Document:

Exhibit 10.3

 

FIRST AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT

 

This FIRST
AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT dated as of February 27,
2009 (the “First Amendment”),
is entered into by and among SMURFIT-STONE CONTAINER ENTERPRISES, INC., a
Delaware corporation, a debtor and debtor-in-possession in a case pending under
Chapter 11 of the Bankruptcy Code (“U.S. Borrower”),
SMURFIT-STONE CONTAINER CANADA INC., a company continued under the Companies
Act (Nova Scotia), and operating pursuant to a proceeding under the CCAA, and a
debtor and debtor in possession in a case pending under Chapter 11 of the
Bankruptcy Code (“Canadian Borrower,”
and together with the U.S. Borrower, the “Borrowers”),
SMURFIT-STONE CONTAINER CORPORATION, a Delaware corporation, a debtor and
debtor-in-possession in a case pending under Chapter 11 of the Bankruptcy Code
(“Parent”), the other Loan Parties
party hereto, the Lenders party hereto, JPMORGAN CHASE BANK, N.A., as
Administrative Agent and Collateral Agent, and JPMORGAN CHASE BANK, N.A.,
TORONTO BRANCH, as Canadian Administrative Agent and Canadian Collateral Agent.

 

WITNESSETH:

 

WHEREAS, the
Borrowers, the Lenders, and the Agents are parties to that certain Amended and
Restated Credit Agreement dated as of February 25, 2009, pursuant to which
the Lenders have made available to the Borrowers a term loan, revolving credit
and letter of credit facility in an aggregate principal amount not to exceed
US$750,000,000 (the “Credit Agreement”);

 

WHEREAS, the
Borrowers have requested that the Lenders amend and supplement the Credit
Agreement to reflect certain modifications to the Credit Agreement; and

 

WHEREAS, the
Lenders have agreed to amend and supplement the Credit Agreement to reflect
certain modifications to the Credit Agreement.

 

NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

Section 1.                                            Definitions.  Capitalized terms used and not otherwise
defined in this First Amendment are used as defined in the Credit Agreement
(after giving effect to this First Amendment). 
In addition, the capitalized term “First
Amendment Effectiveness Date” shall mean the first Business Day
on which the conditions set forth in Section 3 hereof are fully
satisfied to the satisfaction of the Administrative Agent or waived by the
Administrative Agent.  The Administrative
Agent will give the Borrowers and each Lender written notice of the occurrence
of the First Amendment Effectiveness Date.

 

 

Section 2.                                            Amendments
to Credit Agreement.  Subject to the
conditions set forth in Section 3 hereof, the Credit Agreement is
hereby amended as follows:

 

2.1                                 The definition of “Reserves”
in Section 1.1 of the Credit Agreement is hereby amended and restated in
its entirety as follows:

 

“Reserves” means Dilution Reserves,
Inventory Reserves, Rent Reserves and any other reserves established by the
Applicable Agent in its Permitted Discretion (including, without limitation,
reserves for accrued and unpaid interest on the Secured Obligations, Banking
Services Reserves, reserves for consignee’s, warehousemen’s and bailee’s
charges, reserves for Swap Obligations, reserves for environmental liabilities
of any Loan Party, reserves for contingent liabilities of any Loan Party,
reserves for uninsured losses of any Loan Party, reserves for uninsured,
underinsured, un-indemnified or under-indemnified liabilities or potential
liabilities with respect to any litigation, reserves for cash held in deposit
accounts of Smurfit-Stone Puerto Rico, Inc. during such times as cash
dominion is in effect under Section 5.7 and reserves for taxes, fees,
assessments, and other governmental charges) with respect to the Collateral or
any Loan Party, and with regard to the Canadian Borrowing Base, in addition to
the foregoing, reserves for Priority Payables outstanding on or after the
Effective Date that may affect the collectability of such accounts or the saleability
of such inventory and that have not already been taken into account in the
calculation of the applicable Borrowing Base to the extent such Priority
Payables do not constitute amounts otherwise secured by the Directors’ Charge.

 

2.2                                 Section 2.24(a)(x) of
the Credit Agreement is hereby amended and restated in its entirety as follows:

 

(x)                                   with
respect to the Cases and assets of the U.S. Loan Parties, (x) in the event
of the occurrence and during the continuance of an Event of Default or an event
that would constitute an Event of Default with the giving of notice or lapse of
time or both (a “Default”), the payment of allowed and unpaid professional fees
and disbursements incurred by (A) the U.S. Loan Parties and (B) any
statutory committees appointed in the Cases of the U.S. Loan Parties, in an
aggregate amount of items (A) and (B) not in excess of US$11,000,000,
and (y) the payment of fees pursuant to 28 U.S.C. § 1930 and to the Clerk
of the Bankruptcy Court ((x) and (y), collectively, the “Carve-Out”);

 

2.3                                 Section 3.10 of
the Credit Agreement is hereby amended by deleting the amount “US$100,000” and
substituting therefor the amount “US$250,000”.

 

 

Section 3.                                            Effectiveness.  The effectiveness of this First Amendment is
subject to the following conditions precedent:

 

3.1                                 Loan Documents.  Each Loan Party, the Required Lenders and the
Administrative Agent shall have signed a counterpart of this First Amendment
(whether the same or different counterparts) and shall have delivered the same
to the Administrative Agent.

 

3.2                                 Payment of Fees and
Expenses.  The Loan Parties shall
have paid to the Administrative Agent any unpaid balance of the fees and
expenses due and payable by the Loan Parties pursuant to the Loan Documents.

 

Section 4.                                            Representations
and Warranties.  Each Loan Party
represents and warrants to the Lenders that:

 

4.1                                 After giving effect to
the First Amendment, the representations and warranties of the Loan Parties
contained in Section 3 of the Credit Agreement are true and correct
in all material respects on and as of the date hereof as if such
representations and warranties had been made on and as of the date hereof
(except to the extent that any such representations and warranties specifically
relate to an earlier date);

 

4.2                                 After giving effect to
the First Amendment, (i) each Loan Party is in compliance with all the
terms and provisions set forth in the Credit Agreement and (ii) no Event
of Default has occurred and is continuing or would result from the execution,
delivery and performance of this First Amendment; and

 

4.3                                 A true and correct
copy of the Final Order as entered by the Bankruptcy Court is attached hereto
as Exhibit A.

 

Section 5.                                            Choice
of Law. THIS FIRST AMENDMENT SHALL IN ALL RESPECTS BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE AND THE BANKRUPTCY
CODE.

 

Section 6.                                            Full
Force and Effect.  Except as
specifically amended hereby, all of the terms and conditions of the Credit
Agreement shall remain in full force and effect, and the same are hereby
ratified and confirmed.  No reference to
this First Amendment need be made in any instrument or document at any time
referring to the Credit Agreement, and a reference to the Credit Agreement in
any such instrument or document shall be deemed a reference to the Credit
Agreement as amended hereby.

 

Section 7.                                            Counterparts;
Electronic Signatures.  This First
Amendment may be executed in any number of counterparts, each of which shall
constitute an original, but all of which taken together shall constitute one
and the same agreement.  The
Administrative Agent may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.

 

 

Section 8.                                            Headings.  Section headings used herein are for
convenience only and are not to affect the construction of or be taken into
consideration in interpreting this First Amendment.

 

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

IN WITNESS
WHEREOF, the parties hereto have caused this First Amendment to be duly
executed as of the day and the year first written.

 

	
   

  	
  SMURFIT-STONE CONTAINER

  ENTERPRISES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMURFIT-STONE CONTAINER CANADA

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMURFIT-STONE
  CONTAINER

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CALPINE
  CORRUGATED LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CAMEO
  CONTAINER CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice President
  and Chief Financial Officer

  
					

 

 

	
   

  	
  LOT 24D
  REDEVELOPMENT

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ATLANTA &
  SAINT ANDREWS BAY

  RAILWAY COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STONE INTERNATIONAL
  SERVICES

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STONE
  GLOBAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  STONE
  CONNECTICUT PAPERBOARD

  PROPERTIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMURFIT-STONE
  PUERTO RICO, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
					

 

 

	
   

  	
  SMURFIT
  NEWSPRINT CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SLP
  FINANCE I, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice President
  and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SLP
  FINANCE II, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMBI
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  3083527
  NOVA SCOTIA COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MBI
  LIMITED/LIMITÉE

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SMURFIT-MBI,
  by its general partner, MBI

  Limited/Limitée

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
					

 

 

	
   

  	
  STONE
  CONTAINER FINANCE COMPANY

  OF CANADA II

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  639647
  BRITISH COLUMBIA LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  B.C.
  SHIPPER SUPPLIES LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SPECIALTY
  CONTAINERS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SLP
  FINANCE GENERAL PARTNERSHIP, by

  its general partner, SLP Finance I, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FRANCOBEC
  COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
					

 

 

	
   

  	
  605681
  N.B. INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles
  A. Hinrichs

  
	
   

  	
  Name:

  	
  Charles A.
  Hinrichs

  
	
   

  	
  Title:

  	
  Senior Vice
  President and Chief Financial Officer

  
					

 

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A.

  
	
   

  	
  Individually
  and as Administrative Agent and

  Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter S.
  Predun

  
	
   

  	
  Name:

  	
  Peter S.
  Predun

  
	
   

  	
  Title:

  	
  Executive
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN
  CHASE BANK, N.A., TORONTO

  BRANCH

  
	
   

  	
  Individually
  and as Canadian Administrative Agent

  and Canadian Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Drew
  McDonald

  
	
   

  	
  Name:

  	
  Drew
  McDonald

  
	
   

  	
  Title:

  	
  Executive
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE
  BANK TRUST COMPANY

  AMERICAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Frank Fazio

  
	
   

  	
  Name:

  	
  Frank Fazio

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Philip
  Saliba

  
	
   

  	
  Name:

  	
  Philip
  Saliba

  
	
   

  	
  Title:

  	
  Director

  
					

 

 

EXHIBIT A

FINAL ORDERExhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This
Employment Agreement (this “Agreement”) is entered into on February 24,
2009, by and between Crocs, Inc. a Delaware corporation (the “Company”),
and John Duerden  (the “Executive”).

 

BACKGROUND

 

A.                                   The Company is in the business of designing,
manufacturing, marketing, distributing, and selling unique and innovative
footwear for men, women and children.

 

B.                                     The Company desires to employ Executive as
the Company’s Chief Executive Officer and President, and Executive desires to
be so employed by the Company, on the terms and conditions set forth in this
Agreement.

 

C.                                     In Executive’s position, Executive will have
access to confidential, proprietary and trade secret information of the
Company.  It is desirable and in the best
interests of the Company and its stockholders to protect confidential,
proprietary and trade secret information of the Company, to prevent unfair
competition by former executives of the Company following separation of their
employment with the Company and to secure cooperation from former executives
with respect to matters related to their employment with the Company.

 

AGREEMENT

 

In consideration of the foregoing premises and the
respective agreements of the Company and Executive set forth below, the Company
and Executive, intending to be legally bound, agree as follows:

 

1.                                       EMPLOYMENT; BOARD APPOINTMENT.

 

(a)                                  Employment.  Subject to the terms and
conditions hereof, the Company shall employ Executive and Executive agrees to
be so employed as CEO Designee from February 24, 2009 through March 16,
2009.  On March 16, 2009, the Board
shall appoint, the Company shall employ, and Executive agrees to be so employed
in the capacity of Chief Executive Officer and President of the Company
commencing on the date of appointment. 
Executive’s employment as Chief Executive Officer and President
hereunder shall not be for any specific term and shall be subject to
termination at will by either Executive or the Company for any reason upon
written notice to the other party.

 

(b)                                 Board Appointment.  Upon
Executive’s commencement of employment pursuant to Section 1(a), the Board
of Directors of the Company (together with any authorized committee of the
Board, the “Board”), shall appoint Executive as a director of the Company.

 

2.                                       DUTIES.  Beginning on March 16,
2009, and at all times thereafter during his employment, Executive shall serve
as the Company’s Chief Executive Officer and President and as a member of the
Board.  As the Company’s Chief Executive
Officer and President, 

 

1

 

Executive shall direct and
manage the affairs of the Company with such duties, functions and
responsibilities (including the right to hire and dismiss employees (subject to
approval of the Board in the case of corporate officers)) as are customarily
associated with and incident to the positions of Chief Executive Officer and
President and as the Company may, from time to time, require of him, subject to
the direction of the Company’s Board. 
Executive shall be the only officer of the Company with the right to
report directly to the Board; provided, however, that other officers of the
Company may report directly to the Board: (i) if such officer is elected
to the Board with the prior consent of Executive; (ii) such officer
reports directly to the Board with the consent of the Executive; or (iii) such
officer reports to the Board as may be required by law. These duties, functions
and responsibilities include, but are not limited to, directing the Company’s
day-to-day affairs, as well as defining the roles and responsibilities of the
Company’s officers and employees.  The
Executive shall serve the Company faithfully, conscientiously and to the best
of the Executive’s ability and shall promote the interests and reputation of
the Company.  Unless prevented by
sickness or disability, the Executive shall devote his time, attention,
knowledge, energy and skills, during normal working hours, and at such other
times as the Executive’s duties may reasonably require, to the duties of the
Executive’s employment; provided, however, that it shall not be a breach of
this Agreement for the Executive to manage his own private financial
investments; or with the consent of the Board (which consent shall not be
unreasonably withheld) to be a member of the board of directors of other
companies that do not compete with the Company, so long as, in either case,
such activities do not require the Executive to spend a material amount of time
away from his performance of his duties hereunder, or otherwise violate this
Agreement or the Company’s other policies. 
A list of boards of directors upon which Executive currently is a member
is attached hereto as Exhibit A, and, upon appointment of Executive as
Chief Executive Officer and President, the Board also will consent to Executive’s
service on those boards of directors. 
The principal place of employment of the Executive shall be the
principal executive offices of the Company. 
The Executive acknowledges that in the course of his employment he may
be required, from time to time, to travel on behalf of the Company. Executive
will follow and comply with the policies and procedures of the Company,
including without limitation, policies relating to business ethics, code of
conduct, conflict of interest, non-discrimination, confidentiality and
protection of trade secrets, and insider trading. Executive hereby represents
and confirms that neither (i) Executive’s entering into this Agreement nor
(ii) Executive’s performance of Executive’s duties and obligations
hereunder will violate or conflict with any other agreement (oral or written)
to which Executive is a party or by which Executive is bound.  Without commenting on whether a breach of any
other section of this Agreement is material, the parties agree that a breach of
this Section 2 shall be a material breach of this Agreement.

 

3.                                       COMPENSATION. 
During Executive’s employment under this Agreement, Executive will be
provided with the below compensation and benefits.

 

(a)                                  Base Salary.  The Company will pay to
Executive for services provided hereunder an annualized base salary (“Base
Salary”) at an initial rate of $850,000.00, which Base Salary will be paid on a
bi-weekly basis in accordance with the Company’s normal payroll policies and
procedures.  The Board will review
Executive’s performance on an annual basis and determine any adjustments to
Executive’s Base Salary in its sole discretion but in no 

 

2

 

event may the Board reduce
Executive’s Base Salary by greater than 10% (i.e. during Executive’s employment
with the Company, his base salary shall never be less than $765,000).

 

(b)                                 Incentive Compensation. Executive will be eligible to participate
in the Company’s 2008 Cash Incentive Plan bonus plan (the “Bonus Plan”),  in accordance with its terms, as may be amended and in
effect from time to time.  Executive’s
annual target incentive compensation under the Bonus Plan shall be 100% of
Executive’s Base Salary with a possible payout of up to a maximum of 200% of
Executive’s Base Salary pursuant to the current terms and conditions of the
Bonus Plan. Executive shall have a guaranteed bonus under the Bonus Plan equal
to no less than 50% of Executive’s Base Salary for the remainder of 2009 (pro
rated based on the proportion of the year Executive was employed by the
Company).  However, Executive shall be
eligible to receive the full possible payout of 200%, without proration, in the
calendar year 2009.  All payments under
the Bonus Plan (and any successor thereto) shall be made to the Executive
within 2 1⁄2 months after the end of the calendar year in which such payments
were earned.

 

(c)                                  Stock Options. 
Effective upon commencement of Executive’s employment with the Company
and upon approval by the Board, the Company will grant to Executive an option
to purchase 400,000 shares of common stock of the Company at the fair market
value as of the date of the grant, subject to the Company’s 2007 Equity
Incentive Plan and a written stock option agreement to be entered into by and
between Executive and the Company.

 

(d)                                 Restricted Stock. 
Effective upon commencement of Executive’s employment with the Company
and upon approval by the Board, the Company will grant to Executive 400,000
shares of restricted stock pursuant to the Company’s 2007 Equity Incentive Plan
and a written restricted stock award agreement to be entered into by and
between Executive and the Company.

 

(e)                                  Signing Bonus. 
Executive will receive a $350,000 signing bonus payable within 5
business days of his commencing employment with the Company.

 

(f)                                    Deferred Compensation. 
Executive will be eligible to participate in the Company’s 2007 Senior
Executive Deferred Compensation Plan in accordance with its terms, as may be
amended and in effect from time to time.

 

(g)                                 Employee
Benefits.  Executive will be entitled
to participate in all employee benefit plans and programs generally available
to and on terms no less favorable than executive employees of the Company, to
the extent that Executive meets the eligibility requirements for each
individual plan or program.  Executive’s
participation in any plan or program
will be subject to the provisions, rules, and regulations of, or applicable to,
the plan or program.  The Company
provides no assurance as to the adoption or continuation of any particular
employee benefit plan or program.

 

(h)                                 Business Expenses.  The
Company will reimburse Executive for all reasonable and necessary out-of-pocket
business, travel, and entertainment expenses incurred by 

 

3

 

Executive in the performance
of Executive’s duties and responsibilities to the Company during Executive’s
employment under this Agreement.  Such
reimbursement shall be subject to the Company’s normal policies and procedures
for expense verification, documentation, and reimbursement; provided, however,
that Executive shall submit verification of expenses within 45 days after the
date the expense was incurred, and the Company shall reimburse Executive for
such expenses eligible for reimbursement within 30 days thereafter.  The right to reimbursement hereunder is not
subject to liquidation or exchange for any other benefit, and the amount of
expenses eligible for reimbursement in a calendar year shall not affect the
expenses eligible for reimbursement in any other calendar year.

 

(i)                                     Vacation Time. 
Executive shall be entitled to 25 days of paid vacation per year.

 

(j)                                     Relocation Benefits.  The
Company will provide Executive with a relocation package with respect to
reasonable costs associated with relocating from the London, England
metropolitan area to the Boulder, Colorado metropolitan area.  If Executive does not commence employment or
he terminates his employment with the Company within one year of his start date
as an employee of the Company, Executive shall reimburse the Company for a
pro-rata share of all relocation expenditures made by the Company pursuant to
this Section 3(j).  As an example:
If Executive completes six months of service prior to terminating his
employment with the Company, he shall reimburse the Company for 50% of all
relocation expenditures (6 months = 50% pro-rata share).  Such package shall include:

 

(i)                                     Payment to an agreed upon vendor for
reasonable costs of packing, moving and unpacking the household goods,
automobiles and personal effects of Executive and Executive’s immediate family
from the London, England metropolitan area to the Boulder, Colorado
metropolitan area.

 

(ii)                                  Payment of rental costs for reasonably
acceptable temporary housing in the Boulder, Colorado metropolitan area for
Executive and Executive’s immediate family for up to 12 months while Executive
searches for a permanent residence in the Boulder, Colorado metropolitan area.

 

(iii)                               Executive shall submit invoices, receipts or
other appropriate documentation of each expense under this Section 3(j) within
30 days after such expense is incurred, and the Company will pay such
reimbursements to Executive, or directly to a vendor, within 30 days
thereafter.

 

4.                                       CONFIDENTIAL INFORMATION. 
Except as authorized in writing by the Board or as necessary in carrying
out Executive’s responsibilities for the Company, Executive will not at any
time divulge, furnish, or make accessible to anyone or use in any way, any
confidential, proprietary, or secret knowledge or information of the Company
that Executive has acquired or will acquire about the Company, whether
developed by himself or by others, concerning (a) any trade secrets, (b) any
confidential, proprietary, or secret designs, inventions, discoveries,
programs, processes, formulae, plans, devices, or material (whether or not
patented or patentable) directly or indirectly useful in any aspect of the
business of the Company, (c) any 

 

4

 

confidential, proprietary,
or secret customer or supplier lists, (d) any confidential, proprietary,
or secret development or research work, (e) any strategic or other
confidential business, marketing, or sales plans, systems or techniques, (f) any
confidential, proprietary, or secret financial data or plans, or (g) any
other confidential or proprietary information or secret aspects of the business
of the Company.  Executive acknowledges
that the above-described knowledge and information constitute a unique and
valuable asset of the Company and represent a substantial investment of time
and expense by the Company, and that any disclosure or other use of such
knowledge or information other than for the sole benefit of the Company would
be wrongful and would cause irreparable harm to the Company.  Executive will refrain from intentionally
committing any acts that would materially reduce, and shall take reasonable
steps to protect, the value of such knowledge or information to the Company.  The foregoing obligations of confidentiality
shall not apply to any knowledge or information that (i) is now or
subsequently becomes generally publicly known, other than as a direct or
indirect result of the breach by Executive of this Agreement, (ii) is
independently made available to Executive in good faith by a third party who
has not violated a confidential relationship with the Company, or (iii) is
required to be disclosed by law or legal process.  Executive understands and agrees that
Executive’s obligations under this Agreement to maintain the confidentiality of
the Company’s confidential information are in addition to any obligations of
Executive under applicable statutory or common law.

 

5.                                       VENTURES.  If, during Executive’s
employment with the Company, Executive participates in the planning or
implementing of any project, program, or venture involving the Company, all
rights in such project, program, or venture belong to the Company.  Except as approved in writing by the Board,
Executive will not be entitled to any interest in any such project, program, or
venture or to any commission, finder’s fee, or other compensation in connection
therewith.  Executive will have no
interest, direct or indirect, in any customer or supplier that conducts
business with the Company, provided, however, that prior to commencing
employment with the Company, Executive has disclosed in writing to the Company,
his interest in certain entities that, at some time, may be interested in
conducting business with the Company. 
Executive is under no obligation to divest himself of such
interest.  Executive agrees that, if any
such entities desire to conduct business with the Company, Executive shall
exclude himself from any such dealings, shall not participate in any decision
regarding whether to engage in such a relationship, and shall not engage in
conversation with the decision makers at the Company regarding the advisability
of such a relationship.

 

6.                                       INTELLECTUAL PROPERTY.

 

(a)                                  Disclosure and Assignment. 
Executive hereby transfers and assigns to the Company (or its designee)
all right, title, and interest of Executive in and to every idea, concept,
invention, and improvement (whether patented, patentable or not) conceived or
reduced to practice by Executive whether solely or in collaboration with others
while Executive is employed by the Company, and all copyrighted or
copyrightable matter created by Executive whether solely or in collaboration
with others while Executive is employed by the Company, in each case, that
relates to the Company’s  business
(collectively, “Creations”).  Executive
shall communicate promptly and disclose to the Company, in such form as the
Company may request, all information, details, and data pertaining to each
Creation.  Every copyrightable Creation,
regardless of whether copyright protection is sought or preserved by the
Company, shall be a 

 

5

 

“work
made for hire” as defined in 17 U.S.C. § 101, and the Company shall
own all rights in and to such matter throughout the world, without the payment
of any royalty or other consideration to Executive or anyone claiming through
Executive.

 

(b)                                 Trademarks.  All right, title, and interest
in and to any and all trademarks, trade names, service marks, and logos
adopted, used, or considered for use by the Company during Executive’s
employment (whether or not developed by Executive) to identify the Company’s
business or other goods or services (collectively, the “Marks”), together with
the goodwill appurtenant thereto, and all other materials, ideas, or other
property conceived, created, developed, adopted, or improved by Executive
solely or jointly during Executive’s employment by the Company and relating to
its business shall be owned exclusively by the Company.  Executive shall not have, and will not claim
to have, any right, title, or interest of any kind in or to the Marks or such
other property.

 

7.                                       NONCOMPETITION AND NONSOLICITATION COVENANTS.

 

(a)                                  Agreement Not to Compete. 
During Executive’s employment with the Company and for a period of 8
consecutive months from and after the termination of Executive’s employment,
whether such termination is with or without Cause, or is at the instance of
Executive or the Company, Executive will not, directly or indirectly, in any
manner or capacity, including without limitation as a proprietor, principal,
agent, partner, officer, director, investor, stockholder, employee, member of
any association, consultant or otherwise engage or participate in any
Competitive Business.  “Competitive
Business” means any person, entity or business operation (other than the
Company) that designs, manufactures, markets, distributes, or sells footwear or
other products that are the same or similar to the footwear or other products
designed, manufactured, marketed, distributed or sold by the Company in any
geographic location in which the Company is then doing business, or is then
actively preparing to do business, or that engages in any other business that
is competitive with the then-current businesses of the Company or with any business
or market the Company is actively preparing to enter as of the date of
termination of Executive’s employment. 
Ownership (as either a proprietor, principal, investor, or stockholder
in this Section 7(a)) by Executive, as a passive investment, of less than
5%  of the outstanding shares of capital
stock of any corporation shall not constitute a breach of this Section 7(a).

 

(b)                                 Agreement Not to Hire. 
During Executive’s employment with the Company and for a period of 12
consecutive months from and after the termination of Executive’s employment,
whether such termination is with or without Cause, or is at the instance of
Executive or the Company, Executive will not, directly or indirectly, in any
manner or capacity, including without limitation as a proprietor,  principal, agent, partner, officer, director,
investor, stockholder, employee, member of any association, consultant, or
otherwise, hire, engage, or solicit any person who is then an employee of the
Company or who was an employee of the Company at any time during the 60 day
period immediately preceding Executive’s Termination Date.

 

(c)                                  Agreement Not to Solicit. 
During Executive’s employment with the Company and for a period of 12
consecutive months from and after the termination of 

 

6

 

Executive’s employment,
whether such termination is with or without Cause, or is at the instance of
Executive or the Company, Executive will not, directly or indirectly, in any
manner or capacity including without limitation as a principal, agent, partner,
officer, director, employee, or consultant, solicit, request, advise, or induce
any current or potential customer (potential customer in this Section 7(c) is
defined as any potential customer with whom the Company has been actively
engaging in discussions during the 30 day period immediately preceding
Executive’s termination of employment), supplier, vendor or other business
contact of the Company to cancel, curtail, or otherwise change its relationship
adversely to the Company, or interfere in any manner with the relationship
between the Company and any of its customers, suppliers, vendors or other
business contacts.  This paragraph
applies only to customers, suppliers, vendors and other business contacts of
the Company that had active relationships with the Company as of the date of
Executive’s termination of employment with the Company.

 

(d)                                 Modification.  If
the duration of, the scope of, or any business activity covered by, any
provision of this Section 7 exceeds that which is valid and enforceable
under applicable law, such provision will be construed to cover only that
duration, scope, or activity that is determined to be valid and
enforceable.  Executive hereby
acknowledges that this Section 7 will be construed so that its provisions
are valid and enforceable to the maximum extent, not exceeding its express
terms, possible under applicable law.

 

(e)                                  No Adequate Remedy at Law. 
Executive hereby acknowledges that the provisions of this Section 7
are reasonable and necessary to protect the legitimate interests of the Company
and that any violation of this Section 7 by Executive will cause
substantial and irreparable harm to the Company to such an extent that monetary
damages alone would be an inadequate remedy therefor.  Accordingly, in the event of any actual or
threatened breach of any such provisions, the Company will, in addition to any
other remedies it may have, be entitled to injunctive and other equitable
relief to enforce such provisions, and such relief may be granted without the
necessity of proving actual monetary damages.

 

8.                                       TERMINATION OF EMPLOYMENT.

 

(a)                                  Executive’s employment with the Company under
this Agreement will terminate upon the occurrence of any one of the following
events:

 

(i)                                     The Executive’s receipt of the Company’s
written notice to Executive of the termination of Executive’s employment,
effective as of the date stated in such notice;

 

(ii)                                  The Company’s receipt of Executive’s written
resignation from the Company, effective not earlier than 30 days after delivery
of such written notice of resignation, provided that the Board may waive such
notice or relieve Executive of Executive’s duties during such notice period;

 

(iii)                               Executive’s Disability; or

 

(iv)                              Executive’s death.

 

7

 

(b)                                 The date upon which Executive’s termination
of employment with the Company is effective is the “Termination Date.”  For purposes of Sections 9 and 10 of this
Agreement only, the Termination Date shall mean the date on which a “separation
from service” has occurred for purposes of Section 409A of the Code and
the regulations and guidance thereunder.

 

9.                                       PAYMENT UPON INVOLUNTARY TERMINATION WITHOUT
CAUSE.  If Executive’s employment with the Company is
terminated involuntarily at the initiative of the Company without Cause (as
defined in Section 13 below), then, in addition to such Base Salary and
any other compensation that has been earned but not paid to Executive as of the
Termination Date, the Company shall, subject to the conditions in Section 11,
provide Executive the following severance pay and benefits:

 

(a)                                  pay to Executive a lump sum amount equal to
one year of Executive’s Base Salary in effect as of the Termination Date;

 

(b)                                 pay to Executive a lump sum amount equal to
any annual incentive (bonus) compensation earned by Executive during the year
in which the Termination Date occurs (based on actual achievement of
performance objectives during such year), on a prorated basis for the
proportion of the year that Executive was employed with the Company;

 

(c)                                  pay to Executive a lump sum amount of
Executive’s annual incentive (bonus) compensation equal to 100% of Executive’s
Base Salary at the time of Executive’s Termination Date;

 

(d)                                 immediate vesting of any unvested stock
options or unvested restricted stock then held by Executive that would have
vested had Executive remained employed for 12 months after the Termination
Date; and

 

(e)                                  if Executive (and/or Executive’s covered
dependents) is eligible for and properly elects to continue group health insurance
coverage, as in place immediately prior to the Termination Date, and if
Executive continues to pay the employee portion of such health coverage, the
Company will pay the employer portion of premiums for such coverage until the
earlier of (i) twelve months after the Termination Date, or (ii) the
effective date of any subsequent similar coverage that Executive obtains by
becoming employed by another company with similar coverage as the Company.

 

Any such amounts that become
due and owing pursuant to Sections 9(a) or (c) shall be paid to
Executive in full as soon as administratively practicable following the
Termination Date and Executive’s satisfaction of the conditions in Section 11,
but in no case later than 2 1/2 months after the Termination Date. Any such
amounts that become due and owing pursuant to Section 9(b) shall be
paid to Executive in full no later then when such annual bonuses are paid to
other senior executive officers of the Company, provided Executive is in
satisfaction of the conditions in Section 11.  For purposes of this Section 9, Base
Salary shall be determined prior to any 

 

8

 

reduction that would entitle
the Executive to terminate his employment with the Company for Good Reason.

 

10.                                 PAYMENT UPON RESIGNATION BY EXECUTIVE FOR
GOOD REASON.  Upon resignation by Executive for Good Reason
(as defined in Section 13 below), then, in addition to such Base Salary
and any other compensation that has been earned but not paid to Executive as of
the Termination Date, Executive shall be entitled to severance pay and benefits
as provided in Section 9(a)-(e) for a termination by the Company
without Cause, provided, however, that, if Executive resigns for Good Reason
and the Termination Date is within six months of any Change of Control (as
defined in Section 13 below), he shall receive all severance pay and
benefits described in Section 9(a)-(c) and 9(e), and the unvested
stock options or unvested restricted stock then held by Executive that would
have vested had Executive remained employed for 24 months after the Termination
Date shall immediately vest.  Any such
amounts that become due and owing pursuant to this Section 10 shall be
paid to Executive in accordance with the provisions of Section 9.

 

11.                                 CONDITIONS. Notwithstanding anything above to the contrary, the Company will not
be obligated to make any payments to Executive under Sections 9 or 10 unless
the following two conditions are met:

 

(a)  The Company and
Executive hereby agree and covenant that, within 30 business days of the date
of Executive’s Termination Date, they will enter into a mutually agreeable form
of release, in which Executive releases any claims he may have against the
Company relating to his employment with the Company, provided that Executive
shall not be required to release any claims he may have against the company
relating to his rights to indemnification, insurance coverage (including
without limitation directors’ and officers’ liability insurance coverage), and
the ability to enforce the terms of this Agreement; and all applicable
rescission periods provided by law for releases of claims shall have expired
and Executive shall have signed and not rescinded the release of claims.

 

(b)                                 Executive is in compliance with the terms of
this Agreement as of the dates of such payments.

 

12.                                 OTHER TERMINATION.

 

(a)                                 If Executive’s employment with the Company is
terminated:

 

(i)                                       by reason of Executive’s abandonment of
Executive’s employment or resignation for any reason other than Good Reason;

 

(ii)                                    by reason of termination of Executive’s
employment by the Company for Cause; or

 

(iii)                                 upon Executive’s death or Disability,

 

9

 

then the Company will pay to Executive, or
Executive’s beneficiary or Executive’s estate, as the case may be,  such Base Salary and any other compensation
that has been earned but not paid to Executive as of the Termination Date
(including but not limited to all compensation for prior performance years that
has not yet been paid, such as Executive’s annual incentive compensation,
notwithstanding any contrary language in any plans or policies), payable
pursuant to the Company’s normal payroll practices and procedures and as
provided under any applicable plans or programs.

 

(b)                                If Executive’s employment is terminated by
virtue of this Agreement being rejected in a bankruptcy proceeding, then
Executive shall be entitled to rejection damages in the amount of the severance
pay and benefits as provided in Section 9(a)-(e) for a termination by
the Company without Cause.

 

13.                                 DEFINITIONS.

 

(a)                                  Cause.  “Cause” hereunder means:

 

(i)                                     Executive’s conviction, or guilty or no
contest plea, to any felony;

 

(ii)                                  any act of fraud by Executive related to or
connected with Executive’s employment by the Company which causes material harm
to the Company or its reputation;

 

(iii)                               Executive’s material breach of his fiduciary
duty to the Company which causes material harm to the Company;

 

(iv)                              Executive’s gross negligence or gross
misconduct in the performance of duties reasonably assigned to Executive which
causes material harm to the Company;

 

(v)                                 any willful and material violation by
Executive of the Company’s codes of conduct or other rules or policies of
the Company, which causes material harm to the Company;

 

(vi)                              any entry of any court order or other ruling
that prevents Executive from performing his material duties and
responsibilities hereunder; or

 

(v)                                 any
willful and material breach of this
Agreement by Executive which causes material harm to the Company.

 

(b)                                 Disability.  “Disability” hereunder means
either (i) any severe medically determinable physical impairment that
renders Executive unable to function, such as Executive being in a coma, from
which a physician with relevant and appropriate expertise has given his medical
opinion that Executive will not recover within six months; or (ii) Executive’s
inability because of mental or physical illness or incapacity, whether total or
partial, to perform 

 

10

 

his duties under this Agreement for a
continuous period of 120 days, or for shorter periods aggregating 120 days out
of any 180 day period.

 

(c)                                  Good Reason.  “Good Reason” hereunder means
any of the following conditions arising during Executive’s term of employment
without the consent of Executive:

 

(i)                                     a material diminution in Executive’s
responsibilities, authority, or duties;

 

(ii)                                  a material reduction in Executive’s Base
Salary (unless such reduction is part of an across the board uniformly applied
reduction affecting all senior executives of the Company and does not exceed
the average percentage reduction for all such senior executive officers);

 

(iii)                               a reduction in Executive’s incentive or
equity compensation such that it is materially less favorable than those
provided generally to other senior executive officers;

 

(iv)                              relocation of the Company, or of Executive’s
office, 50 miles or more from 6328 Monarch Park Place, Niwot, Colorado;

 

(v)                                 assignment of duties or responsibilities
materially inconsistent with those described in Section 2 hereof without
the consent of the Executive;

 

(vi)                              the Board’s failure to appoint Executive as
Chief Executive Officer on March 16, 2009;

 

(vii)                           the adoption of any resolution or other Board
action that appoints another officer or Board member to oversee, assume, or
share responsibilities of running the Company on a day-to-day basis, which
responsibilities previously were in the province of Executive;

 

(viii)                        the cessation of the Executive’s membership
on the Company’s or its successor’s Board and/or his removal from the position
of Chief Executive Officer of the Company or its successor;

 

(ix)                                any change in Executive’s reporting
responsibility being solely to the Board; or

 

(x)                                   any other action or inaction that constitutes
a material breach by the Company of this Agreement.

 

provided, however, that “Good Reason” will
not exist unless Executive has first provided written notice to the Company of
the occurrence of one or more of the conditions under clauses (i) 

 

11

 

through (x) above within 90 days of the
condition’s occurrence and such condition(s) is (are) not fully remedied
by the Company within 30 days after the Company’s receipt of written notice
from Executive.

 

(d)                                   Change of Control.  “Change
of Control” hereunder means any one of the following events:

 

(i) the disposition, whether by sale, merger, consolidation, etc.
of all or substantially all of the company’s assets, unless, in advance of such
disposition, the Executive waives this provision in writing; or

 

(ii) any person, entity  or
group (as the term “group” is defined in the rules and regulations
relating to Section 13D of the Securities Exchange Act of 1934) acquires
50% or more of the voting common stock of the Company.

 

14.                                 OTHER POST-TERMINATION OBLIGATIONS.

 

(a)                                  In the event of termination of Executive’s
employment, the sole obligation of the Company under this Agreement will be its
obligation to make the payments called for by Sections 9, 10 or 12 hereof, as
the case may be, and the Company will have no other obligation to Executive or
to Executive’s beneficiary or Executive’s estate, except as otherwise provided
by law or by the terms of any employee benefit plans or programs, or of any
incentive compensation or stock ownership plans, then maintained by the Company
in which Executive participates.

 

(b)                                 Immediately upon termination of Executive’s
employment with the Company for any reason, Executive will resign all positions
then held as a director or officer of the Company and of any subsidiary, parent
or affiliated entity of the Company.

 

(c)                                  Upon termination of Executive’s employment
with the Company, Executive shall promptly deliver to the Company any and all
Company records and any and all Company property in Executive’s possession or
under Executive’s control, including without limitation manuals, books, blank
forms, documents, letters, memoranda, notes, notebooks, reports, printouts,
computer disks, flash drives or other digital storage media, source codes,
data, tables or calculations and all copies thereof, documents that in whole or
in part contain any trade secrets or confidential, proprietary or other secret
information of the Company and all copies thereof, and keys, access cards,
access codes, passwords, credit cards, personal computers, handheld personal
computers or other digital devices, telephones and other electronic equipment
belonging to the Company.

 

(d)                                 Following termination of Executive’s
employment with the Company for any reason, Executive will, upon reasonable
request of the Company or its designee, cooperate with the Company in
connection with the transition of Executive’s duties and responsibilities for
the Company; consult with the Company regarding business matters that Executive
was directly and substantially involved with while employed by the Company; and
be 

 

12

 

reasonably available, with or without subpoena, to
be interviewed, review documents or things, give depositions, testify, or
engage in other reasonable activities in connection with any litigation or
investigation, with respect to matters that Executive then has or may have
knowledge of by virtue of Executive’s employment by or service to the Company
or any related entity.  The Company shall
compensate Executive at a rate of $800 per hour for such work, and shall
reimburse Executive’s reasonable legal fees incurred in connection therewith.
Such reimbursement shall be subject to the Company’s normal policies and procedures
for expense verification, documentation, and reimbursement.

 

(e)                                  Executive will not malign, defame or
disparage the reputation, character, image, products or services of the
Company, or the reputation or character of the Company’s directors, officers,
employees or agents, provided that nothing in this Section 14(e) shall
be construed to limit or restrict Executive from taking any action that
Executive in good faith reasonably believes is necessary to fulfill Executive’s
fiduciary obligations to the Company, or from providing truthful information in
connection with any legal proceeding, government investigation or other legal
matter.

 

15.                                 LIABILITY INSURANCE AND INDEMNIFICATION.  The
Company shall maintain directors’ and officers’ liability insurance for
Executive while Executive is employed under this Agreement and thereafter at a
level equivalent to or exceeding the level currently provided for other current
and former officers of the Company.  The
Company further agrees to indemnify and hold harmless Executive to the fullest
extent permitted under the Company’s charter and bylaws and Delaware law,
including without limitation, advancing Executive’s legal fees incurred in
connection with any legal proceeding.

 

16.                                 MISCELLANEOUS.

 

(a)                                  Tax Withholding.  The
Company may withhold from any amounts payable under this Agreement such
federal, state and local income and employment taxes as the Company shall
determine are required to be withheld pursuant to any applicable law or
regulation.

 

(b)                                 Section 409A.  This
Agreement is intended to satisfy, or be exempt from, the requirements of Section 409A(a)(2),
(3) and (4) of the Code, including current and future guidance and
regulations interpreting such provisions, and should be interpreted
accordingly. The Company makes
no warranty to Executive with respect to tax treatment of any compensation to
be paid to him in connection with his employment, and Executive shall be solely
responsible for the payment of all taxes due and owing with respect to wages,
benefits, and other compensation provided to him.

 

(c)                                  Governing Law.  All
matters relating to the interpretation, construction, application, validity,
and enforcement of this Agreement will be governed by the laws of the State of
Colorado without giving effect to any choice or conflict of law provision or
rule, whether of the State of Colorado or any other jurisdiction, that would
cause the application of laws of any jurisdiction other than the State of
Colorado.

 

13

 

(d)                                 Jurisdiction and Venue. 
Except for disputes to be resolved by arbitration as provided in Section 16(e),
Executive and the Company consent to jurisdiction of the courts of the State of
Colorado and/or the United States District Court, District of Colorado for the
purpose of resolving all issues of law, equity, or fact arising out of or in
connection with this Agreement.  Except
for disputes to be resolved by arbitration as provided in Section 16(e),
any action involving claims of a breach of this Agreement must be brought in
such courts.  Each party consents to
personal jurisdiction over such party in the state and/or federal courts of
Colorado and hereby waives any defense of lack of personal jurisdiction.  Venue, for the purpose of all such suits,
will be in Denver County, State of Colorado.

 

(e)                                  Waiver of Jury Trial; Arbitration.  To
the extent permitted by law, Executive and the Company waive any and all rights
to a jury trial with respect to any dispute arising out of or relating to this
Agreement.  Except for disputes arising
under Sections 4, 5, 6, 7 or 14 hereof, all disputes involving the
interpretation, construction, application or alleged breach of this Agreement
and all disputes relating to the termination of Executive’s employment with the
Company shall be submitted to final and binding arbitration in Denver,
Colorado.  The arbitrator shall be
selected and the arbitration shall be conducted pursuant to the then most
recent Employment Dispute Resolution Rules of the American Arbitration
Association, and the arbitration shall be administered by the American
Arbitration Association, unless the parties thereto agree otherwise.  The decision of the arbitrator shall be final
and binding, and any court of competent jurisdiction may enter judgment upon
the award.  All fees and expenses of the
arbitrator shall be paid by the Company. 
The arbitrator shall have jurisdiction and authority to interpret and
apply the provisions of this Agreement and relevant federal, state and local
laws, rules and regulations insofar as necessary to the determination of
the dispute and to remedy any breaches of the Agreement and/or violations of
applicable laws, but shall not have jurisdiction or authority to alter in any
way the provisions of this Agreement. 
The arbitrator shall have the authority to award attorneys’ fees and
costs to the prevailing party but shall not have the authority to award the
fees and expenses of the arbitrator to the prevailing party.  In the event of an arbitration, Executive
shall be entitled to obtain documents from the Company and its officers and
directors reasonably in advance of the arbitration hearing so as to be able to
prepare his case.  The parties hereby
agree that this arbitration provision shall be in lieu of any requirement that
either party exhausts such party’s administrative remedies under federal, state
or local law.

 

(f)                                    Entire Agreement.  This
Agreement contains the entire agreement of the parties relating to Executive’s
employment with the Company and supersedes all prior agreements and
understandings with respect to such subject matter, and the parties hereto have
made no agreements, representations, or warranties relating to the subject
matter of this Agreement that are not set forth in this Agreement.

 

(g)                                 No Violation of Other Agreements. 
Executive hereby represents and agrees that neither (i) Executive’s
entering into this Agreement nor (ii) Executive’s carrying out the
provisions of this Agreement, will violate any other agreement (oral, written,
or other) to which Executive is a party or by which Executive is bound.

 

14

 

(h)                                 Assignment.  This Agreement shall not be
assignable, in whole or in party, by either party without the written consent
of the other party, except that the Company may, without the consent of
Executive, assign or delegate all or any portion of its rights and obligations
under this Agreement to any corporation or other business entity (i) with
which the Company may merge or consolidate, (ii) to which the Company may
sell or transfer all or substantially all of its assets or capital stock, or (iii) of
which 50% or more of the capital stock or the voting control is owned, directly
or indirectly, by the Company or which is under common ownership or control
with the Company.  Any such current or
future successor, parent, affiliate or other joint venture partner to which any
right or obligation has been assigned or delegated shall be deemed to be the “Company”
for purposes of such rights or obligations of this Agreement.

 

(i)                                     Amendments.  No amendment or modification
of this Agreement will be effective unless made in writing and signed by the
parties hereto.

 

(j)                                     Counterparts.  This
Agreement may be executed by facsimile signature and in any number of
counterparts, and such counterparts executed and delivered, each as an
original, will constitute but one and the same instrument.

 

(k)                                  Severability. 
Subject to Section 7(d) hereof, to the extent that any portion
of any provision of this Agreement is held invalid or unenforceable, it will be
considered deleted herefrom and the remainder of such provision and of this
Agreement will be unaffected and will continue in full force and effect.

 

(l)                                     Survival.  The provisions of this
Agreement that by their terms or implication extend beyond the Termination
Date, including without limitation Sections 4, 6, 7, 14, 15, and 16 of this
Agreement, shall survive the termination of Executive’s employment with the
Company for any reason.

 

(m)                               Captions and Headings.  The
captions and paragraph headings used in this Agreement are for convenience of
reference only and will not affect the construction or interpretation of this
Agreement or any of the provisions hereof.

 

(n)                                 Notices.  Any notice required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given when (i) delivered personally; (ii) sent
by facsimile or other similar electronic device with confirmation; (iii) delivered
by reliable overnight courier; or (iv) three business days after being
sent by registered or certified mail, postage prepaid, and in the case of (iii) and
(iv) addressed as follows:

 

	
  If to the Company:

  	
  Crocs, Inc.

  
	
   

  	
  6328 Monarch Park Place

  
	
   

  	
  Niwot, CO 80503

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  
	
  If to Executive:

  	
   

  	
   

  
	
   

  	
  [latest address on file
  with the Company]

  

 

15

 

Executive and the Company
have executed this Agreement effective as of the date set forth in the first
paragraph.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CROCS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Richard Sharp

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its: Chairman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ John Duerden

  
	
   

  	
  John Duerden

  

 

16

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