of Employee's annual salary for the
subject calendar year pursuant to Section 2.1;
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(b) if XXX for the calendar year is at least equal to
or greater than 25.0%, the cash bonus shall be equal to 100% of Employee's
annual salary for the subject calendar year pursuant to Section 2.1; and
(c) The Performance-Based Annual Bonus payable for
any calendar year shall be paid to Employee no later than the 15th day of April
of the following year. Nothing herein shall preclude Employee from participating
in any equity or equity-based compensation program of Employer and the bonus
program set forth in this Section 2.2 herein may be replaced with a different
program approved by the Board's Compensation Committee and agreed with
by Employee.
2.3 Tax Withholding. Employer shall provide for the
withholding of any taxes required to be withheld by Federal, state and local law
with respect to any payment in cash, shares of capital stock or other property
made by or on behalf of Employer to or for the benefit of Employee under this
Agreement or otherwise. Employer may, at its option: (i) withhold such taxes
from any cash payments owing from Employer to Employee, including any payments
owing under any other provision of the Agreement, (ii) require Employee to pay
to Employer in cash such amount as may be required to satisfy such withholding
or (iii) make other satisfactory arrangements with Employee to satisfy such
withholding obligations.
3. DUTIES, TIME AND EFFORTS. Employee shall serve as Chairman of the
Board and Chief Executive Officer of Employer, as such, shall report to the
Board of Directors or any Executive Committee of the Board of Directors of
Employer and his duties shall include generally, but without limitation,
authority and responsibility for the whole overall supervision of the operations
of Employer; and he shall also undertake such other reasonable duties of a
similar managerial nature as the Board of Directors or Executive Committee of
Employer may at any time, or from time to time, direct him to perform. It is
understood that Employee may be required to provide services to other
corporations owned by or, affiliated with Employer, without additional
compensation. Other than providing services to affiliates, Employee shall
devote his full productive time, energies,
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and abilities to the proper and efficient performance of Employer's
business pursuant to the employment hereunder. Employee shall at all times
during the term hereof be furnished with such office, stenographic and other
necessary secretarial assistance, and such other facilities, amenities and
services as are suitable to Employee's position as Chief Executive Officer of
Employer and adequate for the performance of Employee's duties hereunder. Unless
otherwise agreed to by Employee, Employee's offices shall be maintained at the
premises of the principal office of the Employer in Manhattan Beach, California;
provided, however, that in connection with the performance of his duties and
responsibilities, Employee acknowledges that he may be required to undertake
significant business traveling. Employee may not, without the prior express
authorization of Employer's Board of Directors, directly or indirectly, during
the term of this Agreement engage in any activity competitive with Employer's
business or practice, whether acting alone, as a partner, or as an officer,
director or employee of any other corporation, whether professional or
otherwise; provided, however that nothing herein contained shall prevent
Employee from purchasing and/or holding less than five percent (5%) of the
issued and outstanding stock of a publicly-held corporation which competes with
Employer.
4. VACATION. Employee shall be entitled to a paid vacation of four (4)
weeks during each twelve (12) month period of the term of this Agreement. The
date or dates of said vacation shall be determined by Employee and the Board of
Directors of Employer. If for any reason Employee does not take his full four
(4) weeks of vacation as provided above, he may carry over a maximum of one (1)
week into the following year, but if he does not use the carried over vacation
week in that year it shall expire. Therefore, under no circumstances, regardless
of Employee's failure to take vacations, would he be entitled to more than five
(5) weeks vacation during any twelve (12) month period.
5. TERM. The term of employment shall commence upon the date of this
Agreement and terminate on the ______ day of June, 2002 unless sooner terminated
upon the happening of any of the following events:
5.1 Upon Mutual Agreement. Whenever Employer and
Employee shall otherwise mutually agree to termination.
5.2 Death. Death of Employee.
5.3 Disability. Disability of Employee, either physically or
mentally, not arising out of an injury sustained while on Employer's business
extending beyond One Hundred and Fifty (150) consecutive days, or totaling more
than one hundred eighty (180) days in any period of three hundred sixty-five
(365) days (not limited to any calendar or fiscal year). Such determination to
be based upon a certificate as to such physical or mental disability employed by
Employer.
5.4 Termination for Cause After Notice and Failure to Cure.
Employer may at any time during the term of this Agreement, terminate Employee's
employment with Employer for cause ("Cause"), by written notice to Employee by
complying with the notice
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requirements and restrictions in Section 5.8. Cause shall be limited to the
following reasons:
(a) Conviction of Employee for, or Employee
pleads guilty or nolo contendere on, any crime involving a dishonest act or
involving any behavior not expected of a Chief Executive Officer of a public
corporation, which would make the continuance of his employment by Employer
detrimental to Employer.
(b) Knowing and intentional commission of a
material dishonest act by Employee in the scope of his employment, including,
but not limited to theft, embezzlement, falsification of records,
misappropriation of funds or property, or fraud against, or with respect to the
business of, Employer or any affiliate, which would make the continuance of his
employment by Employer detrimental to Employer.
(c) Persistent malfeasance, misfeasance or
non-feasance in connection with the performance of his duties.
(d) Employee commits any act that causes, or
knowingly fails to take reasonable and appropriate action to prevent, any
material injury to the financial condition or business reputation of Employer
or any of its affiliates; however, this shall not apply to (i) any act of
Employer or its affiliates by any other employee thereof except to the extent
that such act is committed at the direction, or with the knowledge, of Employee
or (ii) any action in which Employee acted in good faith and in a manner
reasonably to be in or not opposed to the best interests of Employer, as
determined by Employer's Board of Directors.
(e) Breach of any material provision of this
Agreement.
5.5 Good Reason (by Employee). Employee's employment may be
terminated by Employee at any time for any of the following reasons (each of
which is referred to herein as "Good Reason") by giving the Employer effective
date of such termination (which effective date may be the date of such notice):
(a) Employer commits a breach of any material
term of this Agreement and, if such breach is capable of being cured, fails
to cure such breach within 15 days of receipt of written notice of such
breach; or
(b) Employer removes Employee from the position
of Chief Executive Officer of Employer other than for Cause, or Employer
effects any diminution of the powers, duties or authority of Employee, in each
case, without the prior written consent of the Employee.
5.6 Executive's Rights to Terminate. Employee may, at his
option, terminate his employment hereunder for any reason upon 60 days' prior
written notice to Employer.
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5.7 Without Cause. Employer may, at its option, terminate
Employee's employment without Cause at any time upon written notice to Employee.
5.8 Notice Requirements and Restrictions. Provided however,
and by restriction to the right of Employer set forth in Section 5.4, in the
event Employer contends that Employee is not performing the services required by
this Agreement or that it has Cause to terminate this Agreement pursuant to
Section 5.4 of this Agreement, Employer shall provide Employee with a written
notice specifying in reasonable detail the services or matters in which it
contends Employee has not been adequately performing and why Employer has Cause
to terminate this Agreement, and what Employee should do to adequately perform
his obligations hereunder. If Employee performs the required services within
fifteen (15) days of receipt of the notice or modified his performance to
correct the matters complained of, Employee's breach will be deemed cured and he
shall not be terminated; provided, however, if the nature of the service not
performed by Employee or the matters complained of are such that more than
fifteen (15) days are reasonably required to perform the required service or to
correct the matters complained of, then Employee's breach will be deemed cured
if Employee commences to perform such service or to correct such matters within
said fifteen (15) day period and thereafter diligently prosecutes such
performance or correction to completion. If Employee does not perform the
required services or modify his performance to correct the matters complained of
within said period Employer shall have the right to terminate this Agreement at
the end of said fifteen (15) day period. It is understood that Employee's
performance hereunder will not be deemed unsatisfactory solely on the basis of
any economic performance of Employer, though the Board of Directors of Employer
may consider economic performance as a factor. For purpose of this Agreement,
the "Date of Termination" shall mean the later of the date that any party gives
written notice that it intends to terminate this Agreement pursuant to the terms
hereof, or the date, if any, specified by the terminating party in such notice
as the effective date of termination.
6. OBLIGATIONS OF THE CORPORATION UPON TERMINATION.
6.1 Cause or Voluntary. If Employee's employment shall be
terminated under Sections 5.1, 5.2, 5.4 or 5.6, Employer's obligations to
Employee shall terminate, other than the obligation (i) to pay to Employee his
Salary through the Date of Termination at the rate in effect on the day
preceding the Date of Termination, (ii) any bonus due as of the Date of
Termination, and (iii) to continue to provide Employee with benefits of the type
described in Section 9 through the Date of Termination.
6.2 Without Cause or for Good Reason. If Employer shall
terminate Employee's employment without Cause pursuant to Section 5.7, or if
Employee shall terminate his employment for Good Reason pursuant to Section 5.5,
Employer shall (i) continue, in accordance with Employer's normal payroll
procedures, to pay the Employee his Salary through the Expiration Date of this
Agreement, (ii) continue to pay the Employee his Performance - Based Annual
Bonus pursuant to Section 2.2 through the Expiration Date of this Agreement at
the rate in effect on the day
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preceding the Date of Termination, and (iii) continue to provide the Executive
with benefits of the type described in Section 9 through the Expiration Date of
this Agreement.
6.3 Disability. During any period of total disability, Employee
shall be entitled to his full compensation as provided for hereunder for a
period of three (3) months. Thereafter during such period of total disability,
Employee shall be entitled to compensation for the balance of the term of this
Agreement equal to the Base Salary otherwise payable to the Employee under
Section 2.1 hereof, during such period of total disability, less amounts
received by the Employee under a policy provided pursuant to Section 9.6.
7. EMPLOYER'S AUTHORITY. To the extent that the following is not
inconsistent with the other provisions of this Agreement, Employee agrees to
observe and comply with the rules and regulations of Employer as adopted by
Employer's Board of Directors respecting performance of this duties and to carry
out and perform orders, directions and policies of Employer as they may be, from
time to time, stated to him either orally or in writing.
8. EFFECTIVE DATE. The effective date of this Agreement shall be the
date of execution as indicated above.
9. EXPENSES AND FRINGE BENEFITS.
9.1 Employer and Employee agree that proper discharge of the
duties imposed upon Employee shall require the frequent use of an automobile.
Employer hereby agrees that it shall provide to Employee an automobile, chosen
by the Employee and suitable for use by the Chief Executive Officer of a public
company such as Employer. Such automobile shall be purchased or leased by
Employer and provided to Employee for his exclusive use, or at the option of
Employee, Employee shall purchase or lease an automobile and the cost thereof
shall be reimbursed by Employer. In addition to providing the automobile,
Employer shall pay or reimburse all reasonable expenses incurred by Employee in
connection with the use and operation of the automobile. Further, should
Employee so desire, Employer shall provide a driver for Employee's automobile,
during such hours and at such times as may be reasonable for the proper
performance of Employee's duties as Chief Executive Officer of a public company.
9.2 Employer and Employee agree that it is necessary and
proper for Employee to maintain membership in certain private clubs, civic and
fraternal organizations and other associations and that such membership shall be
in the best interests of Employer and in furtherance of Employee's obligations
hereunder. Employer agrees to pay or reimburse the costs of any such membership
in any such clubs, groups or organizations which Employee shall, in his
discretion, determine to be in the best interests of the Employee. In the event
the cost of any such membership shall exceed One Thousand Dollars ($1,000.00)
per month or shall represent the purchase of an equity interest in such club,
group or organization (an "equity membership"), the payment of the cost of such
membership shall be subject to the approval of the Board of Directors. Any
equity
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membership so approved shall be held in the name of Employee during the
term of this Agreement and, upon the termination hereof, Employee shall have the
right tot retain such equity membership for a payment to Employer in an amount
equal to the initial cost thereof.
9.3 Without limiting the generality of the obligations of
Employer pursuant to Sections 9.1 and 9.2 Employer shall also pay or reimburse
all expenses reasonably incurred by Employee in discharge or Employee's duties
hereunder. Such expenses shall include, without limitation, the following:
(a) Education expenses incurred for the purpose of
maintaining or improving Employee's skills;
(b) Expenses for travel, lodging, and related
expenses in connection with conventions or meetings,
attendance at which is necessary or appropriate in connection
with the performance by Employee of his duties required
hereunder;
(c) Expenses for meals, entertainment and similar
items reasonably incurred by Employee in connection with the
business of Employer; and
(d) Such other expenses incurred by Employee
reasonably related to the discharge by Employee of his duties
as set forth herein.
9.4 Employer reserves the right to require, as a condition of
payment or reimbursement for any item pursuant to Section 9.3, Employee to
furnish Employer with reasonable documentation evidencing that the expense has
been incurred and the relationship of such item to the business of Employer or
the duties of Employee.
9.5 Employer shall provide, for the benefit of Employee and
his spouse, standard coverage medical insurance, with additional coverage for
dental expenses.
9.6 Notwithstanding any provision herein to the contrary,
Employer shall provide the Employee all other Employee fringe benefits which are
generally provided for or made available to the employees of Employer.
10. CONFIDENTIAL DISCLOSURE. Except to the extent that the proper
performance of Employee's duties pursuant to this Agreement may require
disclosure, Employee agrees that he will not for any reason or at any time
during the term of this Agreement disclose, communicate or divulge to, or use
for the direct or indirect benefit of any person, firm or association or company
other than Employer, any secret or confidential information relating to the
customer lists, policies, processes, prospects, products, operations or services
of Employer or any other secret or confidential information relating to Employer
or its affiliates or the products or services and the accounting, marketing,
selling, financing and other business methods and techniques of Employer.
However,
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confidential information shall not include (A) at the time of disclosure to
Employee such information that was in the public domain or later entered the
public domain other than as a result of a breach of an obligation herein; or (B)
subsequent to disclosure to Employee, Employee received such information from a
third party under no obligation to maintain such information in confidence, and
the third party came into possession of such information other than as a result
of a breach of an obligation herein. All documents, materials or articles of
information of any kind furnished to Employee by Employer or developed by
Employee in the course of his employment hereunder are and shall remain the sole
property of Employer; and if Employer requests the return of such information at
any time during, upon or after the termination of Employee's employment
hereunder, Employee shall immediately deliver the same to Employer. Employee
agrees that the remedy at law for any breach of the foregoing may be inadequate,
and that Employer shall be entitled to any type of injunctive relief for any
such breach in addition to any other rights or remedies in law or equity to
which Employer may be entitled.
11. MISCELLANEOUS.
11.1 Assignability of Agreement. The provisions of this
Agreement shall inure to the benefit of the parties hereto, and their respective
permitted heirs, legal representatives, successors and assigns. Employer shall
require any successor (whether direct or indirect, by purchase, merger,
reorganization, consolidation, acquisition of property or stock, liquidation or
otherwise) to all or a significant portion of its assets, by agreement in form
and substance satisfactory to Employee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that Employer would be
required to perform this Agreement if no such succession had taken place. The
obligations of Employee under this Agreement shall be personal and not delegable
by him in any manner whatsoever.
11.2 Notices. Any notice, request, instruction or other
document to be given hereunder by either party hereto to the other shall be in
writing and delivered personally or sent by certified or registered mail,
postage prepaid, and if mailed to any addressed in a state other than the state
of mailing, by air mail, addressed as follows:
(a) If to Employee, to:
Xxxxxx X. Xxxxxxxxx
000 Xxxxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
(b) If to Employer, to:
Skechers U.S.A., Inc.
000 Xxxxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx, Chief Financial Officer
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Any notice so given shall be deemed received when delivered personally, or (if
mailed) when dispatched. Any party may change the address to which notices are
to be sent by giving written notice of such change of address to the other party
in the manner herein provided for giving notice.
11.3 Waiver. No waiver of any breach of any warranty,
representation, covenant or other term or provision of this Agreement shall be
deemed to be a waiver of any preceding or succeeding breach of the same or any
other warranty, representation, covenant, term or provision. No extension of the
time for performance of any obligation or other act shall be deemed to be an
extension of the time for the performance of any other obligation of any other
act.
11.4 Amendment to Agreement. This Agreement contains the
entire agreement between the parties hereto with respect to the transactions
contemplated herein, and may not be amended, supplemented or discharged except
by an instrument in writing signed by both parties hereto. This Agreement
supersedes any and all previous Employment Agreements between the parties which
are hereby revoked.
11.5 Disputes/Attorneys Fees. Should any dispute arise
concerning the terms or the interpretations of this Agreement, and such dispute
results in arbitration and/or litigation then, unless otherwise directed by the
court, the prevailing party shall be entitled to and be awarded reasonable
attorneys' fees and costs in addition to any other relief to which it may be
entitled.
11.6 Time of the Essence. Time is of the essence of each
provision of this Agreement in which time is an element.
11.7 Arbitration. The parties agree if any controversy or
claim shall arise out of this Agreement or the breach hereof and either party
shall request that the matter be settled by arbitration the matter shall be
settled exclusively by arbitration in accordance with the rules then in effect
of the American Arbitration Association in the City of Los Angeles, California,
as the same may be modified by the statutes of California then in effect, by a
single arbitrator, if the parties shall agree upon one, or by one arbitrator
appointee by each party and a third arbitrator appointed by the other
arbitrators. In case of any failure of a party to make an appointment referred
to above within two (2) weeks after written notice of controversy, such
appointment shall be made by the Association. All arbitration proceedings shall
be held in the City of Los Angeles, California, and each party agrees to comply
in all respects with any award made in such proceeding and to the entry of a
judgment in any jurisdiction upon any award rendered in such proceeding. All
costs and expenses of arbitration (including costs of preparation therefor and
reasonable attorneys' fees incurred in connection therewith) of the party
prevailing in such arbitration shall be borne by the losing party to such
arbitration, unless otherwise directed by the arbitrators. Notwithstanding any
provision of this section herein set forth, no party may make a request for
arbitration hereunder with respect to any matter at any time following
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the expiration of thirty days after notice of the filing of a legal action with
respect to such matters in a court of competent jurisdiction.
11.8 Indemnification. Employer agrees to indemnify Employee
for any and all liabilities to which he may be subject as a result of his
service as an officer, director or other corporate agent of Employer, or of any
other enterprise at the request of the Employer, or otherwise as a result of his
employment hereunder, as well as the expense (including, without limitation,
reasonable counsel fees) of any proceeding brought or threatened against
Employee as a result of such service or employment, to the fullest extent
permitted by law. Such counsel fees shall, to the fullest extent permitted by
law, be paid by Employer in advance of the final disposition of the proceeding
upon receipt of an undertaking of Employee satisfactory to counsel for Employer
to repay such fees unless it shall ultimately be determined that he is not
entitled to be indemnified with respect thereto.
11.9 Execution in Counterparts. This Agreement may be executed
by the parties hereto in two counterparts, each of which shall be deemed to be
an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart
11.10 Severability. If any provision of this Agreement shall
be adjudged by any court of competent jurisdiction to be invalid or
unenforceable for any reason, such judgment shall not affect, impair or
invalidate the remainder of this Agreement
11.11 Headings Descriptive. The headings of the several
paragraphs of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any of this Agreement.
11.12 Governing Law. This Agreement shall be construed in
accordance with and be governed by the laws of the State of California.
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IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the Effective Date.
"EMPLOYER"
Skechers, U.S.A., Inc.
By:
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Name: Xxxxxxx Xxxxxxxxx
Title: President
"EMPLOYEE"
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Xxxxxx X. Xxxxxxxxx
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